USA OPTION TRADER

GOLD, DOLLAR, OIL and DOW JONES

2010-02-17T21:12:00.003+07:00

Interesting market yesterday, because the charts show some new sign of reversal for GOLD,OIL, and DOW JONES.

GOLD

Gold gapped up yesterday and now above MA 20 and MA 50 which signal strength. Also it breaks the downtrend line.

OIL

Oil has broken the downtrend and close above MA 20 and MA 50 which also signals strength. MACD crossing and pointing up.

DOLLAR

Dollar has broken the support line and may find support on MA 20. Today the dollar futures is up while stock market has not opened yet. The dow, gold futures also point up. Usually dollar futures would be points down if gold and dow futures point up. We have to check whether the inverse correlation between them still valid or starting to change.

DOW JONES

Dow Jones close above its MA 20, again it signals strength. Also DOW has broken the downtrend line.
Because DOW still below MA 50 the uptrend has not been confirmed. Should wait for higher low for another confirmation for conservative trader.
With less bad news to discount,good news from US economy indicator, it is likely stock market will go up in short term.
The most bad news is Greek debt which has been contained for a while.

Best regards

Snip

NVDA revisited

2010-02-12T01:20:00.003+07:00

I did a cut loss for NVDA as planned and after that it goes up. This one of classic example of psychology of trading. I could ignore my cut loss plan for the next trading or stick to it because I would not be able to tell the futures. After analyze the NVDA chart, the stock was at Fibo 50% that acted as support level. I admit that it was missed by me. At that time I just want to keep my loss small.

It is not small profit that kills traders but big loss will.

The NVDA chart was taken today while market still open, the chart may be different when stock market close.

Best regards

Snip

Does Bull get enough good news?

2010-02-12T01:04:00.003+07:00

Market still open and currently is at green area. First falling weekly jobless claim and help from EU for Greece boost market. From technical point of view, dow at resistance line, but has not recaptured above the MA 20 and 50. If we trade based on news, trader can do speculative buy because if there is no bad news to be discounted, market should go higher from now. Or we can wait until higher low of Dow are formed and go long from that point.

But until that time, I will stay bearish.

Best regards

Snip

DOW close below 10,000

2010-02-09T05:40:00.002+07:00

DOW close below 10,000 the important psychology support level. From technical view, it confirmed the down move. The dragon fly doji yesterday was a failure bullish reversal sign, because today candle does not close above previous highest price. Looks like it is true that last Friday bounce only from short covering (taking profit) and speculative buy (buy on support). Without solid fundamental news, the stock has hard time to go up. This situation is similiar with year 2007 and 2008. Becareful with long position.

When big money start to go out from stock market, it is hard to prevent the downturn. Only when the stock market oversold, we can play long position.

Best regards

Snip

Bear Market anyone?

2010-02-08T00:06:00.006+07:00

US Stock Market has breached the important support of 10,000 and fortunately close above it in the closing time.

The long black candles recently showed on Doji is signs of fear. Fear is stronger than greed. That's why the down move is faster and more devastating. Dow create lower high and almost close below 10,000 but the support is very strong there. We can see minor technical rebound on Monday but the weekly move should be continue down.

I remember the dragon fly doji was also formed on August 2007 after The fed made emergency rate for discount rate. The volume was very high at that day. On the other hand, the last Friday doji is not followed by significant fundamental news, so I think this will only be a technical rebound where speculator bought in hoping of up move in next Monday.

When dow is still below MA 50, I would say that the intermediate trend is bearish. Should sell the rally unless the higher low is formed.

GLD (Gold ETF) lower high has formed. Big institution may already taking profit from it.

UUP (Dollar ETF) uptrend has been confirmed, but the shooting star show possibility of minor down next monday.

USO (Oil ETF) lower high has formed, but the price was hold on important support. Need to close below support to confirm downtrend.

What I see is, the money flow start to move from stock market, gold, oil into dollar. Taking profit action is in the way. The market has no good news to be discounted and Obama make it worse with his plan with banks. So the market has began to discount situation that is indicated by the bad news.

The next important support is MA 200. If it is breached, then it is a bear market again.

Everyone expect V shape recovery. Before that many analisyt predict W shape recovery. So when everyone already sure the recovery will be V shape, very little trader predict W shape recovery... then market can do the opposite. Becareful.

Best regards

Snip

Cut loss NVDA, Let Profit Run for UUP

2010-01-30T08:50:00.004+07:00

Quick update, we cut loss for NVDA position, because it break the support. Meanwhile let profit run for UUP, it break resistance which give uptrend signal.

