A Magical Monday in the Making
Monday, January 28, 2008 at 10:18AM In response to last Friday's GLD exercise, the joke is on you. I spent the weekend and the early morning cornering the Gold market to ensure that all my readers would profit from such a bold exercise. You are welcome. Now the e-mails are piling up asking me to predict sporting event winners, weather patterns, and asking me if I would be willing to do magic shows for 8 year old birthday parties.
In all seriousness, GLD gapped higher and started running this morning as discussed. Getting into the trade at these levels changes the value of the set-up for the worse, in my opinion...so don't ask if I would buy it today. I am still very bullish on the metal for the short term, but buying here at $91.50 gives me an extra $1.50 of risk to the downside (always be willing to allow a trade to go back to support, which is at $90). I would rather wait for a dip, or a down day to buy.
For all the proud owners of GLD...as prices move higher, look to tighten up stops along the way. I will admit that a top is on the horizon, so protect yourself in case it happens sooner than later.
Moving on...the Watchlist has been released and the ideas are out there. This ought to be a great week for those that like to make money. For those that like to lose money, I think it will be difficult to continue your unproductive habits. Perhaps it is time for you to change your ways. There will be a lot of easy trades this week, so be ready to take them down. I will continue to share them as I see them.
BTW- I am seeing some curious signals out there in the financial world that might be pointing towards the end of the bear market soon, with higher stock prices on the horizon. Once I can determine a time frame, I will share these ideas with you. Until then, focus on the trading you ought to be doing here and now...not the trading you will be doing weeks from now.
Disclaimer: I am not bullish yet... nor a magician.
Reader Comments (35)
Jeff thanks again for the watchlist and for GLD which I was already in but added to. On the financials note you mentioned I had a banker friend tell me last week that the CEO of his bank and others where buying financial stocks. I told him I thought it a bit early but they seem to see something which I ignored until your mention of it.
Thanks Jeff,
I'm looking forward to game show called the "Option Market" to make BIG $$$$$$$$. Also thought you might like this if you haven't already seen...
If you had purchased $1,000.00 of Delta Airline stock one year ago you would have $49.00 left.
With Enron, you would have had $16.50 left of the original $1,000.00.
With WorldCom, you would have had less than $5.00 left.
But, if you had purchased $1,000.00 worth of beer one year ago, drank all of the beer, than turned in the cans for the aluminum recycling REFUND, you would have had $214.00.
Based on the above, the best current investment advice is to drink heavily and recycle.
It's called the 401-Keg.
Thanks for all you do.
There is a saying which I try to always remember in times like this "After Problem, comes No Problem"! Kind of obviuos but we usually look for complex answers when things can be very simple. IMHO Getting into financials will be also obvious, but the right time can be tricky based on each one's solvency / risk tolerance / time frame.
That's why I am greatful to have Jeff as a mentor.
Jeff you may not be a magician but you sure know how to work wonders...
Added to GLD at the pullback early this AM, so I added .85 to my risk which by adjusting my position size I thought it was reasonable...Time will tell.
Thanks for all your invaluable help!
CEOJWS,
For me price, volume, support, resistance and trend are my main focus. The moving averages are always on my chart but come into play based on the individual stock. If the stock I'm looking at obeys the moving average in some meaningful way then that would cause me to also obey its significance.
thanks for the watchlist
;-)
Jeff- thanks for the extra entertainment value for an old magic geek like me. Mandrake the Magician was a comic strip from back in the 30's. An original one of those would be worth a few bucks now.
Where in the world do you come up with all these visual goodies you throw in here? With all you do I don't see how you even have the time to find them. You are amazing.
Stan
Stan,
It is easier to come up with jokes than new market commentary EVERY day. I like to joke around as much as I like to trade.
Jeff the un-magician,
What in the world would make you think we are not going into slower earnings and an economic downturn this year?
I think you better start making your bar mitvah magic show schedule, because your new magic rabbit told me you been smokin the funny stuff.
