Mylant's Money Blog

ETF SPY: Still Undecided where it wants to go

Analysis for short term option trading!

Technically Speaking-

Trade Recommendations- literally, we have not changed position all week. Do not look for much to happen in the markets to day either. We may move a bit up but we do not expect any grand mover considering we have not had any yet this week. Trade either way, but best to be neutral.

Bollinger Bands— nothing changed from yesterday but a widening of the bands a little; for the last three days the SPY has pushed the top of the bands. We have ever slight widening as SPY attempts to push itself up. This is important as we wrote about before. The SPY may be attempting to move itself out of this wide trade zone and move up. So we will watch the fight today.

RSI- no changes, still bullish; the SPY continues to move with strength. This is the one thing that we can see as a fight. The SPY continues to have bullish strength as it fights to stay up and not move back down to the lower 112 level. It just does not appear to be where it wants to go.

Balanced Volume- volume continues to remain high at close. There still is a lot of interest in the SPY and money continues to flow.

Money Flow- money went out yesterday but we are still looking for the breaking of support before we really consider bearish strength.

Outside Market Influences-

Markets were in a resilient mood Friday, remaining hopeful that Europe will come up with a comprehensive plan to deal with its crippling debt crisis, albeit a few days later than initially thought. Europe's main stock markets all opened higher despite the surprise news Thursday that a European debt deal won't be clinched in time for a summit on Sunday. Germany and France said a second meeting will take place by Wednesday at the latest

Microsoft hits profit forecasts as Windows decline halts. Microsoft's (MSFT) FQ1 EPS grew 6.1% to $0.68 and met analyst expectations as revenue topped predictions with a 7% increase to $17.37B. Income rose throughout Microsoft's product line-up, including at its Windows division, where strong corporate sales helped end three straight quarters of declines.

Gaddafi's death has little impact on oil prices. Reaction in the oil market was muted yesterday following the death of Muammar Gaddafi, as efforts to revive Libyan oil output have been underway for months. Still, getting back to regular production won't be easy, as the government is still in its infancy and infighting could spark a second uprising.

Bollinger Bands- Fundamentals

Bollinger Bands (shows price movement)

As one can see from this picture, Bollinger Bands consist of three lines. A middle line that is a “stock’s Moving Average” and two other lines above and below that are standard deviations. The bands expand and contract. They expand as the stock becomes more volital and contract as it trades in a tight pattern.

Why use Bollinger Bands? How are they helpful to us as traders?

The upper and lower Bands will help us detemine what we call “over-bought” and “over-sold” levels in the stock.

When a stock pushes through the upper band, it is considered “over-bought.”

When it pushes through the lower band, it is considered “over-sold.”

This is very heplful when we are looking at a stock that has a “trading zone” and is moving sideways. If we are using a “Spread” strategy, it will help us determine when to get in because the stock will usually trade between the top and lower bands. Buying when the stock breaks into the lower band and is considered “over-sold” is a good signal.

As we will continue to learn, we should always use more than one indicator to make a trade. When we do make a trade, we should always have an exite strategy in case our observations are wrong. A stock may hit a lower band, but if it does not correct, it may continue on a dowward pattern riding the lower band.

The middle Band can help us determine the strength of a movement. As a moving average, the middle band can help us determine how strong a particular trend is.

If a stock is trending upward and consistently bouncing off the middle band for its lows, then we know we have a very strong upward trend.

After the same manner, if a stock is moving downward and bounces off the middle band like a ceiling, we know the downward trend is very strong.

The middle band is a gage for us to determine how strong the trend really is. It will help us identify strength and weakness in the movement of the stock.

There are two different formations that we can find in a Bolinger Band indicator that may help us with buy and sell signals that are important.

Double Top Sell Signal

A Double Bottom Buy Signal—when a new low forms and pierces the lower band and is subsequently followed by another low that does not pierce the lower band, we have a possible bullish buy signal.  The second low may be lower than the first, but the important thing is that it does not pierce the lower band like the first one did. This “bullish set-up” will be confirmed by a movement through the middle bands.

A Double Top Sell Signal— is just like the double bottom buy signal, this is a “bearish set-up” to get rid of the stock. It is opposite of the previous one. We are looking for two tops. The first top breaks through the upper band. The second top does not break through the upper band. The bearish turn is confirmed as the stock moves downward through the middle band.

What will we use Bollinger Bands for?

Determine the strength of a trend, up or down.

Identify “over-bought” and “over-sold” points.

Use “double tops/bottoms” as “signals in a possible trend reversal.

