Nov 16

Market Going Down Protect Yourself!

I took both my SPY puts and the IWM puts off with gains of 86% and 145%. I got into EEM put trade and a XLV put trade yesterday as well. I am very bullish on Square (SQ) and had got into a straight stock trade just before the earnings call on Tuesday. The stock is up about 5% since then. Usually I do not do straight stock trades. But SQ was trading at around 11 and it did not make sense to trade options. I am bullish about the company but may not hold on to it because I expect the market to go lower.
SPY: I closed my November puts and will roll over into the December puts if the market goes up a little today. I feel there is still around 5% downside to the market remaining.
IWM: looks exactly same as the SPY which is to say really bad. Again, I closed my November put options but will likely get into the December puts today or tomorrow.
EEM: bearish; I made a bearish bet yesterday using December put options
XLF: keeps drifting lower and moving towards a bearish zone; so the hope that Financials will pull the market up is diminishing
XLK: definitely looks in bear territory; may get in with a trade today
XLE: bearish trend
XLV: completely broken; I got in with a December put trade
XLU: massive break yesterday to the downside; looks like it will go lower
XLI: bearish
XBI: completely broken, tried getting in with a December put trade but could not get my price
VIX: seems unstoppable at this time
GLD: getting bullish as the market thinks this will be a safe haven

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

Nov 16

Market Trending Down

The markets continue to trend down and my put options in SPY and IWM are well in the profits. I am going to continue to hold them with an eye out to 18 November which is their expiration date.

Both the SPY and IWM are trending in similar manner and look very weak. This is in combination with the VIX having back to back over 5% rise which is signaling the downward trend likely continues most of this week through the November 8 election date.

The election polls are also likely going to show that the race is tightening which means more uncertainlty for the market. There are plays for each candidate winning which I will look into later in the week.

Interestingly XLF (Financials) and XLK (Technology) have been somewhat of a good story with either a upward or neutral trend. It remains to be seen if these sectors bring up the overall market or swoon to take the market further down.

Both the XLV (Healthcare) and the XBI (Bio Technology) sectors have been pummeled and look really broken. XLU (Utilities) and the XLE (Energy) look neutral to me.

EEM (Emerging Markets) are still neutral but could be heading downward as well.

Oct 16

Short-Term(ism) may not be a bad thing

There is an interesting article in CNBC today that talks about a lot of things but mostly risk and reward. The article is┬ámore concerned about protecting one’s downside and how you can do better than inflation rate to be moving in the right direction. But do people (individual investors) really look at things in such a dispassionate way? The primary tendency is if you are bullish you buy and when you are nervous or (more likely) the market has tanked fear comes over you and you sell.

There are several downsides to taking a short-term approach to the stock market:

  1. You are liable for short-term capital gains
  2. You have to monitor the market on a regular basis

But you are unlikely to get caught in a “black swan” situation.

If you start with the premise that you don’t know what is going to happen to the markets tomorrow, you have a more “hands-off” and “mind-off” approach to the markets.

The premise for The Alternate Trader model is to stop predicting the market. To really believe that there is no way to know what is going to happen tomorrow. And let your behavior be completely driven by what the market tells you.

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

Market commentary for October 18, 2016

The market looks somewhat mixed. The main signals seem to be towards the bearish side with SPY and IWM trending low. There is some good news from the quarterly results from the banks and financials though which is likely stemming the tide a little.

But overall the market seems to have more chance of going down than up. So, I may take up a stance along those lines in the next day or so.

SPY: Bearish since last Thursday October 13; I should have got in with a bearish trade that same day. I will likely buy SPXS today

EEM: Just about touching the bearish line; should watch for the next few days

IWM: Really in bearish territory; I should go long on TZA

XLE: Very choppy; cannot make a judgment

XLU: Has been severely bearish; now trying to come up a little but still in bearish territory

XLI: Almost in bearish territory

XLF: Strangely trending against the wind a little; looks like in somewhat of a bullish trend probably due to the good results from the banks and financials recently

XLK: Neutral but looks like breaking soon

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

Sep 16

Two more trades: ERY and FAZ

Last Thursday I sort of doubled down and went long the FAZ based on trend seen in XLF and ERY based on trend seen in XLE. Both, per my earlier commentary were broken. So, here is how my trades look now:

EDZ bought at 23.77

SPXS bought at 12.66

FAZ bought at 31.68

ERY bought at 13.81

The markets seem mostly on neutral territory at this point in time. But it just seems to me that it is waiting for an excuse to go down.

SPY: kind of neutral at this time

EEM: almost went close to positive territory but I consider neutral as of now, today is important

XLF: in a bearish trend

XLE: in a bearish trend

Sep 16

Tracking the Market and the Trades on SPXS and EDZ

Yesterday I went long the SPXS based on trends seen in the SPY and EDZ based on trends seen in the EEM. I will be tracking these to see how this move pays out. There have been a couple of days of sideways moves from the markets. So, let’s look at some of my favorite tickers as to how they are trending:

SPY: still broken and cannot seem to make up its mind; this is not surprising because the biggest influencer of the market – the Fed – cannot seem to make up tjheir mind either; so the broader market is just reflecting the dilemma of the Fed

EEM: looks little less bearish than the SPY but bearish none-the-less

XLU: bearish

XLF: looks worse than the SPY

XLK: better than others but caught in the downward trend of the broader market; may be the last one to fall

XLE: looks really sorry, completely broken

Today is a big day with both the Fed and the BOJ coming out with policy statements. The BOJ policy starement is already out as I write this and it was not the shock and awe that the markets were fearing. So, futures are higher as of now which is about 15 minutes before market open. But more important now will be what the Fed says later in the day and how the markets react. It is important to distinguish from the immediate market reaction to the slightly mid-term market reaction. By mid-term I really mean a week to a few weeks.