2014/10/31 Trading up the S&P500 rally with Fibonacci-Cluster support (SPX SPY ES)

S&P 500 Fibonacci Clusters with repeated Symmetry Support

Nice rally S&P!!! ... great stuff but how to trade this market efficiently and how to jump on the train, when it's already in full speed? How about using Fibonacci-support-clusters for entry and for controlling risk? The chart shows a double bottom being formed on Oct 16, followed by a break of symmetry on Oct 20 (the symmetry stemming from a Oct 8-9 swing). This was the first indication that the trend had changed. From now on, the S&P followed a simple rhythm pattern, repeating very similar down-swings over and over again. Until today, there were six similar swings that could have been used to enter the market long and to define narrow stop-levels slightly underneath the Fibonacci support clusters (i.e, red closely staggered lines). With very narrow stops you would have been stopped out at points 3 and 6, but by giving the trade a bit more room to breath (and/or by working with options) you could have traded the full rally up with this technique. BTW, then next symmetry support Fib-Cluster is right there from 1990 - 2000, possibly a support zone for the next swing up? 

Schicke Rally S&P!!! ... super Ding, aber wie tradet man das effektiv und wie spring ich drauf auf den fahrenden Zug, wenn der schon so richtig in Schwung is? Der obige Chart zeigt uns, wie ein doppelter Boden am 16. Okt. ausgeformt wurde, gefolgt von einem Bruch der Symmetrie am 20. Okt. (die Symmetrie stammt von einem Swing am 8-9. Okt.). Dieser Bruch gab uns ein erstes Signal, dass der Trend gebrochen war. Von dann an folgte der S&P einem einfachen Rhythmus und wiederholte mehrere Male sehr ähnliche, kurze Abschwünge. Bis heute hatten wir sechs solcher Abschwünge, die jeweils gut für den Einstieg in den Markt benützt hätten werden können und die auch gut-definierte Stopp-Niveaus unter den Fibonacci-Clusters zur Verfügung stellten (siehe rote, eng zusammenliegende Linien). Mit sehr engen Stopps wäre man wohl bei den Punkten 3 und 6 ausgestoppt worden, aber mit ein bisschen mehr "Luft" in den Trades (und/oder mit Optionen als Handelswerkzeug), hätte man mit dieser Technik einen Grossteil der Rally hochtraden können. Übrigens, der nächste Symmetrie Fibo-Cluster bei 1990 - 2000 ist auch schon eingezeichnet und könnte eine mögliche Unterstützungszone für den nächsten Schwung nach oben anbieten? 

2014/10/30 DAX Fibonacci symmetry resistance cluster in 30 min Chart

DAX Fibonacci Cluster & Symmetry Resistance (30 min)

2014/10/28 DAX Fibonacci symmetry resistance cluster in 30 min Chart

DAX Fibonacci Cluster & Symmetry Resistance (30 min)

2014/10/02 S&P500 Fibonacci symmetry support cluster (SPX SPY ES)

S&P 500 Fibonacci Cluster & Symmetry Support

While market action was fierce, the S&P 500 must first prove whether it really means it. At the moment, we are still in a perfectly fine correction that has not exceeded similar down moves we've observed in the recent past. The Fibonacci Cluster in the chart needs to hold should this be another "normal" swing. Note however that the Squeeze has fired south and hints that more days with selling pressure might be ahead of us.

2014/09/05 AZO Butterfly into Sep 22 earnings (BMO) with 550 pinning potential

AZU Butterfly 

Speculative Long Trade Setup into earnings with Fibonacci Support Cluster in the 1h Chart: 

- could push up into earnings on Monday, Sep 22 (BMO)
- pinning potential at the round number of 550, which is a common Fibonacci target in both, the 1h and daily charts

My Trade Strategy is to buy a 550 butterfly which expires on Friday Sep 19, the last trading day before the Monday Sep 22 earnings announcement: BUY BUTTERFLY AZO SEP14 +540/ -2*550/ +560 CALL @2.20. Idealy AZO would pin at 550 where the max profit of 1550/contract would be realized. The Risk/Reward of the trade is a very favorable 440/1550. 

