Welcome to the latest edition of “Mastering the Markets,” your go-to weekly blog for all things related to options and futures trading. At SeekingOptions, we are dedicated to helping our members become disciplined traders with a strong focus on risk management. In this post, we’ll dive into the latest market trends, share expert tips, and provide actionable strategies to enhance your trading game. Let’s get started! #TradingTips #RiskManagement
Market Recap: The Week That Was
This week saw significant movements in both the options and futures markets. Here’s a quick recap:
Options Market: The options market experienced heightened volatility due to geopolitical tensions and economic data releases. Traders saw increased premiums on both calls and puts, making it a lucrative week for those who played their cards right. #OptionsTrading
Futures Market: The futures market was equally dynamic, with commodities like gold and crude oil showing significant price swings. The S&P 500 futures also saw a roller-coaster ride, reflecting the broader market sentiment. #Futures
Expert Tips: Staying Disciplined in Volatile Markets
Volatility can be both an opportunity and a risk. Here are some expert tips to help you stay disciplined:
Stick to Your Trading Plan: It’s easy to get swayed by market movements, but sticking to your pre-defined trading plan is crucial. This includes setting entry and exit points, stop-loss levels, and position sizes. #Discipline
Use Stop-Loss Orders: Always use stop-loss orders to protect your capital. This ensures that you exit a losing trade before it can do significant damage to your portfolio. #RiskManagement
Diversify Your Portfolio: Don’t put all your eggs in one basket. Diversifying your trades across different assets can help mitigate risk. #Diversification
Strategy Spotlight: The Iron Condor
One of the most popular strategies among options traders is the Iron Condor. Here’s a quick overview:
What is it?: The Iron Condor is a neutral strategy that involves selling an out-of-the-money call and put, while simultaneously buying a further out-of-the-money call and put.
Why use it?: This strategy allows you to profit from low volatility, as it benefits from the premiums collected from selling the options.
Risk Management: The maximum loss is limited to the difference between the strike prices of the calls or puts, minus the net premium received. #IronCondor #OptionsStrategy
Risk Management: The Cornerstone of Successful Trading
At SeekingOptions, we believe that risk management is the cornerstone of successful trading. Here are some key principles to keep in mind:
Position Sizing: Never risk more than a small percentage of your trading capital on a single trade. This helps in managing losses and preserving capital for future opportunities. #PositionSizing
Leverage Wisely: While leverage can amplify gains, it can also magnify losses. Use leverage cautiously and understand the risks involved. #Leverage
Continuous Learning: The markets are constantly evolving, and so should your trading strategies. Stay updated with the latest trends, tools, and techniques to stay ahead of the curve. #ContinuousLearning
Tip of the Day
“Always Review Your Trades”: At the end of each trading day, take some time to review your trades. Analyze what went well and what didn’t. This practice helps in identifying patterns, refining strategies, and improving your decision-making process. Remember, every trade is a learning opportunity. #TradingTip #DailyReview
Conclusion
Thank you for joining us in this week’s edition of “Mastering the Markets.” We hope these insights and tips help you navigate the complex world of options and futures trading with greater confidence and discipline. Stay tuned for more weekly updates, and don’t forget to follow us on Twitter for real-time tips and market analysis. #TradingTips #RiskManagement #OptionsTrading #Futures
Happy Trading!
Feel free to share your thoughts and experiences in the comments below. Let’s build a community of disciplined and successful traders together! #TradingCommunity #SeekingOptions
Follow us on Twitter:@SeekingOptions for more updates and insights. #FollowUs #TradingInsights
SeekingOptions.com its partners and/or 3rd party affiliates are in open entry/closing positions in all of the above stocks, options, or other forms of equities. The trades provided in the above daily/weekly watchlist are simulations based on SeekingOptions oscillators strictly for educational purposes only, and not to solicit any stock , option or other form of equity. Under Section 202(a)(11)(A)-(E) of the Advisers Act this information is not considered investment or portfolio advisement from an authorized broker registered by the S.EC. (Securities Exchange Committee) and is limited to the scope of education in the form of market commentary through simulated trades via SeekingOptions.com indicators, and other educational tools.
U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
Use of any of this information is entirely at your own risk, for which SeekingOptions.com will not be liable. Neither we nor any third parties provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or suitability of the information and content found or offered in the material for any particular purpose. You acknowledge that such information and materials may contain inaccuracies or errors and we expressly exclude liability for any such inaccuracies or errors to the fullest extent permitted by law. All information exists for nothing other than entertainment and general educational purposes. We are not registered trading advisors. SeekingOptions.com is not a registered investment Advisor or Broker/Dealer. TRADE AT YOUR OWN RISK
The markets posted solid gains to start the week off yesterday. While they closed off of their highs, it was a great continuation of the rally that began late last week and extended into this week, we are currently looking at the Elliote Wave Counts that we described in the following Video
Last week’s impressive employment numbers sent stocks soaring on Friday. And Apple’s continued rally on better than expected earnings and word that Warren Buffett bet heavily on Apple shares helped ignite a tech rally, we still think $AAPL has higher prices, look for today’s video will be sent out shortly. We think $AAPL could see prices beyond 220 dollars
Are we getting close to end the three month long correction in the stock market, if so we could be setup to break out of the wedge, we are trading it mechanically. On $SPX right now we completed 4/5 and right now we looking for wave 5 around 2684-2693. For another entry setup to get us to 2710, which would still give us another entry for higher prices, again wait for the the updated video and charts..
