Bulls and Bears - The Market

[Isiah6:8]

I figure Isaiah6:8 is probably on a way better track than since that would be cost averaging down making a higher potential upside with less average paid per share. That never crossed my mind.

Keep the trade simple at first. I personally have never looked at this name before this thread, so I want to keep it simple. From a volatility perspective I could play the name in the options market, however, I don't need a home run. I need another runner on base.

Given volatility in the name, I want to capture my upside exposure while I think the opportunity for greater price volatility is there. The downside stop allows me to limp away, re-evaluate the current environment, adjust my perception & model, and then attempt another go around with hopefully a more accurate view.

 

[compforce]

I'm thinking the price plunged to $8.27 since you owned 200 shares and you said that put you in the red about $100. I would try to buy a weekly option at the highest strike price I could get for a premium less than $50 a contract. At 2 contracts that would cost $100, so then the strike price would need to reach $9.27 to ensure recouped losses so that would be the minimum strike price to put you at breakeven minus commissions and fees. A higher strike price for a put option would be ideal because then you can sell at higher regardless of the lower stock price, but if it goes up higher then you're doing fine minus the premium paid.

ETA: I chose weekly because I assume the premiums are cheaper for a shorter timeframe.

Options really aren't an option (pun intended) when you are talking about day trades or short term holds of 1-2 days. The premium you pay for the option is going to be more than the expected value of the equity. You'd be better off selling and taking your loss than to go with an option to save something this short term. Also, if you buy a put, then if the stock rises and you want to take profits, you need enough profit to not only cover the commissions, but also cover the loss in value on the option....which is leveraged, meaning the more you make on the stock, the more you lose on the option...multiplied by the leverage. It's a no-win unless your profit on the stock is more than the entire cost of the put.

Ha, well I guess not.

I figure Isaiah6:8 is probably on a way better track than since that would be cost averaging down making a higher potential upside with less average paid per share. That never crossed my mind.

The reason you don't trade the NUGT shares in to buy DUST at that point is because NUGT is at a low and DUST is at a high. Sell low and buy high will send you to the poorhouse.

So doubling is actually the right answer. I actually bought 300 shares of NUGT at 8.34...(filled @ 8.31) why did I buy 300 rather than simply doubling by buying 200? Why at 8.34? Notice I don't place a stop. I mentioned that earlier in this thread (I think).



The first reason for 300 shares is the cost. My total buying power is about 10k, enough to buy 1000 shares. By doubling to 500, I set myself up to be able to double one more time if I need to. What is the second reason? All of the information is there to answer this question.

 

[The Hate Ape]

Towards the end, the Bulls are fighting for control and keeping the sell volume in check

S1 @ 8.3
S2 @ 8.25
R1 @ 8.4 w/ a gap up to 8.6

By averaging down you decrease your losses should you exit, while equally putting yourself in a stronger position on a trend.

Without an RSI, my eyeballs say the path of least resistance is ^ not down on this security. (per the chart)

My layman's guess is that the stock action is oversold and will return to test the first resistance level. Should the R1 be broken you're looking at a great gap fill behind a decent volume surge.

Verdict: Average down as much as possible and watch carefully. Be prepared to throw more in if necessary but exit if S2 is broken.

 

[compforce]

Towards the end, the Bulls are fighting for control and keeping the sell volume in check

S1 @ 8.3
S2 @ 8.25
R1 @ 8.4 w/ a gap up to 8.6

By averaging down you decrease your losses should you exit, while equally putting yourself in a stronger position on a trend.

Without an RSI, my eyeballs say the path of least resistance is ^ not down on this security. (per the chart)

My layman's guess is that the stock action is oversold and will return to test the first resistance level. Should the R1 be broken you're looking at a great gap fill behind a decent volume surge.

Verdict: Average down as much as possible and watch carefully. Be prepared to throw more in if necessary but exit if S2 is broken.

You're thinking like a trader... That's where most people get themselves in trouble. It's much easier than that. I can give you any study you want to look at for the time period. I don't use any of them. What you see above is what I have up when I'm trading. On rare occasions I have TTM Squeeze up, but that's just because I think it looks cool. I don't use them because they are all lagging indicators. I want to be ahead of everyone else. I'm thinking what algos are thinking about so that I can get in front of them and anticipate them. Here's your RSI. It was at almost exactly 50 at the time.


