Market Review 2022-09-15

Long Term Picture 1Y/D SPY

As of now the 390 level is still holding. However today there should have been a bit more bullish action. We may loose that 390 level and go down to 370/360.

The only encouraging thing here is the bullish divergence on the MACD and the price. We will have to see who is going to be the winner. 

Market SQN

The SQN is still going up, but the volatility as well. This is not good for the market. 

Big 5 and VIX

Conclusion

So far we held 390. If we loose it 360ish is the new target

Disclosure

I have been beneficially long the shares in SPY, IWM and QQQ. I wrote this article myself and it expresses my own views and opinions. I am not receiving any compensation for this. I have no business relation ship with any company whose stock is mentioned in this article.

I am not an investment advisor or professional. This article is my personal opinion and experience and is not meant to be a recommendation of the purchase or sale of a stock or option. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters.

 

Market Review - Tue 2022-09-14

Long Term Picture 1Y/D SPY

Today's candle is a doji. Bulls and bears where fighting and nobody is a winner. The first part of the W pattern has been formed. The second part will hopefully follow. The statistics of the W Pattern can be found here. If the W completes, that target for the trade is $431, The W  has a height of $20, breakout point would be $411. $411+$20=$431 and we are back at the high from August 16.

Market SQN

Today the Market SQN number is finally pointing back into an up trending direction. At the same time the market volatility is declining. 

Big 5 and VIX

For SPY and IWM lower trend line is still intact. Not so much for DIA. The QQQ's start to look more like DIA. EEM is almost back to support. 
Many people talk about the market will go even lower. This may be possible. However I don't see this in the charts. The big red candles on SPY were all news driven. Fed speaking and CPI number was a surprise.

Conclusion

So far we held 390 and today was indecision. To me that means bullish.

Disclosure

I have been beneficially long the shares in SPY, IWM and QQQ. I wrote this article myself and it expresses my own views and opinions. I am not receiving any compensation for this. I have no business relation ship with any company whose stock is mentioned in this article.

I am not an investment advisor or professional. This article is my personal opinion and experience and is not meant to be a recommendation of the purchase or sale of a stock or option. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters.

Market Review - Tue 2022-09-13

Long Term Picture 1Y/D SPY

When I woke up this morning, the market was up already big time again. That was before the CPI report hit. Inflation for August came in higher then expected and that spooked the market big time.

Market SQN

The market SQN number goes back at the border of bear to strong bear. The market volatility number is going up again. If we can't hold the 390 level, we can easy go back to the 360ish level.

Big 5 And VIX

For SPY, IWM and QQQ the lower trend line is still intact. Not so much for DIA. EEM is almost back to support. The VIX is right at short term resistance. None of the moving averages are in the proper order. They are all opposite (3SMA = black, 30SMA = red, 10EMA = blue, 20EMA = orange).

Conclusion

If we hold 390, I expect it to bounce up and this was just a knew jerk reaction. Otherwise my next target is 360.

There is always a bull market somewhere.

Disclosure

I have been beneficially long the shares in SPY, IWM and QQQ. I wrote this article myself and it expresses my own views and opinions. I am not receiving any compensation for this. I have no business relation ship with any company whose stock is mentioned in this article.

I am not an investment advisor or professional. This article is my personal opinion and experience and is not meant to be a recommendation of the purchase or sale of a stock or option. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters.

Covered Call - KSS

Trend

The cyan rectangle shows the sideways trend of KSS.

The purple vertical bars mark 10 days before earnings. During these days no new trade can be entered for that ticker.

Other Considerations

KSS is a very volatile stock. It reflects in the options. Getting 80c for 1 week on a 30$ stock is more then 2%. For those stocks I like to see a dividend on top of it. In case I end up with an investment (my rules do not have a stop), I'd like to get paid for it. Now, dividends of course can get cut. Right now the yield is 6.5%. 

KSS has some problems. It used to me by favorite store to shop in. The number of racks has been reduced and my most favorite clothing line Apt. 9 no longer exists. 

The Trade

I prefer to enter my trades on Friday. I bought 100shares for $30.65 and sold next week Friday (9/16) 1 strike out of the money (31 Call) for $0.81. 

If called out the return ($31-$30.65)*100+$81 = $116. $116/$3065 = 3.78% for the week,

If not called out the return is $81/$3065 = 2.64%

Trade Maintenance

When the order filled, I add a closing order to buy back the short call GTC (Good Till Canceled). My broker has the option to send me a text message when an order fills. So if the within a day or 2 the closing order fills, something is up and I check the charts.

I can now sell another option to get more income. If I sell the stock as well is a discretionary decision. At the latest in November I review all "left over" tickers and see what can be used for tax loss harvesting.

 

Disclosure

I have been beneficially long the shares in KSS and short the call in KSS. I wrote this article myself and it expresses my own views and opinions. I am not receiving any compensation for this. I have no business relation ship with any company whose stock is mentioned in this article.

I am not an investment advisor or professional. This article is my personal opinion and experience and is not meant to be a recommendation of the purchase or sale of a stock or option. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters.

 

Covered Calls 1 OTM Trading Rules

The Strategy

Buy 100 shares, sell a call 1 week out 1 strike out of the money (OTM). This is an very short term strategy.

What to Trade

Liquid stocks and ETFs with liquid options in a sideways to upwards trend. 

ONLY TRADE STOCKS AND ETF's THAT ONE IS WILLING TO KEEP FOR THE LONG RUN.

Use fundamental and technical analysis to establish your boundaries. Write down what the exit strategy is going to be and stick to it.

Entry

Some brokers allow to buy write in a single trade.  

The call option to sell is 1 to 2 weeks out, 1 strike out of the money.  Desired return is 1% per week

Management 

When the trade is filled, place a closing order to buy back the short option for 2 cents or less. Most US brokers don't charge commissions for it

Exits

There are different cases:

• the stock trades above the short call strike price => get called out. This is a home run.
• The option is bought back for 2 cents. Sell another call 7-14 days out and try to get another 1% return. Some times it takes more then 1 or 2 weeks, then try to find something up to 5 weeks. The sold option always must be above the stock purchase price.

Update Week Sep 05 (week 79)

 

Added

I was supposed to add $150 to JHG. And I forgot all about it.

Review and Discussion

In week 79 $4.40 came in in dividends. YTD this are $263.83 and since inception $320.47. I think somewhere I skipped a dividend or 2 in my record keeping. So I will keep using the numbers from my trading journal.

Next Week's Plan

$150 will go into JHG and this time really. The other 150$ will go into OHI.

Disclaimer

All information on this blog is for entertainment, and education information purposes only. Nothing discussed constitutes as financial, investment, trading, tax or any other advice. No decisions should be made based on the information provided. Always do you own independent research and consult a professional broker or financial advisor.

I own everything I discuss. I am not getting paid anything to mention anything.  

Update Aug 29 (week 78)

Added

As planed I added $150 each toBST and ENB

Review and Discussion

In week 78 $18.43 came in in dividends. YTD this are 259.43 and since inception $310.58.

Next Week's Plan

$150 will go into JHG

Disclaimer

All information on this blog is for entertainment, and education information purposes only. Nothing discussed constitutes as financial, investment, trading, tax or any other advice. No decisions should be made based on the information provided. Always do you own independent research and consult a professional broker or financial advisor.

I own everything I discuss. I am not getting paid anything to mention anything.