Wolf on Wall Street

Friday, March 1, 2013

Market Update-Futures

ES's intraday chart is close to inline, it's starting to lose some momentum, NQ's chart is downright interesting.

ES losing some momentum on the 1 min...

NQ-NASDAQ futures never gained it, they are leading negative...

Hmmm

I'll admit it, I'm probably jumping the gun a little here, but I think I'm going to go for one half of the intended position in GOOG Puts. I'm looking at April 20th, 2013 expiration with a strike of $810.

You know where I'd like to fill the rest.

I'd REALLY Like to get GOOG

I can't go too much further on the equity short in GOOG without violating risk management rules I try to keep, if this were a brand new position, I think I'd be looking to phase in to it and enter about 50% short right now and wait for a chance to hopefully get the rest a little higher as I talked about in this last GOOG Update/Trade Idea on Feb 27.

Since then I have posted numerous notes/reminders about GOOG:
Feb 27th- Positions I Like

Feb 27th GOOG Reminder

Feb 28 Note

Mention of it last night in "One More Try"

And now once more... I think I'll have to look at Puts, but I do like a longer term equity short as well.

The yellow arrow is what I believe to be the head fake area, BIDU did the same thing for an even longer period of time, but stuck around the same spot when we entered that head fake at the highs of the year for 2012, a move above recent resistance would be at $809, I might have little choice but to take action if that were to happen.

The 2 min chart shows a classic leading positive divergence to the left in white and a leading negative divergence to the right in red, however even shorter term...

The 1 min chart shows GOOG making some upside this morning rather than continuing the move lower, this is good from my perspective, but I don't know how long it lasts and the op-ex day doesn't make things easier.

The 5 min leading negative and where I'd prefer to enter a GOOG put or short.

The 15 min chart with accumulation and nasty distribution, leading well below the year's lows.

Here's a closer look at the same chart, this damage is done in a flat range where we often see divergences and above the head fake area, which is the reason for the head fake move.

The 2 hour chart has a bad negative divergence, I put some marks to use comparative divergence analysis, look at price at the two green hash marks and look at 3C at the two red hash marks, not only is it locally divergent, but leading negative on a much larger basis, I REALLY WANT THIS ONE.

Starting the Month Off Right

Our weekly and monthly (for March) options ranking is pretty darn good, of course it is early, but it shows once again how many people were positioned the wrong way.

March SPY PUT P/L

Just because there's a gap, it's op ex and 3C isn't telling me much on the Futures yet, I decided to take half off the table and leave the longer April QQQ puts in place.

Almost 32%

Taking Half of March SPY Puts Off the Table

Gold Futures

Gold futures with a huge 3C leading positive divergence right off the lows, GLD will gap up.

Pre-Market Futures

Good morning.

Here's what ES futures did last night in to the present...

(*This chart is rolled back to yesterday) Last night after hours a 1 min positive divergence popped up in the futures taking them off the lows and up about 5 points, like I said last night, I don't know if it was the start of a bigger move, if it was op-ex related, if it was nothing or even if it was simply support to keep the market from plunging even further, the New York F_E_D has an active trading desk and they do step in the market at strategic points when they feel it necessary so it could have been the F_E_D lending the market support to keep the market from turning in to a Black Swan, who knows?

What we do know is it started going negative around 3 a.m. EDT when the European markets open.

Here's the chart rolled forward to the present, the green arrow is the European open, by then 3C was negative and the 5 point gain started to erase, we have a small positive divergence off the lows this morning pre-market.

I'll be watching the SPY March $155 puts in case I want to close them early on the gap down, I'll let you know first...

Here's the 5 min chart, the signal is to the left, I haven't decided whether to close them (puts) or not because 3C is in line with price, but no longer a divergent signal.

NQ-NASDAQ Futures

These went negative at the European open as well and are in line, I'll probably leave the April QQQ $68 puts alone unless I see something that looks imperative to take profits on the gap down.

The 5 min chart here doesn't look as good as the ES chart, but it is still in line

As far as GLD goes, our April long Calls should enjoy the gap up.

Thursday, February 28, 2013

For those who bought GLD Calls

You'll probably like this, gold futures-5 min chart

Leading positive, we should see some nice gains from this one probably tomorrow.

