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Gold Bullion Likely To Pullback
Then Rocket Higher
Back in latter June I forecasted a big
top in Gold, mostly due to the 5 wave structures up from the October
2008 lows to June highs, and the 5 waves up from February lows to
June highs converging. We then dropped from 1243 at the time of
the forecast to $1155, which was one of my potential “A wave down”
rally pivots. I expected a counter-trend rally or “B” wave
up to 1212-1225. So, all of that worked out pretty well, until
we hit $1238. Now, $1238 is a 78% Fibonacci re-tracement of the
drop from $1265 to $1155. Normally, a re-tracement in a weaker
market or sector is capped at 61.8% or 50%.
The strength of that counter-trend move
caused me to go back and review my patterns a few more times.
Most of this is pure instinct and experience, but I think $1155 was
the low of the correction. It also looks like that was an
A B C correction to $1155, and with the strong rally… it means we
are likely beginning a new set of 5 waves up from $1155.
That brings us to my recent commentary
for my paying subscribers that I was going to review the wave
patterns and that we closed our Gold trading short position out
several days ago with a small profit. It is a a good thing we
did because Gold rallied hard from 1212 to 1243 since that time,
catching some people off guard. At this time, Gold is quite
overbought and due for a small corrective pattern. It would seem
logical that after a rally from $1155 to $1243 roughly, that we would
pull back 38-50% of that move, so I'm looking for a pullback to
around $1200 plus , and then a rally. We could see new highs in
Gold in the next few months, and $1300 is on the radar now.
In summary, I got the topping call
right, the bottom pivot right, and the counter-rally pretty much
right…. but I'm changing my views to BULLISH intermediately after a
pullback, from BEARISH intermediately. Obviously the fundamentals for
Gold have never been stronger, but I was expecting a deeper
correction off the 21 month rally, and instead to me it looks like
with Quantitative Easing 2 upon us that Gold buyers are really
stepping up their gold purchases.
Below is an updated Elliott Wave based
chart showing clear corrective (3 wave) patterns from December 2009,
and bullish (5 wave) pattern from February through the June 2010
highs. We just completed a 3 wave correction to $1155, and now this
is probably a short-term peak wave 1 up, with a mini-wave 2 down to
$1200 or so to follow. Once done with a pullback, we could see a run
to $1280 or so, and later over $1,300.
If you’d like to receive free weekly
reports, check us out at www.markettrendforecast.com
David Banister
PST
August 26, 2010
Traders Talk
Chris Vermeulen
How To Trade Gold and Silver’s Volatility
If I was going to put on a position
here, I would look to the long side. We need to get well above the high
from Wednesday, I believe the next good move will be to the upside, but
I would not be surprised if we get some more downside still. The move up
may drag out as well. I do not think anyone wants to see a stock market crash
any time soon, maybe next year after our countries have put some
distance from recent events. Bloggers also look neutral.
August 25, 2010
Traders Talk
Please watch this video if you are Neurologist, it is alright to be wrong. There is a Neurologist talking in the video. MS is a simple disease, we are all just being slowly poisoned by our own blood.
It may still be about the US dollar.
It has gone nowhere, the stock market may still have some rally if the OEX manages
to find support near here. I did take a look at TRIX on the monthly, if
we close here after the weekly, and the daily go off sells, the market
may still be poised to move higher.
August 24, 2010
Traders Talk
Toby Connor
Why the US Dollar is Key
I think all it may take is a break of 480 on the OEX, and we could be on our way to 460. The stock market may be close to fairly valued
right now, so we may continue to see some wild swings in the market.
Was that an angel dressed in a black, and white dress on Kingsway the
other day? I did not know any lived in the area.
August 23, 2010
Traders Talk
Chris Vermeulen
Are Gold & SP500 Topping Out Here?
The Momentum Cycle section has an update.
You have to love these good news
miracle MS stories, that do not stop coming out, now you may have the
procedure done for five thousand dollars in New York to! Canada's
position? The conservative government here, is still not directing
the Provinces to make it available. We need some leadership from Prime Minister
Stephen Harper. He needs to do something now, as in ordering the Provinces
to offer the procedure to people who have MS. It is not controversial, or experimental, as all hospitals offer this, unless you
have MS. It has been available for over thirty years now.
I do not like this, 470 may be in play now. TRIX
did go back on a sell, this week may be crucial for the SPX. I have the
weekly still holding on, but the Russell weekly is on a sell. There is
so much cash out there, we may not get a crash.
August 20, 2010
Traders Talk
David Banister
Are are going to get 460? I do not
think so, VIX may be setting up to turn if we get more downside, but
TRIX did stay on a buy. If we can get more people jobs somehow, I think
we will be alright. Try the chicken in the Caymans, you will be
surprised if you find that great chicken shack. I think the Internet
will provide more jobs for us all, as industries start to adjust to
this new way to do business. Have a great weekend everyone! I have never
seen a bed bug anywhere, but thank you for the warning if I travel again
anytime soon. I have great name for a new flavor of vanilla ice cream, please email me if interested.
Risk
Comparison: Options Versus Equities – Part 1
While future articles will return to
focusing on the option Greeks, a recent comment regarding risk really
piqued my interest. The age old discussion about risk versus reward,
equities versus options, and the fundamental difference between
Nassim Taleb’s “Black Swan” risk and what most people perceive
as ordinary risk.
In a perfect world, financial markets
are by design a discounting mechanism of a cash flow stream, risk
versus reward, and a psychological environment where the difference
between profits and losses is merely perception. In the end, trading
is all about the mastery of risk mitigation and leveraging
probability.
I am an options trader, not because I
do not like equities or futures, but because I fear the perception of
their so-called safety. Most academics and the average investor
believe that financial markets, specifically individual stocks follow
a Gaussian, or log normal distribution. While various economists and
statisticians have argued this point for decades, to understand that
price distributions are in fact not strictly Gaussian.
Price distributions are capable of
exhibiting more than the predicted occasions of price inhabiting the
extreme regions of the distribution curve. Understanding these
concepts is critical in order to have a robust understanding of risk.
This type of phenomenon is called “fat tail” risk;
statisticians refer to it as leptokurtosis. It is this degree of
risk well beyond the normally distributed range to which Taleb has
characterized as “Black Swan” risk.
In financial markets, having accepted
that these fat tails do in fact exist and exist with a frequency far
beyond what is intuitively apparent, risk becomes significantly
harder to quantify. When risk becomes more difficult to quantify it
can be said that investors and traders have significantly more
exposure to a catastrophic event than they realize.
In basic terms, the financial world we
live in today is wrought with fat tails. Government integration and
manipulation of financial markets, the Federal Reserve’s
(supposedly independent) direct engagement into the bond market, and
specifically treasuries and mortgage backed securities creates
an environment in those markets where distributions are not
statistically normalized. Geopolitical risk such as the potential for
an Israeli air strike against Iran places unconditional risk on a
variety of risk assets, at the forefront light sweet crude oil.
If one considers all the various risks
extant, risk today seems excruciatingly high. Professors on
Minyanville have recently called into question whether paper assets
like the Gold ETF GLD is accurately priced. It is widely believed
that there is significantly less physical gold versus gold-backed
paper. This adds yet another element of uncertainty to an
increasingly uncertain environment.
What would happen to the gold ETF GLD
if an analyst announced that the GLD ETF no longer had access to
physical gold? What would happen to the valuation? How can they
maintain adequate capital levels inside the ETF if gold demand rises
while physical supply diminishes? The answer is contraction in the
NAV price of the gold ETF. In real terms, the ETF owns less gold than
the paper supposedly represents and price must come down to indicate
this discrepancy. Make no mistake, the market will be happy to
provide the swift and unforgiving necessity of adjusting to parity.
