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 ...