The VTSO trade for SPY, active

If you read my last post it briefly outlined trade ideas based on the McClellan oscillator as a trigger and the chart indicated a trade to open on November 15th.

Here is the oscillator:

...and here is the current SPY daily chart:

Today the adjusted VTSO has the stop at $134.76. While this price is still below the entry price of $135.98 the loss, should the stop be triggered now, is not very great.

I toyed around with the idea of taking profits at 4%, 6% and 8% gains along the way but found that just leaving the VTSO run and adjusting it at those particular points in the trade is more profitable by about 10% overall. While the smaller realized gains serve to give the feeling of success, they are not necessary. Having said that, a target exit of 6 % has the best bang for the buck if I decided to go that route for a smaller sidebar trade.

Jeff.

The VTSO as a trade management tool for SPY profits

I have toyed around with all sorts of indicators in the past and found some nice correlations that could have turned into decent trading plans. The only downside, usually, was that there were a high number of trades indicated with a large tendency to get whipsawed right out of the trades.

Profitable, but with a lot of work unless a good set of rules were established to govern the trade management.

This is an example of a very simple trade entry plan using some basic trade management rules to provide a profitable, even if not a stellar, outcome.

I used the NYSE McClellan Oscillator (ratio adjusted version) and applied it to SPY to provide a very simple trade indication. The oscillator represents the rate at which stocks are becoming overbought or oversold. To be honest I am only interested in the easily seen correlation between the overbought value and the corresponding price moves in SPY, not the math behind the oscillator itself..

The green box on the oscillator chart below (3 years, daily) is the sweet spot where the more extreme oversold indication has some validity on placing high probability trades, values of -80 or lower.

Here is the SPY chart in the corresponding 3 year period.

As the oscillator line hits -80 I note the price candle of SPY for that day, green arrows. On the next day if the opening price falls within the range of the previous day's candle body or lower, buy at the open price or lower. Although using a lower price can easily be done it is a rather subjective decision and requires more rules to govern the trade entry. Therefore, in order to simplify the process there can be no exceptions to the simple entry rule and the opening price is always used.

I started out using a staged exit strategy but found that it was not only not necessary, it also hindered the profit potential by providing smaller, incremental profits. While these incremental profits serve to make me feel good that there are profits early on, they reduce the overall effectiveness and simplicity of the plan by 10% or more.

A brief outline of the management plan sounds something like this:

Each trade is opened and treated as a single position throughout.
An initial stop order is immediately established based on the opening trade price, this is a static order.
Particular staggered targets are established for the purposes of adjusting the trade exit.
As the first target is met, a VTSO is placed and set based on this target price.
As the second target is met, the VTSO is tightened based on this value.
As the third target is met, the VTSO is reset again but loosened by a small percentage, this is optional.
At this point the trade is running solely on the VTSO for exiting.
At any time that the price reaches the VTSO value the position is closed, profit or loss.

The advantages of the plan:

Using a VTSO allows for the stop to automatically be raised as the price climbs and allows the price to continue to climb dragging the trailing stop with it. Having multiple staged and fixed targets provides some intermediate adjustments of the trade to reduce the risk once the price starts to move in a favourable direction. This particular setup is simple as it allows a wider margin initially while tightening up the stop progressively without getting stopped out of a trade prematurely.


The draw back of this plan lies in the case where the price drops immediately following the initial entry position as this can produce the largest loss and is very disheartening if the plan is not adhered to thereafter.

I think that I would allow for further targets to provide for more adjustments of the VTSO along the way and perhaps a target, fairly large if hit, to close half of the position.

Having said that, a lot of time is spent sitting on cash between trades so I certainly don't suggest this as any core trading strategy, just a little moneymaker on the side.

Easy in and easy out.

Jeff.

Spy going forward.

Chart:

The latest arrows are the current strikes for minimum target spreads for me now. Note that the price is in the middle of the current linear regression channel. had the price been near the top, about $2.50 higher, the best strike may have moved up 2 or 3 points to match. That puts me at the prime point to enter a call spread... 119, 120 would feel a whole lot better to me.