2014/08/29 UNG - Natural Gas Midterm Setup with Fibonacci Targets & Squeeze Support

UNG setup

Long Trade Setup for UNG (Natural Gas ETF) with Fibonacci Support/Resistance Clusters and midterm targets from the daily Chart:

- solid Fibonacci support cluster at 21

- seasonally expecting move up until the end of the year

- geo-political situation might help 

- the daily Squeeze just fired long yesterday, so we expect an average of 8-10 bars of daily push power

- breakout to a new swing high yesterday indicates that a new long trend could be established
- Fibonacci-target 1: 23
- Fibonacci-target 2 (and hurdle on the way up): 23.4-23.7

My Trade Strategy is to sell an at-the-money Put Credit Spread :  Sell GTC Jan15 +21/-23 ATM PCS at $1.10 or better (currently $1.13).

The idea is to have an "edge" from the analysis and to implement the trade with a neutral 1:1 risk/reward, after having paid commissions. If the spread is sold at $1.10, the max risk will be $0.90 + commissions.

If UNG expires in January above $23 you'll make +100% profit, if it expires below $21 your take the full loss of -100% (this works like a risk-balanced binary option, that's why I call it 100binOpts). In effect, you need only a $1 move up to make full profit on the trade. If you end up somewhere in between the $21-23 range you'll experience a partial profit or loss. Of course, partial profits/losses can also be taken at any time earlier than Jan 15.

2014/08/26 TSLA Squeeze Setup with Fibonacci Targets

TSLA setup

Long Trade Setup with Fibonacci Support/Resistance Clusters and midterm and longterm targets from the daily and weekly Charts:

- the weekly Squeeze has already fired long and a few more bars of push momentum in reserve
- the 4 hour Squeeze is getting ready fire long (with overnight data it already fired long)
- Fibonacci-support-cluster at 253-250
- Fibonacci-targets on the daily chart: 271.4 and 276.9
- Fibonacci-targets on the weekly chart: 288.9 and 319.3

2014/08/09 FSLR Squeeze Setup with Fibonacci Clusters

FSLR setup

Long Trade Setup with Fibonacci Support/Resistance Clusters and Squeeze push engine:

- above all EMAs 21/50/200 (supercalifragilistic setup)
- great push up from EMA 200 after earnings on good volume
- daily squeeze triggered long (2 bars) - weekly squeeze in place
- Fibonacci-support-cluster 60-55
- Fibonacci-target 80
- Fibonacci-hurdle 70

The first move up has taken FSLR up to the Fib-hurdle around 70. A pullback in the 65 zone would be nice and for me a preferred entry zone. If FSLR manages to get through the 70 zone, the move has a high probability to get to 80.

My Trade Strategy is to sell an at-the-money Put Credit Spread (my GTC limit order being already in the market):  Sell Sep14 62.5/67.5 ATM PCS at $2.55 GTC (currently $2.03)

=> if the FSLR expires above $67.5 you make +100% profit, if it expires below $62.5 your take the full loss of -100% (works like a binary option); if you end up in between the $62.5 - $67.5 zone you experience partial profit/loss

Should FSLR pull back to 65 my spread would be filled automatically at $2.55, which is a tiny bit more than 1/2 the spread (the extra 5 cents is to cover commissions). The basic idea is to risk $2.5 to make $2.5.  You will also make full profit if the stock moves up only slightly, no huge rally move needed :) 

Note: This is just a trading example for educational purpose only and should not be taken as trading advice. Trading Options carries substantial risk. An ATM credit spread generally risks the full width of the spread minus the credit received. This means that you need to employ your own risk and money management strategies. 

2014/07/08 DAX hindsight Squeeze trading

DAX - FDAX

While I am not a fan of hindsight trading posts, I thought it might be of value for some of you to have a look at four DAX Squeeze setups in the 30 min time frame that have fired in the last six days. For each one of those setups the Squeeze_Momentum and MACD(13,55,8) correctly indicated the direction in which the Squeeze would fire, i.e. grey arrows pointing three times upwards and yesterday downwards. In all four cases a nice dynamic movement followed the Squeeze phase, good for long options traders (and others too ;) ) It's a nice set of indicators that has worked well for me - independently of the time frame used. 

