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Better Movement But On Low Volume!

Better price movement today. Below
average volume could be effected by
hurricane. Oil and Natural Gas up again.
Keep an eye on the institutional traders.
Get the latest at
TradingTrainer.com.

Hey trading team,

This is A.J. on Monday, August 29th with your
Trading Trainer web log. We are your home of
market insights for the serious option trader.
This web log will cover the events in the market
from today as well as prepare you for watching
the market tomorrow.

The Dow rebounded off horizontal support at
$10,400 and bounced back up into its ascending
price channel. I’m watching this closely. The
NASDAQ closed up at its 50 day average. All in
all today had some pretty nice price movement.
What I notice right off is that institutional
traders are just not buying it. Otherwise, I
would see some volume. Volume was below average
all across the boards. The NYSE had slightly
heavier volume than last Friday while the NASDAQ
came in lighter. What is interesting is the
whole dynamic around the hurricane, and its effects
on the price of oil and natural gas as well as its
effects on the market. As the hurricane was moving
through the Gulf, the price of oil shot way high,
above $70.00 a barrel. Natural gas shot way high,
too. Then, as the storm passed, the price of oil
retreated but still closed higher for the day.
Natural gas, too. But, the market rallied in price.
As if to say, we already factored in the ramifications
of the hurricane, so there! It is very unpredictable.
In times like these we want to fall back to our
elementary trend following rules which state that we
want to do what the institutional traders are doing.
Today they sat on the sidelines and watched. So did I.

I’m going to start using the Bid price in my example
portfolio calculations. It is more telling. With
the bid price, we can know exactly what my ROI would
be should I need to sell immediately. Let’s take a
look. My Encana October 42.50 calls closed higher at
$4.30 an option. I’m in the black with a return on
my investment of 48% after being in the trade for 38
days. My EOG resources October 60 calls closed higher
at $4.10 an option. I’m in the red, still, with a
return on my investment of -34% after being in the
trade for 38 days. My Pacificare Health Systems November
75 calls closed lower at $2.40 an option. I’m now in
the red with a return on my investment of -17% after
being in the trade for 38 days. My Quicksilver September
40 Puts closed down at $1.85 an option. That puts me
in the black with a return on my investment of 16%
after being in the trade for 12 days. And, finally,
my Tenaris October 105 Calls closed up at $8.80 an
option. I’m in the black with a return on my investment
of 11% after 3 days in the trade.

This is my plan for tomorrow. I will be quick to unload
from my portfolio should the broad market choose a
direction. After amateur hour I’m setting limit sell
orders on all the options in my portfolio, good for
the day, setup to catch profit. I’ll also setup my
alert on Genentech - ticker DNA - should it cross above
it’s top Bollinger Band. I have my call all picked out,
so should that alert pop, I take a look and if I like
what it is doing, I’ll easily open a position. For the
rest of the day, though, team. I’m just interested in
where the broad market is going and what our friends
the institutional traders are thinking. It’ll, therefore,
be a low activity day for me.

Till tomorrow, happy market watching, trading and
money making. Trading Trainer is here helping you
create your dream lifestyle.

Best regards always,
A.J.

About the Author
A.J. Brown is a full time options trader, author,
speaker and consultant. Watch him review stocks
charts on video each week, listen to his audio
newsletter where he leads you by the hand through
the end-to-end process of successful option
traders and get tips and tested strategies proven
to boost your return on your invested capital by
massive amounts in his membership site at
TradingTrainer.com today.

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TradingTrainer.com Web Log

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