While the above offers basic examples
of fat tails, the increased statistical variation has a name. The
name of this type of condition where fat tails surround us and
atypical logarithmic distribution takes place is called kurtosis. As
a side note, since recent and forthcoming articles are going to focus
on the Greeks, kurtosis comes from the Greek word meaning υρτός,
kyrtos, or kurtos. (Just thought I’d throw that in there for
a synergistic moment)
A scenario similar to the condition in
which we find financial markets today could likely be summarized as a
period of time where Leptokurtosis has become prevalent.
Leptokurtosis is a statistical phenomenon where a population’s
distribution, in our case equities, has a rather pronounced peak
around the average. This peak is representative of a population that
is rife with fat tails, higher variance, and a propensity for
abnormally large swings in the standard deviation of returns.
What does all this mumbo jumbo mean? It
means that when fat tails are present within a leptokurtic
distribution, risk literally can become infinite. Fat tails and
leptokurtosis are just a few of the many statistical economic studies
that have caught the eye of many academics, specifically in the areas
of advanced statistics, mathematics, and . . . economics.
Distributions, kurtosis, and fat tails are the science behind
behavioral finance. To most people this subject matter is boring,
however it is only boring if you have never experienced the gut
wrenching expression of these phenomena in the market; after that
experience, the subject becomes transfixing.
The average investor believes that when
they buy a stock the likelihood of it declining significantly in a
short period of time is relatively minimal. We have been conditioned
by Wall Street snake oil salesmen that due to inflationary pressure,
over long periods of time equities must rise as a function of
inflation. Everything is a buy in the long term, plus it makes for a
great story to build a business model around that the retail crowd
buys into. While this may be true in the long run, we live finite
lives which do not have the luxury of allowing behavioral mean
reversion over geological periods of time.
Right now risk is excruciatingly high.
We have a variety of risks and uncertainties that are plaguing
financial markets. The statistics behind the market today would
likely exemplify the excessive risk built into the current system. So
how exactly does this relate to options you might be wondering? I
trade options instead of individual stocks to reduce risk. Options
offer a variety of ways to hedge risk, even after a trade has been
initiated. Options allow for manipulation where as with stocks and
futures there is little one can do besides fully hedge a position.
The reason I utilize options instead of
futures or equities for swing trades is because by definition they
are insulated from outlying events such as an unexpected act of war
or a natural disaster which could interrupt the flow of commerce for
an extended period of time. Options are inherently less risky than
stocks because of the leverage built into them. Since all moneys
invested in the market are subject to Black Swan risk, the ability to
control an equivalent position with dramatically less capital
commitment is a core risk reduction strategy.
Yes, a trader can lose his/her entire
investment if they own an option naked. Experienced option traders
that buy and sell calls or puts naked and then hold them for extended
periods of time is likely an anomaly. Experienced option traders will
use some form of a spread to mitigate their risk further.
Additionally, most online brokers offer option traders access to
contingent stops which are based on the underlying asset’s intraday
price.
Fat tails and leptokurtosis are the
result of financial markets reacting violently
to unexpected events, similar to what happened this week when the
jobs number was much worse than expected or to the still unknown
factors which precipitated the recent “flash crash”. Large price
swings similar to what we have seen recently are usually attributed
to higher volatility. Higher volatility for prolonged periods of time
is just another symptom that points to fatter tails and leptokurtic
distributions. Reliance on the Gaussian, log normal distributions
likely have some of the “machines” on Wall Street in a situation
where their models do not work.
Option traders leaning long into the
close on Wednesday that utilized specific types of spreads had
limited risk. They did not have to worry if the market gapped their
stop. Their risk was limited from the moment they initiated the
trade. In contrast, an equity trader that went long before the close
on Wednesday could have exited if they had access to the premarket,
however if they didn’t the gap down found them losing more than
they originally set out to lose. The market gapped over their stop,
leaving them vulnerable to further downside. The unquestioning
reliance on stops to close positions in times of Black Swan events is
flawed at its core because it denies the very existence of unknown
and unknowable risk.
This is just one example of how equity
traders who routinely hold positions overnight are exposing
themselves to potentially unidentifiable levels of risk in today’s
market. If we are in a period where leptokurtosis and subsequent fat
tails in the distribution prevail nothing
is impossible when risk is being calculated. By statistical
definition, a period where a fat tail(s) exist indicates a period
where risk is extremely high.
Log normal modeling software will
significantly underestimate the true risk in financial markets. What
trading software and price models are you using in your analysis? If
you are using a gut feel or one type of stock chart to help guide
your decisions about risk, you could potentially be mischaracterizing
risk by as much as 5-7 standard deviations. 5-7 standard deviations
is scary my friend, the kind of scary that days that have nicknames
that start with “black” are made of.
If you would like to receive our free
options trading reports and trading signals please join our free
newsletter at: www.OptionsTradingSignals.com
J.W. Jones is an independent options
trader using multiple forms of analysis to guide his option trading
strategies. Jones has an extensive background in portfolio analysis
and analytics as well as risk analysis. J.W. strives to reach traders
that are missing opportunities trading options and commits to writing
content which is not only educational, but entertaining as well.
Regular readers will develop the knowledge and skills to trade
options competently over time. Jones focuses on writing spreads in
situations where risk is clearly defined and high potential returns
can be realized.
August 19, 2010
Traders Talk
Chris Vermeulen
Gold, Silver, Oil & SP500 ETF Trends & Reversal Levels
I really did like Seven Mile Beach in the Cayman Islands to, but Magen's Bay
I think looked nicer, but it was a great place to swim. You could see
all kinds of marine life while swimming. It was unbelievable! If you
are looking to start business, to make millions maybe, I would see if
you might be able to start franchises for one chicken place they had in
the Caymans. I was the best chicken! I am not sure if I will be able to
go back any time soon, so I am sharing this with you.
We did close up, GLD may be set to take off here as well to go along with the stock market.
Learning How Delta Creates Profits When Trading Gold
Last
week’s articles focused specifically on the option Greek Theta.
This week we will shift gears and adjust our focus on Delta, another
fundamental tenet of option trading. The official definition of Delta
as provided by Wikipedia is as follows:
Δ, Delta – Measures the rate of change of option value with respect to changes in the underlying asset's price.
Delta has a significant impact on the
price of an option contract(s). When a trader is long a call contract,
Delta will always be positive. Likewise, if an option trader owns a put
contract long, Delta will always be negative. As option contracts get
closer to the money their Delta increases causing the option contract
to rise in value rapidly as the option gets closer to being in the
money.
Clearly Theta has an adverse impact
on a trader who is long a single options position (own options long
with no hedge or spread), however Delta is extremely dynamic and is one
of the major factors directly responsible for option pricing as the
price of the underlying changes throughout the trading day.
If an option is deep in the
money, the option contract will have a higher Delta and will generally
act similarly to actually owning the individual stock. For a deep
in-the-money GLD call that has a Delta of +.80, the first dollar GLD
rises by then the value of the GLD call options increases by roughly
$0.80 or $80.
If the delta is 0.80, this essentially means that the GLD call option
will increase in value 0.80 ($80) for every $1 that the GLD ETF
increases. As the GLD option goes deeper into the money, the Delta will
typically rise until it nearly produces the same gains as the GLD ETF
until the delta asymptotically approaches 1.00 and the option moves in
lockstep with the underlying. While my next article will continue to
help explain Delta, it is important to understand how Delta can enhance
a trader’s return when trading options with a specific
directional bias.
