Wednesday, June 25, 2014

BIDU Put Trade

It has been a few years since I have posted trades on this blog, but I am going to do some here in coming months.  Some may be ETF or equities, but today's is an option on BIDU.

I am placing a limit order to buy an August 170 put on BIDU @ 5.00.

Earnings is July 21st, so this strike includes the upcoming earnings date which is in theory a gamble, but also provides possible volatility for a large winner.  The basic set-up here is a multi time frame over bought at a slightly lower high, and with daily time frame divergence.

Tuesday, June 24, 2014

Top Warning Here For Stocks

I am just posting a verbal top warning here based upon my personal market timing algorithms.  I would suggest being out of the market unless today's high is exceeded on a closing basis.

Alternately, one could sell out partially of the market on long positions or for those experienced in shorting, could place a small to normal size risk trade on the short side based upon an appropriate technical signal for your methodology.

Friday, June 20, 2014

Stochastics Dual Time Frame Sell Set Up

Stock Market Analysis 6-18-14
Stochastics Dual Time Frame Sell Set Up

This stock market video covers multiple time frame analysis of stocks with specific focus on IWM.  There is a multiple time frame stochastics sell set up and a possible head and shoulders top formation happening in IWM concurrent with some extreme market sentiment measures.

I also review gold, oil, bonds and a few sentiment measures regarding US stocks.

Thursday, June 19, 2014

Equity Put/Call Ratio At Multi Year Lows

Click on Chart to Enlarge

The equity put/call ratio put in a very low reading yesterday at 0.38.  And the chart above shows the 10 day average at a multi year low and outside its standard deviation band.  These are further signs building a case that stocks are nearing an optimistic extreme.

The other side of the equation is that stocks are at all time highs and so optimism is warranted here.  As I always point out, it is not the extreme that typically coincides with a high or low.  There is often a period of slowing of market action and development of lesser sentiment extremes which diverge with continued price highs that are the better indication that the time window is narrowing in on a trend change.

From extensive experience monitoring these ratios, my opinion is that extremes like this are good places to reduce positions.  In these cases, sell out partially of the market.  It is true that sometimes trends only pause and your stocks will continue to move big.  So that is why I always hammer home the idea that a trailing stop or stop adjusting mechanism be used to allow for major winners to continue.  So the idea is that when the market is at a sentiment extreme, often most of the move is done, and whatever gains come from here, will often be given back and then some at the next correction.  And so even if you partially sell out, you could often buy back the position at a lower price when opposite extreme sentiment conditions show up.

Saturday, June 14, 2014

Gold Still Appears to Be On the Brink of Advance and is Showing Buy Signals

Click on Chart to Enlarge

As I have been tracking in recent months, gold prices still are unfolding basically as expected according to the outlined price pattern with somewhat of an inverted head and shoulders appearance.

We now have seen a reversal back above the horizontal line at the $1250 level which I mentioned was key support.  Technically, the daily MACD is in a buy signal now.  And using a momentum and moving average channel technique on the daily chart, it is also in a buy signal.  So this might well have been the low for this correction.  Additionally in comparison to common correction in gold historically, we are in the expected late stages of the price and time expectation for a correction.

Again, fall call options, GDX, GLD, or individual gold miners could all be ways to capitalize on the expected move.

I would highlight GDX, SIL, GOLD, GFI, HMY as possible stocks  and ETFs to analyze technically for buying opportunities based on price pattern and valuation.

Sunday, June 1, 2014

Gold Price Near Possible Price Pattern Low

gold completing a price pattern
Click on Chart to Enlarge

Following up on several recent posts I have made tracking a potential buying opportunity on gold, this chart shows that gold prices are currently at the $1250 level which I consider to be the ideal ending price level for this bottoming pattern.

As the chart notes above suggest, a quick move below that level followed by a move back up and any daily time frame technical buy signal, would be cause for long entry in my opinion.

While not shown on this chart, gold prices have also closed outside the lower daily bollinger bands for 4 straight days.  I have discussed this type of action before in other markets, but it can lead a near immediate rebound.  Additionally, weekly stochastics is now oversold at a high low, and price logic since the beginning of the year, suggests that the upwards move is the more powerful, and so we are sensible to prepare for the possibility of a higher low forming here.

Also please review some charts of gold seasonality and understand that for whatever reason, the June-July time frame is often when gold places a relative low.  And we are now entering that window.

Google results on seasonal charts here.

Equity Put/Call Ratio Sell Warning

equity put/call ratio
Click on Chart to Enlarge

This chart shows that the 5 day average of the equity put/call ratio is outside its 1 month, 1 standard deviation band.  I frequently use this signal on a total put/call data chart as a timing indicator to identify when legs up in stocks are about to end.

Based on a typical signal like this I would take some of the following courses of action:

  1. Move stop losses under minor support on long positions so that you can stay with an uptrend but get taken out on any technical break
  2. Exit part of long positions at the current levels, and maintain another portion with a trailing stop or stop movement strategy
  3. Exit long call options on index calls or any near term equity call options
  4. Build and narrow down a list of potential short candidates based upon your trading time frame.  Identify precisely what signals are needed to establish short positions, and exactly the appropriate amount of risk for your trading style and plan.

Again, as I suggested in my last post and on the notes on the chart above.  I would expect that the market has some further upside in it, but seeing as the Nasdaq is at a breakout point, and the Russell 2000 is well below resistance, I am not convinced that we will see successful breakouts on all the indexes prior to the next 1+ month duration correction in the stock indexes.

So after a good call in my recent post suggesting that QQQ would likely rise until further notice, consider this further notice that the easy money may be already made on this move.