Same deal with the puts, more or less. given a price drop to the lower side of the channel I might expect the premiums to jump to place my minimum target strike another $1 lower... just due to the relationship between increases in volatility as the market drops and the premium on put options.

I have two trades expiring Friday and these may free up some capital for me to place trades next week so I have to wait, but I would have waited anyway.

I did February expiry's out of curiosity. Calls would be 119 and puts at 106...not the best even though the puts are well outside of the technical resistance. The call certainly are not.

Jeff

S&P 500 SPY spreads vs scaled trades.

I got lazy and just used the same chart here.

Last post I mentioned diversification in trade type, price levels and timeframes. It reminded me that I could scale into a trade to try to effect some sort of similar idea, not really DCAing as I am looking to grow a core position by adding to it at key times.

I can make a general assumption that the spreads were all profitable, as they all would have been based on the price moves and trade entry points.

In order to fudge against me I will use my minimum $2.40 per day yield based on a $1200 risk trade. Even though I already see that a SPY spread even at today's low VIX numbers can be much higher than that I would choose the safe trade as $2.40 per day lets me run the spread strike farther away from the price. This is 0.2% per day ROR or 6% ROR based on a 30 day trade.

So a quick 22 trades at 30 days per trade calculation leaves 660 trade days at $2.40 is $1584. I would want to optimize my trading to allow for certain overlaps depending upon my capital so I might run $2400 trades here and there. Regardless, this is for a comparison only anyway.

At most, four overlapping trades which uses up my $5000 base. That is a 31.7% return on the account base and I can add one more trade capability into the mix to start the compounding effect.

Scaling into this through purchasing shares directly in SPY in 10 share chunks. Buy at the good bottoms and hold through the top.

Buy at $70, $80, $90, $90, $100 and 6 shares at $104. Average cost is $87.93 for 56 shares. Current price is about $110 so $22.07 per share gain for $1236....if sold now. With a tight stop during this uncertain period it might get sold... maybe not. I can only make money as the price goes up and can only compound if I sell and catch a drop...if the drop reverses when I think it ought.

Meanwhile I am trading spreads and seeing profits while the price wallows each month as expiry dates pass. This way there is a cashflow. Buying and holding has no cashflow...although there is a slight tax advantage when it comes to capital gains

Jeff.

Specialization, Diversification, Yield and Perspective

For anyone reading, keep in mind that the purpose of this blog is more for my own "thinking out loud" so some of what I write is repetitive or obvious or just dribble. This may ramble about as I mush out some thoughts and direction.

I updated my sector performance chart.

Comparing it to the Dec 11th one

The same sectors are under performing and over performing against the S&P500, but this is only 5 trading days later.

I am finding that this is giving a good relative performance indication and I could likely run trades based on this, buy the over performers and short or buy inverse ETFs on the under performers in line with the overall market trend. The trouble is trying to use this for spreads on the ETFs. There is not much to capture in the difference in option premium vs the spread size or risk. I mentioned just plunking my cash into Optioneer as they are able to see trades that average in the 8-10% Return On Risk whereas I am starting to see perhaps 4-5% ROR. I thought that perhaps it had to do with Optioneer using iron condors, taking both the call and put side simultaneously but I determined that doing so would only serve to reduce the ROR as call and put premiums vary depending upon the price point of entry (top of the trend channel is best for calls and bottom for puts). Legging would be best but still yields are small.

Of course there are the largest considerations:

Specialization
Diversification
Yield
Perspective

I actually went looking for dividend stocks today out of curiosity, I wanted to get something to stick in the TFSA to be left to grow until I remembered that yields are in the 5-10% for good dividends...per year. Here I am worrying about losing a few percentage points per MONTH.

That looks after the perspective issue for me.

Specialization is easy enough to consider as being able to trade one stock profitably is a good thing, if it can be done relatively consistently.

Diversification is easy as well. trading one stock sounds like putting everything in one basket until I consider that trading the SPY which is tried to the S&P500...500 stocks altogether. It doesn't get much more diversified than that, which provides another interesting problem.