While options exist for the gold
futures contract, typically if I want to trade gold I utilize the GLD
ETF. The primary reason is that the ETF offers liquid options, which
makes it easier to initiate spreads and multi-legged orders. If options
are thinly traded, the bid ask spread is almost always wide making it
more difficult to get a good fill and a good overall price. Most option
traders stay away from underlying stocks that have illiquid options.
In order to better illustrate how an options’ Delta can create
profits, I will use GLD as an example. Keep in mind, I am not advising
any traders to buy or sell options naked. I only trade options using
strategies that help mitigate various risks to my capital. Theta (time)
risk, volatility risk, and market risk are not being considered as this
is merely an example to illustrate the power of Delta.
Recently Gold and subsequently GLD
suffered a pretty significant pullback. GLD broke down through a major
horizontal trend line and the daily chart was extremely bearish. Just
when a lot of traders were preparing to get short GLD, buyers stepped
in and pushed GLD’s price back above the support area. The GLD
daily chart listed below illustrates the breakdown and subsequent
failure and a powerful rally followed.
Let us assume for contrast that an
option trader and an equity trader each want to get long GLD. The
equity trader buys 200 shares of GLD at $115/share. Assuming the equity
trader does not use margin, the total trade would cost around $23,000
not including commissions. The option trader decides to utilize delta
and purchases 5 October 107 calls which in our example cost $900 per
contract for a grand total of $4,500 not including commissions.
We will assume the October 107 calls have a Delta of 1.00. When a call
option has a delta of 1.00, it essentially means that the owner of the
call is going to get 100% of the move reflected in the premium of the
option he/she owns. Thus if GLD increases by $1, the value of the
option would increase $1 all things being held constant.
This is where Delta really shines; it shines even brighter than gold in
this illustration. Both the equity trader and the option trader have a
profit target of $118/share. A few days later GLD reaches $118/share
and both traders close their trades with profits. The equity trader
made $3/share which relates to a total gain of $600, or around 2.60%.
The option trader realized roughly 95% of the move, meaning around
$2.85. The option trader had five total contracts for a total gain of
$1,425 less commissions. The total gain for the options trader was over
31% less commissions.
Keep in mind, the option trader only
had $4,500 of maximum risk while the equity trader was risking over
$20,000. The option trader made over 100% more money, while risking
only 25% of the total capital required by the equity trader. Behold,
the power of Delta!
J.W. Jones is an independent options
trader using multiple forms of analysis to guide his option trading
strategies. Jones has an extensive background in portfolio analysis and
analytics as well as risk analysis. J.W. strives to reach traders that
are missing opportunities trading options and commits to writing
content which is not only educational, but entertaining as well.
Regular readers will develop the knowledge and skills to trade options
competently over time. Jones focuses on writing spreads in situations
where risk is clearly defined and high potential returns can be
realized.
Kyle Jones
www.OptionsTradingSignals.com
August 18, 2010
Traders Talk
Chris Vermeulen
Learning How Delta Creates Profits When Trading Gold
Just beautiful! Another day of
sunshine in Vancouver, one day I would not mind going to California,
just to compare us in the summer. One of the most incredible places to
go down there, I really love is the US Virgin Islands. I would like to go
again one day.
Will OEX Trader's get to go there
again soon, what the stock market does from here will tell us, hopefully we
will not have a two tier market, and we may get the Russell going on a
buy on the weekly to. I would like to see 100 more Russell points
please. The Virgin Islands really are very beautiful.
We Are Search!
Zubee.com
How To Trade A Volatile In The Energy Market
At
Active Trading Partners, we take a different approach to trading than
most online services in terms of advising our subscribers. Our
methodology revolves around behavioral characteristics of the crowd,
and taking advantage of the extremes in sentiment, whether bullish or
bearish.
In the
case of ETF trading, we often work with 3x Bull or Bear ETF’s
like BGZ, ERY, ERX, TZA, TNA and so forth. Using a combination of
Fibonacci re-tracements and Elliott Wave theory, we look for high
probability set-ups and extreme overbought or oversold situations to
trigger a trade recommendation. A most recent example with
ETF’s was a short position we took against the rising energy
stock index, the XLE. This index had become incredibly overbought
in just a few weeks, and looking at prior topping indicators and
fibonacci trading day cycles, we felt it was a “Low Risk”
bet to short the rally. We recommended ERY at $45.40 as the XLE
headed over $56 and was becoming overbought. Within 7 days we had
a 15% plus gain by going against the crowd. I saw a 13 fibonacci
day trading rally at extremes, so we used the XLE chart below, to
identify the timing to enter into ERY.
We use
the same approach when it comes to trading individual stocks. We
look for “Waterfall decline” reversal patterns, which are
somewhat proprietary for ATP and our methodology. This method
reduces our entry risk because we are buying stocks that have already
taken a recent short term multi-day or even multi-week hit as investors
have exited the stock. Recent examples include buying DCTH, a
former high flier that fell from $16 down to $5.80 when ATP advised
purchase. Within days the stock bottomed and ran to as high as $9
within a few weeks for a 50% move. Another example is OREX, who
took a hit in concert with VVUS several weeks ago. We felt the
sell-off was overdone and recommended the stock at $4.01, after it
dropped from $6. The stock ran back to $5.30 within 10 days for a
30% plus gain.
Trading
in a volatile market means you need to be patient, discerning, and wait
sometimes for an oversold or overbought condition before you act.
Sometimes acting early can cause you to get spooked out of positions
that end up being profitable, but only after you panic sell out at a
loss. At ATP, we use a “tranche buying” methodology which
tries to help with the emotional side of entering or exiting a
trade. We recommend 1/3 or 1/2 positions at a time, even if we
are really confident in our entry point. This way just in case
you mis-timed the bottom of your target by one or two days, which often
happens, you reserve some powder to add additional capital into the
trade to work your way in over several days. We also advise that
our partners enter into these tranches over 24 hours of trading
time, perhaps buying 3-4 times into our position especially on minor
pullbacks. How many times have you bought into a trade entry at
say $5.00 a share, and two days later the position bottomed at $4.50,
you close it for a loss, and then it runs to $6? Using a tranche
buying methodology keeps your emotions in check and you actually look
for a bit further dip as a benefit, not a detriment to your trading.
We also adjust our stops as the stock
or ETF moves after we have completed our entry. The main goal as
a trader or investor is to book profits and limit losses when you are
wrong. Since our ego is often our worst enemy, adjusting
your stops as the trade moves in your favored direction keeps you from
gettting too giddy and letting a profit slip away. In addition, a
reasonable stop prevents you from being over-confident and letting a
small loss turn into a larger one. Another recent sample at ATP
was buying into VITA, which was very oversold at $1.76-$1.80
ranges. We also though advised our partners take profits at
$1.92-$1.97, with a nice and tidy 6-10% gain over 7-8 days of hold
period. The stock then fell hard just a few days later to
$1.64. Not taking profits would have meant wiping out all of your
hard work and watching your paper profits turn into a “hoping for
a rebound” position.
In volatile markets, don’t get
off your game plan and try to keep your ego in check. Enter into
your trades no matter how confident you are, slowly and over 24 -48
hours of trade time. Adjust your stops and prevent yourself from
getting too greedy or giving away profits. Take your time, wait
for set-ups, and also take a break every now and then…nobody
needs to trade everyday.
David Banister
August 17, 2010
Traders Talk
David Banister
Aug 16th- How To Trade A Volatile Market
Wow, did TLT ever make a move. Will it get a little better for the
bears here still? Maybe, but I think traders need to have a few long
trades on, TRIX is back on a buy to, and I am so happy that I am
handling the heat much better now. I was getting worried that I would
not be able to visit my favorite Caribbean island again, St Martin! You
have to go if you have never been, once side of the island is Dutch,
and the other is French. Guys, girls, the scenery was like no other...