Jeff
Thanks for another great list, and nice to see some bullish sentiment pontentially on your horizon, bull markets are more fun, even if they are short lived ones....
Here's something to give you a headache. I just looked at the implied volatility for the VIX. My screen nearly melted. Anyway, for the last month, as the VIX is moving up, the IV is moving down (did I use too many commas there?). I have no idea what this means (if anything).
Have fun :-)
Would someome tell me what REE is please? thanks
Maybe we should discontinue the term REE...
It pisses me off.
No offense jim d...it gets asked every day.
REE means learn to use the search function of the website!!!!
Its easy and you only need to type in three letters R E E, instead of twenty five letters or so to actually ask the question.
Technology is amazing!!!!!!!
Jeff,
Give it a new name and pin the post to the top of the home page. Maybe embed it in the OPTION ADDICT logo :-)
Are there any good ways to make money with options on stocks with pretty good dividends (like WFC or EPD) other than writing covered calls and raking in the dividend quarter after quarter?
The option prices won't move very much because the stocks pay such a good dividend and its usually better to just own the stock rather than options, right?
In defense of the newbies (I was one myself not too long ago) it's not obvious that REE is a native blog term that can be searched for. When I first saw it I think I thought it was a universal trading term that I had missed. Of course it is fun to see it asked and least once a day and twice on Tuesdays and Thursdays.
I propose for the blog we rename REE simply EE.....can't be pissing off the Big Kahuna.... ;)
OR entry/exit
Raimo
Did you take the TNB trade last week? Great move to the downside today on a positive day for the indices (so far) but potential resistance at 42.
Here's an idea- before anyone can leave messages on the blog they need to read some introductory information and take a test of their comprehension of the information. They will have to understand critically important terms such as Support, Resistance, REE and Clean Cups.
Stan
Ken..
No. I was looking for it to get a bit higher, so I missed it....oh well, maybe next time. Looks really good though!!
Jeff,
Can't wait to hear your ideas on why the bear market is ending. Don't see it, especially with ABK and MBI about to go bankrupt and re-set over a trillion dollars worth of bonds and sending the financials over the brink, but being a "newbie" still, I want to LEARN!!! Thanks for all you do.
Jeff,
Thanks to your great presentation and discussion Friday, I added to my GLD position even though I already had my quota. The downside risk was so small, and the upside too good.
I know you mentioned AAPL last week (I think Marketcast.) Do you see it at some long-term support?
125? Sold my GS this morning. I think the market may rally some this week. How bout you?
Just a reminder. IT has an open house on Basic Options tonight at 8 EST for those interested in learning or needing a refresher course ;)
clean cups
Thanks Westy for your very cordial resoonse.
Raimo
TNB - if it bounces here may be good entry for calls, on 60 day chart - bull flag breakout should occur at c 43.5 for an aggressive entry or the H&S pattern breakout at c45 for a less aggressive one. Either way it would be a a low risk, high reward trade
Anybody looking at PVH from Jeff's bearish list from last week?
Jim D.
REE refers to entry/exit rules. You can look back in the archives to get exact info or check the search topics area.
To All: Great Move today in IBKR - but put in stops. Approaching resistance.
Watch for B-out above 34ish.
KC
IYR frozen at horizontal support.
May be a good entrance for a put play....
KC
Casey:
It made a big move last Friday - it's too far away from resistance to enter now (IMO)
KC
Check the volume on AUXL...breakout confirmation?
Jeff, I am a little confused by your reference to support on GLD being at 90. I thought that prior highs (a single "higher high") were not necessarily support. Is it because this is a 52 week high that you would treat it as support? Wouldn't you have to let it get below ~86.50 (prior lows)to confirm a change in trend? Believe me, were I in this trade I would much prefer limiting risk to only 90 instead of all of the way down to 86.5, however, I have been guilty of not allowing trades enough room to move and need to understand this better.
Thanks -
Funny, I was discussing this thing with my older sister the other day, now I'll have one particular much more argument in my hand when it'll appear to confrontation when once more.
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