Yield, well, the yield will be the yield and will beat all dividend producers even over the long haul if I just manage to double them, let alone possibly stepping up returns by an entire order of magnitude.

OK, so trading one ETF is diversity but if it is SPY then it can be OVER DIVERSIFIED...huh?

Sure. Trading one over or under-performing sector allows diversity when using ETFs but allows exceptional performance due to specialization. This is the key why SPY can return a better yield in spread trading than most sector ETFs...because it is over-diversified as it represents ALL sectors it cannot help but perform in a rather mediocre style. Just look at the above charts and see that the SPX is consistently ranked 5, 6 or 7 in all categories.

This is the hallmark of a great vehicle to trade a method that works best with relatively non-volatile securities. This allows wider margins and tighter spreads to both give a lesser risk profile over all while still providing a decent yield. Finding the right security to match a preferred method of trading is like curve fitting... but even that has it's advantages.

Next up... diversity through S&P500 price levels.

Jeff.

SPY and the Bull Put Credit Spread continued...

I did some more thinking about this last night and decided to check the historical odds of getting a 102 strike put hit from a $110 level...basically an $8 drop in 36 days as that is what my trade would be for the January puts.

Other factors include the fact that the price is already at the low end of the trend or linear regression channel, even using the price at a peak this happened once in June...very close anyway and in the steep drop earlier in the year. During the drops I would be putting my energy into calls spreads so puts would not make it to the table very often.

So, rather than go on about it here I will be placing some orders, one and maybe two, for either Dec EOM or January expiry.

Order placed for Dec EOM, 6 contracts meets my target for $1200 risk. I went as low as 13 cents or better as SPY is going to open up this morning, maybe 60 cents, which may depreciate the put options...15 cents was based on yesterday's close prices. So we'll see what happens this morning.

It would be nice to be able to sell naked puts and keep all of the premiums, I could go lower on the strike as well and still come out ahead. I know I take the risk of the trade really going against me but it is an ETF tied to the S&P 500, that in itself creates a ton of diversity. The only downside is an ETF valued at $110 needs to have $11,000 free cash to back it up.

Jeff.

SPY and the Bull Put Credit Spread

I modified my spreadsheet to include put calculations today. I was concentrating on the call spreads just because I needed to start somewhere.

Seeing that the call spreads would benefit from having the SPY price closer to the top of the current regression channel I figured that it would be a good time to check the puts...I was not disappointed.

I chose to check the January expiry's first but the timeline is too far out to be comfortable as I would like the trades to be in the 30 day range or shorter if I can manage it. So I also ran the December EOM.

Based on my range finder the calls at the SPY $110 level should be at 115 strikes sold for EOM and the puts 105 strike sold. For some reason I look at the chart and I don't like the call level still... perhaps I should add a trend factor in there. I did add an adjustment for the price position in the trend or regression channel. Time will tell how much I may have to adjust these factors.

Anyway, back to the puts.

I decided a while back that $10 days for trades risking $5,000 are my minimum target, (Optioneer), breaking that down to smaller trades puts me at $2.40 per day at the $1200 mark assuming that I can keep my money working for me regularly. This is roughly what I expect to use in my SPY trading as a risk allowance. This doesn't convert very well to an overall ROR as it depends upon the timeframe...as long as the daily dollar target is met the rest looks after itself. It is a 0.2% daily ROR though so a 30 day trade should return 6%.

Using that as a minimum guide I ran the various strikes at the various spread values and I can now just scan down the chart to see what the minimum credit trade would be to accommodate my minimum target. As of today's close prices a 104 strike put sold and a 102 put bought would provide $3.09 per day over the balance of the month...22 days. Seeing as the premium collected is based upon the difference in the prices of the two options a longer expiry should have provided a similar result.

Using the chart for minimum targets allows me to assign a better risk model as I can use the absolute farthest strike from the price and I don't really need the whole range calculation at all. Now trial and error can be very expensive in this so I will have to be nimble if this puts the spreads too close and they start coming under pressure form a larger price move than I anticipate. All I need to do to adjust is lower my daily minimum target and the trade moves farther away on it's own.

A quick comparison of the SPY puts.