August 16, 2010
Traders Talk
Chris Vermeulen
Gold, Oil, SP500 & Dollar At Key Pivot Points
Mr. Sam Kirtley
US Dollar to Fade as Gold Heads Higher
I forgot to mention, that the volatility indicator gave another signal. I just can not see a crash coming as Robert Prechter,
has also identified the same 1987 pattern I mentioned months ago. We
have Master11 in a buy zone to. ADX may be suggesting a big move
soon, and it could be to the upside, once we are finished correcting
here. The OEX was almost unchanged on Friday, and there is still room
for the US dollar to keep on dropping.
Operation shunned by Canada transforms life
We Are Search!
Zubee.com
Learning How Theta Can Be Utilized to Trade Gold
A
fundamental knowledge of Theta is imperative in order to understand the
mechanics and construction of option strategies. In many cases, Theta
is either the profit engine or the means by which experienced option
traders reduce the cost of opening a new position. Theta can even take
an ETF that pays no dividend and create a monthly income stream
utilizing a technique known as a covered call write.
The most exciting thing about
options is their versatility. You can trade them in so many different
ways. A trader can define a positions’ risk with unbelievable
precision. When traded properly utilizing hard stops, options offer
traders opportunities that stocks and futures simply cannot provide.
Theta allows option traders to write spreads which generally offer nice
returns with very limited risk.
Theta is the fundamental
reason behind the slow and relentless deterioration of option values
over time. As a series of options gets closer to expiration, Theta
becomes a very powerful force. As stated in the previous article, the
final two weeks of option expiration put Theta into overdrive. Courtesy
of Optionsuniversity, the two charts listed below illustrate the rapid
decay of Theta.
These charts illustrate
effectively that option contracts which are out of the money and
consist entirely of time premium decline rapidly in value on their way
to 0 potentially. While Theta must be respected, it is Theta’s
relationship with implied volatility that really makes it a force that
must be monitored closely.
While I will not discuss
implied volatility in this article, in future articles it will gain
considerable attention. Implied volatility is paramount in every
decision that an option trader makes. Ignoring implied volatility and
Theta is a recipe for disaster, the kind of disaster where an entire
trading account is wiped out in less than 30 days. In most of the
trades that I place, Theta is regularly a profit engine. I never
purchase options naked, in every option trade that I construct I am
utilizing some form of a spread in order to mitigate the ever present
wasting away of time premium. In many cases, Theta is the driving force
behind my profitability.
In any other case, Theta
decreases the cost for me to purchase options allowing me to minimize
my risk to an acceptable level. Vertical spreads come in two
variations: debit spreads and credit spreads. A vertical spread is a
multi-legged option trade which involves more than one strike price. As
an example, we will assume that GLD is trading around $119/share. If I
were to have placed a call credit spread trade at the close on Thursday
I could have sold the GLD August 120 call strike and purchased the GLD
August 121 call strike, thus receiving a credit in my account.
At current prices as I type,
the August 120 call strike would have resulted in a credit to my
trading account of $53 dollars while the August 121 call strike would
have resulted in a debit in my account of $29 dollars with a one lot
position size. If I were to place this trade, I would have a strong
feeling that the price of GLD was going to decline. The reason this
trade is called a vertical credit spread is because the total trade
results in a credit to my account of $24 dollars less commissions. The
vertical aspect of the trade is based on the arrangement of the
positions on the options board, also called an option chain.
When an option trader places a
credit spread, they are relying on time decay, Theta, to provide them
with profits. In many cases, option traders will utilize vertical
spreads to play a directional bias. In the example above, the bias on
GLD would be to the downside. However, the maximum amount I can lose is
limited because I purchased the 121 call. The most I can lose is $100
dollars minus the credit of $24 dollars. Thus, the worst case scenario
for this call credit spread would be a loss of $76 dollars for every
contract I had put on. If I had put on 5 contracts, my loss would have
been limited to $380 dollars plus commissions.
A call debit spread is
constructed exactly the opposite direction. If I believed that gold was
going to increase in value I could buy 1 August 120 GLD call for $53
dollars and sell 1 August GLD 121 call for $29 dollars. Notice that the
sale of the GLD 121 call reduces the cost of the GLD 120 call. By
selling the GLD 121 call, I reduce the cost of this spread down to $26
dollars. However, my maximum gain is limited to $74 dollars minus
commissions. The point of this illustration is more to focus on the way
Theta helps option traders in practical situations.
When an option trader utilizes a
credit spread, Theta operates as the profit engine. When an option
trader does the exact opposite by placing a debit spread, Theta acts to
reduce the overall cost of the spread reducing the overall risk
exposure. As one can see, understanding Theta is crucial when trading
options. While vertical spreads are very basic, they can provide nice
returns while having the unique ability to control risk with an
extremely tight leash.
In future articles, we will
dissect the various option trading strategies which option traders can
utilize in different situations, at different points within the option
expiration cycle. While this article will conclude the basic
overview of Theta, future articles will discuss intimately the key
relationship that Theta and implied volatility share. In closing, I
will leave you with the famous muse of Benjamin Franklin, “Time
is money.”
Chris Vermeulen – Gold Analyst/Trader
J.W Jones – Independent Options Trader
August 13, 2010
Traders Talk
We have to ask ourselves if it is
alright to let Neurologists continue to go on killing people? I think we
need to put a stop to it right now, as a society this not acceptable.
MS patients should not sign waver forms, some men have lost everything
from undergoing chemo treatments, that only manage to slow MS down.
Please help stop these people, they are killing sick innocent people. There
is a relatively safe simple procedure available to treat MS now.
The
good news may be the market, we are at important support right now.
Bulls need the US dollar to continue falling from here, or we may soon
be at a dance line again. Perfect dance partner the other day on
Patterson. Wow!
August 12, 2010
Traders Talk
Chris Vermeulen
How to Take Advantage of Panic Selling for SP500 and Gold
I believe this is fair warning to any business that is supporting a MS
society in any way, they are committing fraud right now. Police have
enough evidence to launch an investigation as to why they are still raising
money for a cure, when Dr Zamboni, ( who should get a medal ) has given
them a cure. Just ask why they stopped doing CCSVI after everyone who had CCSVI done in Canada, all of them got better. I am not
joking about this. You can now also get CCSVI testing in Ontario as
well, and it is being covered, thank you Dawn. Yeah! Guess what? Even little old ladies are doing it!
I do not think the market is joking either, the volatility indicator
really was double trouble. TRIX is still on a sell, I would like 1081 for
the SPX to close above to stay long, and 1036 to hold any plunge, or
we may get a crash. The weekly chart is holding on if we close here. Buy, buy?
What Just Happened? August 11th Market review
The
market dropped unexpectedly today, or did it? Here at
TheMarketTrendForecast we review Elliott Wave and Fibonacci patterns to
identify potential tops and bottoms in advance. Our subscribers
are forewarned of both opportunity and danger when we read the patterns
correctly. Below for example is a chart we sent out to our
subscribers on August 4th, a full 7 days prior to today’s drastic
decline:
We were calling for a top around 1130
on the SP 500 for the past few weeks as a “Bearish Wedge”
pattern was in the process of completing. I felt this was the
final stage in a multi-week 3-3-5 Elliott Pattern that would terminate
with a sudden drop out of the wedge.
These tend to come out of left field, and at major pivots bulls and
bears are normally both caught off guard or flat footed at best.
