This time last week I was busy writing about the coming week. What will the FED do? How will the market react. Will the big 'patience' word be removed?
The key this week, aside from the move higher in stocks, was the US Dollar pulling back. The massive move to the upside has taken a breather. That's good news for the stock market and it's something I've been saying needed to happen for stocks to rally.
On Wednesday the FED kept expectations of a rate hike, while also weakening the dollar... it's magic! The US Dollar was so upset on Wednesday it crashed after the stock market closed.
Today's Unusual Option Activity
While the FED was busy removing patience, anyone patiently buying and holding CALLs did quite well this week. On a personal level it was the best week of 2015, and mostly due to patience.
While the market pundits with 80k followers were again leading their sheep into a large exit-less structure heading into the FED meeting on the March 18th, patience was a virtue at optionmillionaires:
Every single one of those options were 100%+ gains into weeks end. $CAT was near $78, in the chatroom live audio I noted how a mere 3% move in the stock would turn those $79 calls into big gains. After the FED minutes the stock soared over $81 and today closed near the highs of the week.
I covered most of these stocks in the mid-day market video.
as well as the move I was trading for in $TWTR at the start of the week
$TWTR was sitting near $46 when I bought the $47 weekly calls. $TWTR hit $49 today.
Heading into this week and even during the week the market was giving all kinds of signals that it wanted to go higher. Signals that were continually shared in the chat room via live audio, updates, recaps, morning market videos.
Talk about tipping your hand. ON Wednesday before the FED the catcher signaled a 3 for a Yellen Sinker. After the FED Yellen threw a sinker, crushing the VIX. Go figure.
The VIX smackdown continued into the last trading session of the week. Again the VIX was curiously yawning during times of market weakness, giving clues about the likely direction of the market. Couple that with a US Dollar the FED has to talk off the cliff, charts that have historically worked for rallies in the past, small caps hanging tough, biotech breaking out, and this market was telling you to buy and be patient.
Last nights bonus chart also highlighted more weakness for the VIX. Today? More weakness for the VIX.
Take a look at some of the charts I posted at the end of last week and the start of this week concerning the $SPY and $QQQ. Both were turning up, and like previous times, looked poised for a breakout. That is exactly what happened this week.
$SPY At the end of last week:
At the end of this week:
$QQQ at the start of this week
$QQQ at the end of this week:
Patience paid off being long oversold names of $TSLA, $CAT, $GPRO, and $WYNN.
Even yesterday's action felt like a rope-a-dope. The bears were getting fooled into thinking the market was ready to get knocked out. Was it really going to be that easy?
Late in the session on Thursday I bought $SPY calls for a bounce. We got that and then some today as the $SPY neared $211 turning these $.33 calls into $1.50 calls. Buy the dip? Off the lows? Whatever you want to call it, this market remains one where the majority of the stocks are going higher. Which means you want to be long the majority of the time.... simple isn't it?
Bearish articles, posts, traders.... I still see them to this very day. Posting the same negative articles. Claiming to be all in short.... and then we rip higher and they turn from a trader into a sports fan, or a writer for Home and Garden Magazine, or simply vanish until the market starts to turn south again.
For those who are in the business of making money trading stocks and not merely reading witty material, the bearish tweeters, bloggers, best be visited when this market starts to roll over.
I am not the perfect trader. But I also know that the odds are not in your favor fighting a Central Bank, bullish charts, and common sense, which is why I had my best week of 2015. I had a plan coming into the week, I executed, and its on to next week.
Some trades this week posted on private twitter:
$GPRO $40 calls $.55 to $1.60
$TSLA $200 calls $1.33 to $4.60
$SPY $209.50 calls $.33 to $1.50
$WYNN $127 calls $1.26 to $6.00
$CAT $79 calls $.47 to $2.35
I also had losing trades this week.
$BXP puts I bought a few weeks ago are gone.
$ROST puts I bought a few weeks ago are gone.
I bought $DDD calls on the buyout rumor spike, was up briefly but watched them vanish today.
I bought $GOOGL calls, watched them gain 25%, and then vanish as the PEG kept GOOG and GOOGL stuck all session long. $560 and $565.
I also had $JPM calls from yesterday that I posted in the chat room. Those worked out rather well today.
Toward the end of the day I positioned for next week in two stocks. If you haven't seen them I posted my entry in the om.com twitter feed. I'll have more about them this weekend.
The great thing about this market, in my view, and I am not sure most will agree, but it is getting back to a stock pickers market. Even on a day like today, when the market was ripping higher, there were stocks falling.
The key to this week - have a plan - execute - be patient - and don't be afraid to take profits.
This Week at OM.COM
In Addition to the Daily Watchlists, Recaps, Market Videos, and Morning Reads, Option Scans, Chart Setups:
Sunday Night is the Week Ahead Live Webinar
Tuesday A Live Webinar by Yours Truly at 11am Covering The Currency Market
Thursday A Live Webinar by Your Truly at 11am Covering Charts/Scans/Options
Have a Great Weekend