After a Friday’s strong rally a week ago the Market went up on Monday and then stalled. I mentioned to be cautious although I believed we had room to upwards ①. After that, the market went mostly down ②.
But, it was evident, that this market was not in panic, it was resilient to bad trade deal news from Trump. It literally refused to go down. Every dip down was bought in the end. This turned the market into a healthy pullback, a healthy gains consolidation. Of course, it may all change, but I do not think it will happen. I think, we will clear this pullback, and the market will resume its uptrend ③. Then, I think we will move towards the end of year rally and go to approx. 3150 level ③. After that, we will see what the market wants to do next.
My expectation is a bull market continuation. In fact, it appears, that the selloff we experienced in December 2018 was a major bottom ④ which will not be revisited again in the next future of this market (like many previous bottoms except one in 2000).
Next week we still may see some weakness but it appears that 3100 level holds. If it keeps holding, we are heading up. Remember, that market, which refuses to go that has nowhere else to go but up.
#43 – PBCT Naked put – https://tinyurl.com/sajds2z
#44 – PPL naked put – https://tinyurl.com/r6u4xjw
#45 – IWM naked put – https://tinyurl.com/yx6ae54e
#46 – IWM strangle – https://tinyurl.com/vq8gtcs
#42 – We closed our remaining SPY spread trade as expected and added additional $17 dollars profit to our overall trade. We treated this trade as two separate trades but overall, we made 1.54 credit or 45% in 12 days.
#43 – Our PBCT naked put is still doing well although last week the stock went down from $16.48 when we opened the trade to $16.05. At the end of the week, the price recovered and the stock closed at $16.30. This makes our trade safe so far and we can do nothing as of now. We will sit on it and wait. Again, if the market keeps weak next week and the stock goes down we may attempt to roll the trade into the next expiration cycle and the same strike if for credit or a very small debit. Weekly chart indicates weakness and that we broke below two supports ⑤. If this weakness continues, we may act and roll the trade. The daily chart is a bit more promising that this level may hold ⑥. We have still plenty of time in this trade so we will keep holding it as is.
#44 – We took our profits from previous trades and opened a new naked put against PPL last week. We collected nice $41 credit which we immediately reinvested into the stock and bought 1 share of PPL. The naked put seems to be working well in our favor. The stock still follows the trend ⑦ ⑧
#45 – We added a long call using IWM as underlying. The trade worked well on Monday and Tuesday. Later on the trade started losing but not too much. If our overall market expectation is correct, IWM shall go up with the market again.
#46 – We also opened another far OTM long put and long call trades for which we paid literally $20 but the premise was that since we are in a low volatility market if the volatility spikes, this trade should pay off. It briefly happened with our put which gained some momentum. However, when on Friday the market recovered sharply, the momentum got lost. I expect though, that the market will keep crunching higher and higher and eventually, we may reach the 200 dollar mark. If so, our calls will have a nice paycheck for us. Overall, we only risk 20 dollars in this trade and I am willing to lose it if none of my expectations happen.