Obwohl ich kein grosser Fan davon bin, Charts im nachhinein auf ihre Profitabilität zu checken, dachte ich, es könnte nicht schaden mal einen Blick auf vier DAX Squeeze-Setups im 30 min Zeitrahmen zu werfen, die in letzten sechs Tagen losgefeuert haben. Für jedes der Setups wurde vom Squeeze_Momentum und MACD (13,55,8) korrekt angezeigt, in welche Richtung das Squeeze losfeuern würde (siehe graue Pfeile dreimal nach oben und gestern nach unten). In allen vier Fällen folgte eine schöne dynamische Bewegung nach der Squeeze-Phase, ideal für long-Options Trades (und natürlich auch für alle anderen Trades;)) Dieses Indikatoren-Set liefert mir verlässlich gute setups, völlig unabhängig von der Zeiteinheit des verwendeten Charts. 

Aunque no soy un fan de analisar un chart retrospectivamente, pensé que podría ser de valor para algunos de ustedes echar un vistazo a cuatro setups Squeeze del DAX en el marco de tiempo de 30 minutos que han disparado en los últimos seis días. Para cada una de esas setups el Squeeze_Momentum y MACD (13,55,8) indicaron correctamente la dirección en la cual el Squeeze dispararía, es decir, flechas grises que señalan tres veces hacia arriba y una vez hacia abajo ayer. En los cuatro casos, un buen movimiento dinámico siguió a la fase de Squeeze, bueno para negocios de opciones "long" (y otros negocios también ;)) Es un buen conjunto de indicadores que ha funcionado bien para mí -  independendente del período de tiempo utilizado.

Für alle die mehr wissen wollen, hier nochmal das Video zum Squeeze Indikator

2014/07/04 Muenchner Rueckversicherungs AG - daily Squeeze & Fibonacci Targets

Muenchner Rueckversicherungs AG

Muenchner Rueckversicherungs AG has a lot of push power from Squeezes in the weekly/daily charts. It just broke above the important 163.5 resistance level with more upside potential. 

Fibonacci support and resistance levels:

Target 1 (30min - 161.8%): 165

Target 2 (daily - 100%): 170

Target 3 (daily - 127.2%): 175

Support Clusters(daily): 

Support 1: 159-156.8

Support 2: 151.8 - 150..9

Support 3: 147.6 - 145.8

2014/07/02 DAX daily and 30min Squeezes with Fibonacci targets

DAX - FDAX

DAX daily/30 min Squeezes and upside Fibonacci Cluster resistance:

The DAX is building up Squeeze push power in the daily and 30 min charts. Should the Squeezes fire long, would the next Fibonacci Cluster targets be at 10134 and 10330.

2014/06/17 DAX Fibonacci Clusters for the 4h and 30min charts

DAX - FDAX

DAX Support and Resistance Fibonacci Clusters:

 after the Squeeze breakout there might be more more upside potential if a pull-back holds at the 9900 - 9867 Cluster

2014/06/16 DAX Fibonacci Clusters for the 4h and 30min charts

DAX - FDAX

DAX Support and Resistance: Fibonacci Clusters for the 4h and 30min charts

2014/05/23 BIDU & NDX setup update: daily squeeze fired long while weekly squeeze is building thrust power

Short update for the NDX and the BIDU weekly-daily squeeze setup of May 19, 2014:

Driven by the Nasdaq breakout on Friday, the daily squeezes of both, BIDU and the NDX have fired long. In this move, BIDU has already reached a first target, the 127.2% Fib-extension at $167.05, which now adds to the overhead resistance of the April 25 swing high at $167.36. A small retracement on Tuesday possibly with an additional squeeze in the 30 min chart would be nice to find a good entry point for the long side.

What makes this setup so attractive is that there is lots of "squeeze-fuel" left in the trade, with a 7-9 bars expected move off the daily chart, and a weekly squeeze that hasn't even fired yet. A good time to turn on the squeeze thruster ...