However, the market does not move in
random fashion as many people think. As we espouse here at TMTF,
the market moves in reliable “herding patterns” exhibited
by the participants in the market itself. People tend to get overly
optimistic at tops and overly pessimistic at bottoms. These
patterns are oft identified at TMTF as Fibonacci re-tracements or
pivots. In addition, we overlay Elliott Wave patterns whether
corrective or impulsive to help determine probabilities and the next
likely outcome.
More often than not, we are ahead of our peers in our Elliott Wave
forecasts and our counts tend to be more accurate than most. This
is because I use a big picture view, and I don’t rely entirely on
just the wave pattern itself. We add a few ingredients to our market
forecasting soup and this allows us to be consistently ahead of the
crowd with our predictions. Are we bragging a little bit?
You bet we are, and the reason we launched TMTF was to help
educate investors on the value of Elliott Wave theory and thinking
outside the box when looking at the markets. It’s time to
turn off CNBC and tune out the noise, and at TMTF we try to tune out
all the noise, turn down the volume, and provide some straightforward
probabilities and forecasts for our readers.
Perhaps you should join us, and if your not ready, please review our
free occasional reports by going to www.MarketTrendForecast.com and
signing up today!
August 11, 2010
Traders Talk
I was very active for a few days, now
I am paying for it. I think the the below Gann Chart may paint the best
picture, while the stock market stays balanced on a Gann line. If we
take out suggested support on the SPX, we may take quick move to our dance
line on the OEX at 485 again.
August 10, 2010
Traders Talk
Mr. Sam Kirtley
Gold Prepares to Make Yet Another All-Time High
Double
trouble, looks like the volatility indicator just gave another signal.
Sorry I have not commented on the GM IPO for the people, but I think it
is great idea! Everyone wants to own shares in a company, British
Columbia had some success when they gave five free shares of BCRIC.
May be an idea for the GM offering, could spark an economic boom if
people are happy. I just heard there may be another stimulus package.
That is what may take us to 1200 on the SPX,
but there may be a hangover after the party. The chart shows some of
the levels I mentioned before, breaks any of the levels may get us a
good move.
Science may prove angioplasty technique helpful in treating MS
We Are Search!
Zubee.com
Learning How to Profit From Theta When Trading SPX Options
J.W. Jones
As
discussed in the first article, “The Hidden Potential of Learning
How to Trade SPX and Gold Options” I pointed out that there are
several fundamental principles that must be mastered before profits can
be attained when trading options. Novice traders typically skip the
discussion about “The Greeks” and skim over volatility only
to watch their precious trading capital disappear.
As promised, this article and
future articles are going to discuss the Greeks as they relate to
options trading in a way that hopefully everyone reading this can
understand. While there are more than ten Greek symbols that directly
relate to option pricing, an option trader must be able to clearly
articulate and understand 4 of the ancient Greek symbols and one
English invention. (Vega is not a true Greek symbol-Look it up!)
The five core Greek symbols which are
critical in order to understand are as follows, in no particular order:
Delta, Theta, Vega, Gamma, & Rho. Most veteran option traders have
a sound understanding of Delta, Theta, Vega, & Gamma. Rho is not
nearly as well known, but anyone who has ever studied econometrics,
option pricing models, or has studied applied finance know all too well
the importance of Rho. For inquiring minds, Rho measures sensitivity to
current interest rates.
Today’s article is going
to focus on the Greek symbol Theta. By now many readers may wonder why
I continually capitalize the Greek symbols, and the reason is because
they are that critical. The technical definition of Theta derived
directly from Wikipedia when applied to options is as follows:
THETA - Θ, measures the sensitivity of the value of the derivative to the passage of time: the "time decay."
Time decay (Theta decay) is of
critical importance when an option trader is attempting to quantify
and/or mitigate risk. There are two parts factored into the price of an
option contract: extrinsic value (a major component of extrinsic value
is Theta; the other is implied volatility) and intrinsic value which
would be the amount of money a trader would gain if they exercised an
option right away. A great many authors who opine about options get
caught up using terminology like intrinsic and extrinsic value which
only serves to confuse most novice option traders even more. I refuse
to use those words in my writing as I find them to be cumbersome and
option trading can be made much more difficult than it needs to be.
Theta and time decay are
synonyms when discussing options. An easy way to remember their
congruence is that the word time starts with a “T” as does
Theta. If a trader owns calls or puts outside of any type of spread,
they are totally exposed to time decay (Theta) and as an option
contract gets closer to expiration, the time value of the contract
diminishes. This accompanied with failure to account for implied
volatility (to be discussed in the future) are the fundamental reasons
why so many people lose money when trading options.
Just as theta can be an option
trader’s worst enemy, it can also be used as a profit engine. If
an option trader sells an option contract to open the position, that
option trader is using theta as a method to profit or as a way to
reduce the cost of a spread. While this article will not spend a ton of
time discussing various option spread techniques, in the future we will
discuss them in detail. At this point, we are only attempting to
understand that Theta represents the time decay priced into an option.
It is also critical to understand that Theta (time decay) is not linear
in the time course of the life of an option and accelerates rapidly the
final two weeks before an option expires. The rapid time decay the
final two weeks before expiration presents a multitude of ways to drive
profitability, but it also can represent unparalleled risk. While this
article is just an introduction to Theta, the next article later this
week will continue the time decay discussion.
Since we are discussing Theta, I thought it would make sense to discuss
a trade I took last week which utilized Theta as the profit engine.
Recently a variety of underlying indices, stocks, and ETF’s have
options that expire weekly. Weekly expiration expedites Theta and gives
option traders additional vehicles to produce profits.
While most equity or futures traders
might shy away from a chart like this, an option trader has the unique
ability to place a high probability trade. I believed that the market
would stall around the SPX 1130 area so I looked for a trade which
would utilize the SPX weekly options. The SPX weeklies expire based on
the Friday SPX open. With the SPX trading around 1124, I put on a call
credit spread which used time decay as the primary profit engine.
The setup I used involved selling an 1150 SPX call and buying an 1175
SPX call, which is also known as a vertical credit spread. I received
$100 (1.00) for the 1150 SPX call and purchased the 1175 call for $20
(0.20). The $80 dollar profit represents the maximum gain per contract
sold. As an example, if I placed this trade utilizing five contracts
per side I would have a maximum gain of $400 dollars. The probability
of success at the time when I placed this trade was around 78% based on
a log normal distribution of the price of the underlying.
Immediately after placing the trade I
utilized a contingent stop order that would close my trade entirely if
the SPX reached the 1135.17 area. Essentially, my maximum loss not
including commissions was limited to around $60 dollars per contract
with a maximum gain of around $80 per contract assuming we did not get
a big gap open.
Essentially, if the SPX stayed below 1135.17 for two days and opened on
Friday below the 1150 level my trade would reach maximum profitability.
This is a trade I actually placed on Tuesday afternoon, however I
exited the position before the close on Thursday due to the impending
jobs report which was set to come out Friday morning. I was able to
collect over 60% of the premium sold per contract ($80) which came to
about $45-50 per side. At $1,000 dollars risked based on my stop level,
the trade would have produced a net gain of around $750 dollars in less
than 3 days.
Hopefully this basic example illustrates the potential profits options
can produce if they are traded appropriately with risk clearly defined
while having hard stops in place. This trade produced a nice profit,
however it was susceptible to a gap open, thus I maintained a
relatively small position to mitigate my overall risk profile. As
always, a trader must see potential risks from all angles and utilize
proper money management principles when determining how much capital to
risk. In closing, I will leave you with the insightful muse of famed
trader Jesse Livermore, “A loss never troubles me after I take
it.”
www.thegoldandoilguy.com/articles/learning-how-to-profit-from-theta-when-trading-spx-options
www.thegoldandoilguy.com
www.optionstradingsignals.com
August 9, 2010
Traders Talk
Chris Vermeulen
Volume by Price Reveals Key Support & Resistance Levels
How would you
feel if you knew there was a forty five minute procedure available for MS, that
would have an excellent chance of restoring your vision, or speech in
some manner? We still have to go to places like New York to get proper treatment for MS. It would definitely stop you from getting worse as well.
