Nov 16

The Bull Ride Continues

Firstly, I sold off my long positions on TNA and FAS yesterdat just before close. I may have sold off early because it was clearly not based on any trend reversal. But I feel the Financials and the Small Caps havebeen on a straight-up trajectory and did not feel confident that that could continue. I will watch the market and may get into them again soon.

Here is how the trends look at this time:

SPY: nicely bullish, no sign of any jitters, I am long SPXL

IWM: very much bullish, but I took my position in TNA off as I thought that this sector has gone up too much too soon. I could be wrong and this could certainly keep going higher in which case I will get in again

EEM: completely broken and bearish

QQQ: this looks neutral at this time; I do gave a small options play on the long side on this with the expectation that the technology sector will catch up to the broader market soon

XLF: very bullish but I took off my long position in FAS thinking the financials have gone up too much too soon

XLE: bullish

XLI: bullish

XME: bullish – I am long call options

XBI: bullish – I am long call options

XLV: somewhat bullish

XLU: broken and looking bearish

Nov 16

Trade Setups for FAS, TNA and SPXL

Markets are still looking good. In fact they look stronger and seems like the rest of the year could be an uptrend. But I never want to assume anything so will keep watching every day what the trend tells me. As of today, the trend is distinctly bullish.

I am long:

SPXL based on trend seen in the SPY. The trend looks bullish even though it had a down day last Friday.

FAS based on trend seen in XLF. This looks strongly bullish.

TNA based on trend seen in IWM. Again looks string bullish.

So, what about the others. Let us take a quick look at them.

QQQ: Is suffering and looking bearish with the election hangover over it.

XLE: Is kind of neutral at this time. I will keep watching.

EEM: This one is really broken. Completely bearish.

XLU: Completely broken.

XLI: Hugely bullish.

So, seems very much that market is specifically driving up based on expectations from the new President-Elect so far. I wonder if that expectation eventually takes the rest of the market higher or the expectations get dashed somewhere in the next days or weeks. The issue here is that there will be a lot of speculation from now till inauguration day with not much real policy decisions. So, fear could grip the market at any time.

Nov 16

The Aftermath

Markets are holding up well after the stunning election results from last night. It remains to be seen how long it can hold up. The big question mark is what Trump says about trade in the next few days. Having been very vocal about it during the pre-election phase, it is doubtful that he will not do anything.

I am still bearishly positioned in the market based on trends I have been watching. It is time to take stock of those trends again:

SPY: Still somewhat of a bearish trend; I will keep watching and take my bearish trade off if the trend changes

IWM: Similar to SPY this is also still in a bearish trend; I am currently positioned with a bearish trade through put options and long TZA

EEM: This is the only one that has dropped heavily, about 3% as of now. I am positioned with a bearish trade using put options.

USO: Very bearish. I am positioned the wrong way. I need to get out of my call option quickly while it is still breakeven.

XLV: Bearish but good bounce today and could be going towards neutral territory. I am positioned bearish with a put option. I may get out today or tomorrow based on how this behaves.

XBI: Getting out of the hole it was in very fast. Up 7% today which is over enthusiasm I think. I will get out of my bearish trade when there is some pullback in this space.

QQQ: Could also be getting out of the bearish trend. It all depends on how the rest of today shapes up.

XRT: Very bearish. I am long the January put options and will likely stay that way.


Nov 16

Markets Quiet Before The Storm

The markets went up dramatically yesterday and today it is very calm and lukewarm. It does look like yesterday’s action was the recognition was that Clinton is going to win. I guess the question in everyone’s mind is what happens tomorrow – the day after the election. In general my sense is that the risk is still to the downside. There are several reasons for that. One is that Clinton wins but not with a good mandate. This could even mean (at its worst) a contested election result. That is a really bad situation for the markets. Of course if Trump wins all bets are off. If Clinton wins with a large mandate then markets could go higher.

Let us not forget that the general trend of the market is down. The SPY bounced but is still trending bearish. Same with IWM, EEM and QQQ. The XLF is showing signs of bouncing back towards a bullish trend but it is alone in that action. The XLV and XBI are still broken.

So, I am still hedged as I see the risk to the downside.

