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  Jeff Bailey   11/10/20,  6:04:08 PM
Pivot Matrix for tomorrow at this Link

 
 
  Jim Brown   11/10/20,  4:32:17 PM
MMM just authorized a share buyback $1.5 billion. I keep wanting to buy this stock but it will not pull back.

 
 
  Linda Piazza   11/10/20,  3:58:44 PM
I have non-buyer's regret about not triggering a bearish trade on that stop-running push up just above OEX 520 early this afternoon, as I considered doing, but not much regret. I have zero regret about withdrawing our bearish entry on a violation of the 60-minute 130-pma when that entry had not triggered by 3:15 this afternoon. We'll start fresh tomorrow, although we'll be starting without the bond traders which makes trading patterns kind of iffy all day. Today's daily candle is a bearish one that is either just above the midline of the ascending regression channel or just below that midline, depending on how the channel is drawn. RSI and 5(3)3 stochastics roll down, with 21(3)3 stochastics on the verge of being tugged down out of territory indicating overbought conditions. Below at 515.53 lies the 50-dma, a possible level of support, but if the OEX can't find support soon, near the midline of its channel, it perhaps now has vulnerability down to the bottom of its channel, between 506-507. If the OEX does find support and climbs back above that midline, then a retest of recent highs might be in order. Right now, that doesn't look like the highest probability move, but I can't emphasize enough how much the expected light volume and absence of the bond traders might impact trading tomorrow.

 
 
  Jim Brown   11/10/20,  3:55:08 PM
The Dow is clinging to 9750 as we near the close. The TRIN is still rising and the A/D is stuck at -2200 issues. Despite the drop the VXO has declined to 18.01 and could finish in the 17s again.

 
 
  Jeff Bailey   11/10/20,  3:54:52 PM
Bema Gold (BGO) $3.04 +1.33% ... would look to go ahead and close out profitable day trade bearish trade in BGO from $3.12 before the close. Bid $3.03 and offer at $3.04.

Just looks like we're going to run out of time, if stock gaps up to $3.09 tomorrow morning, would rather be flat and be able to short there.

AMEX Gold Bugs ($HUI.X) 208.61 -0.85% at session lows and RED #6.

 
 
  Jim Brown   11/10/20,  3:42:37 PM
Market monitor will be down for 3 min for technical problem.

 
 
  Linda Piazza   11/10/20,  3:40:30 PM
The OEX has been spending the last few minutes retesting the 60-minute 130-pma at 518.64.

 
 
  Linda Piazza   11/10/20,  3:28:54 PM
We would just now have been triggered on our OEX bearish play if I had not withdrawn the entry. For those of you who might have decided to jump in on your own, 517 is an important support level, too, and so you might be on guard should the OEX end the day now at 517, which is what I was afraid might happen if we entered a bearish trade this late in the day.

 
 
  Linda Piazza   11/10/20,  3:14:35 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's withdraw our just-in-case entry again. I do not want it triggered during the last few minutes of trading.

 
 
  Jeff Bailey   11/10/20,  3:08:31 PM
North American Palladium (AMEX:PAL) $7.47 +13.18% Link .... Stock continues to impress, despite palladium futures (pa03z) 204 -0.97% not showing much strength. I begin to wonder if Newmont (NYSE:NEM) $42.66 (unch) might not be getting ready to do some shopping after recent stock offering.

 
 
  Linda Piazza   11/10/20,  2:56:37 PM
Let's see if OEX 519 holds again. If our just-in-case entry is not triggered soon, I'm going to withdraw it. I don't want it be triggered in the last few minutes of trading today, but would rather wait to see what tomorrow brings in that case.

 
 
  Jeff Bailey   11/10/20,  2:53:09 PM
AMEX Gold Bugs ($HUI.X) 211.01 +0.29% .... after seeing intra-day high of BLUE #6 on 5-MRT, now back into its first 5-minute range. BGO bear really needs to see the HUI.X turn red, influence aggressive bulls to liquidate their eager buying at the open, to get BGO back down to $3.02, maybe trade $2.99 and clean out some bullish stops.

 
 
  Linda Piazza   11/10/20,  2:51:02 PM
The OEX also might now find support first at 519.75, but currently level as I type. It sure gets knocked back quickly when it hits a trendline or historical S/R, doesn't it? But then it had that one-point-in-two-minutes climb, too. All of that action is occurring in the middle of the DMZ, though.

