Hi Jeff
Does the resistance formed on MSTR from about 2 years ago at $107 area concern you at all? Thanks man.

Just read the post on synthetics. As I am bored waiting for the FED announcement.
A different twist is what I call a ‘modified synthetic’ or diagonal “synthetics’. I am a very strong ‘naked put’ seller by collecting premiums in to volatility. I especially like long Holidays ie; Christmas in the middle of the week. Over the years, I’ve modified my position and look for ‘naked puts’ plays 30-35 days out such as selling Jan puts and buying Feb, Mar or Apr Calls.
Provided the trade goes as projected, I collect the full premium thru the front month and manage my Calls per my rules.
Typically, my game plan is to just play ‘naked puts’ (collect premiums) over the Holidays and let Theta work for me. Why not credit spreads? Spreads bore me, so I go for the full Theta.

Hey Jeff,
When you say you are buying into the move if we drift lower, do you mean calls on the cheap, or puts ahead of further downside momentum?

Ab

From last thread After Clean cups (darn)

Jeff,
Do you use synthetics to establish a short(the stock) position too?
I have been using synthetics for about 1 1/2 years for bullish positions, but have been leary of using for shorting the stock due to how quickly things can move to the upside in a short squeeze and having a naked call position. Do use synthetics for both sides: ie. to substitue a stock purchase and to short a stock? If so any different considerations for the 'shorting the stock side" with a synthetic? Thanks

OA's -
I would echo David$'s caution about using strict money management on synthetics. Just because the synthetic is cheap DO NOT over leverage yourself. Only buy as many contracts as what you could afford to buy in stock ie if you could only buy 100 shares of stock to stay within your money management only buy 1 contract, because a synthetic moves dollar for dollar as the stock would (for or against you).Use the same stop as you would for the stock. Used in this manner, I've found them to be a great way to effectively use capital and when IV is too high for a straight call option the synthetic cuts away the vega and theta issues on the option.

I know it's right before the announcement, but GS just broke out

Jeff,

Do you know what is happening with the put options on TIN? there was an adjustment. I think this was on your bearish watchlist. I have puts in it but don't understand what is happening with them today. Stock went from 47 to 37 with adjustment. I have 40 puts.
This is all new to me so I appreciate the help. thanks.

Wow! That ain't a little "dip". More like a pothole!

NILE - just a quarter point? This might be sign that there will be no diamonds under the XMAS tree. I'm watching to see if NILE holds below the $71.50 into the last hour of trading - then I'm going to PUT away on NILE.

Jeff,

I was evaluating the STRA stock you mentioned. I would like to see if I have this right. Looks like a head and shoulders pattern with a neckline around $170? Looking for close below that to signal the downtrend. I also read that we want high selling volume to help confirm. Looks like next support would be about $160 so I would expect about a 10 point move.

Appreciate the thoughts.
Eric

Are we going bearish now? If SPY 150 doesn't hold, I could only assume we'd start retesting the lows in the past few months.

What does this mean, Jeff? The market got what it expected, so why is it going down? Or is everyone selling to buy it "cheaper?"

OR- Are these purely speculative questions?

Jeff,
On ATW do you measure from the bottom of the flagpole or do you disregard the pole because it is earnings?

Laney,

I think the market got what it expected (a 25 basis cut), but not what it really wanted (50 basis cut). I know we aren't supposed to really care about the overall market and simply trade what we see, but it is a factor, no?

Yes, Mike. I have been really trying to just "trade the chart" and not the news and I have recouped a bit, but this is just...yuck.

We'll see what the close brings.

Jeff,
ATW - observations and questions. I drew a symmetrical tri the middle of Nov and projected a 10 point move uppon the break. It broke down but not to my exit/support area, and then rallied the 10 points in one movement. It is now at my target. Is this really a flag or just consolidation at a target reached? I don't see obvious bull flags in stock price movement over the previous year. Do you?
Thanks for continued teaching. I know I am becoming a better trader.

OA,
You and Eric has endorsed FXE as a way to hedge the falling dollar. Does today look like an entry point w/ the MACD & Sto turning up?

Thank you!,
Julia

Anyone think VIP's retrace in the last hour is a good time to get in?

Eric

Eric, Jeff thought so. He added, he said.

Why no options on CPLA?

Bob

Eric,

Maybe once if stops falling. It was downgraded today.

Julia

JK,
I know you said you were going to re eval at the close but I was wondering that since I try not to make my moves until the last 15 minutes of the day if the patterns like ATW, DLB are still valid?

Cheers,
ARTY

Anybody buying yet? Still looks to be getting worse to me.
NYSE breadth is 10:1 negative and continuing to spread
NYSE 2650 decliners vs. 560 advancers

Apologies all I know this isn't the right place for this but,
There's nothing like watching your account go down 25% in an hour.
There. I vented. Sorry to bother everyone.

STP pulled back HUGE... jeff/anyone getting into this one? or anything :-)

jym,

I'm new at this but I've learned one important thing that's been worked into my trading rules and has worked so far. With TOS, I've been able to force myself to stay market neutral. In other words, I try and stay as close to a 0 delta as possible. On days like today, at least I may have something nice to look forward to. I believe the first time I ever thought about staying market neutral was on this blog. It really does work. Good luck and pick yourself up. I know I have before and I'll continue to do so. It's the only way to survive this game.

