July 11th, 2016 Watch-list
Hey Traders! So overall a fairly interesting week for the market last week. We started the week as expected with the bears coming in, but the bulls weren't ready to give up control just yet. After some back and forth action Tuesday, Wednesday, and Thursday, Fridays jobs report was going to be key. Most expectations had the potential number for jobs being in the 170k-180k range, but it ended up wildly exceeding expectations, and as a result the market pushed higher with the DJIA closing up 250.86 points and closing well above the 18k resistance level. That level will now be a key area of support on the chart. Next key resistance is 18167.63, which we almost touched Friday. If we end up breaking that, we'll keep an eye on the 18351.36 level as a major resistance point. I felt the bears were ready to take over, but that does not appear to be the case just yet. If we continue to push higher, we'll put a little more emphasis on the weekly chart along with the daily chart to feel a little more confident an actual reversal is occurring. After a very strong May and first half of June, we've had more mixed results the past few weeks with losses in DUST, TVIX, DGAZ, and SGMO the first time around. The main thing is to not let this alter our overall strategy too much. We've had periods like this before and have always come through with a strong string of wins. Lets stay focused. This is part of the business.
Current Below $20 Plays:
TVIX: Still watching this one for a potential re-entry. I've had a few people ask what makes this play a higher risk trade. There are 2 main reason. 1) It tends to see very large % moves intra-day. That means it can run up quickly and hit your profit target, but it can also fall quickly and hit your stop loss. 2) It's been in a steady downtrend for some time. Anytime we are looking to trade this one on the long side, we are essentially going against the strong underlining trend. That automatically increases the risk. So understand the risk that is involved before trading this one. Historically, I've seen about a 50-50 win to loss ration on this trade. But, by using a 1/2 R/R ratio stop loss, you can come out profitable.
DUST: Unfortunately this one turned against us Friday. We're seeing something very interesting happening in the markets right now. Generally, people rush to Gold when they are uncertain or in fear of the market falling. On Friday, we saw both the market soar higher, and Gold also push strongly higher. There seems to be a strong split between some investors being strongly bullish, and others being strongly on the bearish side. For me personally, I'll be looking to get out of Golds way going forward. Eventually DUST will see a strong move and you can obviously still look to trade it as a basic reversal play. But what we will also do is wait for Gold to see a decent pullback, then we'll attack it more on the long side since we will then have the underlining longer term trend in our favor. This one is very similar to TVIX. High risk/high reward. Historically, I've seen about a 50/50 win to loss ratio, but again using a 1/2 R/R ratio stop, you can come out profitable. For those wanting to try their hand at this one again, no changes were made to the chart.
FRO: Nice move Friday on this one with the daily buy given right off the bat as it saw a strong push in the morning. Next key break is the high set Friday, $7.56. After that, $7.61. Let's go ahead, for those that are in, and be a little more cautious here since the market is so unstable and move your stop loss up to roughly $7.10 (right below the key support levels).
Current Above $20 Plays:
SPXU/SDOW: Mixed results on these two so far. We had 2/4 indicators solidly curving up Thursday with the MACD beginning to curve up as well before the price ended up falling further. Friday, with the market being strongly up, these two ended up getting pushed down. If in, you should have honored your stop. If you have not taken an entry on either of these two, understand that they are now basic reversal plays and not support reversal plays. Once we get back to video watch-list (Monday evening) we'll go more in-depth on these two.