Make More Money Waiting

Making money with the stock market in the long term is a buy and hold strategy utilizing stocks with great dividends like Verizon. When you day trade, you must wait for the right buy signals. If you are not disciplined, you will be buying early and late and selling early and late. When you see certain patterns, you have the tendency to buy expecting that pattern based on the day of the week or just plain wishful expectations.

Not waiting does not only shorten your earning potential, it can cost you for your day profit and create a loss you can't dig yourself out of for the day. Let's break down expectations and timing utilizing JP Morgan activity for the day.

Initial Move for the day

The first movement of the day may not be more than a reaction in the opposite direction from the prior day's movement. If this is the case, the theme is likely to continue from the prior day. Alphabet (GOOGL) was a perfect example of this today.

On the other hand, some stocks like JP Morgan go up and come down in the same day which ultimately create net gains for the day. Today looked similar to yesterday for JP Morgan as it moved sharply up from market open. When that happens, you wait for the pull back to  a near open price to buy calls for the upside. On my chart drawing, I mark it with a yellow "A."

Now you are going to let this run until you get 2 consecutive red candles which designate resistance when looking at your daily chart with 5 minute intervals. This is not the time to sell as it must retest the top. When it does, it typically goes slightly higher. You can sell at this mark or place your trade when it retest that mark again. You will know it is a retest when it reaches the same spot, but the stochastic lines have peaked at a lower mark. The second way is based on peaking in the price chart with space between the top of the Bollinger Band (B).

Secondary Movement of the Day

When you have noticed the top has formed. You locate the first out of the money put option and buy at or near the lowest price of the day. Once you are in on the opposite direction, you must be patient and withstand upward movement as long as it doesn't move dramatically above the pre-established ceiling for the day.

Now to determine the exit of this 2nd position of the day, you should look at where the area was that you bought the call option on the first movement of the day. It is almost safe to aim for the point to take your profit and get out. There are many days the reversal is stronger than the upward movement. It is nice expecting it, but if you enter and exit at the right locations, you make profit and are not holding like I did today just to break even.

Further Notes

The strategy works with many stocks, but not every stock has 2 sharp movements in the same day. You can say that most stocks move in one direction and give part back towards the end of the day, but then there will be that one day that it doesn't give back towards the end of the day and you were expecting it. The key is do your research, know your favorite stock tendencies, get in and out to take your profit daily.

Why I Broke Even and Didn't Profit Today

I bought my 8 initials calls at the right moment today. I freaked out with the 2nd large red candle instead of waiting for the retest as I have seen almost every day. Although the stock was higher than where I bought the calls, because the calls were out of the money, I ended up selling at a break even minus commission. I would have been up over $120 if I were patient and sold at the 2 peak.

On the secondary movement, I bought my puts before waiting for the top to form. I have made this mistake before, so you would think I would have learned, but this is why I am writing this blog. No matter if anyone else reads it, I expect it to create a more powerful memory to act appropriately in order to profit off small movements rather than break even or lose money.

So I bought these 108 strike puts in a market order at .48. If I had waited, I could have placed my order to buy them at .36 and would have bought a third more contracts. I did buy more at a lower amount, .44 which is still not .36. I did not panic although I did have 15 contracts with an average cost of .48 that were worth .36. My account was negative $200 at the worst part.

As I mentioned, I did not panic and knew the downward movement was due with all of the red candle following the peak of the day of 109.30. It moved in my direction, but unfortunately the highest these puts were worth today was .54. I did not sell there because I thought it might fall move sharply towards the end of the day. I was greedy and disappointed based on not buying at the right time. If I had bought at .36, I could have sold at .50 with a different of .14 times 20 contracts for a profit of 280 minus commission. Instead I sold at close for .48 to end the day break even minus $20 in commission.

Day Trading with Options Fresh Start Rule

Part of day trading with options is closing out your position by the end of the day. Each day goes by, the options are worth less if the price of the stock opens tomorrow where it closes today. The only time the option is worth more is when it move substantially at open the next day. Most of the time, even if it opens in your direction, you can buy those options for the same price you sold them the prior day. Therefore the odds say, you are more likely to lose money holding options over night. Like anything, holding options over night could work one time, but more times than not it will not work in your favor.