Jorge,
Thanks

Jeff, you have Trader J confused with me. I gave back some profits but decided it is best for me to be in 85% cash now until it becomes more clear if we are bouncing off a moving average at this level or going to lower moving averages before we bounce. The next few days should tell us but I am leaning towards another couple days of bearish trading before a bounce.

This dip is too sharp to buy until things become clear, IMO.

The MACD is still bullish so it is likely we will bounce off the 18-day moving average in the SPY and QQQQ. However, if that 18-day fails, then the MACD will probably turn bearish.

Jorge- "delta neutral"....chuckle chuckle. No offense, but I tried that. With a delta of .17 that's about as neutral as you can get, my account is off more than 5% over the last week. On big rallies I was down, and days like today with a collapse, guess what, I'm down again too. Maybe you could shed some light exactly how you figure "neutrality"? :)

Matt,
Same here, for the last few weeks I was pretty neutral and basically stayed flat and drifted lower. As the market rose I turned more bullish only to get whacked today.

Matt,

Hah! What I've done, and please remember I've been using TOS for about 2 weeks (so much better than Zecco), is to maintain my portfolio at a delta of 0 through the use of SPY puts/calls. If I'm a bit more bullish on stocks, I may offset that with a SPY put and vice versa. I'm not saying it works all the time. I have been burned a couple of times. But so far more often than not, I've managed to stay afloat with wild swings like this. It's not perfect and I'm sure it may be an amateurish move to offset your portfolio with a hedge like a SPY option, but it's been pretty good to me so far. But you're right... on days like today, there's nothing you can do. My SPY puts did make a pretty coin though so I can't complain ;-) Nothing like seeing the S&P smash through support if you're bearish.

I see these levesl on the Big 3 Indices as the Lines that must hold for the Higher Lows/Higher Highs to still be valid:

SP - 1460

NSDAQ - 2600

DOW - 13250

A close below these will signal the short term Bullish trend as broken.

JH,

Actually, Trader J asked a question about taking down some FXE with a rising MACD. Don't worry...I don't have you confused :)

its amazing how 1 hour and 45 minutes can erase 4 days of gains...

Jeff -

Am I seeing things right or not? My charts tell me that the trend is still Bullish - just a pullback to a Higher Low until proven otherwise?

Thanks!

Jeff - I tried to view the trading videos in the archives and it says they are no longer available. Is there a different way to access them?
Thanks for everything.
Susan

I was looking for 1490 to hold....not 1460.....ouch....

http://img406.imageshack.us/img406/3183/spx1yr121107mg9.gif

Another interesting FED day .... The down drop was expected (as Jeff warned us) ... I unloaded a couple of profitable ones (MA and AAPL) prior to the announcement and then bought a few in the last 15 minutes / MA and APPL ... plus PVH, AMZN and MSTR. Have several others to pick up after I see some stabilization .. I went 50% cash today until I see some settling down. The VIX went up 2.85 to 23.59 .. Me and the VIX don't get along too well much above 20... I get ridiculously careful when it approaches 25 and above.

Took a few losses also but the gains of MA and AAPL more than offset those - 2 to 1 ... so all in all, pleased ... but like those above, never fun to see nice gains be wiped out. But, 1000 points up in the DOW in the last week or so just won't sit there. The charts told us that!

Stump,

I just tried each one, and they all worked.

What is the problem?

Raimo,
I'm with you, whew.

I have not had any luck with trading with the indices's (bearish, bullish), so I am really trying to focus on each individual trade only and not let the news/market influence my actions. That being said for the time being staying as close to delta neutral as I possibly can. Thoughts???

Arty

LEH is going down like the titanic... below 60$ next week.

Arty,

I am not a delta neutral kinda guy, I like to be be somewhat delta market direction. That being said, I also pay more attention to my stocks then I do the market. But I will admit today hurt, and I am not very happy. I lost all my gains for the last 3 weeks, and am applying hydrocortisone to the sore areas....

I really expected today to be a flat to up day, unless the little bald man gave no rate cut...which I really did not think he would do. I am surprised at todays end result.....and what pisses me off is I know better...

I WAS bullish on the market, but now even I am wondering...so I am going to take a day off tomorrow (I have an obligation that keeps me away tomorrow anyway) and let the dust settle.

I would suggest trading in smaller positions for now if you are unsure, or, CASH is a safe ticker symbol, which is what I am mostly in right now...

Raimo, sorry to hear about your day. I gave back closer to 3 days' profits rather than 3 weeks, but it's still no fun to be on the wrong side of a move. Don't doubt too much just yet. I think this rally can still continue if we hold above the 1460-1465 range this week.

Just remember, the strongest rallies often come when even the bulls are doubting...

Trader JH,

I got hammered pretty good. I deserve it, I was gambling today instead of trading. The house won. When days like this happen, it makes you question yourself...but the only question one can ask is very simple..did you follow your rules, or did you gamble. Today, I gambled..

The little bald man better hope we never meet, though I screwed up, it would give me great pleasure to stick my boot as far up his patootie (in the great words of Kim) as I can.

Jeff,
Could you elaborate on delta neutral strategy? If I remember correctly you are a proponent of it. My (little) experience has been that when the market doesn't move much I stay flat or drift lower, (I know I should also occasionally drift higher but it hasn't happened) and when the market moves hard in either direction my losers out way my winners. Additionally if you try to trade alpha stocks, (that move by themselves not because of the market) why does delta neutral matter?