So do we get to play this game again???

So tempting to not hold any bullish positions... but resist the temptation I shall. :-)

Market's making a run at an inverse head-and-shoulders reversal, but for once i'm not expecting it to confirm.

If it doesn't, I'm taking down CMI and NILE, 2 solid monster reversals about to confirm.

Brett,
Are you looking at the daily on the SPX? If so, I'm seeing it.

Jodi,

If my watchlist has anything to do with it, we will make a run at this game again this week.

Brett-
So, are you taking down AKS too?

Liz,

I'm in AKS from last week.

Brett-
I know you're a little more of an aggressive trader than I am.

Last week I saw AKS as a bounce off of a long term trend line (looking at the 5 yr chart). What were you looking at that led you to see what you saw? I notice that sometimes I get really focused on one aspect of the chart and I miss other aspects like it being a potential H&S.

Thanks for any insight! ;-)

liz

p.s. and you think it's a headache traveling with 2 kids... try 3 on a 5 1/2 hour flight. Fun! Fun!

liz, I was wondering the same thing about AKS... thanks for asking! Ha!

Brett, do enlighten us...

Yay! JCG finally! Glad I was patient and held. I was *this close* to letting 'er go, but it didn't cross that "line" and I stuck to my rules.

First, I saw the $CRX topping, so i looked for commodity plays that could roll over (disclaimer: Jeff correctly pointed out to me that the $CRX isn't the most reliable commodity index, but that's what I've been using).

Looking at metals, I'm already in a put on ATI, so I scanned for others that haven't topped yet. AKS looked toppy to me and the volume looked strong on the downside. I took an anticipatory trade expecting the neckline to break. I don't always wait for breakouts and breakdowns (ex. Jeff's brilliant call on CMG). Sometimes I use the force. It doesn't always work out, but getting in ahead allows me to load up on cheap OTM puts, and as a bonus, the VIX is usually lower than during big selloffs when these patterns usually confirm.

I don't fully endorse this strategy, only when you're comfortable.

Very insightful, Brett! Thank you! :)

Matt, your rules made you alotta money today! Cool!

Brett-
Thanks for the insight. Always trying to glean as much info and learn as much as I can.

liz

Liz (and others)-

I really want to stress this: Don't tinker with your rules and strategies just because you read about someone else doing it. Only when you know yourself and your trading style and habits can you do this successfully. You may find yourself jumping trades and creating a string of losers for yourself. There's a reason we have rules: It's to keep emotion from ruining our trading results. I'm here all day, every day, so if i do something too aggressive, i can still fix it quickly.

I have done this long enough, and have enough of a trading history to know when I'm doing something outside my risk tolerance. Just because a pattern looks like it will confirm doesn't mean it will. I can show you a list of trades I jumped that blew up in my face.

gahhhhh i took almost all of em and saw horrible returns in comparison to the actual moves. i think it is a combination of otm, drop in iv, and spreads. gahhhhhhhhhhhh volatility is so freakin confusing

Brett, thanks for the insights, and the follow up as well. Much appreciated.

Brad, indeed. Trade OTM if you expect a large move quickly, otherwise, the time decay will eat you up. And for spreads, the return is just not there if your stock moves a lot. On the other hand, if your stock doesn't move much, you can benefit from time decay.

Brett-
Thanks for reminding me. And I did stick with my trading plan, at least today! One day at a time.

liz

grace

Sorry to confuse you but i meant the bid and ask spread and not the trade being a spread. anyways for one of my trades i saw a 10% move on jwn. and i only got 80% returns on that.... doesnt that sound bad to you?

Brett, If $CRX isn't the most reliable commodity index, what did Jeff suggest using?

thanks

GCI and JCG are my heros!! Well... ok... Jeff is too. At the airport in Vancouver and what a pleasant surprise!! Now if NM would just bounce here I'll be all set for the high roller's table when we go to Vegas.

I bought a call on RL last week because the 5 year chart showed it right at support. Everyone else was calling it a bear play. I thumbed my nose at you all and went contrarian. RL thumbed it's nose at me because it wouldn't let me out. I thumbed my nose right back and bought puts on it today. Now I have both. Oh joy! A license to lose money. Tomorrow I have the better part of the day to mop up my messes. Sheesh, I didn't think I'd be a janitor here.

I'll have to catch up on the blog when I get to my hotel in Calgary. Can't wait to see the watchlist Jeff. Thanks a bunch. And thanks for the sweet 16. I usually don't dabble with 16 year olds... but in this case I made an exception to the rule. Could you make it around 45 next time? Just to keep my standards at the right level.

Chris-
You are so bad! Funny, but... the things that come out of that mouth of yours! Hey, I did the same thing with AKS. It was at a long term support line but crashed through today. My hero today was TIN.

liz

Brad,

The spread on JWN is not terrible, but it is highly overvalued. You can eye ball whether an option is overvalued by looking at the delta. For ITM, look for a minimum of .65, the higher the better. The delta for Jan ITM is .39, OTM is .22. Ouch! In addition, the IV is way high going into earnings. Basically, you are getting killed in all front. Having said that, 80% is a really good return!

I hope you took the profit today. It went up by 9% after hours. Expect IV to come down tomorrow because the anticipation prior to earnings is gone.

Hope that helps.

Carl,

He didn't suggest anything, but I imagine if you look at the commodity world as a whole, you get the big picture (watchlists, charts, etc.)

Sorry, Carl, that wasn't very helpful. I meant, look at the charts of what make up the commodity sector: Basic Materials, Energy, Metals, etc.

Brett & Grace,

If you are in JWN puts, check out the after hours action. Up 10% on great earnings & forecast. Heavy AH volume too.

Gotcha. Thanks Brett

Grace...

THANKYOU makes much more sense now haha

Brett,

Excellent reminder to "stay with our own rules" and not get caught up in what someone else is doing. Happy Thanksgiving.

My lawyers will contact you for this post.

Viz.

Nice blog.