BIDU

NDX

2014/05/19 BIDU with nice weekly daily and 30min squeeze setup

The chart says it all: BIDU's showing a nice weekly and daily squeeze setup, and just triggered an additional 30min squeeze long. I am watching the markets at the moment. Should the general direction be up today, BIDU has the potential to be great long candidate, also for the longer run. 

2014/05/15 SPX Calendar - Double Calendar adjustment

Adjustment to SPX Income Calendar, Thursday May 15, 2014: 

Convert SPX Calendar into a Double Calendar

As already indicated in the original post of May 13, an extension of the SPX Calendar into a Double Calendar would be used adjust the trade, should the market move outside of the 2/3-adjustment points under the tent. This happened in a strong sell off on Thursday, May 15, so that an additional SPX JUL/JUN14 1850 Calendar Spread was added, with  35/63 days to go until expiration:

BOT +1 CALENDAR SPX 100 JUL 14/JUN 14 1850 CALL @10.05 CBOE

Volatility was up at 13.64% at the time of the purchase and the IV percentile was at 23% (compare with 10% for the initial tent). Consequently, the cost per contract had increased to $1005 for the second tent, as compared to $955 for the initial tent. As shown in the P/L chart below, the Double Calendar spread is now nicely centered and Theta has doubled, so that time decay can do its work. The SPX Chart below shows horizontal red lines to indicate the new break-even zone of the Double Calendar from 1830 to 1915. Fibonacci clusters are also shown with support levels at 1860/1845/1825 and a target cluster at 1920. 

Profit target / stop loss: generally my stop loss matches the minimum profit target, which is 1/3 of the Calendar max profit value. In this case the tent initially had a height of $1420, so my stop was set around $400-$500 and my profit target in the same range. Note that these values stay the same after adding the second tent to the trade, i.e. after converting the Calender into a Double Calendar. Because you add more risk with the second Calender, your risk/reward value will worsen. However, at the same time you have bought (through the added risk) a higher probability trade, because now you have a wider range to be profitable. A higher probability trade does not mean that you will earn more, but that there is a higher chance you will meet your profit target. Good so !

Updates for this and other trades can be found at the InOutOptions page 

2014/05/12 SPX Calendar - new monthly income trade

New income trade Wednesday May 12, 2014 (opened two hours before the close): 

Bought a SPX JUL/JUN14 1900 monthly Calendar Spread with 38/66 days to go until expiration 

BOT +1 CALENDAR SPX 100 JUL 14/JUN 14 1900 CALL @9.55 CBOE

The trade idea:
The decison for the SPX at 1900 is either UP or DOWN. Volatility is extremely low at the moment at about 12% and SPX IV-percentile is in the lowest 10%. For me a good opportunity to open the first "tent" of a double Calendar, at a value that might see some back and forth trading (up to 1920, down to 1850, see chart)

However, should Ms. Market decide to make a stronger move - either up- or downwards - then a second Calendar tent will be placed according to market action either above or below, receptively. The current trade therefore carries only 1/2 of the total capital I am willing to risk in this trade. Lets Ms. Market play her game, we are prepared with a plan for all three directions. 

Updates for this and other trades can be found at http://inoutsignal.blogspot.de/p/inoutoptions2.html

2014/04/16 RUT May monthly Iron Condor - closed

Update on the monthly RUT Iron Condor of 11Apr14 -  29 days left - closed 16Apr14

BOT +2 IRON CONDOR RUT 100 MAY 14 1210/1230/1040/1020 CALL/PUT @2.60 CBOE

On Thursday the RUT monthly IC was closed after only 7 days. This was a typical Benklifa type trade, as the RUT moved first down to 1100 fib-cluster (see chart), then reversed up to the entry point after 7 days. Time decay worked fine during this period, together with the decreasing vol during the up-move. On Thursday the max profit point of the blue P/L curve was reached, a good moment to take profits and to reduce exposure to risk. We don't know where the market might be going, but looking at the chart, there is good chance that it will not revisit the 1130 point (center of the IC) for some time. That's why taking profits and then waiting for a better new entry appeared to be the preferred exit strategy. After commissions, the trade made $126 in 7 days, which is a 3.8% return-on-capital (risk was $3330). 