 

Using Bollinger Bands alone is not a good idea to determine buying and selling. It is one indicator we will use with a series of others.

 

ETF SPY: JPM did not Met Earning Expect Weakness Today

Analysis for short term option trading!

Technically Speaking-

Trade Recommendations- SPY still appears to have some bullishness in her. Though weak, it still looks like it wants to rise. News around the world is favorable for Slovakia. Oil is on the rise as the dollar slows. This usually means a more expensive market. So we are bullish on the SPY today. But do not be surprised at a slight move of no significance.

Bollinger Bands- SPY has neared the top of the Bollinger Bands with the weakest push yet of this bullish drive north. Forming a low doji signifies a weak reversal. Here we can just call it a lack of strength. Hitting a major point of resistance as well as reaching the top of this (possible sideways formation) we would now expect bearish influence over the SPY.

RSI- the RSI has continued to show strength in the SPY’s latest journey toward bull country. This indicator continues to follow the stock, not revealing any changes that maybe taking place. About all we can see here is a leveling out of yesterday. This possibly may reveal a lack of will power to continue up, but it is speculative at best. 

Balanced Volume- the SPY is still showing strong interest at the stock continues to bounce its way upward. Knowing this indicator uses volume and the “end day price” we can see a lot of strength. But now, will it continue to follow the upward trend or will it bounce back and people take profits from what it has gained?

Money Flow- money has consistently flowed into the stock. It still looks healthy; does not look like people are getting out of the stock yet.

Outside Market Influences-

JPMorgan Chase says its third-quarter income fell 4 percent on weaker investment banking and trading results. The New York bank earned $4.3 billion, or $1.02 per share, compared with $4.4 billion, or $1.01, during the same quarter last year. Analysts surveyed by FactSet forecast the bank would earn 91 cents per share. This is less than the $.93 forecasted. May not be a good day because of this.

Stocks in Europe fell Thursday as investors await more details over exactly how European Union officials plan to tackle their debt crisis and Chinese trade figures stoked concerns over the outlook for the world's second-largest economy. Stocks have been buoyed this week as eurozone officials finally indicated they are willing to take decisive action such as larger write-downs on Greek debt and a push to make banks strengthen their capital against resulting losses.

Foreclosures continued to plague the U.S. housing market last quarter, while a a growing backlog has caused the length of the foreclosure process to drag on and on. Nationwide, foreclosure filings totaled 610,337 in the third quarter, an increase of less than 1% from the previous quarter, said RealtyTrac, an online marketplace for foreclosed properties.

Google Inc's plans to acquire Motorola Mobility Holdings Inc and the health of its advertising business will be in the spotlight when the Internet search leader reports quarterly results on Thursday. Analysts expect Google to deliver solid financial results in the recently ended quarter, with revenue up more than 30 percent year-on-year at $7.21 billion.

FAZ Weekly Options Trade Analysis

FAZ Weekly Options Trade Analysis 

The investment seeks daily investment results, before fees and expenses, of 300% of the inverse of price performance of the Russell 1000® Financial Services Index. The fund normally creates short positions by investing at least 80% of net assets in financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. It is non-diversified.

Trade Recommendations—we have a cup and handle pattern formation that signifies a continuation pattern. Weekly Option Trading should keep focus on a continued move up in the stock but watch for breakouts. There are possible signs that money has flowed in this and
momentum of money entering may be on the decline soon. This means our top will have been reached. Be aware of this as we trade your weekly options.

Bollinger Bands— the FAZ has been challenging the top of the bands as of late. We have seen a double push through the bands and this double top is a good indication that it will bounce back down now. Since the FAZ reacts positively to a negative market, we could have signs of a rise in financials coming soon, if only for a moment! Weekly option trading should keep this in mind.

RSI—The RSI has shown that FAZ has been very healthy and bullish for quite a while, this means falling financials. We continue to have a support level just below the ‘50’ mark and have mirrored the stock, pushing up and rising a bit higher as of late. This could mean financials will continue lower but we are absolutely trading in a very healthy bullish pattern here.

On Balanced Volume—Faz has ever increasing volume and when volume increases like it has, demand goes up and so does the cost of the stock. Presently we have a slight Symmetrical Triangle pattern forming. This tends to be a continuation pattern of rising volume. More and more people are getting into FAZ as Financial Stocks continue to fall. Bullish weekly option trading would be considered a money maker here. 

Money Flow— Volume is increasing, but money is going out of FAZ . The key to what is happening here is to watch support. Big money could have flowed in already and the rest are individuals. If we break support on our trendline, watch the OBV and see if it also starts down, this very well could mean the beginning of financial stocks building a bottom and not moving down anymore.