I'm going to leave the just-in-case entry open a while longer, but someone sure is defending that 519 level. I'm certainly glad that I heeded the signals I'd determined early this morning, pre-market, for entries, thinking that we needed to wait for a test of the 60-minute 100/130-pma's for a bearish entry. After the early violation of the 60-minute 21-pma, I determined that I thought the OEX would probably test those 100/130-pma's through several hours and maybe a couple of days, and then rise to test the 60-minute 21-pma. It still hasn't yet risen to that 521.26 average, still stuck between the support and the resistance offered by these various averages, but keeps trying to climb. If it does retest that broken support, we'll be watching for a rollover or for a punch through the average as a sign that we should be thinking about longs. I'm not sure I'll be interested in entering a long position the last hour of trading ahead of a bond-market holiday when OEX trading might be erratic, though. In fact, I'm pretty sure I wouldn't be interested in that long at this time of day.

 
 
  Linda Piazza   11/10/20,  2:41:00 PM
The OEX should be hitting significant resistance between now and 521.

 
 
  Jeff Bailey   11/10/20,  2:37:21 PM
Bema Gold (BGO) $3.06 +2.34% .... Those traders that have been with us awhile may know my thoughts on trading BGO from bullish and bearish side.

One thing a short-term trader does NOT want to do is show his/her buy order level when looking to cover a short, otherwise, it has been my impression that specialist along with other electronic short-term traders are going to try and get in front of you, and scalp a penny or two, when they attempt to influence you to cover at "their offer."

I like to let the stock try and trade the target, maybe a penny below, THEN go for the closing of your trade.

 
 
  Linda Piazza   11/10/20,  2:31:39 PM
Glad to know that I could help all you longs just by posting my just-in-case entry again!

 
 
  Linda Piazza   11/10/20,  2:30:07 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's reinstate our just-in-case entry, raising the entry by a few cents. If I'd known the OEX was going to get knocked back so quickly, I'd have never withdrawn this entry. Enter a bearish OEX trade at 518.50, just below the 60-minute 130-pma. Stop at 521.50. First target 514. Second target 511.

 
 
  Jane Fox   11/10/20,  2:02:08 PM
The only significant economic report tomorrow is the 7:45ET Weekly Chain store snapshot for the week ending November 8th, a report that will get increasing more important as the holiday season approaches. Prior numbers are (%change from a year ago and a week ago):
October 18th 4.6%, 0.0%
October 25th 5.8%, -0.9%
November 01st 5.1%, 0.5%

 
 
  Linda Piazza   11/10/20,  2:00:15 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's withdraw our just-in-case bearish entry while we watch to see what happens as the OEX retests broken support.

 
 
  Linda Piazza   11/10/20,  1:45:06 PM
Careful--we're right in the middle of the usual stop-running push.

 
 
  Linda Piazza   11/10/20,  1:42:15 PM
Possible bearish divergence is setting up on the OEX five-minute chart, with 21(3)3 stochastics showing a higher high while price so far shows a lower high.

 
 
  Jeff Bailey   11/10/20,  1:29:12 PM
AMEX Gold Bugs ($HUI.X) 212.50 +1% ... back at BLUE #4 here. Let's see if some longs don't start selling a bit here with Treasuries finding some modest selling, Dollar Index ($dx00y) 92.98 -0.06% (30-minute delayed) off fractionally.

Bema Gold (BGO) ... bid/ask $3.11 x $3.12

 
 
  Linda Piazza   11/10/20,  1:24:11 PM
Finally it looks as if the OEX may be moving up for that test of broken support that I've been expected. I see resistance lining up near 520.80, a number I've typed often over the last months. The 60-minute 21-pma lies at 521.00, also a number I've typed often in the last months. Giving the OEX a little room to overrun S/R on a retest of violated support, it probably should not broach 522 if a bearish tenor survives and more likely would roll down somewhere just ahead of or at the day's high. A move above the day's high should alert us to strength.

 
 
  Linda Piazza   11/10/20,  1:17:39 PM
The OEX just can't seem to pick itself up today. It keeps trying, finding support and rising, but so far it has not been able to make headway toward testing recently violated support. At least now if our bearish trade is triggered by a fall through the 60-minute 130-pma, the OEX has already lined up a number of hourly candles along the 60-minute 100-pma, so we have at least three hours of consolidation behind us. I was afraid that we would be triggered and then have to sit out the typical minimum 4-6 hourly candles of consolidation near an important average. Although it's been terrible to sit waiting to be triggered, it would have been far worse to have been triggered and then sit out these hours in limbo. It's still possible that the OEX could rise from here to retest that broken support. We'll soon be entering the stop-running time of day, and let's hope we aren't triggered just before the OEX turns around and runs up to test that support. I'm still not ruling out a bullish play, either, if the price action dictates that we should give it some consideration. Right now, we're mired in the DMZ.