December EOM
Sell to open Dec EOM 104 strike and buy to open the EOM 102 strike for a 15 cent credit.
21 days left, $3.24 per day, 6% overall.

January expiry, 3rd Friday
Sell to open Jan 104 strike and buy to open the Jan 102 strike for a 28 cent credit.
36 days left, $4.06 per day, 13.86% overall.

Sell to open Jan 103 strike and buy to open the Jan 101 strike for a 24 cent credit.
36 days left, $3.39 per day, 11.32% overall.

Sell to open Jan 102 strike and buy to open the Jan 100 strike for a 19 cent credit.
36 days left, $2.56 per day, 8.31% overall.

Jeff.

Option Spread Optimization and the $10 day

I slightly reworked a spreadsheet to provide a comparison between varied strike spreads at various strike levels and incorporated position sizing, Return On Risk, daily returns and the average ROR for the entire spread strike listing that is usable (ie all $1, $2, $3 and $4 spreads from 115 to 121 strike).

The result, the best bang for the buck is for the $2 spreads by a 0.5% margin.

With my Optioneer/Strikepoint trades I look for $10 per trade as a minimum target and that is based on a $5000 (less premium sold) risk profile. With my spreads I might feel comfortable with a 117 or 118 strike spread...go with 118 so safety.

A 118 strike with a $2 spread yields 3.27% based on $1200 gross risk.

This nets about $1.09 per day of the trade (January expiry) if I trade 6 contracts, $1200 total risk. Comparing against the same risk profile as Optioneer I would put $5,000 at risk and yield 3.95% and $5,50 per day.

117 strike the yield jumps to 6.72% and $9 per day
116 strike the yield jumps to 9.65% and $12.50 per day

Considering this is with the price of SPY at the low end of the trading channel now these numbers would look much better with a higher SPY price as the strikes would be that much closer...although the volatility would be lower and would depress the option prices a bit.

Thus the issue becomes how much to risk and how far out to place the strikes to lower the chance of taking a larger hit and meeting a $10 per trade per day target or the equivalent.

$10 per day at $5000 risk
$5 per day at $2500 risk
$2.40 per day at $1200 risk

Today that target could be met with a trade at 116 strike yielding 8.9% and a $2.80 per day profit.

Considering that there is no margin available for these trades and my account is just over $5,000 I would feel better placing more smaller trades so I will have to aim for the "equivalent to $5000" trades. I think that I can find combos to provide this particular cashflow without undue stress.

I also am aiming to be able to do any number crunching after market hours in order to place my trades before the market opens the next morning and not have to worry about intraday chart watching...I either get my target price or I don't. This certainly gives me a feel for what the Optioneer/Strikepoint guys do. I knew it would be fun.

Jeff.

SPY and January Expiry's

I was considering putting a SPY bear call spread in for January expiry this morning but got looking at the chart first. I was liking the spread between 115 and 118 strikes again, the same spread that I have now for Dec EOM (which is doing nicely given the market wallowing of late).

Here is the chart:

Given that the Jan options are only 15 days later than my current trade and there are holidays to suck up some more of the time value it looked good, a 40 cent credit spread. The trouble comes in when the price position on the trend is taken into account. It is at the low of the channel (similar to gold in my other post today) and, if a decent rally occurs to follow the trend my trade would be in jeopardy...as it is the Dec EOM could be.

My best strategy is to wait until the price rises to at least the median of the regression channels which will allow me to select a higher strike to sell which allows me more margin for fluctuation.

Worth noting that the blue old gap levels are providing an interesting bit of activity as the S&P levels hover on the upside of them.

Patience.

While I am waiting for that to set up I placed and filled a trade yesterday with Optioneer at my minimum target for a January expiry. I was actually surprised it filled as I allowed no lenience, I figured if I got it I got it.

Should the SPX fall another 15 points I will place another trade and perhaps get a nice close to 30 day expiry.

Jeff.

Long term gap fill in SPY, corresponding SPX reference

In September, October and November SPY, (and the underlying S&P 500), have ratcheted up in waves. No, I am not going to even think about getting in to Elliot wave theory... I don't much care for that as it is VERY subjective. Each wave has peaked mid month and pulled back to bottom out at the end or beginning of each month. Of course a pattern like this can be taken advantage of but there are a number of factors that preclude even trying to place such a wager.

