December 12th, 2016 Watch-list
Hey gang! Another strong day for the market on Friday with the DJIA going up and setting another all time high while gaining 142.04 point. At this point it is not out of the question that we may see a continued push towards 20k for the DJIA before years ends. So, how do you trade a market that continues to defy logic and push higher when everything we see is screaming a pullback is coming? First, you be extremely cautious. You can't lose money that isn't in the market. Sometimes it's best to simply sit on the sidelines until things settle back down. Second, you target inverse trades with reduced capital, just like we are. With this scenario you run the risk of getting stopped out once or twice if the market pushes higher, hence the reason to go in with reduced capital. As long as you honor your 1/2 R/R ratio stop however, when you finally do get the pullback you can make up for a previous loss or two. Third, you look to cheap options that, if they expire worthless, mean you lose a small amount. But, if the market does reverse, you have the potential for a solid overall gain. We'll be doing a little bit of all 3 of the options above in the coming week. Below you will find the daily chart for the DJIA with key support and resistance labeled.
Current Plays on Watch:
SDOW: Not much new here. This play is very simple. If we get a 3/4 sell signal in the daily DJIA, we then look to SDOW and get our entry utilizing the 15 min technique. Still waiting for that entry.
VXX/VIX: Red day on these two as they often tend to move opposite the market. For VIX a lot depends on what expiration you are in at. If in VXX, we still have not yet hit the 10% stop loss discussed. If you have not secured an entry in these two yet, I would not recommend entering at this time.
SPY/SPXS: This is another inverse market play to consider if we see a pullback in SPY. Exact same scenario here as for SDOW. Want to see a 3/4 sell signal in SPY, then a 15 min buy in SPXS before entering SPXS.
New Below $20 Play to Consider:
AMRS: This is one of those high risk below $1 trades that can produce some solid profit, but also comes with some risk. It seems like nearly every trade we target lately is high risk. The reality is, with how the market is right now, most trades come with increased risk. We saw this one make a strong move before settling back down, seeing another run (though smaller), and now settling right back down to the same support level it reversed off of before. There are a good amount of traders with their eye on this one. If we can see a break of the 50sma and 20sma, we could see this one make a move back towards the 90 cent level. Chart below with details on entry criteria, profit targets, and stop losses.