 
 
  Jonathan Levinson   11/10/20,  1:12:04 PM
Here comes that retest of the lows (Nasdaq and SPX futures). Bonds have given up much of their gains, with gold the bigger winner today, near its highs at 387.20 currently.

 
 
  Jonathan Levinson   11/10/20,  12:55:36 PM
The VXO is up .52 at 18.08, with high implied option volatility in an otherwise quiet, low volume market. I think that we're at or very close to the beginning of the now long-awaited bounce. I'll allow for another test of the lows, but it's becoming increasingly unlikely.

 
 
  Jeff Bailey   11/10/20,  12:49:00 PM
Bema Gold (BGO) $3.13 +4.68% ..... Day trade short at $3.12 (go ahead and cross the market) with bid at $3.12, stop $3.15 and target $3.02.

Dollar looks to be bidding back intra-day, and AMEX Gold Bugs ($HUI.X) 212.64 +1.06% starting to lose some of this morning's early shine.

 
 
  Linda Piazza   11/10/20,  12:45:49 PM
I keep expecting that OEX bounce back up to the 60-minute 21-pma, currently at 521.09, but it hasn't happened so far. I rather expect a rollover at that level, but will be prepared to consider a long on a breakout over that average, also a level of historical S/R, if I'm wrong. Right now, I'm just trying to let the key averages determine the direction that we take.

 
 
  Jeff Bailey   11/10/20,  12:21:09 PM
Buy/Sell Program premium levels ... HL Camp & Company has their computers set for program buying at $-0.08 and selling at $-2.02.

Thought they may be taking Monday and Tuesday off with lackluster volumes expected with bond market closed on Tuesday.

 
 
  Jeff Bailey   11/10/20,  12:12:32 PM
eResearch (ERES) $41.37 -11.6% Link .... stock opened flat, but then found rather sharp decline after Raymond James pointed out that in month of October, six insiders sold an aggregate 464,928 sahres for $22 million in proceeds (roughly $47.32 per share). More than 80% of the selling volume in October came from direct stock sales, so the insider dispositions cannot by in large be attributed to mere options exercises. Raymond James points out that CEO and Chairman have enjoyed 81% of total stock sale proceeds year to date.

 
 
  Linda Piazza   11/10/20,  12:08:55 PM
I must really not have wanted that OEX just-in-case entry posted at 11:55 to trigger. I used the exit header instead of the entry header. It's been corrected. Actually, I am uncomfortable with the entry right now. Although an OEX 60-minute chart shows that the OEX has traded in correlation with these 100/130-pma's and indicates their importance, a study of the past charts shows that the OEX typically has two modes of moving through these key averages. Either it's plunging so quickly that it just cuts right through them on a single candle or else it tends to consolidate a while and then perhaps bounce up to retest broken support before rolling down again or else breaking back through that support. I'm just not sure the consolidation is through yet and am afraid of a false dip that triggers us and then moves up. I'd like to see the OEX consolidate just above the 60-minute 130-pma while the thirty-minute oscillators move up and relieve some oversold pressure and then turn down again or else would like to see the OEX retest that 60-minute 21-pma before turning down again.

 
 
  Jonathan Levinson   11/10/20,  12:00:01 PM
Sept Chicago Fed Manufacturing 2.7% vs. previous reading of 0.2%.

 
 
  Linda Piazza   11/10/20,  11:55:20 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Here's a just-in-case entry. Enter a bearish OEX trade at 518.40, just below Keltner band support and the 60-minute 130-pma. Stop at 521.50. First target 514. Second target 511.

 
 
  Jonathan Levinson   11/10/20,  11:50:54 AM
GE to a new low of day, but down just 0.07%.

 
 
  Jonathan Levinson   11/10/20,  11:48:28 AM
Dec gold is printing a session high of 387.10, HUI up 2.93 at 213.32.

