First, study this previous DETAILED SPY put option trade post. For years and years and thousands and thousands of DJI points, all of the incompetent stock permabear morons have been spouting their stock market crash claims, yet are any of them even giving out, explaining in detail, and discussing PROFITABLE strategies to take advantage of the “crash”? Have you seen any of them who have any clue how to make consistent money in markets? The answer is no there are not. They are experts at spouting total useless crap.
Many years ago, I did a very bullish post about the LONG-TERM secular stock market bull. In it, I gave a much much higher DJI projection, but I also said what?
“….as I repeatedly stated that the March 2009 low in stocks is a generational low and stocks are going massively higher. The Dow is eventually headed to 100K, but with several huge selloffs along the way.”
Meaning cyclical bulls within a secular bull, just like from 1932-1973 and 1974-2000. Just a few months after that post above, we started putting in a top and we had the biggest selloff since the 3/6/09 secular low, then that first cyclical selloff bottomed on 02/11/16. This current selloff is the biggest since the 2016 bottom – deeper and wider than the one earlier this year, many leading stocks have broken down, and a big changing of the guard coming as the FAANGs are done as the leaders. I have discussed this several times the last few months, and again a few weeks ago:
“I generally do not like the faangs overall, a fad to me, they will not be the “faangs’ in a few years, there will be something else to replace them in a secular bull. It’s why I have been more focused on IWM stocks at the buy areas. My 4/2 list was based off that. The qqq is too concentrated in 5 stocks.”
FB is done, social media stocks are done, something else will replace these fad stocks. The FAANGs will be replaced by a new leadership group. I have some ideas, those will be discussed with subscribers. Multiple times the last several weeks, well beforehand, I have already discussed the symbols and the sector which has now go on to become the #1 sector in the market. The Thanksgiving week is one of the most bullish of the year, historically. I gave the stats in today’s premarket comments. The selling in indexes is opening up a lot of opportunities, new leaders are setting up.
As to the SPY put trade today. Do you plan your trades? – extensively? – in detail? – written down? Then why not? Notice my planning of this trade. Early in the day, I started getting my approach for the day together, I had already missed 1 nice long-side setup, waited for the next setup – a short, it did not get to where I was looking for the setup. Notice, I map out the areas and the trend for the day – first chart “Looking at above 272 on a TREND DOWN DAY”. Second chart – huge red volume, could warn of a turn coming – A BOUNCE ONLY in a trend down day. A nice bounce to be able to short into? – possibly. Look at all of the red volume at the low, it’s giving warnings. Chart 3 – I DREW IN THE RES LINE – and wrote it down “269.70 big res intraday” – to repeat I DREW IN THE RES LINE – 269.70. I began the planning of where to look for a trade setup in a downtrend.
Chart 5 – clearly stated – “getting ready for after 3PM rally, but DO NOT want to see a bko BEFORE 3:15, otherwise will try to SHORT – you can not plan more specifically than that. Chart 6 – I need to see an SOS, not an upthrust, there is a way to decipher that. It was an upthrust – wrote it down “UPTHRUST VOLUME” – got an UPTHRUST. So I bought the 270 puts on the BACKSIDE.
Chart 8 – I explain my parameters. Going into a trade, I need to have my parameters worked out, a 20% stop, so I need at least a 20% profit potential. I nailed this parameter beautifully. Do you know how difficult it is to judge how much an option will move per a certain amount of an SPY movement. That is where I put my “Parameter 1”. It takes a professional’s experience to understand how to do this. Many years to work this out, so many variables involved. And the only way to DIRECTIONAL-TRADE options very well is to understand this. Again, look at the first put sale, 1/2 position exit, parameters worked beautifully, Move stop to scratch.
Chart 9, sold the rest and went flat for the day. The puts sold right into the low. The trade worked very well. This week’s options, and did not want to hold overnight. I have been doing VERY little trading. A few option trades. A very few stock trades. Again, I rarely short individual stocks. Last week 3 stock trades all week. Today no stock trades.
Very helpful to watch how you are not stuck on a set plan but adapt to what the market reveals. I realize I have been seeing the upthrust or downthrust volume spikes as a sign of more of the same coming and not an indication of capitulation. Thanks.