We have been moving pretty slowly to the downside so I would expect the same.  However, with Summer in full swing, low volume patterns are weak.  If this pattern breaks to the upside this week expect some big moves.

Bottom line: If I get close to my profit targets on my ICs, I will go ahead and exit.

Mojo

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Even though in these low volumes days technical setups are less valid we can still make money by trading carefully.  The Dow is looking weaker setting up a descending triangle that can rattle up or down between 8500 and 8300 pretty easily.  Once it breaks that lower support the Dow looks to finish in the 7600 range.

Although this is at conflict with my ‘gut’ instinct that I believe we will be more bullish than this I still want to pay heed.  Whenever my technicals and guts are conflicting I consider this a lower probability environment and will either pass on the trade or size down.  Remember its more important to sit and do nothing than it is to try and force a trade.

I hope everyone had a great fourth!

Mojo

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If you are day trading, be sure to stick with the morning activity and then take the afternoon off.

Mojo

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What’s next for the Big Markets?

Where are the tech stocks heading? (Oracle, Apple, and MSFT)

What’s the future for volatility and how can we take advantage of it?

How do we need to adjust our trading style for summer volumes?

What specific technical setups are we looking at and what’s the best time to enter?

If there is anything else you would like for us to cover feel free to email me.  As usual our meeting starts at 7:30pm ET via Webex.  It will be recorded so if you can’t make it tonight you can stream or download the recording at anytime.

If you are interested in joining our trade team and attending our meetings please email me at mojo at insanemoney dot com.

Have a great day!

Mojo

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More aggresive or bullish traders will enter now but I’m going to wait a bit and look for a breakout on the 60 min chart.  Check the forum thread and I will do my best to update you.

Mojo

PS - Futures are only up +2 (YM) after hours so I’ll be watching these as well.  If we get a smallish gap down Tuesday morning I may enter with a small pilot position.

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More aggresive traders will enter immediately at the 50% mark.  For me, I’m willing to miss a little bit of the upswing and will wait for confirmation.  A good way to do that is to drop down a time phase (from daily bars to hourly bars) and wait for a breakout or cross in the exponential moving averages (8 EMA moving above the 21 EMA).

Stay on your feet and hold to your stops.  Summer time can be pretty squirelly!

Mojo

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Here’s what I found:

We are sitting just below pretty strong overhead resistance at 8800.  The volume is declining which is usually a weakening but that could also be due to the summertime.  Weak MACD are turning down and ATR (or total distance from the high to low each day) is getting smaller.  By themselves, it would be a toss up.  Taken together, things are looking short term weaker.

My best guess is to look for a push away from 8800 to the downside with a reversal and eventual breakout on big news.  One we breakout pay attention to the 9,000 level resistance.  If we slice right through it without retracing we should be at 9,500 in short order.

I going to use this bearish move down to cash in my bearish trades and setup some neutral / bullish trades on the cheap.

Mojo

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I still think we are long term bullish so I’m going to use this short pullback to close out some bearish trades for profit and (more importantly) to setup some bullish trades on the cheap.

Like most summers I will be reducing my size, trading more delta neutral, and being more careful of news events since the lower volume market seems to react more dramatically.  No since reunioning a good vacation with a poor trade!

Mojo

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Anyway, I legged in to this one first on the bottom side (puts) and then on the top side (calls) a few days later.  That allowed me to get good fills and almost immediate profit.  Take a look at this graph:

The vertical red line on the left is the lowest break even point at 1310.24.  The vertical red line on the right is the highest break even point at 1493.90.  The line in the middle is the ‘live line’ or current price.

Right now, we are sitting at a profit of close to +15%.  This is inline with my profit target so I will be really sensitive to any losses from here.  I will likely close this down or pare down my position if my profits starts to decrease.  (It’s tough to do this when you consider that I could hold closer to expiration and possible reach 30% or better!)

Important Note: Remember that our TOS analyzer is only showing the profit at expiration assuming volatility stays the same.  If vols go down it will be a lot less (if any).  If vols go up it could be much more. Don’t be fooled! The price could stay exactly where it is and I could still lose money.

Mojo

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Mojo

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