How angry would you be, or would you handle it with a smile like Martin
Dimitrov does? The Wall Street Journal is not helping our cause, and
should research some facts before publishing, anything to do with MS.
They are helping to keep the treatment for MS in the stone age. MS Societies have been born out of corruption in the medical community,
and have know since the 1800's that veins have played a big roll in MS.
All our medical care on both sides of the border has some corruption.
Neurologists have been caught with their pants down. This should not be happening! We should get
rid of MS Societies as soon possible, as they are a black eye on society. Thank you Ken! The anti-WSJ gif is only going to stay up for this weekend.
The market may continue to stay up as well. I would look at 1133 on the SPX as
an area where we may get a breakout from, and around 1103 for support.
Just a weekly GDX chart today for junior gold stock bulls.
"
How come insurance covers Viagra and not CCSVI, they are both vascular blood flow problems!"
Thank you Ken Torbert!
August 6, 2010
Traders Talk
I have been made aware of another tragic MS story
here in BC. Why are Neurologists being so stubborn? Just admit you have
all been wrong, and move on. You are only making our health care system
look less credible, by continuing to hold people with MS in their own
prisons. We are not some country that mistreats it's own citizens. I
know a lot of people would not mind though, if the USA would invade us,
just to liberate people with MS. This is very unjust on us. Martin's new Neurologist, his answer was to prescribe Aricept, a Alzheimer treatment for a vascular condition. You know our email if you wish to help him. Thank you.
Just a weekly GLD chart tonight for the gold bulls. Have a great weekend everyone, and I would still love to visit that plantation one day!
MS patient battles Victoria to receive new treatment
The Hidden Potential of Learning How to Trade SP500 & Gold Options
J.W. Jones
Market
technicians believe they operate in a world that few people truly
understand. It is as if they believe they are working in some sort of
secretive financial construct that only a few lucky souls away from
Wall Street can access. The truth is that technical analysis should
only be used as one metric to help a trader navigate financial markets.
There are a variety of research
methodologies which all shed light and offer clues where the market may
be heading. Market internals, the volatility index, Fed speak, and even
fundamental analysis can be helpful to traders. It would not make sense
to ignore market information that provides greater insight and
additional clues that can help give a trader an edge. After all, the
edge is what all traders seek. The sweet spot in trading is having a
trading system that gives you an edge and offers a variety of way to
quantify, mitigate, and define risk.
The same traders that only look to
use purely technical analysis in their trading also fail to recognize
other investment vehicles which might offer advantageous returns. The
best kept secrets are always kept in the open, right beneath the
public’s proverbial nose. People will travel the world in search
of secrets or to prove theories, but in many cases the Holy Grail is
lying right beneath their noses.
The greatest secret financial markets
offer are the unbelievable potential returns that options can offer.
Options offer a variety of ways to profit in a multitude of market
conditions. Options offer unique profit engines that are not available
or even possible when trading stocks or bonds. Most traders overlook
options or are simply unwilling to put in the time or effort to learn
how to trade them appropriately. In doing so, they are walking away
from huge opportunities.
Most novice traders are quick to
spurn options as they consistently lose money when trading them. The
most common reason novice option traders experience losses is that they
do not do their homework beforehand. New option traders fail to
recognize the importance of “The Greeks.” Option traders
not only have to be cognizant of the volatility index, but they have to
be proficient in the dynamic factors that impact option prices such as
implied volatility. In the future, my articles will be focused with the
intent to educate readers about “The Greeks” in a way that
is easy to read and understand.
Traders that utilize a trading system
or that look for low risk entries find themselves sitting idle when
market conditions are not favorable for their trading system or when
prudent entries have not presented themselves. The ability to trade
options gives a trader another investment vehicle that can offer
potential profits. In most situations, options can offer attractive
returns while taking significantly less risk than trading stocks,
ETF’s or bonds.
In order to illustrate a situation
where options can present a better risk versus reward, we need to look
no further than intraday market action in the S&P 500 on August
2nd. The market rallied from the previous close and was bumping up
against significant resistance. Traders could have been looking to get
long or short based on recent price action. The market had been
consolidating, and a significant move was likely coming.
Clearly the market was at a
crossroads and a breakout could be right around the corner, or the
market could test recent highs only to turn down to retest recent
support. Stock traders
have to make a decision about direction or sit on the sidelines and let
others do the heavy lifting. Option traders could put on positions that
have a directional bias, or they could utilize time decay (theta) as a
profit engine.
Through the use of spreads such as an
iron condor or a butterfly spread, option traders can actually put on a
position that has the ability to be profitable regardless of which
direction SPY goes. In order for a spread to work, SPY’s
price must stay within the confines of the spread which is also
determined by the specific option strike prices selected by the option
trader. Similar to the mechanism that drives asset pricing, the more
risk an option trader takes the greater their return. If a spread is
written that is extremely wide and thus less risky, potential returns
diminish.
Ultimately, this is a recent example
of how options can offer more than just leverage, but a totally
different methodology that can produce outsized profits. In the future,
we will dissect the various spreads and the profit engines that drive
them. However, before we begin detailed discussion of various option
strategies, option traders must have a sound understanding of various
volatility principles as well as the impact that the Greek’s have
in the world of options. In closing, I will leave you with the muse of
George Orwell, “To see what is in front of one's nose requires a
constant struggle.”
If you would like to continue learning about the hidden potential options trading can provide please join my FREE Newsletter: www.OptionsTradingSignals.com
J.W. Jones is an independent
options trader using multiple forms of analysis to guide his option
trading strategies. Jones has an extensive background in portfolio
analysis and analytics as well as risk analysis. J.W. strives to reach
traders that are missing opportunities trading options and commits to
writing content which is not only educational, but entertaining as
well. Regular readers will develop the knowledge and skills to trade
options competently over time. Jones focuses on writing spreads in
situations where risk is clearly defined and high potential returns can
be realized.
Chris Vermeulen
August 5, 2010
Traders Talk
David Banister
Chris Vermeulen
Gold and Oil Shine Compared to the SP500
I think we need to take a serious look at how much privacy there really is in Canada. This raises serious issues when Revenue Canada workers are looking at our profiles for personal gain. We also need to take a good look at Shaw, and Telus Internet services as well.
How many of their people are looking at what people are viewing on their computers,
I think a lot of people would mind, especially if the information is
used in an unscrupulous way, or in any manner. I believe stronger
privacy laws are needed here to protect all of us.
I hope Martin is able to get some protection for himself today, he is
meeting with another Neurologist today. I hope he gets referred for
CCSVI here. He is having a difificult time driving his wheelchair
now to, as he now only has one hand left to control it, that works sometimes. If you see us
on the streets in Vancouver, please remember he is legally blind as well.
I know he would not mind if he found a generous benefactor who pay to
have CCSVI done in the USA. San Diego, and Seattle look to be the
closest places to go, if anyone wants to send him there. The cost is
around 7500 dollars to have CCSVI in the USA from what I have heard.
Then the time he may take to recover in a hospital. Hopefully I
will have good news tomorrow, but you may email me regarding Martin at, oextrader@whipmail.com. Thank you.