Tomorrow is a new day and as long as you did not buy options based on hope instead of indicators, you can make tomorrow twice as good as today.

Wild Thursday After Christmas

Slowly everything appeared to go down on Thursday until a bottom of resistance appeared at 2pm. At 2pm everything shot straight up. I took advantage of the initial rise, bought my Puts at the wrong time and then didn't sell on time, and didn't have anything left to take advantage of the awesome run in the afternoon.

This created a light bulb in my head, so I made a video about it

Day After Christmas Boom

What a day! The market opened higher and most stocks retraced to Monday's lows

before taking off higher. I made a profit higher than what I lost on Monday, but failed to wait for the right time to buy and I sold around noon instead of expecting the run to last the whole day which is typical for Wednesday off of an over sold condition.

I didn't trade Alphabet (GOOGL) today, but I did use it for reference as it was one of the only stocks that did not go down to retest Monday's lows. I bought call options on Boeing, Tesla and Netflix on the way down. I was down bad by the time it changed and went higher. I ended up selling everything around 12:30 pm and missed out on the other half of the gains for the day. I made charts on each company below.

I would expect to see more upward movement on Thursday with some pull back for the second half of the day and it should give back half of today's gain. I hope I am wrong, but I will trade carefully tomorrow. Check out my market commentary below along with my favorite pick for 2019.

Amazon, Alphabet and Intel... Oh my!!!

Tesla reported a blow out quarter and I believe it should be trading closer to $420/share now, but we



have too much Geo-Political risk the market is dealing with as they have proven relevant on earnings calls whether it is stated or not. Amazon also reported its best quarter ever Thursday night and went down 10% due to a miss on the revenue. Alphabet reported earnings that were near Apple's last quarter's numbers, but also missed on revenue versus expectations. I think it is crazy to think that these companies should be punished due to a miss that doesn't really account for much since they are still growing and increasing their earnings per share.

Intel had a great earnings report which was expected since AMD did not. I don't know if it matters as we are facing increasing interest rates along with higher import cost due to tariffs. We are also on the edge of a mid term election where Democrats are expected to play a bigger role in the House of Representatives. If that happens, expect more time wasted as they will try to reverse the tax cuts instead of working on new things. The tax cut won't be reversed because President of Trump would not sign off on it and the Senate won't vote for a change either. What it does mean is bigger tax refunds for most families in the United States which will spur more vehicle and technology purchases. I believe Ford and Tesla are prime to explode to the upside for 2019.

Until then I think we may experience a little more downside before the market regains its feet and takes off to the upside. It feels similar to earlier in the year however the decline that started in late January was started by Amazon and Alphabet missing earnings. As they started moving up, we got the tariff news and moved everything back down. I think we are near the bottom of the market as the whole picture changes once the tariffs disappear regardless if the Federal Reserve slows down with the rate hikes or not.

Next week we will hear from Apple, Facebook and all of the other important companies that didn't report this week. I would expect to see everything to move up next week and even faster for the remainder of the year.

Turmoil to Profit in the Market... and Tesla

Everything opened lower this morning with the exception to Verizon and McDonald's who reported their third quarter earnings and were awesome. The huge drop was a carry over from the down Asian and European Markets. From open, everything went up for the first 20 minutes before retesting the downside. Most stocks dipped slightly lower than where they opened, but once they hit that retest point, everything went up.

You certainly could have profited by buying anything except Catepiller and profited today, but you would have been best to wait for that retest of the bottom. Buying Call Options on Apple and Netflix were very good to profit especially if you held them until the end of the day. Alphabet (GOOGL) and Amazon had great movement, but because they report earnings on Thursday, their options are too expensive to mess with.

Tesla options got very expensive from open because the company has elected to move up their earnings report to Wednesday which is a week earlier than scheduled and 2 weeks before normal. Obviously they must have good news to move up the earnings report like this as we expect them to produce the company's first profitable quarter in a long time. There was news today that notable short sellers have gone long on Tesla stating their new Model 3 is going to put them over the top.

I am very disappointed because I had 2 weekly Call Options with a 260 strike price that I closed out yesterday afternoon. Those 2 options would have been worth 3700 each by the end of Tuesday. If Tesla produces a huge profit, I would expect the company to trade up to 420 by the end of the week.