Going back in time a bit, October 3rd 2008, the market was in a downturn and as the market tested the SPY $110 mark on the Friday as it hit $109.68 and closed on $110.34.

It opened on Monday the 6th down at $107.15, a $3.19 gap or 2.89% and continued down more than $30 into March of 2009 to a low of $67.10... almost $40 on the money.

This gap is important as September past tested the bottom of the gap and pulled back. October tested the top of the gap and pulled back. November passed the top, basically closing the gap over one year later, and may see this $110 level as support for now.

If the pattern holds I see the $115 being tested by mid December, which puts my $115-$118 spread in serious jeopardy as it is a Dec 31st expiry. If it does not make it to $115 then I think that it may hit $113, pullback to the $110 support level again before taking off to the $116 level and may do so near the end of December...BAH! I may have to close the spread early in either case.

Of course we may see this level be a further test and a correction take place too.

Either way I will not likely set another spread trade right away in SPY as I wait for a bit while this shakes out. I could place a $1 or $2 higher spread, wait for the first trade to atrophy somewhat and close it to keep some credit and just step the spreads up to the EOM.

Hmmm... step spread trading in the same month to capture premiums in an uptrend situation...has some merit for future thought.

Here is the SPX chart for the S&P500 index. I noted that there is no gap on that Oct 6th morning BUT the level on the Friday closed at 1099.23...say 1100 for now and opened on Monday at 1097.56. The S&P dropped from there and returned the next day to test 1073 and dropped never to look back until testing 1073 in September...basically the exact same range as if it had gapped. Same pattern as the SPY, which it should be, just the lack of gap was noted.

The red lines are the Friday Oct 3rd 2008 close and the following Tuesday test of 1073 with the current correspondence

I like how the price is hovering about the 1100 mark after testing and crossing it, nice consolidation... begs the use of a directionless spread trade to capture the move which ever way it ends up going, as long as it goes quickly. The short Linear Regression channel is showing signs of a slowing down of the uptrend which is remaining within the longer term LR channel so far. Target moves, like in the SPY, are 1080 on the bottom and 1150 on the top.

Jeff.

Dual timeframe linear regression and SPY spread trades.

I have been looking at a number of methods to have a trend indicator properly indicate a trend. The trouble is not so much getting an indicator to do this as it is to get one to do this with the sensitivity that works for me. I can easily eyeball a price chart and see the trend setting up even without the typical SMAs.

One that seems to give me both a trend indication and a channel range gauge is plotting two linear regression tools on the same chart.

One is 40 days which gives me some level of sensitivity as it uses the last 8 week average price slope bracketed by one standard deviation.

The other is an 80 day which gives me a larger trend slope and one standard deviation channel.

The slope of each with respect to the other gives a very easy and quick idea of where the trend is likely to be heading and what the most likely outer range is going to be.

See the shorter 40 day is mostly bracketed by the longer 80 day LR channel and they are both, more or less heading in the same direction.

This would let me place trades within the upper channel for a bear call spread while keeping me out of any put spreads altogether. If I were one to play the odds on something like this I might place the call spread for a credit and use that credit to buy a long put to give me some further downside exposure, but that is another strategy for another time.

Here is another period with the same linear regression settings:

The wide deviations are almost horizontal indicating a likely shift in trend with the shorter term LR heading sharply up. A typical phrase is to "trade with the trend" but here which trend to choose. Normally I would suggest the longer term IF it were more pronounced. In this case the longer term is weak and the shorter term is much stronger.

On trade day the price is approaching the 200 sma which can be typically resistance so a decent spread is available that might use that as an additional guide. Notice how the 300 turns from resistance once it is broken and the price literally bounces off of it and forms the beginning of the latest trend toward recovery.

The last chart is two months farther along. The long term has turned up but the short term has weakened. This is a good time to pull a spread in a little tighter as the price will head up long term but the short term trend is a little consolidation, prime spread time and full iron condors would be appropriate here so puts spreads would bracket this on the bottom. The 200 has turned support so this gives more odds in favour of a further move up, eventually.