We took $ANET long positions and we have been trailing our longs
“Probability is not a mere computation of odds on the dice or more complicated variants; it is the acceptance of the lack of certainty in our knowledge and the development of methods for dealing with our ignorance.” “The consequences are not trivial: It means that rational thinking has little, very little, to do with risk avoidance. Much of what rational thinking seems to do is rationalize one’s actions by fitting some logic to them.”
SeekingOptions.com its partners and/or 3rd party affiliates are in open entry/closing positions in all of the above stocks, options, or other forms of equities. The trades provided in the above daily/weekly watchlist are simulations based on SeekingOptions oscillators strictly for educational purposes only, and not to solicit any stock , option or other form of equity. Under Section 202(a)(11)(A)-(E) of the Advisers Act this information is not considered investment or portfolio advisement from an authorized broker registered by the S.EC. (Securities Exchange Committee) and is limited to the scope of education in the form of market commentary through simulated trades via SeekingOptions.com indicators, and other educational tools.
U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
Use of any of this information is entirely at your own risk, for which SeekingOptions.com will not be liable. Neither we nor any third parties provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or suitability of the information and content found or offered in the material for any particular purpose. You acknowledge that such information and materials may contain inaccuracies or errors and we expressly exclude liability for any such inaccuracies or errors to the fullest extent permitted by law. All information exists for nothing other than entertainment and general educational purposes. We are not registered trading advisors. SeekingOptions.com is not a registered investment Advisor or Broker/Dealer. TRADE AT YOUR OWN RISK
Initially we will degrade the targets of all our leaders and ETFs from 2.618 to 1.618 in their sub-divisions that we do regularly in our live trading rooms.
Second, we will slowly work on underweight our leaders and we will move capital tactically to $SPX and its leveraged ETFs, limiting purchases from now on only if 2400 area is seen or if some parameters are met on the upside, like taking 2719 resistance in something more than 3 waves up. Most importantly, we should cut exposure on Indexes to only 20-30% of our portfolios once we arrive to the 2950 area and we must have cut most of our non essential longs.
Options: Much more importantly, we will limit option trading on companies; we should only trade options on $SPX/$IWM and $QQQ, trading options on companies from now on should be limited to when we are looking for 1% and 1.618 retraces, you have to adapt and limit the way you make money.
If you want to trade options, make sure you are pointing your target at secure 1% and 1.618 retraces, prepare for some companies to get to exuberant levels, but be aware something that goes up 10% today might/will be down 20% tomorrow, you will lose more money than what you intend to make by following something that goes up only by going up.
We will cut our target for the market to 3100 from 3200 and we should only go after the 3,000 level with limited capital, by the time market hits 2950 our only positions should be on indexes $SPX/$IWM/$QQQ.
Now, assuming 2950 will be seen before 2191, some parameters should be met, starting with the fact that the market should not break under 2373 area.
First approach, under 2587 we continue considering that 2420/2375 are targets, 2327 represents .764 below the standard 1%, this is our primary approach, while we think pullback can go below 2420, but we don’t think it will exceed 2327; if standard pullback is playing out. Traders should consider shorts for as long as market breaks and stay under 2587, and continue shorting when $SPX breaks 2506. Round number for this first approach is 2373.9.
Second approach is a confirmation of first approach, below 2587 market might or might not find support at 2447, acceleration under 2506.3 only confirms 2447 is solid target. Acceleration down under 2447 only confirms our number at 2373 is secure.
Third approach, as shown in chart below, only points to 2422, implying extensions to 2373 might be short lived.
“A VIX future effectively serves as a means reversion indicator in that it tells us what the market expects as a mean”- Adam Warner
Conclusion:
Some new rules have been set, bears are right shorting the market, below 2587 we confirm 2506, below 2506 we confirm 2447, below 2447 we confirm 2373. Everything should be slowly under weighted, except for the indexes, where we can accumulate tactical positions. For example, if $SPX 2719 is taken and $SPX holds above 2687.5 on pullbacks, we can tactically go for 2823. By concentrating our energies on $SPX/$IWM/$QQQ we will avoid the risk of being too spread out.
Rules
Impulsive Waves always divide into 5 waves: Waves 1,2,3,4,& 5; followed by a corrective wave, typically A, B & C.
The waves that are numbered (1,2,3,4,5) are in the direction of the Trend.
The waves that are Lettered (A, B, C ) are against the Trend.
Structure = 5-3-5-3-5 (21) followed by 5-3-5 (13)
Wave 1 could divide into an impulsive 5 wave or a Leading Diagonal.
Wave 3 is always an Impulsive 5 wave and is never the shortest wave.
Waves 5 & C are always 5 waves but it could be an Ending Diagonal.
Wave 2, 4 and B always subdivide in 3 wave corrections.
Wave 2 Never moves beyond origin of Wave 1.