 
 
  Linda Piazza   11/10/20,  11:42:03 AM
Okay, I declare the OEX officially doing nothing but gyrating between support and resistance. Think that carries any weight? I don't think so, but I'm going to be reluctant to enter any kind of trade between today's high and 518.50, just below the 60-minute 130-pma. I've mentioned a couple of times today my fear that the OEX would just gyrate between that support and resistance over a several-hour period, and that's what's happened so far. We can just let price action tell us what's going to happen next by breaking out either to the upside or the downside. Oscillators will follow. There's no use watching every little twitch of each oscillator until then. I often note at least four to six consolidating candles once a key average is approached before the OEX moves away from that average, so I would say we could be waiting another couple of hours until a move ensues.

Now the great humiliator is free to commence a big move beginning at the moment this post appears.

 
 
  Jonathan Levinson   11/10/20,  11:37:42 AM
The put to call ratio is .77 for this past half hour, with the VXO up to 18.12.

 
 
  Jonathan Levinson   11/10/20,  11:27:51 AM
New lows printing on the Nasdaq futures here.

 
 
  Linda Piazza   11/10/20,  11:25:13 AM
Swing Trade Signals
I actually typed a bearish entry at OEX 520, but just can't bring myself to enter a signal just ahead of the 60-minute 100/130-pma's. I think a 520 entry made sense since it would mitigate losses if the OEX did bounce, but I just couldn't do it.

 
 
  Linda Piazza   11/10/20,  11:20:14 AM
Swing Trade Signals
The OEX has not been able to climb above 520.50-521 on this upcycle on the five-minute oscillators. I'm considering a bearish entry here.

 
 
  Linda Piazza   11/10/20,  11:12:24 AM
So far, this OEX climb looks like a bear-flag climb and the last few three-minute candles are forming underneath the 50% retracement of the drop that immediately preceded the climb, too, which is in keeping with a bear flag. The 3-minute oscillators have not yet begun to roll down, however, so we can't be sure that's what's happening. Still, while I'm considering the possibility of a bullish play, it looks to me as if more evidence supports a bearish one just now. More evidence than that may support a trapped-between-resistance-and-support consolidation day, however, so I want to be careful.

 
 
  Jonathan Levinson   11/10/20,  11:06:03 AM
So far, this bounce is just a sideways move off the lows. Still watching closely for a turn up on the longer intraday oscillators.

 
 
  Linda Piazza   11/10/20,  11:05:03 AM
Is this an ideal bullish entry, at the OEX 60-minute 100-pma? Perhaps, but that's still to be proven, and volume patterns don't support that thesis, yet. Sixty-minute momentum and RSI, usually the first to signal a change in the wind, are both hinging up. We're going to wait for a test of the 60-minute 21-pma at 521 and the day's high there, too, before making any decisions, however. This is the reason we needed to wait for either a rollover near the day's high (to give us a tight stop)on a bearish entry or a test of the 60-minute 100/130-pma's for an entry. There was just too much chance of a bounce from those averages and we didn't want to get in without some cushion in case the OEX did more than retest overhead resistance.

 
 
  Jeff Bailey   11/10/20,  11:00:48 AM
Broker/Dealer Index (XBD.X) 655.05 -1.27% .... Traders/investors that read this weekend's Ask the Analyst column might associate this index with the Wall Street Bullish % (BPWALL) from Dorsey/Wright.

Gabelli Asset Mgmnt. (GBL) $35.35 -0.84% Link .... is stock I'm looking for short/put entry on, but with market being so strong (I view a market making 52-week high on Friday as strong, not weak) am looking to be patient for a 3-box upward reversal entry point.

 
 
  Linda Piazza   11/10/20,  10:51:36 AM
Most volume patterns were bearish as of a few minutes ago, with adv:dec ratios are 11:18 for the NYSE and 10:18 for the Nasdaq, and with down volume more than double up volume on each exchange. New highs were 337 against 15 new lows, however. Volume was a light 247 million on the NYSE and a more robust 455 million on the Nasdaq.

Here's what I'm afraid will happen, though. The OEX may be caught for a number of hours or number of days between the 60-minute 21-pma (overhead resistance) and the 100/130-pma's (support). It could be stuck there through tomorrow, bouncing between support and resistance. Tomorrow's volume should be even lighter, which could make for choppy trading.

 
 
  Jonathan Levinson   11/10/20,  10:49:02 AM
GE printing a session high.

 
 
  Jeff Bailey   11/10/20,  10:44:36 AM
Rite Aid (RAD) $6.17 -2.06% ... Jeff: Can you check out RAD (Rite Aid Corp)the charts look good closing above $6.20.

