August 22nd: Ed’s Daily Notes and Traders Corner   35 comments

The S&P 500 levels to watch today:

UPSIDE: 1994 (August 21st’s high and the all-time high), and 2001 (top of the Bollinger Bands).
LAST CLOSE: 1992.
DOWNSIDE: 1991 (July’s high), 1988 (August 20th’s high), 1986 (August 21st’s low), 1982 (August 19th’s high), 1977 (August 20th’s low), 1971-1972 (2 data points), 1968 (June’s high), 1964 (August 15th’s high), 1959 (50 day moving average), 1958 (August 18th’s low), 1955 (August 14th’s high), 1951 (20 day moving average), 1947-1948 (2 data points), 1944 (August 11th’s high), 1941 (August 15th’s low), 1927-1939 (July’s low and 9 data points), 1924 (May’s high), 1923 (100 day moving average), 1921 (August 4th’s low), 1916 (August 1st’s low), 1909-1913 (3 data points), 1904 (August 7th’s low), and 1902 (bottom of the Bollinger Bands).

S&P 500 Daily Momentum: Bullish
S&P 500 Daily Overbought/oversold: Neutral (leaning overbought)
S&P 500 Weekly Momentum: Bearish (weakening)
S&P 500 Weekly Overbought/oversold: Neutral (leaning overbought)
S&P 500 Futures: Slightly negative, almost neutral
Overall: With Fed Chair Janet Yellen’s speech today at 10 am EST, the markets are basically on the edge of their seats. But the S&P 500 has already had a big run-up this week, up 1.91%. What can Yellen say to push markets up further? Other than “QE forever!”, there isn’t much that she hasn’t already said. In addition, the technicals are getting dangerously close to overbought levels. One other thing: Have you noticed the Nasdaq hasn’t been participating as much in this week’s run-up? It is only up 1.5%. The Russell 2000, the small cap index, is only up 1.6%. On the other hand, the Dow Jones Industrial Average is up 2.26%. Overall, this tells me the big caps are moving up more than the small caps. A move into big caps is not a positive market sign folks. Be careful out there.

And now for the news…

Bloomberg: India to Unveil First Warship to Deter Chinese Submarines

India will unveil its first home-built anti-submarine warship tomorrow in a move to deter China from conducting underwater patrols near its shores.

Defense Minister Arun Jaitley will commission the 3,300-ton INS Kamorta at the southeastern Vishakapatnam port. The move comes a week after Prime Minister Narendra Modi introduced the largest indigenously built guided-missile destroyer and vowed to bolster the country’s defenses so “no one dares to cast an evil glance at India.”

India is playing catch-up to China, which built 20 such warships in the past two years and sent a nuclear submarine to the Indian Ocean in December for a two-month anti-piracy patrol. The waters are home to shipping lanes carrying about 80 percent of the world’s seaborne oil, mostly headed to China and Japan.

Anybody get the feeling World War III might take place in Asia instead of Europe?

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35 responses to “August 22nd: Ed’s Daily Notes and Traders Corner

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  1. Marshall, caught a quick headline about a possible I6 delay due to screen issues. Did you see anything? Have anything to do with GTAT? Didn’t catch anything more than the headline, so I’m not sure what they meant by screen issue.

  2. Bought PLUG 8-18 @ 5.99 Sold 8-22 5.50 calls @ .51 expecting a pullback. Bought the calls back for .25 104% profit on the options. Reduced my basis to 5.73. Will probably sell next week 6.00. I’ll wait a bit to see how the market responds to Yellen. This is a very small position.

  3. Bought GTAT 8-18 @ 17.93. Sold 8-22 18 calls @ .49. Bought back for .21 133% profit on the options. Reduced my basis on this position to 17.72. Nice bounce today. Not sure if I’ll sell calls or hold.

  4. S&P is overbought on the daily chart. Still lots of room to move higher on weekly. I would expect to see a leveling with small pullbacks for now.

  5. I just sold the CAMT I bought the other day at 4.28 for a 4.5% gain. I still like the stock longer term and may buy back on a pullback n

  6. Marshall what do you think about the NADL deal?

    • Owning anything in Russia right now makes me nervous. Hard to judge with the facts we are given whether it is a good deal. It does look like NADL has secured work from rosneft for foreseeable future.

  7. I sold some UVXY 8-29 25 calls for 1.40. Trying to work my basis down on half of what’s left of my uvxy. My basis is now right at 30 so I have a long way to go.

    • Jeff, I’m still holding two positions that are not covered. Daily chart looks a little better. Market looks overbought so I’m going to hold for now to see if we get a market pullback. If not, I’ll sell longer term calls. Premiums are still good. I’m not adding anymore until I see a change from this upward trend. Either flat or down will work.

    • I’m with you, I do not intend to hold these until 8-29. If they dip under $1.00 I will buy to close and restart the process.