The stock market sure looks interesting
here, we may be setting up for a strong move up on Friday. The volatility
indicator just gave a signal to. I am posting a weekly SPX chart
tonight so traders may see why 1200 may be a possibility.
August 4, 2010
Traders Talk
David Banister
August 3rd- Was that the Bottom at 1011?
It looks like Alberta is joining the
celebration, that a lot of people already know about on Facebook. We
all know it is the cure, I hope we all see how the system has failed
us, and we can make it better. Remember even some Doctors here, who
have MS, traveled to the USA to get CCSVI .
The market may still
get better from here to, if the Russell closes here by the end of the
week, the weekly will be back on a buy.
August 3, 2010
Traders Talk
Toby Connor
Gold Scents Weekend Report - Stocks, US Dollar, Gold and Miners
Are we going to get a pause this
week? One weekly OEX cycle may bottom, before we may continue to head higher. I
suspect we will see 1200 on the SPX before we may get a peak. I am
going to post a simple momentum chart I look at, we may just be
starting a strong move up.
August 2, 2010
Traders Talk
Chris Vermeulen
How to Find Low Risk SP500, Gold & Oil ETF Setups
CCSVI looks to be batting a 1000 now!
We just hit one way out of the park, Barb Farrell is no longer on a feeding
tube, and looks to be getting a lot better. I do not see how anyone
could argue that CCSVI does not help cure MS. It will take some time
for MS societies to be disbanded, and there should be some kind of
acknowledgment from the government, as well as apologies, on how they
became corrupted by drug companies, in to mainly looking for a
treatments that involved the use of expensive drugs. I hope this is the
last Ponzi type of drug scheme that is going. I have a contact person in Seattle to, if anyone is looking to have this done. We now just have to find a way
of bringing this cancer treatment to people.
The falling US dollar looks to be really helping people, and may still have a long way to fall. We may have 40 SPX points on the upside, keeping in mind my last commentary. There are some interesting charts on this stock market page.
July 30, 2010
Traders Talk
645 almost held on the Russell. The US dollar
helped, as long as the US dollar keeps falling, we may not soon
test our dance line at 482. That may be the risk for the stock market, if 645
does not keep holding. Have a great weekend everyone!
July 29, 2010
Traders Talk
David Banister
Jul 29th- Is Market Topping Again?
Chris Vermeulen
Financials, Oil & Gold on the Move
We could change Canada right now, and it would be profound. The Liberal party, I believe should try and get Premier Brad Wall to join them! He is another hero in the making, in the company of Kirsty Duncan, and
Dr Zamboni. I believe every person with MS, and their families
would back Premier Brad Wall, if he ran for Prime Minister of Canada. We
are so grateful, thank you.
I
am exhausted right now, and very happy. All I will say is we may still
run up 20 SPX points to the upside before we may roll over, but 645 may
hold us on the Russell.
July 28, 2010
Traders Talk
Toby Connor
Hoping for a Break
The weekly OEX looks to be wanting to
turn up, but the Russell may still be struggling. It is possible we may
get a short around the highs we just saw, but we may need the Russell
to take out 645, to see possible further downside, otherwise may get a
trading range going in to the fall.
July 27, 2010
Traders Talk
510,
is that a good number on the OEX? We may get a peak there, as Bloggers may be getting too bullish. We may be lucky to get another 15 SPX points here. I do not like that two weekly OEX cycles may both be turning down soon. If we are going to go higher then 510 on the OEX, I would look for SOX to move a lot higher here, with the oil stocks. John Townsend, may be right, with the sentiment numbers he explored, but we may need our cycles to get out of the way first.
~
July 26, 2010
Traders Talk
David Banister
Should the Bulls expect a massive hangover after this party next week?
Chris Vermeulen
How To Be Positioned for SP500, Gold & Oil
John Townsend
SP-500, GLD and GDX - Sentiment Trumps Everything
One system I look at suggests 40 more
SPX points if it is going to be right. It would be good if the market
could get well above 500 on the OEX. MAJ looks strong to. Are oil
stock, and technology stocks going to carry the market here, will the weekly charts turn back up this week?
~
July 23, 2010
Traders Talk
50 ways to leave, or is that now 500?
We may have a real battle at this level. I would not hope for a a lot
of progress just above 500, but we may get at least 50 more SPX points. Have a great weekend everyone!
July 22, 2010
Traders Talk
Chris Vermeulen
Back 2 Back Reversals for the Stock Market
John Townsend
Time to Rally: SP-500 and GLD
Market still looks alright with MAJ looking good, TRIX
on a buy, and once again we are right on our dance line. This could be
a long slow dance still. I would keep thinking of that 465 number to
stay bullish, with the market needing to take out the highs from
yesterday to move higher. The US Dollar may be key here, if it is continue to move down.
Traders Talk
David Banister
Scaling into Trades for Profits
I have to say I was very impressed with the live Doppler
ultra sound I saw yesterday at the False Creek Health Care Centre, that was given to someone who has MS. A
generous person paid for it, as doctors here are not allowed to order
one, if a person has MS. Looks like the vascular community is moving
forward with new technology, and some Neurologists are staying struck
in the stone age, continuing to use us as testers for drugs that do not
work.
Is the market going to work here? If we take out the tendline just above here on the SPX, we may have a small breakout happening.
July 20, 2010
Traders Talk
Toby Connor
Carpe Aurum (Seize the Gold)
I think the stock market wants to dance all night long,
and she is beautiful. I have a number that may not get tested, one Gann
line comes in around 465 on the OEX. I believe bulls to be safe above
that number. Right now is a perfect time to visit Vancouver, we are
having great weather.
July 19, 2010
Traders Talk
This weeks Gold, and Oil
Report
http://www.thegoldandoilguy.com/articles/gold-oil-and-sp500-trading-patterns/
When is this going to stop?
Neurologists are continuing to use us as guinea pigs. 58 Tysabri
deaths now
from them trying to treat a disease their way, and there
was absolutely no proof that MS was ever a neurological disease,
in fact
there was hints of MS being a vascular problem, over 100 years ago.
Please
stop this insanity, some MS doctors are only disgracing themselves
further,
with each unnecessary death of a person. MS societies need to be
legislated out of existence, and society needs to right this wrong,
that is still hurting us.
I have made a decision to longer support any business that supports any
MS society, if I am able to. Other people have as well, and this
is spreading on Facebook. San Diego CCSVI.
I have no call to make on the maket today. Weird that VIX only moved up a little, and we are right back on our dance line again.
July 16, 2010
Traders Talk
Some changes, I am no longer going to
post the DOW system. Now this one of those businesses where one can post
a sign on the door, "gone fishing today". We need to break out
here, or one may want to put on a short. This is not a easy market to
trade, what is why I recommended penny gold stocks as possibly good
investments right now. My Russell system stayed short to. Have a great weekend everyone! And thank god we
have the oil stopped, I can hear Granny cheering now.
July 15, 2010
Beach Boys - California Dreaming
David Banister
http://www.activetradingpartners.com/articles/2010/07/jul-14-preparing-for-a-monsoon-drop/
Mid week Gold, and Oil
Report.
http://www.thegoldandoilguy.com/articles/mid-week-us-dollar-oil-gold-and-sp500/
The world is getting exciting to me
again. It looks like one of the biggest injustice's ever put on people,
looks to be, being corrected. I am putting that very nicely. It will
be one for the history books. CCSVI is now available in San Diego
California. I have heard you can get in other states as well, thank you.