Would appreciate your views.

On RAD's weekly interval chart, I've taken conventional retracement from $1.50 (12/24/00) lows to $9.99 (06/17/01) highs, and really like the way stock has traded these retracement levels in recent months. "Best" bull entry would be a pullback to 61.8% retracement of $4.75, which would line up with a 3-box reversal on PnF chart. However, nice pennant on WEEKLY with apex at 50% retracement of $5.74 also a strong looking level of pullback support.

PnF chart is bullish to $10.75 vertical count.

May want to keep an eye on Walgreen (WAG) $36.51 Link with RAD. WAG just broke out of BIG based at $34.00, and might get correlative pullback with RAD. If RAD pullback to $5.74 as WAG pulls into $34, then both may likely get good bullish bounce above these highs. If WAG just continues higher, then RAD should hold $5.74 support.

 
 
  Jonathan Levinson   11/10/20,  10:42:49 AM
I'm watching a number of intraday oscillators, and another plunge to test the lows cannot be ruled out- there's a wavelet bounce in play here, but the 30 minute cycle downphase is bottoming and not over quite yet. Any one of these wavelet bounces could begin to run to the upside, though. I'd like to try waiting to buy the next low of the day, down near my Keltner supports of 1046.50 ES, 1424 NQ, but always the risk of missing the entry altogether.

 
 
  Linda Piazza   11/10/20,  10:40:01 AM
Here comes the bounce finally. Now we have to watch how the OEX behaves near next resistance from 520.50-521. A climb above today's high (and coincidentally the 10-dma and the 60-minute 21-pma) will have us standing aside from a bearish play and reassessing the possibility of a long play.

 
 
  Linda Piazza   11/10/20,  10:35:32 AM
I sure was hoping for a test of broken support to allow us to enter a bearish trade at a higher level, giving us some cushion. Although that would have gotten us into a bearish trade ahead of a test of the 60-minute 100/130-pma's, it would have allowed us to set a tight stop just over today's high. So far, we haven't gotten that bounce, and now may have to wait for a test of the 60-minute 130-pma to enter.

 
 
  Linda Piazza   11/10/20,  10:31:10 AM
Here are two cautions about bearish OEX plays right here, ahead of a test of the 60-minute 130-pma: Link

 
 
  Jeff Bailey   11/10/20,  10:30:25 AM
Cendant (CD) $20.93 +0.09% Link ... You have not mentioned CD for a while - can you update your views as CD approaches the $21 resistance.

I try to mention CD at least once a week, but stock didn't trade $21 last week where I've got yet another upside alert for an "X." Stock continues to impress, but just creeping higher. Still some room to its bullish vertical count of $36.50.

Was looking at a covered call write (out the money) for those long from $17.50-$18.50 in a November expiration $21, but only offers $22.50's. Could write a November $20.00 (CDKD) for $1.00, but with no overhead supply, not sure it worth the risk of losing the stock.

 
 
  James Brown   11/10/20,  10:25:33 AM
New OI put play Amgen (AMGN) is down another 50 cents after breaking the $60 level on Friday. We're watching the BTK biotech index, which is one of the worst performing sectors this morning, down 1.67%.

 
 
  Jonathan Levinson   11/10/20,  10:23:59 AM
The Treasury Department will sell $24 billion of three-year notes today, and $16 billion and $17 billion of five- and 10-year debt this week. This, like any other offering of paper, should drain liquidity from the markets. But then, as ever, the Fed may step up to the plate to help cushion the blow.

 
 
  James Brown   11/10/20,  10:21:37 AM
New OI put play PACCAR (PCAR) has been triggered. The stock is down more than 2 percent and breaking the $75 mark. This is a bearish breakout of its recent wedge-pattern.

 
 
  Jeff Bailey   11/10/20,  10:19:57 AM
Netease.com (NTES) $43.58 +0.71% .... Hello Jeff-- I hope you are continuing to monitor NTES. Sure like trading your 'ideas'

Took a quick glance this morning, but looking for a setup where we get the major indices closer to a strong level of support like a WEEKLY S1 for a bounce, and if NTES can hang in here at the $45 area, should look for a decent bounce to $50 or $55.