Wave 3 must go beyond Wave 1.
Wave 4 never moves into wave 1 range.
Wave A can be a three wave structure or Leading Diagonal.
Wave 5 often goes beyond Wave 3, if not it is called “Truncation”.
The Chart shows a bull Market. For a Bear Market the chart can be flipped and all the rules remain the same.
The same pattern can be viewed in all time frames: Thick Charts, 1 min, 2 min, 3 min, 5 min, 10 min, 15 min, 30 min, 1 h, 4h, Daily, Weekly, Monthly Charts etc…
Guidelines:
Waves 2 & 4 will almost always Alternate into ZigZags, Flats, or Combos.
Wave 4 can be Flats, Triangles or Combinations
Wave 2 which is usually ZigZag or a ZigZag combination.
Wave 4 Usually Terminates in the same area as the Previous Wave 4 of Wave 3.
Typical Fib counts for Wave 2 is 50%, 61.8% of Wave 1.
Typical Fib Count of Wave 4 is 38.2% or 61.8% of wave 3.
See the charts for other Fibonacci relations.
Often Waves ad-hear to the laws of Channeling:
5 ends around the Chanel line extension of endpoints of 1-3, and
Wave 4 may end at the parallel line point 1-3. (please look at the charts)
Rules
ZigZag is always a 3 wave structure.
Structure = 5-3-5
Wave B never move beyond the start of Wave A.
Wave B is subdivided into a three wave pattern: zigzag, flat, triangle or any combination thereof.
Wave A can be either an Impulsive wave or a Leading Diagonal.
Wave C can subdivide into 5 wave structures: a Diagonal or an Impulse wave.
Guidelines:
Waves A and C connected is usually parallel to the Line connecting the origin of the ZigZag to point B.
Waves A and C usually are Equal in length.
Wave A and C are more often subdivided into an Impulse Wave.
Wave C is always ended beyond Wave A.
Besides Waves A & C usually being equal, the ratios in a correction are less accurate than in an Impulse Waves 1,3 & 5.
See the chart for Typical Fibonacci Retracements.
Glossary
R within links stands for Running
F within links stands for Forced.
(()) double parenthesis stand for macro count from 2009 lows.
As shown on the Chart below that the most probable count for VT, the Vanguard Total World Stock Index ETF. We can see wave (2) was a running flat, beautiful in it’s nature, you don’t need to do anything; the flat plays and develops itself naturally, this is the reason I cordially invite you take it as natural.
We prefer this count over other more tortured lucubration, if we say for example, that this is a 1-2-(1)-(2); we will have an overlap in any subdivision that we force versus the February 2016 decline, it is clear here on chart below
52.31 high of wave (1) versus 50.35 low of the 2016 decline, overlap is clear; now if we gracefully divide the counts as macro ((I))-((II))-((III)), definitely wave ((III)) off the 2009 lows has ran its course at the 2.618 for wave V of macro ((III)), we have an overlap within macro ((III)), so please pay close attention because what I am posting here is important, and if you don’t read carefully we will make a tremendous mistake.
So, here is the important question, based on this chart alone, what is the standard pullback? Well, standard 1% for this chart is 61.01 or a 17% correction from current levels. If this ETF tracks SPX perfectly, this would imply SPX should see the 2190 level. While the chart is beautiful, it’s implications are not. So first let me tell you what I think, I think primarily that bears are being honest and are playing it’s game fair, we, the bulls, are committing a mistake because our time is running out fast, our time to be aggressive on the long side is over gentlemen.
If some upside is left, it should be in the 5th of the V of macro ((III)), so we are playing the last squiggles of something that is ending, like miners that decide to work on a planet too close to a Supernova whose time is over, might explode anytime, we are playing a risky game… risk won’t bode well if we don’t play it with strict rules.
As the DOW and S&P 500 making new all time high. There is also the most hyped tech IPO of 2016 is living up to expectations. Twilio inc. the cloud computing company is up 200% since IPO, good call from Jim Cramer.
Tuesday, 9 Aug 2016 | 4:06 PM ET
Jim Cramer said on Tuesday that the cloud communications company Twilio is the future of cloud computing as demand for its services rises.
Marc Faber once again brings his dim view on the stock market and this time he takes on Tesla $TSLA.
He believes that due to fierce competition, the stock will stand no chance but to go back to ZERO. Is this another classic false titanic alarm?
“What they produce can be produced by Mercedes, BMW, Toyota, Nissan. Anybody in the world can make it eventually, at much lower cost and probably much more efficiently,” Faber said Monday on CNBC’s “Trading Nation.”
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at the 2.618 for wave V of macro ((III)), we have an overlap within macro ((III)), so please pay close attention because what I am posting here is important, and if you don’t read carefully we will make a tremendous mistake.
is 61.01 or a 17% correction from current levels. If this ETF tracks SPX perfectly, this would imply SPX should see the 2190 level. While the chart is beautiful, it’s implications are not. So first let me tell you what I think, I think primarily that bears are being honest and are playing it’s game fair, we, the bulls, are committing a mistake because our time is running out fast, our time to be aggressive on the long side is over gentlemen.