John Mylant is in high demand worldwide as an option investment trainer. Using Credit Spreads on weekly options, he teaches clients around the world how to grow their money at about 3% per week. Learn about Weekly Option Trading now…

Trading Weekly Options: FAS Directional Analysis

FAS Weekly Options Trade Analysis (9-18-2011)

The investment seeks daily investment results, before fees and expenses, of 300% of the price performance of the Russell 1000® Financial Services Index. The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is non-diversified.

 
Trade Recommendations—if you are trading weekly options with FAS we maintain keeping a bearish option strategy in place. There may be an opportunity to look for money making opportunities on both ends soon, but these signs are weak at the most. Since the bands have been tight, the options are trading tight. This means there is not a whole lot of movement and room for mistakes. Trade your weekly options bearishly still but this week we may still see a couple bullish days before we turn bearish again.

Bollinger Bands—FAS has been moving steadily down for the last 6 months. It has been steady and consistent and this is why we can see the bands moving along so closely together. Except for the one drop we had in the markets in August, FAS has been steady and somewhat predictable. We are still moving down in a bouncing pattern and we still have room to move up a bit before we continue our downward bounce.

RSI—since FAS have that deep plunge in the markets, we have seen the development of a positive divergence. Our lows appear to be getting higher and we see our highs becoming steady but not really moving up. When we look for a positive divergence, we also want to see the highs getting higher. Since we do not have the higher highs like we like, we would say that we have signs of the bearish trend slowing, but it is a weak sign at best. 

MACD— the FAS has more pronounced signs of a positive divergence here. This is especially true in the MACD Histogram. Just now have we rested upon the ‘0’ marker we have been positive while the stock was dropping. Trading weekly options, one would watch for a change of direction. Maybe the best we can see is a sideways movement and no more downward trends. This would allow us to trade in either direction with a weekly option strategy. 

Chart—FAS is consistently moving down. One would choose a bearish weekly option strategy just by looking at the charts. We are steady and since we have been predictable we do not expect a huge change to take place in the chart. Possibly bearish to sideways in the future, but this is even week.

John Mylant is CEO of EmpoweredInvestingNow.com. He is in high demand as an Investment Trainer. Coaching traders all over the world how to grow their portfolio, he uses Option Strategies that are safe, conservative, and allows for quick steady growth with limited liability. Interested in successfully growing your portfolio using options—safely, efficiently, and quickly? Trade Weekly Options now....

Amazon AMZN: Weekly Options Trade Analysis

September 24, 2011

AMZN Weekly Options Trade Analysis 

Amazon.com, Inc. operates as an online retailer in North America and internationally. It operates retail Web sites, including amazon.com and amazon.ca. The company serves consumers through its retail Web sites and focuses on selection, price, and convenience. It also offers programs that enable sellers to sell their products on its Web sites, and their own branded Web sites. In addition,
the company serves developer customers through Amazon Web Services, which provides access to technology infrastructure that developers can use to enable virtually various type of business. Further, it manufactures and sells the Kindle e-reader.

Trade Recommendations—if you are trading weekly options on AMZN, focus your attention on bearish weekly option strategies. We believe that our bullish days are numbered and it looks like the bears are going to have the upper hand for a while.

Bollinger Bands—after moving up so high, AMZN appears to have dipped back down to the middle band. If it follows the same pattern it has been following, then it is still going to move lower. AMZN has been bouncing wildly back and forth getting higher and lower. If we follow the same pattern, we still have a ways to go before we turn bullish again.   

RSI—while AMZN has been moving up, we can discover a slight negative divergence in higher highs. This is telling us that we may be coming to the end of this wacky pattern. The higher highs do not have as much strength and we may have seen the last of this pattern. Important observation.

MACD—AMZN looks like it is still ready to move down farther and is not giving us any indication that it will bounce off the middle band where it rests. The MACD Histogram could make a mild point for a low but we do not have any indication really that it is ready to stop.  We expect still a move down.

Chart—while AMZN has been moving up, we are getting indications that this continuous widening is about to end. And if the indicators are correct it will lean toward the bearish side right now and our bullish moves have come to an end—at least in the short term.

John Mylant is CEO of EmpoweredInvestingNow.com. He is in high demand as an Investment Trainer. Coaching traders all over the world how to grow their portfolio, he uses Option Strategies that are safe, conservative, and allows for quick steady growth with limited liability. Interested in successfully growing your portfolio using options—safely, efficiently, and quickly? Trade Weekly Options now....