Enough for now except to note that the dual linear regression periods may just take the place of my more complicated calculations for risk and range for spreads in order to simplify this whole process... afterall that is one of my goals.

Jeff.

Interesting Gap Play with a Spread...continued...SPY

Well, that was easy enough.

So, I got to walk through the trade with the Questrade order desk. I goofed in that I wrote the option name down wrong and I was buying the wrong side of the spread...and selling the wrong side but all my numbers were right.

Once I got that down I was good to go.

The order is placed, I selected my net credit allowance as opposed to ordering the calls individually by price, which makes the ordering process quicker. Next time I will have the order written down exactly as it needs to be to save the confusion.

Oh, the order is filled. They tell me the commission and to expect the trade to appear in my account tomorrow, options settlement is the next morning I think.

My order:

Underlying security is the ETF SPY
Buy to open 4 Dec 118 Calls RDQLN
Sell to open 4 Dec 115 Calls RDQLK
for a net credit of 35 cents or better
Commissions are $17.95 (less than I calculated as I figured $26??)

The order filled at 1149h. Due to the slow activity today my fills show up and I can see the 4 contracts in each of the charts for the respective options. The fill prices were 24 cents for the long call and 62 cents for the short call for a net credit of 38 cents. These were the bid and ask for the options so I lost the spread right away, which my 35 cent credit allowed. Seeing as I use the spread quotes as my basis I cannot complain about that.

That gets confusing when talking about the spread in the quote while placing a spread trade order.

I could have alternately placed the order as a market order and it would have been filled the same in this case.

As long as the trade expires while SPY is under $115 I keep the full $134.50. 21 days to expiry and Christmas looming I think I will be OK...even though I am only 4.3% off the current price. Not a large margin.
The total risk is $1074
The Return On Risk is 12.5%
The daily return is $6.38

My criteria may be as follows:
Spread = $3 ( The minimum anyway)
The credit needs to be 32 cents or better yo yield 10% for the trade given the current time line and SPY price. This produces about $5.25 per day. Perhaps if I aim for a minimum of $5 per day based on a 4 contract spread I might be in good shape overall.

This will vary based on a number of factors so I think that I should just concentrate on the 10% overall ROR and the $5 per day per trade to start. Most trades should be at least two contracts (four if you count them all).

Given a $5,000 capital base I could make four such trades for a $20 per day return which works out to about $600 per month. Obviously I am not going to get rich quick on this but that is not my goal, cashflow is and this is a great start at a cashflow strategy.

I am going to look at the sector ETFs next and see where their prices are. I think that a $20 to $60 security would be a better place to be buying options as I can pick up more contracts while allowing a larger margin between the strike and real price of the ETF. Perhaps 8 contracts with the same risk profile or 16 cheaper contracts out near the 10% area.

Off to lunch now.

Jeff.

June 4th

Not much to say today. Sort of a lazy uptrend with a range start and finish, so I don't think this really counts as a trend day. I stayed out of the SSO trades as I was expecting either a range or small move day as the volume was on the lower than average side all day until the EOD rush.

Note that the bars are closing in the bottom of the range.

Although the TICK could have been used for some upside trades I decided to not trade SSO as the moves were going to be rather small so my 100 share lots would hardly break even on a decent move. The upside was smaller than the downside so this was a test of my resolve to watch for downmoves. I hit one good trade and two small losers, one was a too tight stop issue as the idea was sound and the expected move was good. The wrong was really a speculative play for a reversion trade that did not materialize...then I called it quits for short (SDS) trades. I could use larger position sizing but I want to stick with 100 shares for a while yet.

I could have played other ETFs, specifically SPY for the upside moves but I was trying to avoid the downspikes that SPY exhibits. I expected that those would take out a stop. I see that may not be the case as if they did there would be a sudden huge runup of price as market orders were executed as other stops were also taken out at the spiked price...and I survived an SDS spike. Perhaps I do not completely understand what the spike represents. I recall getting caught and creating my own huge down spike on an old trade where I lost a fair chunk of change because of the spike. I think that the spike represents an anomolous fill and does not affect the bid/ask quote therefore the stop does not get triggered. I will rethink my staying away from SPY as a result.