Dow jones also break support. Looks like dollar will go up meanwhile stock market,gold and oil will go down. The dollar carry trade may start to unwind, stock market may continue to go down for short term.

Best regards

Snip

NVDA buy on support, UUP start up trend

2010-01-25T06:04:00.002+07:00

NVDA has touched the support $16.50 and rebounded. The us market down 4% last week. This could be a major pullback and also could be a opportunity for go in for long position.

Go long NVDA on Monday.

For call option can choose call Feb or March strike 16.

Dont forget to set stop loss according to your money management.

Dollar ETF (UUP) has touched important resistance line, expect to see dollar go higher if break the resistance line. UUP also has created higher low which indicate that the dollar can start the uptrend. For call option can choose call March strike 23.

Dont forget to set stop loss according to your money management.

If usa stock market continue go down, the dollar will likely to go up

Best regards

Snip

NVDA break resistance line

2009-12-23T06:37:00.004+07:00

My last post about NVDA was on Nov 9. The dec call was a profit position. The stock price was $13.16. Today NVDA close at $17.88.

Up about 30% in less than 2 months. Also NVDA has broken the resistance line at $16.5

It may because of Santa Claus rally but still the tech sector now is a leader again.

The entry point for buy high - sell higher has been missed. It still can go higher but risk reward ratio is not really good

We should use buy on support strategy to enter long position in NVDA. Buy two months call option.

Wait for NVDA to drop near support around $16.50 then we can long 17 Feb call.

Best regards

Snip

Dollar broke the downtrend

2009-12-21T23:22:00.003+07:00

The chart of dollar ETF (UUP) shows that dollar has broken its downtrend line.

The volume is quite high. It can show the potential new uptrend for dollar.

Today the stock market is up, dollar slightly up, gold down. Looks like there is changing of relation between three of them. Usually dollar went down while stock market and gold went up.

It looks like the big fund institution is moving their fund from gold. Their fund then can be allocated to cash or stock market. And they stop shorting the dollar. Big institution can not move their funds in only one day, so they have to start early, in anticipating the Fed may increase the rate in 2010

UUP has broken the downtrend line, retested it and go up. Based on technical analysis it show probability that this is not only a regular bounce for dollar.

So I recomend go long on dollar, buy on support for UUP. The long call is not really expensive.

Stock is moving sideways with bullish bias. Continue to buy on support for swing trading.

Best regards

Snip

Take Profit for VALE

2009-12-11T22:32:00.002+07:00

VALE call option that I recomended two days ago has risen.

27.5 Jan 10 call @$1.67 -->2.05, profit=$38
27 Mar 10 call @2.98-->3.40, profit=$42
28 Mar 10 call @2.47-->2.85,profit = 38

Price is taken from live bid price when this posting made.

I recomend to take profit and go weekend in happiness.

Best regards

Snip

Buy on Support: VALE

2009-12-09T23:10:00.003+07:00

We have buy on support opportunity for VALE. Today VALE is holding on support MA 50 days.after went down several days. Stochastic show no more overbought condition

The options that can be choosed:

27.5 Jan 10 call @$1.67
27 Mar 10 call @2.98
28 Mar 10 call @2.47

The price is taken when market still open.

You can enter now or wait until 10 minutes before market close for candlestick up confirmation.

Please buy with proper money management.

Best regards

Snip

VALE and RDC

2009-11-17T05:07:00.003+07:00

I found new uptrend stock that bounce off their support on MA 20. Today they go higher and will test their resistance line. The entry time should be today or for breakout play, we should wait until the stock break through the resistance line. For VALE we can buy Dec 28 Call or 29 call.

for RDC we can buy Dec 25 or 27.5 call. If you prefer bigger delta then you should go for more ITM call.

As always, dont forget to set your stop loss and do the good money management.

US Stock will likely to move higher after Ben Bernanke state today that the Fed will keep interest rate low for extended period. So the dollar will still be moved into stock and commodity. As long as the dollar go down, the stock market will go up. But becareful when the Fed start to give signal raising interest rate, the stock market will likely have big correction because dollar will be moved out from stock.

I have a thought that now the usa economy still in recovery mode but stock market has gone up fast. When usa economy start to grow fast, the interest rate will be raised, dollar move out from stock, then stock market will most likely go down. So Dow theory is correct, stock market discount everything.

Best regards

Snip

NVDA,SWKS,SBUX

2009-11-09T00:15:00.004+07:00

After earning announcement last friday, NVDA and SWKS gapped up and break their downtrend line. With good outlook forecast news, these two stock can go higher. MACD has formed golden cross for bull signal. Stochastic has pointed up and leave oversold level.