2014/04/11 new RUT Iron Condor - monthly income trade

New income trade Wednesday Apr 11, 2014: 


Sold 2cts monthly May14 RUT Iron Condor mIC - 34 days left.

Monthly IC: 20 points wide wings , 170 points wide, Call delta 8, Put delta 16, vol=0.2311
Credit $670, Risk $3330, R/R Potential = 20%

SOLD -2 IRON CONDOR RUT 100 MAY 14 1210/1230/1040/1020 CALL/PUT @3.35 CBOE

Markets are down today, vol is (still) up nicely, ticks are moving up and I am expecting some short covering. We are still in the range 1080 - 1210 for the RUT, so I expect some sideways ups-n-downs in this range before the markets might take a more decisive move up or down. One more swing within this range and this RUT mIC might move in a profitable range ... let's see ;)  

For updates on this trade follow:  http://inoutsignal.blogspot.de/p/inoutoptions2.html

2014/04/10 new SPX Iron Condor - monthly Benklifa type income trade

Dear InOutSignal Blog Reader, 

Please note that I have added a new tab about Income-Option-Trades to the InOutSignal Blog. You will find information there about Iron Condor and Calendar Spread trades, together with a performance chart. I will also post more details on some of these trades here in the blog. Here's the first one: 

New income trade Wednesday Apr 9, 2014: 
Sold new Benklifa type monthly May14 SPX Iron Condor with 36 days left.

Benklifa type IC: 25 points wide wings (need to be at 0-25-50-100 strikes), 200 points wide, Call delta 15, Put delta 12

SOLD -2 IRON CONDOR SPX 100 MAY 14 1925/1950/1750/1725 CALL/PUT @4.30 CBOE

Although markets are up yesterday and vol down, I got filled for 4.30 selling the above mIC, which is a better fill than some ICs that I had sold earlier (at higher vol). Best thing that can happen to this type of IC is that the price moves away for a few days and then returns to the middle of the Condor. That's the point to take partial profits .... even if it is only a small portion of the total credit received. The idea is to be in the market as short as possible and to take advantage of the theta decay during this round-trip move. The SPX is just in the middle of 1900 - 1840 range, so chanced are good for such a round-trip move, we will see. More soon  in the updates or at http://inoutsignal.blogspot.de/p/inoutoptions2.html

2014/03/23 AAPL Apple squeezed in weekly and daily charts setting up for a dynamic break-out

AAPL - Apple

Since the December 2013, Apple (AAPL) has formed a triangle pattern, squeezing the price now at the tip of the triangle in a narrow range between 526 to 535. Because of the symmetry of this triangle, the patter is neither bearish nor bullish. At the same time, the TTM-Squeeze indicator with four red dots the weekly and daily charts indicates that a dynamic move is just ahead of us. If triggered this move will likely push the price for 8-10 weeks in one or the other direction (i.e. about 8-10 momentum bars of the weekly TTM-Squeeze). At this time, we don't know in which direction the journey will go, but we might use the squeeze of the 30-minute chart as a trigger. 

My personal scheme to enter the trade with a 30-min trigger follows the rules:

1) The 8 EMA (green line ) needs to cross over the 20 SME (red mid-line of the Keltner Channel) in the 30-min chart
2)  The 30-min candle needs to close above the swing high 533.75 (long) or below the swing low 526.33 (short)
3) The TTM_Squeeze needs to have fired after the close of the 30-min bar (one green dot after a series of red dots) with either a blue momentum bar up (long) or a red momentum bar down (short)

2014/03/10 Review: DAX after the daily, 2-hour, 30-min and 5-min squeezes have fired

German DAX - FDAX

As covered in this blog on Thursday March 6, 2014, the German DAX (FDAX) was setting up for a bigger move with multiple squeezes in place. In addition to a daily squeeze, the chart also pictured 2-hour, 30-min and 5-min squeezes. The expectation was that a larger move would occur. 