I'll have to consider position sizing and price values when looking at SPY again in my risk management as I need to be playing both the up and down side of the market. SSO may still be a better play with 200 shares.

Jeff.

May 15th, Getting more acquainted with the TICK

I certainly wish this was as easy live as it is after the fact, but then everyone would be doing it and none of this would work.

Here is the TICK chart partitioned without regard to the actual SPY chart.

I should point out, the actual tick is not on this chart, I have the Bollinger Bands and a few moving averages. Almost those are enough to use... I am considering simplifying this chart for live use somehow. I think getting an overall feel for the movement may be more important than the absolute numbers represented here. I set up an alert that alerts me any time a TICK value hits + or - 800. Depending on the price setup these are great entry or exit points for trades.

Here is the SPY chart with the same partitions overlayed. Pretty close once again.

The ranging off the start uses the 200SMA as a support and tests it a few times before heading up to the upper range. The black horizontals are the high and low from yesterday so the whole day is really sort of a range day in that sense.

The TICK moving averages spent most of the day in the negative area once SPY came close to the upper range.

The key, obviously, is to be able to anticipate the change in the trend and place the trade accordingly. I missed playing the drop after 1100h due to just not paying attention. I placed a trade on SSO,was stopped out quickly and did not get the SDS trade in quick enough to catch the move... back to my market orders as they take no adjustment to setup before placing the order.

I entered a trade after 1330h anticipating an EOD rally off of the low from yesterday. I should have closed the trade in the green as it just wallowed around for almost an hour but I let my stop close me out...of course the higher volume activity at that point lost me a few more cents per share on my stop loss. Options expiration was somewhat a factor here so I should have been out of all trades earlier today than most other days.

Jeff.

May 14th...nothing good to say.

Today was a perfect example of a good day to not trade...but not due to the market.

I was up late last night.
I did not sleep all that great.
The power went out early this morning... I have alarms to alert me to this for various reasons.
The dogs, due to being disturbed, wanted up and out.
The power never cam back on so I dealt with very limited water supply for morning routines.
I dragged myself into the office.

This does not provide a good mindset for anything so I should not be surprised that I was not on my game today...in fact I was not even in the same stadium.

Seven trades, all losers, most small, a few larger than my normal. I traded with an expectation, with a vengeance, with frustration...I finally threw in the towel.

Here is the NYSE TICK chart, for reference and for me to really see what really poor trading ideas I had. I dropped the bars and left the Bollinger Bands on with the various moving averages. SPY chart for reference to follow. The vertical bars are divisions between the apparent trending types over the day and this should give some direction to the trade styles to use during these times. I placed these lines in hindsight but without any other reference to charts.

Here is the corresponding SPY chart with the lines placed at the same times...only using the TICK references. The generalities of the TICK are pretty close to reality.

The light blue line is yesterday's opening price. The the low for today, during regular market hours, never broke the low for yesterday, the bottom of the chart is about $88.50, which was the low. Seeing as this was tested before 1000h it could be a good idea to stay long as long as the price stayed above that level with some conviction, found in the TICK trending up over the morning

Trades 1 and 4 could be timed to correspond with the rising low of the TICK and the testing of the 200SMA on the SPY.

Trade 2 was testing the 50 and 1/2 of R1 ( which I find useful often) and a TICK low, slightly higher risk but still a good pullback entry especially once the 30 crosses and the price tests both these SMAs shortly following the arrow.

Trade 3, a short, is the inverse of 2 as price tests the 30/50 on the underside. The heavy red line is yesterday's close, a decent resistance as it has been tested for about an hour. Target would be the 200SMA.

I have decided not to play the last hour as it is too volatile for my risk level right now...as long as I can follow that rule of mine.

While these are all hindsight trade setups they are setups that I will be watching for over the next while. The range market is the toughest to judge for me so I will try to stay away from it for a while.

Jeff.