SBUX also gapped higher because of earning announcement and made new 52 weeks high. I still believe this stock can go to $25 in less then next 3 months. This stock once in downtrend mode and now should be in uptrend mode because of its fundamental better now.

As usual for playing uptrend, we can buy call option.

For NVDA, we can buy Dec 09 13 call, SWKS Dec 09 12.5 call, SBUX Dec 09 21 call.

Their theta are 0.01, so it is quite small.

Best regards

Snip

Dow - Technical sign of reversal

2009-11-04T16:37:00.003+07:00

Dow formed hammer candle on important support MA 50 days yesterday. It signal sign of technical reversal. Check the chart and see what happen when Dow created hammer candle on MA 50 in early Oct 09. If history repeat itself, technically we will see bounce up.
But last time, there were no concern regarding Fed will increase fund rate that can affect dollar carry trade. The following FOMC will be closely watched by trader to see if there is any sign that Fed may increase the rate in short time.
If trader find any sign of it, I think there could be market sell off because stock market discount any news and the herd will overreact. But this market sell off will not be long.

Usually the interest rate will be raised because economy is improving, so in the longer time frame, based on historical data, when the fed raising the rate, stock market went up after went down first.

I prefer not to add any position before Fed announcement because market will be volatile before and after announcement. If you lucky to have correct position, then there will be quick profit, otherwise there will be quick loss.

Best regards

Snip

BAC - took profit

2009-11-04T10:59:00.002+07:00

Last night I put profit protection order for my Nov 15 put and it was hit at 45% profit.
I put profit protection so the profit position will not turn to a loss one.
BAC went lower at early trading yesterday and then reverse up.
It always feel good to take profit, no matter how much it is.

Best regards

Snip

Stronger Dollar, weaker Stock Market

2009-11-01T11:09:00.007+07:00

From March 09 till now, it is clear that Dollar has inverse relationship with stock market. As easy dollar is provided by the Fed, people use it to buy stock, gold, crude oil. So while the stock market, gold, crude oil go up together, dollar has been in downtrend.

Recently the dollar show some strength, as trader took profit and move position from stock,gold, crude oil to dollar cash.

As a result, the dollar go up and the others go down.

From the dollar chart, it show that the dollar price has been above MA 20, down retesting it and go up last friday. It will test whether it can break the downtrend line.

Stock market can only go up when there are buyers who willing to take higher price from seller.

Currently looks like big institution start to move the money out, as we can see from the dollar chart. As individual trader, we must becareful not to be trapped buying from big institution. Follow the big money, when they get out, why we should insist to stay? My prediction is dollar will be able to move above the resistance line and stock market can go down to 9200 for dow jones.

For option trader, we can start to buy put option to play this correction phase. Start small first and can add when get confirmation from dollar break above the resistance line.

Currently I play put option BAC and my position now is 50% profit.

SP500 has breach its important support while dow close on MA 50 support, not yet breach.

Weekly chart of Dow and SP500 also show bearish sign, while their monthly chart create doji pattern which show indecision between buyer and seller.

When market does not respond well on good economic news, we should be ready that the correction will continue. If you can not handle shorting or put position, better stay sideline until the market show some uptrend strength again.

Best regards

Snip

S&P 500 breach important support

2009-10-29T06:17:00.002+07:00

S&P500 breach important MA 50 day support. While Dow is heading for MA 50 days support.

As Dollar continue to be stronger, stock go down. Same thing happen with crude oil and gold. Looks like the profit taking action is happening. The lack of good economic news and doubt for USA earning has caused market to go down. The last four days loosing streak happen on Sept 29 when the dow and sp500 pullback to their MA 50 days support, then bounced up.

Today SP500 already breach it but Dow has not. While this is usually happen in bull market, especially in overbought condition, we have to becareful to add long position. Buy on support can be used with stop loss in place to protect capital.

For BAC , I just entered put option 15 nov 09 because the stock and bank sector lack of good news and the sentiment has been negative for BAC.

Best regards

Snip

DOW weekly chart

2009-10-27T08:47:00.002+07:00

DOW weekly chart's candle formed gravestone doji, a sign of reversal. Meanwhile the dow daily chart show sideways movement.
On Oct 26 close, DOW close lower with increasing volume.
I check the technology(XLK), energy (XLE) and financial sector(XLF) as the leader of market rally. Financial currently on the support of MA50 (daily chart) after went down because bad news for banks.
Weekly energy and technology chart is at resistance level MA50 and can not go through it.
They signal that market may have some pullback.
DOW can reach MA 50 before go up again. Some profit taking action are going to happen. We just to be careful to see if the big institution sell to individual customer (which often come late) at top.
I have not added more long position because of this market behaviour lately.
The last time DOW hit MA50 showed good entry point because market went up after that. I will wait to see that happen while looking for some potential short position.

