Mylant's Money Blog

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....

Weekly Options Trade Analysis: Alcoa AA

AA Alcoa

Weekly Options Trade Analysis

Direction— AA is attempting to push herself into bullish territory but may be forming a trading range it will stay in.

Bollinger Bands— having touched the top of the Bands, AA rests on the top of the middle Band as of Friday. This may be a sign of strength if we can get her to continue moving up. The upper resistance and lower support will clarify the strength AA has in this move when we come to those lines.

RSI— AA has found support with RSI. It continues to show bullish movement; so one would think to design a weekly option strategy that is bullish. Not so quickly, for the RSI shows strength but the support is weak. We have yet to reach the ‘50’ level in this move. Be cautious.

MACD— the MACD, like the RSI shows bullish support but it is also weak. AA is trying to push up, but is having a hard time moving into bullish territory. Therefore we are extremely cautious when recommending Bullish Weekly Option Plays. There is just too much weakness here.

Chart— We seem to be building a rising wedge. This is continually showing us reversal patterns, so we are waiting for AA to become bearish very soon.

Trade Recommendations— AA is not giving us any signs of strength in this movement. It is more of a struggle to move up. For this reason, any weekly option strategy should take into account a bullish move to about 13.5 and then hit resistance and move back down. Look for a very short bullish run an then a longer bearish walk. Create your option strategy accordingly.

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? Click here to learn more.