The stock market may have some more thanking on the upside to, I believe. I would not hope for more than a eight point pullback on RUT. NYA just broke above the 50 day, and we have the volatility indicator giving a signal, with TRIX
still on a sell. I am posting a weekly chart so traders may understand why
I say it is oversold, with one indicator on a sell. I do look at some
other charts I do not post, so I do believe there may be some good
upside still. Are we going to get that oil gusher capped soon, and we
bring back Beverly Hillbillies,
Gulf coast style? I still love hearing Granny talk. We need to be
serious, and laugh about what has happened. I think it is how we may go
forward, if we get it plugged soon, may be all the market needs.
July 14, 2010
Traders Talk
490, should be our line in the sand from here on the OEX,
we are still oversold on some weekly charts. We look to be headed
higher still. We could get some more pullbacks, but as long as we go
above 490 we should be alright. We may get some more downside pressure
after the next two weeks, as both our weekly OEX cycles look to be
turning down by then.
July 13, 2010
Toby Connor
Bears Beware II
Never short a dull market? Look at the trendline on SOXX, mid 360. We could get there soon.
July 12, 2010
David Bowie - Let's Dance
John Townsend
Can the Stock Market Keep Rising? Gold, too?
This weeks Gold, and Oil Report
http://www.futurestradingsignals.com/trading-education/is-gold-about-to-rocket-and-sp500-tank-video/
We look to be dancing again. I have also updated the OIX,
chart just below. The trendline was touched on Friday. I think a short
trade may work out, if we get any rally to short today. Our SPX cycle chart may be suggesting a top on Monday. We clould just consolditaton if we get a peak today, but we do have the weekly Russell still on a sell.
Love is wonderful, one of that best parts about love is honesty.
July 9, 2010
Already Gone by
The Eagles- live 1974
Woo Hoo! Oh where is the market going, will there ever be great bands
again? I think the answer to the last question is a yes. I think we need
to be careful at 492 - 493 on the OEX. A push through there, we may see
consolidation before we may continue to head higher to possibly our
target on the OIX. I am not suggesting a short trade here, but you could do good on the SPX, if we hit 600 on the OIX. You may not want to hold the short for too long.
July 8, 2010
4 Non Blondes - What's Up
John Townsend
SP-500, GLD and GDX - More Down or Now Up
Sam Kirtley
US Stocks: Down, Down, Deeper and Down
Gold, Black Gold and Equities Technical Charts
It’s been a short but exciting week so far. Investors and traders
are have been scratching their heads the past few days as stocks
continued to bounce around giving mixed signals. But today was a clear
day of short covering from this much oversold market condition.
Below are a few charts showing what I’m currently thinking will unfold in the near future.
Gold Futures Trading – 2 Hour Chart
In the past couple weeks we sold our position in gold at $1255-60 area
in anticipation for this sharp drop. The market was kind enough to show
us though its price and volume action that a nasty drop was just around
the corner. Currently we are in cash waiting for the down trend
momentum to stall and reverse before taking another long position in
gold. I feel it could still drop one more time, but the chart is giving
mixed signals when reviewing the short term charts.
Crude Oil Futures – Daily Trading Chart
Crude has seen a shift in the trend over the past 2-3 months. Selling
volume over took the buyers and are now pulling prices down into bear
flag pattern which means lower prices still.
SP500 Futures – 60 Minute Trading Chart
SP500 and other major indexes have been selling down the past couple
weeks. Tuesday we saw the market gap up very big then sell off. But
that surge higher was an early warning sign that the selling momentum
was slowing for the time being.
1075 on the SP500 is a key resistance level and a point which many
traders will be taking profits and trying to short the market. That
will create a lot of selling pressure at that level and only time will
tell if we can clear it.
Mid-Week Commodity and Index Trading Conclusion:
It looks as though we are getting the over due bounce in the stock
market everyone has been anticipating. The large rally today
(Wednesday) has covered most of the ground as it has moved up over 3%
today. Overhead resistance looks to be only 2% away before sellers step
back in and try to pull the market back down.
If the market goes up for another couple days then gold should have a
small pullback to test support. When the equities market starts to drop
again money should flow back into gold and send it higher as the safe
haven of choice.
Crude oil broke down late last week and this week it bounced back up to
retest the breakdown level. This is common and once complete oil should
continue to drop.
The market is still in a strong down trend on an intermediate basis so
be sure to lock in profits once your investments reach key resistance
levels. If you don’t the market has a way of taking back those
gains very quickly in the current market condition.
To get my detailed trading signals signup to my trading services:
ETF & Futures Swing Trading – www.TheGoldAndOilGuy.com
ETF & Futures Active Trading & Education – www.FuturesTradingSignals.com
Chris Vermeulen
OIX
to time the market? If the higher trendline comes in to play, it may be
suggesting around 600. We may have problems then, if we continue to
rally. Will VIX get back to twenty?
July 7, 2010
Sky - Love Song
So far so good, our Gann line held.
As long as we hold it, we should see some more upside when we may take
out some resitance here.
July 6, 2010
Forum on Health
Toby Connor
Bears Should Beware
Hope everyone is having nice
holidays in Canada, and the USA. We have a market that is being held up
at the moment by steps Mr. Bernake has taken, and I will call it a "Scotch tape Market" right now. Another great American invention, Richard Gurley Drew.
I have never see it like this. I think some investors still have
their pocket books closed. We are sitting right on a Gann line, and
TRIX is still hanging on to the buy signal, if you dare to play the
upside here. I have no vision as to how the gap at 933 on the SPX may get filled,
if even it is to happen in the coming years. We could continue to get
a stealth bull market for ten more years.
You are also now able to get the MS cure in Egypt as well.
July 2, 2010
30
Seconds to Mars - Kings & Queens
I am going to ask that all the Ministers of health across Canada watch the movie Awakenings. That is how some people with MS are being condemned now. Steve Garvie
with no stents, was one of the first to be released from that prison.
He has been reporting to that his body has been healing itself to, so
that his walking is getting back to completely normal. I have been posting other cases here as well, with people
throwing out their handicapped parking permits, and canes. Are we
valuing corporate welfare above people? Does Canada really need all the
corporate sponsorship from MS drug companies? Over forty seven other
countries are now offering this to their people, even the woman in
Ontario with the feeding tube showed an immediate improvement, and
added this, "Placebo my eye". Please watch the movie Awakenings, it is incredulous that we do not offer this in Canada, and the USA. We do not need young people like Martin, and others, to be trapped in (some blind right now) MS prisons any longer.
How much longer for the market? We did reach one target that I had posted for Russell. If we rally from here, it keeps a possible market crash in play in the fall.
A
COMMENT FROM MACLLEANS MAGAZINE
I find it hard to believe
that medical professionals continue to
withhold this treatment from persons with MS. The neuros who are
'protecting their turf' (and the funding that comes along with it) at
the expense of all MS patients should have their medical licenses
revoked - they are a disgrace to the medical profession. They, along
with the MS Society, are acting like bullies. What they are doing to
persons with MS is not only unconscionable, but discriminatory, perhaps
even illegal. Our government needs to step in and stop this insanity and
ensure that all persons with MS in Canada be able to be tested and
treated in Canada under the umbrella of our health care system
immediately. 47 other countries are standing up for the rights of their
citizens - Canada should be among them. In fact, it's disturbing that
Canada isn't leading the way for the thousands of Canadians inflicted
with this horrible disease.
July 1, 2010
CCSVI
PRE walkj/ump and 15 days POST walk/jump
Mid week Gold, and Oil
Report.
http://www.thegoldandoilguy.com/articles/market-meltdown-metal-missiles-%E2%80%93-spx-gold-silver-oil/
A new month, and the market is not
looking new here either. We could see 933 on the SPX before we may even
start to rally. Like I said I do not like any setups here at all. The
below chart may just offer more of a guide.