BAC chart show some weakness as it break support yesterday, creating first lower low.
Usually market will bounce up after went down more than 100 points these days.
So when BAC go up then fail to create higher high, then we can go short BAC for more safer entry point. The timing entry should be at 15 minutes before market close.

Best regards

Snip

SBUX update 2 - exit signal

2009-10-22T21:01:00.005+07:00

Ascending triangle of SBUX give exit signal today as stock break down the support of ascending triangle. Next support is $20.03. One can exit today, for more confirmation can exit near market close to confirm that the candle close below support. For me I will stretch my stop loss to $19.90 to avoid false break support, but the risk is I will loose more. Please calculate your potential loss and protect your capital. My personal view this SBUX is a good ascending triangle but now it is starting to fail that chart pattern play. My current floating loss for SBUX position is 40%

Best regards

Snip

SWKS - CUT LOSS

2009-10-22T20:44:00.003+07:00

Update for SWKS, this play does not work. I have exited my position and take loss 60% of my SWKS position. As usual, I did not put more than 5% of my total capital for one position. So my loss is about 3% of my total capital. This is business cost. Yesterday after I analyzed SWKS chart and admit I was wrong. This chart create lower high and lower low. I should not play call option. So yesterday I took my loss.

Today the stock going down further because of symphaty play. TQNT which in same industry as SWKS get bad earning news so SWKS going down in symphaty.

Best regards,

Snip

CROX

2009-10-16T05:44:00.002+07:00

This once loveable stock had been crushed from $75 to $1. But from early April 09 this stock has started uptrend and go sevenfold. The last closing price is $8.

I admit the buy signal should come yesterday when the stokc break its resistance at $ 7.45.

The stock usually rise two weeks before earning date (Nov 5) and now plus takeover rumours that may push the stock up. The target price from Technical Analysis can reach $10.

Fundamentally, the last earning report is better than expected. The firm is probably mending their financials.

It is up to you want to buy call option or the stock for investment.

Best regards

Snip

UPS

2009-10-15T20:50:00.003+07:00

When searching for stock candidates, I found UPS. The stock has created higher low, and with economy going better, surely UPS sales can increase.

The earning date is Oct 22, 2009. If you are not an earning gap player, you should exit on Oct 21.

We can buy Nov 55 call at $3.2 per contract. How many contract? It depends by your capital. We must not take more than 5% of our capital for one position.

Best regards

Snip

SWKS

2009-10-14T20:35:00.004+07:00

In line with good news from INTC, i found new candidate for my blog. I have played this stock and made profit from it before. The stock has pulled back and may give sign ready to go up again. The earning date is November 5.From technical analysis, the stochastic ready to leave the oversold area, MACD histogram create lower bar, the price also fail to create lower low.

The 12.5 call Nov 09 looks interesting. I capture the price 2 minutes after market open as below:

The ask price is $85 per contract.

Best regards

Snip

Ascending Triangle-SBUX-Update 1

2009-10-14T20:14:00.002+07:00

It has been a while for SBUX. On Oct 8, 2009 it penetrated the resistance line but failed to close above it. After that SBUX going sideways for few days. Looks like the stock wait for the good news to break above or bad news to break down.

Today we may have good news to push it up, the good news from INTC & JPM earning.

Hopefully SBUX can go up and close above the resistance line for confirmation up trend.

Best regards

Snip

OC, LVS reviewed from Sep 28 posting

2009-10-08T22:31:00.000+07:00

Let's see if we buy my candidates on Sep 29. We buy OC Nov 22.5 call $$2.00/contract and LVS Nov 18 call @ $2.00/contract.
The stop loss is set on 70% loss, so we will get out if loss reach $1.4/contract. Big stop loss for anticipating price swing dan can kill our position and reverse back the next day/hours. Because of that, for one position we should only put maximum 4% of our capital. So the maximum loss for each position will be 70% X 4% = 2.8% from our capital.

I use thinkback feature from my favourite brokerage, Thinkorswim, to track historical price.

For Oct 8, I use live price when writing this post, so the price can be a little different.

Buy on Sep 29, sell on Oct 8.

The calculation as per below :

Not a bad profit for 8 trading days only.

Best regards

Snip