Where are the natural points of support and resistance in every equity (or future/forex pair)?

 

[compforce]

I'd like to add something about indicators. There's nothing wrong with using indicators. Almost all of them are built based on nothing more than price action and volume over a period of time and typically some kind of comparison. At various times I tried using EMA, MACD, RSI, Bollinger Bands, Stochastics and many more. Here's where I had a problem with them. They are all showing you what just happened and reaching back in time. Non-institutional traders are all using various combinations of them. And 90% of those traders lose their money (that's an oft quoted statistic that I haven't researched personally). If everyone is doing it and only a few are succeeding, why would I copy them? I focus on systemic patterns created within the chart and volume graphs, almost exclusively. By doing that, I sat on the phone with a friend of mine and literally predicted every single direction change, including volume fluctuations for more than two hours on a 1 minute chart live as it ticked and he watched it. (I'm trying to get him on here, he's a Cav vet and my trading partner). As an aside, he uses RSI as his primary indicator with volume as confirmation. Of the indicators I tried, MACD "two line" was the one I favored.

Technically, @The Hate Ape is completely correct. although the other way of looking at it has support at 8.25 (the line created by the lows) and resistance at 8.35 (the tops of the four peaks) I don't think there is enough info on the chart shown to develop s1,s2,r1,r2. You'd need to know that the ATR is 1.60 (real number) and work from there. The problem with doing that is that it's a 1 minute chart. Those types of channels work better the longer the period so they are very inaccurate when you are day trading on a minute chart. EMA is probably a better way to find resistance and support on this short a period. Bear in mind my average hold is less than 30 minutes. Very fast, very volatile trading.

 

[compforce]

OK, so in the interest of not dragging this out unnecessarily, here was my entire thought process through the trade. First, here's the chart I used with all my drawings on it. This one is actually tame compared to most of them. They tend to look like spiderwebs by the end of the day.:


The answer to the questions I asked in the previous post:
Why did I buy 300 rather than a straight double by buying 200? - Because the natural support/resistance levels in any equity are the round numbers. So in order of strongest to weakest they are
100
50
25/75
10
5
1
.50
.25/.75
.10

By buying 300 shares I ended up at just under 8.50, meaning that I would plan to take profits just under 9.00 and make a .50 profit without having to cross the natural resistance.

Why did I buy when I did? - Look at the volume chart. Leading up to my trade there was steadily decreasing downward volume (bears). At the time of my trade, the upward pressure had just taken over (bulls). There is a natural rythm to momentum, it tends to swing one way and then back the other. The combination of price and volume tells you which part of the cycle you are in...or you can use TTM Squeeze/RSI to tell you.

I was very comfortable with this trade, especially when it developed a rising wedge pattern (green line and red resistance line). So we rode up and I got my indicator to get out at 8.73. But because that came on very low volume during lunch hour, I decided to hold. That was reinforced when I got my indicator to get in at 8.72. During lunch there was a slight upward trend. When it dropped after lunch I really wasn't all that worried because there were several support lines between the price and catastrophe. As expected it bounced off the 8.50 line and started climbing. I got out on the first red tick after 15:50 because I didn't think there was enough time left for it to retrace and come back up and I don't like holding this overnight when I have significant profit. Here's the actual trade log (the trade was on optionshouse to get the lower commission/fees, but I do NOT endorse them, I HATE their platform with a passion):



As a side note, this is a very low risk trade because it's at the extreme bottom of the 52 week trading range for the symbol. I'm actually back in right now for 800@7.50 to take advantage of today's plunging gold prices. I'll hold this for as long as a week or two to try to hit an exit above 9 (that would be a $1200 profit).

 

[Isiah6:8]

Just rotated into energy names and some more biotech in the PA. Rotated out of a few financial companies which had paid off holding since February.

I think energy will be an interesting sector with some US producers coming back online leaner. They become takeout candidates and with the Permian land values going for what they are I think there is some opportunity there.

Watching NUGT and the volatility is unreal. I think the thread needs an update on some of the trades @compforce has done

 

[compforce]

Just rotated into energy names and some more biotech in the PA. Rotated out of a few financial companies which had paid off holding since February.

I think energy will be an interesting sector with some US producers coming back online leaner. They become takeout candidates and with the Permian land values going for what they are I think there is some opportunity there.

