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Bullish Trend Trade Entry on BP

12/24/2013

Strarting from Scratch: A Complete Entry to Exit Trend-Following System Using Chaikin Analytics for Desktop and iPad.

12/22/2013

By request, here is my 10 step system for beating the market.

Update on Comcast Option Trend Trade

12/19/2013

In early November, I entered a 2 contract long call option trend trade on an Oversold Buy Signal (the green arrow). Today I rolled my deep in-the-money Comcast long call option down from the April 47 to the April 44 strike. The options have appreciated nicely and my rule calls for a roll down any time the option delta gets above .85 to a strike near the .70 delta. If you don't speak option gibberish: this means that I took partial profits on the trade.

Here is the order that filled: SOLD -2 VERTICAL CMCSA 100 APR 14 44/47 CALL @2.37 ISE.
That resulted in a cred t of $2.37
It reduced my risk on this long term trend trade, by lowering the cost basis from $4.50 to $2.13. (because I extracted a a $2.37 credit)
Comcast remains in a solid uptrend, in a strong industry group with a VERY BULLISH Power Gauge rating. No need to exit this trade. As long as CMCSA keeps making higher highs and higher lows, I'll keep rolling my option down through about mid March, extracting profits as I go.
It is rolling up out of oversold territory. When the stock gets overbought, I'll consider selling an out of the money call option. This is like rolling into a covered call trade, but with a deep in the money option. Some call it a diagonal. I call it a covered call on steroids. The return potential is much greater than with a covered call.
Today could be a decent entry opportunity, but I'm going to keep running with 2 contracts and free up capital to find another option trend trade to diversify.
See the Chaikin User Option Portfolio trade results here

Market Reversal. Insane Volume!

12/18/2013

The S&P 500 rallied to resistance on incredible volume. I'm cautiously optimistic the Santa Claus Rally is here. If you believe we can break out and move higher, then check out these VERY Bullish Power Gauge rated stocks: #ADM

#ANR
#BIIB
#COF
#MRVL
#PSX
#VLO

These are all highly liquid, optionable stocks, with strong industry groups, technical and fundamental ratings. Remember, the Power Gauge is 85% fundamental. Very Bullish stocks with uptrending Chaikin Trend Lines that are over sold represent the sweet spot for this systeml. Here's an example: Archer Daniels Midland. It broke out of a period of price consolidation today.

#ADM

Uptrending (orange) Chaikin trend line.
Money Flow and relative strenght are supportive of price.
Power Gauge is very bullish, with all 20 factors green. This is rare to see the the meters pegged.
The stock never quite made it to overold, though I expect it will pull back and test $42 as price support, before moving higher.

Is the Market Trend Changing? How I Use Chaikin Analytics to Forecast Market Direction and Pick My Strategies

12/15/2013

Before each trading week, I like to get a sense for market conditions and develop a forecast for where the market is likely headed over the short, intermediate and long term. This really helps my trading. While I prefer trend following strategies over any other type of trading, sometimes the market won't reward this strategy. It's important to have a plan for up, down and sideways markets. Chaikin Analytics and a couple of charts are the only tools I need. Here's my 6 step process.

1. I ANALYZE THE LONG TERM TIME FRAME - MONTHS TO YEARS - TO CONFIRM WHETHER IT'S A BULL OR BEAR MARKET.

The Bull is Still Running. But She May Need to Catch Her Breath.

S&P 500 is still making a series of higher highs and higher lows in the weekly time-frame.
The 10 week Exponential Moving Average is above the 40 week EMA and both averages are pointing up, with the faster moving average accelerating away from the slower MA. These are signs of a strong bull market.
Price has fallen to the 10 week EMA, and a cross below it will change my long term posture to Mildly Bullish from Extremely Bullish.
The market appears to have made a short term top and could be rolling over. I look at other time frames to confirm. Technicians will note that last week's hanging man candle was confirmed this week with a lower closing price than last week's intra-week low. This suggests further possible downside for stocks, but not necessarily a change in the long term trend.
The trend remains bullish, but the market can retrace significantly before bouncing (perhaps down to 1650). As long as a higher low is made, the bullish trend remains in tact.
How will this impact my trading? Use Chaikin Analytics Portfolio Health Check to make sure my holdings are as strong as possible. I'll be looking to protect profits on stocks that have appreciated significantly by moving up stops, selling covered calls or buying collars. My criteria for entering a trend trade will be much more stringent. I'm more likely to trade in a shorter time-frame a cut my risk in half.

2. Intermediate Time Frame (Weeks to Months)
The Bullish Trend Is Breaking Down. We're in a Sideways Market With Further Downside Potential

While the 10 Day EMA remains bullishly above 40 Day EMA, price has fallen below both. A bearish cross of the two averages would be a very bearish development.
After making a series of equal lows and highs, the market appears to have broken a significant intermediate term support line.
Fears of the Fed announcement may push prices down further Monday - Wednesday morning, with a possible snap back relief rally after the announcement (assuming no unexpected fed curve ball).
How it affects my trading: I will find very bearish or very bullish rated stocks according to Chaikin Analytics that have highly liquid options and trade directionally when price is both oversold/overbought and touching an outer volatility bands. I prefer selling out-of-the-money call and put spreads at support or resistance if option premium is rewarding enough relative to the risk, but neutral strategies like calendars and iron condors come into play here. I'm unlikely to initiate bullish trend trades in these market conditions. I also do not believe that longer term short trades are appropriate...at least not yet.

3. Short Term Time Frame: Days to Weeks

Very Bearish But Oversold

The hourly chart shows a break of support at around 1782 on the S&P 500. The 10 period (green) exponential moving average is below 40 period moving average, and both are pointing down and price is below them. Technicians may notice a broken head & shoulders neckline, suggesting a possible 25 point additional downside move.