Nov 16

The Election Trade

From all indications it looks like Hillary Clinton will win the election tomorrow. What is really interesting is whether the Democrats will also take the Senate. Right now it looks that way. If that happens it would be a strong mandate for Hillary. The House seems like will still remain Republican. So, the overall givernment will be split. However, having the Senate behind her may make stronger and the expectations from her first 2 years could be higher than normal.

The general concensus is that there will be a bounce in the aftermath of a Clinton victory. In fact, the pre-market numbers look like there will be a very strong bounce of the lows we have seen.

From the trends perspective, SPY is still very bearish. IWM could be looking to bounce. EEM looks bad. The Technology sector (XLK and QQQ) both look bad. The XLF is neutral. The XLE is broken as well.

XLV and XBI both look broken and will likely have a negative impact even if Hillary wins. I am long puts on both of them.

I am positioned bearishly in the market but will look to trim if I see the trends turning for real.

Nov 16

Open Bearish Trades: SPY, IWM, EEM, QQQ, XLV

I am positioned very bearishly at the moment in the market. My current trades are:

Long SPXS based on trend seen in SPY. My expectation is for SPY to be trending down. SPXS is the leveraged play for that.

Long TZA based on trend seen in IWM. TZA is the leveraged play for IWM going down.

Long EEM 36.5 December put options.

Long QQQ 114 December put options.

Long XLV 66 December put options.


Nov 16

Market Is Broken!

Market is broken and it is time to play the downside at least till the election which is a few trading days away.
SPY: broken bad; looks to be trending below and will likely keep dragging the market down. I am long the November puts which are holding some healthy gains so far; I contemplated taking my profits yesterday just before close and then did not as the market really looks broken
IWM: the trends looks exactly same as the SPY; again, I am long the November puts and holding some good gains on it
EEM: somewhat bearish; looks like it has held itself somewhat so far but risk to the downside is more than any chance of upside
XLF: interestingly this is finally starting to go down in sync with the broader market; there was some hope that the financials would take the market up but that hope is fading
XLK: just broke to the downside yesterday and looks bearish
XLE: bearish trend
XLV: completely broken; I may get in a bearish bet today
XLU: seems to be the only odd one out; trending bullish
XLI: trending bearish
XBI: completely broken – maybe because of the politics around this sector; I may get in with a bearish play
VIX: extremely bullish and looks like it is going to break the 20 number; I do not want to trade it though because it is really volatile as its name suggests

Oct 16

Markets on downward trend

The markets have been in a downward trend since my last post here couple of weeks back. I went long put options on the SPY and the IWM. I did not buy the SPXS and TZA as I had originally planned for as I wanted to define my risk and play a short-term trade.

The move down on the SPY has not been significant since my bearish trade. However, it has trended down. The move down on the IWM has been a little more pronounced and it could be the signal for the broader market to go down as well. I have November puts on both which are showing healthy profits as of now. I may close these and roll over into December puts if the trend is maintained.

To be noted is the fact that XLF is distinctly bullish while XLK and EEM are neutral. So, there is some risk that marjet reverses trend and starts getting bullish.

XLE is broken. XLU is bullish and XLI is bearish.

The VIX just trended up today again but is still low under 17 which is higher than where it has been for a while but still lower than what we would call a bear market.


Oct 16

Trade Update on SPXS, ERY, EDZ and FAZ

I sold all my positions on SPXS, ERY, EDZ and FAZ for a net loss of 3%. Lesson learned is get in when the model tells me to get in and don’t wait. In this instance I wavered and waited. Not that I would not have lost some money. I still would have. But I would have disciplined towards my principles.

Oct 16

Market Trends and Trade Status on SPXS, ERY, EDZ, FAZ

Overall the market looks like in neutral territory. However, I have a bearish bet at this time and it does not look like the chances of the downward trend that I am hoping for may pan out. The chance only seems to be 50% at this time – not something I like to bet on. So, the prudent thing for me would be to get out of the market and wait for a definite trend to develop.

SPY: looks neutral but also looks like will break in some direction quickly; there is danger that it will break in the opposite direction that I am positioned – I am positioned in a bearish stance; perhaps I will reduce my exposure or get out completely to see which direction the market breaks and then take action

EEM: very much same as the SPY

XLF: clearly very volatile; best for me to get out

XLE: has turned bullish; I need to get out from my bearish bet