 
 
  James Brown   11/10/20,  10:19:02 AM
JetBlue Airways (JBLU) a current OI put play, is seeing some initial selling but bulls are fighting hard to defend it near the $55 mark. This could be a stock to watch today. Shares are down 1.5%

 
 
  Linda Piazza   11/10/20,  10:17:25 AM
Swing Trade Signals
The OEX is testing support and I would expect at least a tepid bounce to test just-broken support. At least I hope we get a tepid bounce, because I'm considering a bearish entry on such a bounce. We could then set a tight stop just over the day's high. If not, though, we may be waiting for a test of the 60-minute 130-pma at 518.59. In fact, as I type, that support failed and that indeed looks like what we'll be doing.

 
 
  Jonathan Levinson   11/10/20,  10:16:15 AM
The US Dollar Index is going sideways, Dec gold up 1.40, silver -,002 at 5.056, HUI +1.72 at 212.11.

 
 
  James Brown   11/10/20,  10:13:54 AM
Wedbush Morgan is upping graphics chipmaker NVIDIA (NVDA) from a "hold" to a "buy" with a price target of $28. NVDA had gapped up on Friday after its Thursday evening earnings report and shares have been able to maintain its gains thus far.

 
 
  Jeff Bailey   11/10/20,  10:12:24 AM
QQQ $35.52 -0.28% ... Day trade bull from Friday's $35.63 should be stopped out at $35.58.

Just couldn't get the move above BLUE #1 $35.72 in early going.

 
 
  James Brown   11/10/20,  10:08:58 AM
Lehman Brothers (LEH) is starting coverage on the deep-discount, "dollar" stores. Dollar General (DG) gets an "over weight", Dollar Tree (DLTR) and Family Dollar (FDO) get an "equal weight" and 99-Cent Only stores (NDN) gets an "under weight".

 
 
  Jonathan Levinson   11/10/20,  10:06:56 AM
Opening put to call ratio .62, VXO up to 18.07. TRINQ .91, TICKQ +77. The short cycle upphase is intact, but so is the 30 min cycle downphase, and so I expect a weak flat-to-upward drift for the time being. It should break down once the short cycle up ends, but if it can gain some strength, there's a chance for bulls to convert the 30 minute downphase to an up. That's the uncertainty this AM.

 
 
  James Brown   11/10/20,  10:05:10 AM
Ouch! Kohl's (KSS) is falling another 2.6 percent and broke the $50 mark earlier this morning after Goldman Sachs cut the stock from "out perform" to "in line". If you remember last week KSS reported October same-store sales that dropped 12 percent.

 
 
  Jonathan Levinson   11/10/20,  10:02:57 AM
There is a 3.5B weekend repo expiring today, against which the Fed has added a 5B 2-day repo, net addition of 1.5B.

 
 
  Jonathan Levinson   11/10/20,  10:02:06 AM
No price reaction to the data.

 
 
  Jonathan Levinson   11/10/20,  10:01:19 AM
Richmond Fed Manufacturing =20.

 
 
  James Brown   11/10/20,  9:55:59 AM
Drug stocks continue to under perform and leading the way this morning is Schering Plough Corp (SGP). The stock is down 1.6 percent after revealing that Q4 net income will likely come in below Q3's 6 cents a share (which missed by 4 cents).

 
 
  Linda Piazza   11/10/20,  9:54:07 AM
I'm kind of halfway expecting a retest of broken support at OEX 522. Perhaps right after the release of the economic numbers?

 
 
  Ray Cummins   11/10/20,  9:52:28 AM
Spreads/Combos & Premium-Selling -- E-mail Replies Part II

Subject: Buying Back Credit Spreads

Learning to correctly manage portfolio positions; maximizing gains while limiting losses, is one of the most important aspects of successful trading. The first thing a trader should realize is that they should never enter a position without a pre-planned exit strategy. The reason for this approach is simple: the most common reason for losing money in the options market is failing to close a position in a timely manner, regardless of whether the action is to limit losses or lock-in gains.

A surprising number of traders achieve excellent profits, but end up giving most (or all) of it back simply because they don't develop a sensible plan to manage each position. As far as closing plays early, there are many occasions when a position will yield a favorable profit far in advance of its expiration and learning to take advantage of those situations is an important part of becoming a profitable trader. I am sure there are some "rules of thumb" but for me, any time a position offers a profit similar to the initial target gain (based on ROI/time) I consider it an early-exit candidate. Hope that helps!

 
 
  Linda Piazza   11/10/20,  9:50:11 AM
If we're going to be entering a bearish trade, I'd like to get in as far ahead of 517 (confirmation level for the double-top, midline of the regression channel on the daily chart) as possible, but am leery of entering ahead of economic numbers and also before the OEX tests the 60-minute 100/130-pma's.