The market could experience a relief rally after the Fed announcement Wednesday. We could break to the upside, but my forecast is that the relief rally will fail and the market will fall further (See my Chaikin Bull Bear Power Gauge Analysis next) So I will be ready to pull the trigger on some bearish trades. But only short term ones.

I'll use the moving averages in multiple time-frames to trigger a change in posture. If the 10 hour EMA crosses above the 40 hour EMA AND the 10 Day EMA remains above the 40 Day EMA, then it's likely the market bull trend will resume.

5. My Secret Weapon: The Power Gauge Bull - Bear Ratio Trend Confirms Recent Downward Price Action

The Chaikin Analytics Power Gauge Bull:Bear ratio has fallen below 1 for the first time this Fall.

Ninety S&P 500 stocks have a BULLISH or VERY BULLISH Power Gauge rating are outweighed by 110 BEARISH or VERY BEARISH rated equities.
Fundamentals drive the Power Gauge ratings of each stock in the S&P 500. So weakening aggregate Power Gauge ratings confirm technical damage to the market's bull trend this week.

6. Sector Strength: Healthcare, Tech, Financials and Industrials

I apply The Power Gauge Bull Bear Ratio to each major sector ETF, then rank them on a relative basis. This helps me focus only on the sectors likely to outperform the market over the never 3- 6 months.

Healthcare, Tech, Financials and Industrials are the ones with most bullish potential. But ratios are much lower than they were a few weeks ago.

For bullish trades: I will look for the strongest industry groups within each sector, then find stocks with the highest Power Gauge rating within those industry groups. I'll pull the trigger when the stocks are oversold and at support. Until the market starts trending, I will trade a shorter time frame, with a price target and put on half my normal risk for directional trades.
We can look at weak sectors, weak industry groups, Very Bearish stocks at resistance and oversold to trade bearishly over short time frames. Same deal: price targets and half the normal risk.

December 08th, 2013

12/8/2013

Today’s Bullish Trading Idea: What’s all the excitement over a company that sells laxatives, antacids and vitamins? Insiders are gobbling up shares and analysts are taking their estimates up. That makes Very Bullish Power Gauge rated Perrigo Company likely to outperform the market over the next 3 - 6 months. Let’s review the checklist:

Waiting for a Bounce On Wellpoint

12/6/2013

The healh-care sector has rotated back into favor recently. Looking for a market bounce and an oversold buy signal before getting into this one.

What Are Current Market Conditions For Trading

12/6/2013

The underlying strength of the market is weakening. While the intermediate and long term bullish trend remain in tact, we're in the midst of a short term bearish correction. The Bull:Bear Power Gauge ratio is near it's low of the past month and the number of sectors expected to outperform the S&P is narrowing. Cyclical stocks in tech and industrials, along with financials (thanks to rising interest rates) are poised for outperformance. Healthcare remains strongs, while discretionary is pulling back. If the market bounces, that's where we should find strength for a Santa Claus rally.

The ratio dropped to its lowest level since 11/8. 126 stocks bullish rated stocks cmpared to 93 bearish stocks. The bull:bear ratio of 1.35 keeps us in bullish, though approaching neutral, territory.

Sectors w/Best Potential to Outperform: Tech, Healthcare & Industrials and Financials. Breadth of Sector Strength Thins.

The Power Gauge Bull Bear Radio is applied to each major ETF, then ranked on a relative basis. In theory, ETF's ranked higher than the SPY (The ETF that tracks the S&P 500) have potential to outpeform the market over the next 3 - 6 months.

Search in for Industry Group strength in these Sectors and for the Bullish to Very Bullish rated stocks.

Market Direction

Long Term Weekly Time Frame: Bullish

Daily Time Frame: Bullish

Hourly Time Frame: Bearish

Chaikin S&P 500 Power Gauge Ratio Trend as of December 4, 2013

12/4/2013

The Chaikin S&P 500 Power Gauge ratio as of December 4th is 129 Bullish to 84 Bearish stocks for a ratio of 1.55. The ratio high was 2.58 on 11/17 and the low was 1.34 on 11/8. We are near the low end of the rage over the past 30 days, but well above the zero line, indicating a bullish market.

AAPL: Legging Into a Covered Call on Steroids

12/4/2013

Well, our single contract long-dated in-the-money Apple option has paid off in the past week big time!

The original trade on 11/15: BOT +1 AAPL 100 APR 14 480 CALL @60.40 NASDAQ

If I were to sell it today: SELL -1 AAPL 100 APR 14 480 CALL @91.50 LMT

That's a profit of more than $3,000 and better than 50% in slightly over 2 weeks. Apple is now overbought according the Chaikin oscillator. Price could continue to move up, but at these levels, the probabilities favor a sideways move, pullback or some other price consolidation So today, I opted to leg iinto an OTM short call option. I sold the $575 December Week 2 call for $4.55. Expiration is in 9 days, and Apple wll have to move up another $10 before I risk getting exercised. My hope is that this option will expire worthless, and I'll write another OTM call option for December Week 3 and beyond.

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By request, here is my 10 step system for beating the market.

1. I ANALYZE THE LONG TERM TIME FRAME - MONTHS TO YEARS - TO CONFIRM WHETHER IT'S A BULL OR BEAR MARKET.

3. Short Term Time Frame: Days to Weeks

Very Bearish But Oversold

5. My Secret Weapon: The Power Gauge Bull - Bear Ratio Trend Confirms Recent Downward Price Action

6. Sector Strength: Healthcare, Tech, Financials and Industrials

Sectors w/Best Potential to Outperform: Tech, Healthcare & Industrials and Financials. Breadth of Sector Strength Thins.

Market Direction

Daily Time Frame: Bullish

Hourly Time Frame: Bearish

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