Have a look at the chart today and compare it to the post of 2014/3/6 (The grey areas of the chart indicate the time of the earlier post). It is clear that all three squeezes on the charts (see "Sq" in the indicator below) fired one after the other, resulting in a 300 point move south of the DAX. The five minute chart on the right shows only a small portion of that move so that one of the frequent 5-min squeezes could have been used trigger to enter into the large move. When entering in the trade, the TRIX and MACD indicators help finding the direction of the squeeze momentum.

2014/03/06 DAX daily, 2-hour, 30-min and 5-min squeezes - watch out for a MOVE!

German DAX - FDAX

  

The German DAX (FDAX) is setting up for a bigger move with multiple squeezes in place. In the chart you find the 2-hour, 30-min and 5-min squeeze, but there's also a two-day old squeeze forming on the daily chart. The 30-min chart indicates one possible outcome for a move after today's ECB-decision at 13:45 CET , but a breakout in the opposite direction is equally likely. My approach here is to use the 5-min and 30-min squeezes as trigger to then  ride on the 2-hour and daily momentum of the move. 

2014/03/05 BIDU in weekly and 4-hour squeeze with Fibinacci targets at 185/190

Baidu - BIDU

Baidu (BIDU) has been coiled in a weekly squeeze for the last seven weeks. Yesterday it also entered into a 4-hour squeeze that might fire today or within the next few days. This four-hour momentum could be used as a trigger for the expected longer-term move from the weekly squeeze. Fibonacci targets are 185 and 190. Additional support comes from seasonality, which indicates that Baidu favors the upside during the months March through October (see T. Bopp at traders-mag)

2014/01/27 Nice example of a 30-min squeeze trigger in the S&P 500 (ES, SPY, SPX, RUT, IWM)

S&P 500

Just as forecasted in the blog below of January 21, a larger move occurred in the S&P 500 (and most other indexes) after the tipple-squeeze had built up "over pressure" that need to be released. In the earlier blog it was also mentioned that the 30-min squeeze could be used as a trigger in order to decide, in which direction the S&P 500 would fire (long or short). This trigger decision has worked out beautifully in this case and is therefore displayed here as a generic example. 

In the figure above the cursor resides on the Jan 23 candle in the daily chart. The program automatically highlights the time period of Jan 23 in the 4-h and 30-min charts. While the squeezes of all three charts fired short on Jan 23, the 30-min squeeze was the first one to do so. In order to catch the big move, one would use the firing 30-min squeeze as the trigger, and then carefully observe if the other squeezes follow suit in the same direction. The stop loss would be placed fairly tightly in the 30-min chart, preferably above a Fibonacci Cluster or some other resistance level.  

Once triggered, the release of the over pressure typically takes place during 6-8 bars before the squeeze momentum dies down. This also applies to the S&P 500 daily chart, which today is only three days (=bars) into the momentum release triggered on Jan 23. So I expect more movement downwards ...

2014/01/21 S&P 500 and Russel 2000 consolidating with daily-squeeze and 4hour-squeeze patterns - expect a larger move ! (ES, SPY, SPX, RUT, IWM)

 S&P 500

Russel 2000

Two important indices, the S&P 500 and the Russel 2000 are consolidating with daily- and 4-hour squeeze patterns (the Russel even features a 30-min squeeze, too). When squeezed too hard, these "babies" like to escape from their cages, and they tend to do this at an accelerated pace that might last for a few days. While the direction of this move is still unclear, the momentum indicators on the 4-hour charts hint for higher levels of those indices. The 30-min squeeze of the Russel 2000 could be used as a trigger, when it fires long or short. 

2014/01/14 ES (SPY, SPX) at strong Fibonacci Cluster Support - will it hold?

After yesterday's significant sell-off, the E-mini S&P 500 Futures formed a large red candle that has reached an important Fibonacci support cluster. Today's price action will show if this support level can hold. If so, the rally might continue with upside targets in the 1852 - 1857 range.