One more Try

This could be nothing (although I doubt it), it could be the start of a move for an options expiration pin or it could be that new Dow high I think Wall St. would love to have, especially on a Friday, but there's some movement in futures.

The 1 min ES chart is flying with a leading positive divegrence, this may not last overnight or it might, but there's no support for any price moves that could potentially come from this, so it gives us another opportunity like today perhaps with names like GOOG and PCLN, but it's way too early to tell, I just saw it and thought to post it.

The real problem is in the 5 min chart, this is why I preferred next week's expiration on the puts, the volatility in the market is insane, so I'd rather have a few extra days, but this shows us what's been going on with smart money.

NQ has the same 1 min...

And the same 5 min.

Maybe I'll check these before I go to bed, but a I said in the last post, maybe op-ex, maybe the new Dow high to bring retail in over the weekend, maybe it's nothing, but it can't hurt.

3C Quick Start

Many of the charts you see here at WOWS are my proprietary indicator 3C which reveals underlying institutional money movements and often contradicts price. To understand the annotations made on charts, you must first understand that 3C has no numerical value, it is a pure divergence indicator. Positive divergences represent accumulation by smart money, negative divergences represent distribution by smart money and when 3C trades with price, that is trend confirmation.

The chart annotation system is simple; white arrows represent relative positive divergences, red arrows represent relative negative divergences and green arrows represent trend confirmation. When 3C is in a white or red box, that represents a leading positive or negative divergence, leading divergences are the most powerful.

We analyse 3C in multiple timeframes, the longer the timeframe the stronger the accumulation. 1-2 min timeframes represent intraday moves, a 5 min timeframe can represent a day or two and 15 min timeframes average trends of a swing trade nature. 30 and 60 min charts can move the market for a month or more and daily charts can be over a year.

You'll get use to seeing the charts and understanding how the multiple timeframe analysis works and works well.

Welcome to Wolf on Wall Street.

The trades featured here are meant to maximize returns with the least risk and highest probabilities. Unless otherwise mentioned, all trades are meant to be executed at market. I prefer long-term trending trades which perform well in rising markets, but really stand out in declining markets. However, we get occasional one day gifts 30,40,60% 1-day gains. I'd urge you to consider taking some or all off the table in such cases, the markets don't give gifts like that often or for very long. Most of the returns that make the system outperform so well come in short-entry trades. If you are opposed to short trades, this is not the system for you, unless you are ok with buying an inverse ETF. If you would like more information about the truth about shorting stocks, just email me.

Risk management. I recommend a specific and consistent risk management approach to all positions. In most cases we try for 2% risk money (2% of portfolio) unless such a position size exceeds 15-20% of overall portfolio in actual position size. Each trader is different and each has a different allowance of open trades. I like to keep the overall money in the trade around 10-15% of portfolio per position in case of gaps against you. Stops are generally executed at the end of day and I personally never place a stop order, all my stops are mental; remember, the middle man gets to see everyone's cards. When you are not in tune with the market or opportunities just aren't that spectacular, I take my risk per position down to 1% or even half a percent of portfolio value.

Each trader is different and must determine their own level of comfort with risk. I do have a channel stop which I provide to TeleChart/StockFinder users for automated stops, I appreciate you using my links to sign up if you do. The Trend Channel catches trends and works well as it automatically adjusts for each stock's volatility. Arbitrary exits based on nervousness about the markets WILL decrease the portfolio performance dramatically. This system will not ever get you in at market bottoms or tops. The recent 1 year performance against the Russell 2k buy and hold had the system beating it by 3:1. Ultimately it is up to you as to how you proceed, but I'm always available to help you determine what might work best for you.

I do use other scans and systems when market conditions warrant their use and may change strategy with market conditions.

The MOST IMPORTANT tool you have to bring you long term success is RISK MANAGEMENT. There are plenty of articles linked at Trade-Guild.net on Risk Management. We can be wrong 75% of the time and still outperform the market with solid, consistent risk management.

Position Sizing

The position sizes noted in the positions @ 2% risk of portfolio are based on a $20,000 portfolio-adjust as needed. Due to tight stops, there is the possibility, even probability that one position could take up the entire portfolio. You need to decide how many positions you want to trade and reduce the position size according to that. For instance, if you want to trade 5 positions in a $20,000 portfolio, no one position should be valued at more than $4,000-not risk money or 2% rule, but share price entry x shares.