 

Weekly Options Trade Analysis- AIG

Weekly Options Trading: AIG Trade Analysis (9-20-11)

American International Group, Inc. is an international insurance organization. The company operates property and casualty insurance networks worldwide and conducts activities in the U.S. life insurance and retirement services industry. It also involves in commercial aircraft leasing and residential mortgage guaranty insurance businesses. The company, through Chartis Inc., provides various property and casualty insurance products under commercial and consumer categories

worldwide. These products include surplus lines, executive liability/directors’ and officers’ liability, employment practices, excess casualty, and travel/assistance lines.

Trade Recommendations— because the bearish flag AIG appears to be in, a weekly option trade should be cautious. We are moving down in this formation but extreme caution should be taken. Since this formation is well formed, we need to be careful that the stock doesn’t continue down on a break through. But it could bounce off of support. So a weekly option strategy should wait until we have more discovery of our direction.

Bollinger Bands— AIG has been healthy as it has bounced in a slight bullish direction from the bottom to the top of the Bollinger Bands. It continues to move up. Presently it is moving back down, let’s see if it will touch resistance and move back up or will it define the continued longer term move down.

RSI— AIG has followed the chart in the RSI here. We are not seeing anything that tells us differently but supports the bullish move up.

MACD— we learn a little more about the AIG from the MACD indicator. First of all, we can tell there is not a whole lot of strength in this intended move. For the bullish move, we have still been in the bearish territory. But the MACD Histogram has given us bullish territory. Since it has been moving down, we are wondering if we are now going to break through the pattern and continue down.

Chart— After a prolonged downward move, we now have been inching our way upward and it appears that we have a bearish flag formation.

John Mylant is CEO of EmpoweredInvestingNow.com. He is in high demand as an Investment Trainer. Coaching traders all over the world how to grow their portfolio, he uses Option Strategies that are safe, conservative, and allows for quick steady growth with limited liability. Interested in successfully growing your portfolio using options—safely, efficiently, and quickly? Trade Weekly Options now....

Weekly Options Trading: EFA Trade Analysis

EFA Weekly Options Trade Analysis (9-18-2011)

The investment seeks to replicate, net of expenses, the MSCI EAFE index. The fund generally invests at least 90% of its assets in the securities comprising the index. The index has been developed by MSCI as an equity benchmark for its international stock performance. It is a capitalization-weighted index that aims to capture 85% of the total market capitalization. The fund is non-diversified.  

Trade Recommendations- trading weekly options with EFA, we are still bearish in nature but we would be cautious on longer term options that are bearish because of the change that the indicators are preaching that might be coming here soon. We should be changing direction of consolidating again, but this present move is really losing steam. Short term, we can see a short move up and then another drop down to its support trend line. So watch the bounce off the upper trend line and play the weekly option for a bearish gain.

Bollinger Bands- EFA has been bearishly moving down the bottom band—bouncing off and apparently using the middle band as its area of resistance. We have had a quick slide down the band and twice we have punched through the bottom. This is a possible sign of slowing down and not moving down so quickly. It could be the end or an apparent consolidating period. This is known as a double bottom buying period. So watch for a slow down in moving down.

RSI- here the EFA starts to show us something different. While the chart is moving down in such a strong bearish position, the RSI supports this move by never even touching the ‘50’nuetral mark. But we also have a series of higher lows given us a positive divergence. This divergence is usually a sign of a trend change. More proof of a turn around or slow down in the bearish direction of this ETF.

MACD-like the RSI, the EFA MACD is bearish, supporting the move, but at the same time giving us a positive divergence. The strongest divergence can be seen in the MAC Histogram. We have a push through positive territory whereas the other indicators are not showing us this.

Chart-from a long term neutral position, EFA has been steadily moving bearishly for the last 90 days. As we move down, we continue to trade in a tightening wedge. Eventually that wedge will have to break out and all indicators are leading to that breakout coming soon. While supporting the bearish tendencies of the stock, they are also giving us warning signs that EFA is slowing down and ready for a different change in the way it is moving.

John Mylant is CEO of EmpoweredInvestingNow.com. He is in high demand as an Investment Trainer. Coaching traders all over the world how to grow their portfolio, he uses Option Strategies that are safe, conservative, and allows for quick steady growth with limited liability. Interested in successfully growing your portfolio using options—safely, efficiently, and quickly? Trade Weekly Options now....

Weekly Options Trading: AAPL Trade Analysis

Weekly Options Trade Analysis for AAPL

Trading Recommendations— AAPL appears to be poised for a breakout from this chart pattern. A weekly option trade should consider a bullish play first since 75% of all Symmetrical Triangles are continuation patterns. Straight option buys or a Bullish Spread may be in order here. But we must look for signs in the indicators of possible changes to break out.