Watching NUGT and the volatility is unreal. I think the thread needs an update on some of the trades @compforce has done

I'm not sure energy is a good bet right now for a short hold. I think it's at the top and going to sell off a bit. Natural gas (the commodity) will crash if Trump holds to his promise to remove the impediments to fracking allowing the supply to shoot up and depress prices. On the other hand, some of the consumers of energy products should go through the roof if the prices come down.

As far as NUGT, it's definitely a day/swing trader symbol. When the prospectus says "do not hold this longer than 1 day" it's a sure sign of volatility. As far as my trades, they are based on a simple principle. Figure out which way you think the symbol is going to go for the day, establish a small position when you think it is plateaud and then if it goes down, wait for it to hit a floor and cost average down, wait some more and if it goes down, cost average again and then give it time to work. I made about 14% on my money in the last two weeks of last month. Right now I have a position at 8.44 that I've been holding for a week waiting for the rate announcement today. 5 out of the last 8 rate increases gold has gone up. If it goes up, I stand to make a bit of cash. If it goes down, it has an absolute floor at about 6.50 so I'll wait and then cost average down and wait for it to come back up, even if it takes a month.

 

[Isiah6:8]

I'm holding refiners/producers/drillers of oil with lesser exposure if any to nat gas. I don't really ever look at nat gas as a play. In my PA are a few very small horizontal frackers who become profitable in the higher $40s per barrel. I think that if we stay range bound oil will be $55-60/barrel and these guys will come back online leaner. I have been building this position since $29/barrel and will probably give it one more go of an increase if it dips mid $40s/b. Companies like Whiting fit the screen albeit a little more gas than preferred, but land value can offset.

I always thought the don't hold more than one day was also due to the daily re-hedge of the position more than the vol. So you technically don't hold the same position you did the day before and unless you are calc'ing out the re-hedge.

If that name dips low 7's I would probably dip my toes into it to give it a run in real time. I just dont really have the time to day trade a PA so I normally due the quarterly rebal but find the day trading stuff fascinating.

 

[compforce]

I always thought the don't hold more than one day was also due to the daily re-hedge of the position more than the vol. So you technically don't hold the same position you did the day before and unless you are calc'ing out the re-hedge.

If that name dips low 7's I would probably dip my toes into it to give it a run in real time. I just dont really have the time to day trade a PA so I normally due the quarterly rebal but find the day trading stuff fascinating.

Exactly right, the re-hedge does weird things, but it also creates an opportunity when the price goes the wrong way. The reason for the long hold is I'm waiting for the rate increase. Average holding time on NUGT is 4 days so I'm not the only one playing around holding while the price is low.

In the low 7's, I'd drop out of my other positions and put it all in NUGT

 

[ThunderHorse]

I had bought UWTI and got out last week at 24 even, it was a small trade so I only made $60. Today's rate hike wrecked the rest of my positions. Even gold went red which was weird.

 

[compforce]

I had bought UWTI and got out last week at 24 even, it was a small trade so I only made $60. Today's rate hike wrecked the rest of my positions. Even gold went red which was weird.

UWTI delisted last week. Be glad you got out with a profit. I almost didn't. So now I'm waiting for tomorrow to see what gold is going to do. I think NUGT overreacted to the rate hike. Gold actually didn't move much after the announcement. It was -15+ already and closed the regular session at -19 (1.65%). NUGT on the other hand was at 6.91, down 1.17 (14.48%). I expect NUGT to rebound in regular trading tomorrow. Right now I own 600 shares @ 7.67 Tomorrow I will either buy another 600 shares @6.50ish if it drops just to average myself below 7.50 or I'll just hold and wait to see what comes next. At this price, I actually don't care if I have to hold it 6 months to get it back up to profitability (which I think will actually come within a week or so).

 

[Isiah6:8]

I might enter a position into NUGT down here although part of me just wants to stay away. I mean it is very enticing given the range but I do not like the idea of holding this given the daily re-hedge

 

[compforce]

I might enter a position into NUGT down here although part of me just wants to stay away. I mean it is very enticing given the range but I do not like the idea of holding this given the daily re-hedge

I'd hold off until Monday if I were you. Right now it's blown through support to 6-6.10. It needs to stabilize and then start correcting to make any money. Personally, I am down about 800 on it right now, but not worried because I'm going to average again when I'm sure it's hit bottom. Fed kinda screwed me by saying they anticipate 3 increases next year. The current one was already priced in along with an expectation of 2 increases. The big drop is from that extra increase being priced.