 
 
  James Brown   11/10/20,  9:49:50 AM
Wal-Mart (WMT) is reporting same-store sales for the first week of November are tracking in-line with guidance of 3-5% growth.

 
 
  Ray Cummins   11/10/20,  9:48:37 AM
Spreads/Combos & Premium-Selling -- E-mail Replies

Subject: Buying Back Credit Spreads

Ray -- You've mentioned that a core strategy is selling OTM credit spreads on OEX/SPX. Are there times when the price action flattens out that you would buy back the spread just to reduce your exposure even though the short leg is not being threatened? Are there any "rules of thumb" you use in doing so: like, time left to expiration, and what percentage of your credit you can retain by buying back? Any thoughts on this topic would be appreciated. Thanks. Brian

Hello Brian, Professional traders often write (out-of-the-money) credit-spreads and strangles on the S&P 100 Index (OEX) and this technique is probably one of the safest strategies for "premium-sellers" because OEX options:

1) Are liquid -- they have good open interest and active daily volume, even in the OTM options.
2) Have robust option premium (excellent "time value" in the front-month calls and puts)
3) Have small bid/ask spreads to reduce slippage
4) Are not prone to gapping moves because the OEX has relatively controlled directional moves that allows for timely exit and adjustment trades.

 
 
  James Brown   11/10/20,  9:47:12 AM
bear-killer Countrywide Financial Corp (CFC) is down 1.6% this morning after reporting its October operational data. Mortgage lending was down slightly in October from September but the company says "demand remains strong".

Short-term traders may want to watch the $100 mark. A breakdown there could drop shares toward its $95 level or at least the 94-96 range where it consolidated for a week in October. Its simple 30-dma is currently at 95.94.

 
 
  Linda Piazza   11/10/20,  9:44:10 AM
So far, the OEX clings to its 60-minute 21-pma in that way it's had lately of finding an average and following it for several hours or several days. It's also testing the important 520.80 level. The OEX 60-minute 100/130-pma's lie at 519.23 and 518.61, and we'll be watching to see if they're tested, although I'm also leery of geting stuck in another consolidation day, although I suspect that today, market participants may be just waiting for the release of economic numbers at 10:00 before doing whatever they're going to do. A decline below 517.27 will also mark a confirmation of a double-top formation on the OEX 60-minute chart. If confirmed, that double top would project down to about 509, but to get down that far, it has to get below the bottom of that gap from 10/2-10/3, a gap that has had some importance in trading since early October.

 
 
  Jonathan Levinson   11/10/20,  9:44:08 AM
Ver little clarity here, but the short cycle oscillators are showing that the morning bounce is not going to fail right away. The longer intraday cycles are still pointed south on the Nasdaq and SPX futures, but if the bounce can get through the next level of resistance on those indices, we could see an consensus build. We're still in the opening chop, though, and things can change fast.

 
 
  Jeff Bailey   11/10/20,  9:41:37 AM
Dow Transports (TRAN) 2,991 +0.39% .... just off session high of 2,996.66. Bulls look for a strong move above 3,000 to signal further market strength.

 
 
  James Brown   11/10/20,  9:39:32 AM
Initial selling is strongest in the SOX (semiconductors) and the GHA (hardware) sectors, both down more than 1/2 of a percent despite an upgrade of Intel (INTC) by JPM and a positive cover story for Intl Business Machines (IBM) by Barron's over the weekend.

 
 
  James Brown   11/10/20,  9:35:30 AM
A popular stock to trade lately, Sirius Satellite Radio (SIRI) is downgraded to "market perform" from "out perform" by SG Cowen. Shares are down more than 4 percent but still in a short-term wedge pattern over the last three weeks.

 
 
  Linda Piazza   11/10/20,  9:34:36 AM
During its first five minutes of trading, the OEX hit a high of 521.28 and a low of 520.53. The midpoint of that range lies at 520.91, with the OEX currently below that level, indicating early weakness. We'll have other measures to watch in a few minutes, but this helps us gauge earliest strength and weakness. Let's watch what happens at the first reversal that usually begins in a few minutes. I don't want to jump to early conclusions ahead of the only economic numbers of note this week and ahead of a test of the 60-minute 100/130-pma's.

 
 
  Jonathan Levinson   11/10/20,  9:34:24 AM
GE is at its session low, early in the game and still in positive territory.