      • bought em back at .95 cost was 1.40 so 47% gain. Only need about 12 more of these and my basis will be down around market.

  8. Sold GTAT week 5 18.50 calls for .46. Reduced basis on this position to 17.26. Still have some not covered.

  9. Having a very nice day. Both GPS and BRCD reported strong earnings last night and they are both trading up over 4.5%.

  10. Ed, Marshall or anybody. If rates do start to go up next year what sectors will be best to be in at that time? I know Marshall has mentioned insurance stocks will benefit and I would imagine oil/mining stocks? Is tech a good area to be in also?

    • Bobb – I am not an expert in this area. I hear on TV a lot that regional banks really tend to benefit, I guess they may have loans indexed to the rate or perhaps new loans are at higher rates. A direct play is TBT, which shorts t bills. It seems like the most obvious investment of the decade as the risk is almost entirely asymmetrical. Rates can not go down much more, but they can go up a lot.

    • bobb, I think you have to be careful in trying to make investment decisions on how you think the market, industries, or individual stocks will react to a specific event. Often times the reaction is exactly the opposite of what you would expect. If you are an investor, I would watch what Marshall does and perform your due diligence on his picks. I would say his track record is hard to beat.

      • hmm I’ve heard that before 🙂 It’s good advice. Now the hardest lesson trust the chart. Looking at buying calls and selling off some GTAT. dag nab-it lost .20 and chart sank.

    • Completely agree on Marshall’s great stock picks

      • You guys are all so nice! I love all of you! (Actually, for a college course I am taking, today is my “day of compassion”, so I am reflecting on how I treat people and especially those in need or who have suffered misfortune. I am also trying to be more compassionate to the environment and animals. So I am going vegetarian today and rode my bike to work).

  11. Sold week 5 PLUG 6’s for .10. Further reducing my basis from 5.99 to 5.63

  12. I added to my TLM at the start of the week at 10.47. It is up strongly today on heavy volume to 10.88. It also seems to me that there is a lot of option activity on the October 11s.

  13. What got into VJET this morning?

    • Don’t know. All of the 3ddd stocks I checked are doing well. Putting FEYE back on the watch list. Haven’t played this one since it topped out in the upper 30’s. Not ready to play but chart is starting to look good. Looking for some confirmation first.

  14. Not sure if anyone is still in NSR with me. This was a stock I bought in May that was under in pressure at end of May regarding a large FTC contract. They have sky rocketed almost 10% this afternoon. Not sure what the news is, but it is a major pop.

  15. Looks like I will be called out on GTAT. Bought about a month ago at 14.99. Sold calls twice at 17 strike. Roughly 16 percent gain! Thanks to everyone who has posted advice on options. I have learned a lot. The last 15 months or so I have entered 9 option plays, 7 have been profitable. Small losses on the other 2.
    I have a question for those who might be knowledgeable on this. I can’t trade during the daytime. In the shop I work at, we have a couple of computers however I would not dare use one of those to log onto my account. Therefore, I always enter limit orders after hours. (Today I have the afternoon off!)
    After hours limit orders have their drawbacks and there have been times I wish I could have traded during the day. I don’t have a smart phone nor do I really want one. (small screen) Question– Would it be risky to use my Windows tablet to log on to the unsecured guest wifi at work and access my brokerage account?

    • Nice trading Robert! I’d suggest buy a smart phone, I did.

    • Robert, not sure about your technical question. Instead of using the after hours limited orders you could enter a good til cancelled sale order at the time you purchase if you have a price target. Or, a gtc limit price that you are willing to pay. I have entered gtc sell orders when I’m going to be out of touch for a few days. There are draw backs to doing this but sometimes you may not have a choice. Glad to see another person using covered calls.

  16. I sold 1 of my GTAT positions. Bought 8/15 @17.15 sold 18.04 5.6%
    I bought my first covered call for aug29 @18.5 .35 reducing my cost from 15.77 to 15.42. If I’m called out profit would be 19.92%. I bought the shares on 8/11.
    I have 1 other position in my IRA and I’ll wait on cc till next week.
    Buying this cc today @ 18.50 strike did I limit upside gains if the stock moves over 18.50 next week?
    Man last month I quit drinking. This month I’m putting this knowledge to use, thanks folks 🙂 7.77% for the week, at least it ain’t 6’s 🙂

    • Congratulations on the profit. I assume you meant you sold covered calls not bought. Unless you buy back your calls, you did limit yourself to the 18.50 sale price if at option expiration the stock is over 18.50. Lost opportunity is one of the downsides to using covered calls. That is why covered calls work best in flat or down markets.

  17. Thanks for the ideas. Still holding a call option on TNA I bought recently. Looking for TNA to trend closer to 80 next week before I unload and may just enter a gtc order.

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