 

[ThunderHorse]

UWTI delisted last week. Be glad you got out with a profit. I almost didn't. So now I'm waiting for tomorrow to see what gold is going to do. I think NUGT overreacted to the rate hike. Gold actually didn't move much after the announcement. It was -15+ already and closed the regular session at -19 (1.65%). NUGT on the other hand was at 6.91, down 1.17 (14.48%). I expect NUGT to rebound in regular trading tomorrow. Right now I own 600 shares @ 7.67 Tomorrow I will either buy another 600 shares @6.50ish if it drops just to average myself below 7.50 or I'll just hold and wait to see what comes next. At this price, I actually don't care if I have to hold it 6 months to get it back up to profitability (which I think will actually come within a week or so).

Yeah I've traded UWTI and DWTI over the past year. I missed the announcement on the delisting and was wondering why it wasn't updating on google. I was looking to get back in on the trade UWT and UWTIF are up, but I'm keeping my skin out of the game. I've had a long trade with UGLD that I need to come back up a bit so I can feel comfortable with a cash position and reinvest with either my $TWTR or $CHK positions.

 

[ThunderHorse]

So a couple days ago I sold my UGLD position which took me into the shorts following the election.

I took that cash and bought 50 more CHK at $7.11 and then 100 TWTR at 17.13.

 

[Isiah6:8]

100 TWTR at 17.13.

What are the thoughts on TWTR for purchasing? I have never owned any and missed out on some profitable moves.

 

[compforce]

What are the thoughts on TWTR for purchasing? I have never owned any and missed out on some profitable moves.

Twitter is doomed. Price targets are $10 and they are rated strong sell. They don't have any profits, never have. They were purely an acquisition play and that fell apart last year. Right now they are dealing with a dead baby bounce as they claw to stay relevant. It's ok for a short term play while they thrash, but don't expect any major gains over the mid to long term.

My gold play for today:
JDST - It's the bear gold play. Works just like DUST, but is a couple of dollars cheaper per share.
+100@21.01
-100@23.47
$246 GP, $230 NP

If I had enough cash in the account to actually day trade, it just opened again @23.46

 

[ThunderHorse]

I disagree on the gold trade. That's why I got out of UGLD. I held onto it too long and really don't have the cash to cost average with the share price it was at. May be worth it in the middle of the year if this rally holds because there is bound to be a correction.

I disagree with your opinion on TWTR, in regards to their profitability and I think it will be seen this year. Twitter is all about information, that's its currency and the amount of ads I see is insane. But streaming live stuff such as the NFL will be a boon, although I think Alphabet (we used to say Google) messed up by not go after that rights deal without the amount of live content using youtube as a platform.

I don't intent to hold either for a crazy amount of time as they are not long investments, but TWTR is a much shorter trade for me at this point.

 

[compforce]

I disagree on the gold trade. That's why I got out of UGLD. I held onto it too long and really don't have the cash to cost average with the share price it was at. May be worth it in the middle of the year if this rally holds because there is bound to be a correction.

I'm not sure what you disagree with. I was sharing the day trade I made today. That was in the bear ETF so I was betting on gold going down, which it did. No opinions there, just a trade.

I disagree with your opinion on TWTR, in regards to their profitability and I think it will be seen this year. Twitter is all about information, that's its currency and the amount of ads I see is insane. But streaming live stuff such as the NFL will be a boon, although I think Alphabet (we used to say Google) messed up by not go after that rights deal without the amount of live content using youtube as a platform.

I don't intent to hold either for a crazy amount of time as they are not long investments, but TWTR is a much shorter trade for me at this point.

Feel free to disagree. Ad revenue is getting cheaper because there is an oversupply and the market is saturated. Meanwhile the NFL ratings have been tanking so that's no big win. 1/4-1/2 of twitter users are bots. It's the same fallacy as the dot com era. Users do not equal revenue, especially on platforms where a user can have multiple accounts that are being calculated as 2 people. If they can monetize it and turn a profit, then fine. Their fundamentals are horrible as well. I wouldn't touch twitter with a 10 foot pole as a 3 month or longer hold. JMO, I truly hope you make some money on it. I'll be surprised if it ever hits $25 again.