 
 
  Linda Piazza   11/10/20,  9:29:38 AM
The OEX looks primed to test its 60-minute 100/130-pma's today, but what will happen after that? I'm not sure. I was doing some back testing this weekend to see if the slope of the 1.35% envelope at the time it's touched affects how quickly the OEX rebounds. As I was doing that testing, I noticed how infrequently the OEX has tested those outer bands the last few months as compared to previous months. Lately, the OEX tends to hit a central average in the middle of that envelope and stick there for a number of periods, sometimes up to a week or more.

 
 
  James Brown   11/10/20,  9:29:03 AM
Day traders may want to keep an eye on shares of Whirlpool Corp (WHR). Bank of America has cut the stock to a "sell". As of Friday the stock has closed just under the $70 mark after a week of mild profit taking.

 
 
  Jeff Bailey   11/10/20,  9:28:10 AM
QQQ $35.63 ... fractions higher at $35.68 in pre-market trade. Will adjust Friday's bullish profile for $35.63 as follows. Raise stop to $35.58, target $35.89 at WEEKLY 38.2% retracement. Link

Didn't get a bullish pop out of Japan like I was looking for after election.

 
 
  James Brown   11/10/20,  9:26:13 AM
If you remember Friday we commented on F.A.O. Inc (FAOO), parent company to FAO Schwarz, Right Start, and Zany Brainy stores. The company reported on Friday that it may not have enough cash to operate its stores through November and December wasn't looking hot either as they tried to get an advance loan on its expected holiday sales. The stock lost some 55% on Friday. Now shares are falling another 20% in pre-market trading today as its lenders have delivered a notice of default and as one Reuters article put it..."no longer consider themselves obligated to make further loans or extend credit."

 
 
  James Brown   11/10/20,  9:21:22 AM
Getting some good news this morning is Guidant (GDT). The U.S. FDA has approved its latest model of pacemakers. The stock could see a bounce from the $50 level.

 
 
  Jeff Bailey   11/10/20,  9:13:51 AM
09:00 Update posted at this Link

 
 
  Jonathan Levinson   11/10/20,  8:10:12 AM
Love your detailed analysis. Could you give me me your opinion on something? What do you watch to determine whether or not the selling, or the buying, is strong or weak? Say I'm in a QQQ trade, which I am, and on Monday morning I want to be able to see if the selling is picking up and intensifying - what is the best way to see this? Thanks for your work!

While some use monentum or ROC oscillators, I prefer to simply watch my support and resistance lines and follow the stochastics, Macd, volume EMA and ADX on my short cycle 150-tick intraday charts. The TRINQ and TRIN will keep rising in a strengthening selling move. Easiest is to watch the decision points (support/resistance) and evaluate the condition of the oscillators there.

 
 
  Linda Piazza   11/10/20,  7:10:19 AM
Good morning. Japan’s general election, held this weekend, continues to impact trading. Amid uncertainty over reforms to be enacted, banks lost ground in overnight trading after Prime Minister Koizumi’s Liberal Democratic Party trimmed its majority. The Nikkei opened down, dropped, rose almost to the breakeven level again, and then dropped back toward the previous low. In the afternoon session, the Nikkei steadied near the day’s low. It closed down 144.24 points or 1.17%, at 10,504.54. Techs and telecoms also declined. Internet investor Softbank reported after the bell, noting a loss that widened over the year-ago period.

In China, October’s industrial production rose 17.2%. China’s Shanghai Composite gained 0.4%, but many other Asian bourses declined. The Taiwan Weighted was another exception to those declining bourses, closing flat, up 0.04%. South Korea’s Kospi lost 0.93% and Singapore’s Straits Times declined 1.51%. Hong Kong’s Hang Seng lost 0.48%.

Most European bourses currently trade slightly down. Although German chipmaker Infineon (IFX) reported its first profit in nine quarters and cited rising memory chip prices, others noted pricing pressures in some of its divisions. The company slides lower in European trading, pressuring the European bourses. German pharmaceutical company Bayer trades higher after announcing Friday that it would shed its chemicals business.

Currently, the FTSE 100 trades down 14.80 points or 0.34%, at 4362.10. The CAC 40 has lost 7.21 points or 0.21%, to trade at 3445.84. The DAX had declined 9.14 points or 0.24%, to trade at 3773.42.

 
 
  OI Technical Staff   11/9/200,  6:42:53 PM
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