Bollinger Bands— AAPL presently sits at the bottom of the Bollinger Bands and we have two options ahead of us. Since we have a developing pattern here, we have room to slide down the lower band like we did last time on our formation, or we can bounce from this low and start to move up again to the top of the band.

RSI— since AAPL has a tightening up of the stock candlesticks, the RSI has been following the same direction. We have higher lows and lower highs, so on this 60 minute chart we have no sure sign to follow through the RSI.

MACD— following in the same steps as the RSI the MACD is showing AAPL consolidating getting ready for a move out of this particular pattern. Like the RSI, AAPL is giving us higher lows and lower highs. Supporting the chart movement but not giving us any particular signs.

Chart— the indicators are not giving us a whole lot of signs as to the direction of AAPL. They merely appear to be supporting what we already are see in the chart. The 60 minute is showing the Symmetrical Triangle. The symmetrical triangle, which can also be referred to as a coil, usually forms during a trend as a continuation pattern. The pattern contains at least two lower highs and two higher lows. When these points are connected, the lines converge as
they are extended and the symmetrical triangle takes shape. You could also think of it as a contracting wedge, wide at the beginning and narrowing over time. There are instances when symmetrical triangles mark important trend reversals; they more often mark a continuation of the current trend. Regardless of the nature of the pattern, continuation or reversal, the direction of the next major move can only be determined after a valid breakout.

Roughly 75% of symmetrical triangles are continuation patterns and the rest mark reversals. The reversal patterns can be especially difficult to analyze and often have false breakouts. Even so, we should not anticipate the direction of the breakout, but rather wait for it to happen. Further analysis should be applied to the breakout by looking for gaps, accelerated price movements, and volume for confirmation. Confirmation is especially important for upside breakouts.

John Mylant is CEO of EmpoweredInvestingNow.com. He is in high demand as an Investment Trainer. Coaching traders all over the world how to grow their portfolio, he uses Option Strategies that are safe, conservative, and allows for quick steady growth with limited liability. Interested in successfully growing your portfolio using options—safely, efficiently, and quickly? Trade Weekly Options now....

 

WEEKLY OPTIONS ANALYSIS: EEM

ETF EEM Emerging Markets Weekly Options Analysis

Technically Speaking-

Direction- the EEM Emerging Markets ETF, is bearish in nature with a slight upward turn that looks like a penant.

Bollinger Bands- the ETF EEM has consolidated to the point where it is looking for a way to break out. It ended the day Friday at the bottom of the Bollinger Bands. If the same formation continues, it looks as if it is ready to move up again.  But we are watching to see if it is ready to break through and form the second flag pole.

RSI- the EEM is following the same flag pattern as the stock. It shows a bullish support but let us not forget we are in a bearish formation as we consolidate so we cannot read much from here. Be cautious here.

MACD- as with the RSI, mirrors the EEM stock chart. Both the MACD & MACD Histogram are showing higher highs and higher lows. This indicates a breakout eventually—soon in one direction or another. We are lightly bullish but we are getting ready to break out in a continued southward move

Chart- the Flags and Pennants can be categorized as continuation patterns. They usually represent only brief pauses in a dynamic stock. They are typically seen right after a big, quick move. The stock then usually takes off again in the same direction. Research has shown that these patterns are some of the most reliable continuation patterns

Bearish flags are comprised of higher tops and higher bottoms. "Bear" flags also have a tendency to slope against the trend. Their trend-lines run parallel as well. Flagpole: The flagpole is the distance from the first resistance or support break to the high or low of the flag/pennant. The sharp advance (or decline) that forms the flagpole should break a trend line or resistance/support level. A line extending up from this break to the high of the flag/pennant forms the flagpole.

Flag: A flag is a small rectangle pattern that slopes against the previous trend. If the previous move was up, then the flag would slope down. If the move was down, then the flag would slope up. Because flags are usually too short in duration to actually have reaction highs and lows, the price action just needs to be contained within two parallel trend lines.

Making a play on the EEM Emerging Markets ETF should be positioned for a bearish move.

John Mylant is CEO of EmpoweredInvestingNow.com. He is in high demand as an Investment Trainer. Coaching traders all over the world how to grow their portfolio, he uses Option Strategies that are safe, conservative, and allows for quick steady growth with limited liability. Interested in successfully growing your portfolio using options—safely, efficiently, and quickly? Trade Weekly Options now....