Something interesting happened today when Verizon reported earnings. Most stocks that move up before earnings announcement typically sell off the next day even when they beat their earnings report. Verizon has been steadily going up for the past month. After the earnings announcement, not only did the stock move up, but it continued going higher after the market opened. That has not happened since July of 2017. Since the 2nd quarter earnings announcement of 2017, every report has beat expectations but the stock reversed it's premarket gains to actually trade lower.

Apple was the first company to have this kind of positive stock movement after beating their numbers on the second quarter of 2018. McDonald's today had similar movement. This is completely different from Netflix which traded down every day since their earnings announcement until today. This trend appears to be reversing with bell weather companies like Apple, Verizon and McDonld's. On Wednesday before the market opens we will get Boeing and AT&T earnings. Boeing will be is expected to be awesome and AT&T won't. I would expect the market to be mixed on Wednesday with some late day upward movement.

Upward movement is expected when Amazon and Alphabet report earnings this week. Both companies are around 200 points off their all time high that was established 3 months ago. What will be interesting is if they move up after earnings, open the following day higher and if they can keep those gains and move higher to get closer to their all time highs. FANG companies tend to sell off after reaching a huge increase. They were making new highs the past couple of quarters post earnings, so this feels different. 

Netflix and Chilled, Interest Rates and Market Correction

Netflix reported a blow out 3rd quarter Tuesday afternoon. The stock rose as high as $400 before

settling around $385 and then opened Wednesday morning at $380. From there it went down along with FANG. Facebook, Amazon, and Alphabet found a bottom earlier than Netflix. Netflix found it's bottom around 355 before moving up for the afternoon. I like to see if that number will hold, but so far on Thursday is barely hanging on. Alphabet bottomed at 1115 which should be a key point to pay attention to on Thursday.

Today Alphabet opened higher at 1130 and went straight down to 1114 before bouncing up and then retesting that level at which I bought Call Options and it didn't hold as it went down to 1110. Much of the downward movement in stocks is due to the Federal Reserve minutes noting they still expect to raise interest rates 3 more times next year in addition to again in December. Rising interest rates is what Trump expects will kill the economy and he is right.

Higher interest rates cost all businesses more. Businesses finance expansion with the issuance of debt and small businesses may use debt to help with daily cash flow. Start up businesses may utilize debt to help establish themselves. Consumers use loans to purchase vehicles, homes and luxury items. If the businesses are being squeezed and the consumers have less desire to purchase higher end items, everyone loses, not just the housing sector.

The housing sector has extra constrains between higher material cost along with higher rates consumers have to pay for the mortgage loans. I believe the ultimate problem is the housing sector got fat and greedy from low interest rates for so long. Because interest rates were so low, people wanted larger houses that are larger than what they actually need. Where are they building homes for the average family? It isn't in Orlando, Florida.

Moving forward, Americans are going to have some of the largest tax refunds at the beginning of 2019. Housing may benefit some but with higher interest rates, not as much that will make a difference for the long term. People buy cars when they get big tax refunds regardless of the interest rates so I think Ford is positioning themselves to be the best along with Tesla. I think with Ford and Tesla at their 52 week lows they are a value and a growth buy for 2019 and investors will be happy by August of 2019.

Thursday and Friday Market Movement

This past week was a busy week for the end of August. Amazon is still moving to new highs along with Apple despite Netflix cutting off the Apple Store's cut of Netflix subscriptions. There are still more tariff talks as we ironed out a deal with Mexico, Canada is pushing for a deal next. Tesla has continued to move down as Elon Musk has left the headlines and other auto manufacturers are entering the electric auto space. 

Alphabet (GOOGL) had a nice move up this past week. It peaked out around 1269 which was a surprise that it went up on Thursday given that it started the day down. It fell back to 1260, came back up to 1266 and was in free fall mode until 2pm on Friday. I bought 3 1260 Puts on when it was at 1265 and sold it too soon at 1258. If I sold them on Friday at the low of 1225, I would have multiplied my money by 7. 

So that sounds good and you might say let's do that the next time it goes up. Typically Alphabet has a great week ending with a fall in the last day and a half. The next week it starts down with a bottom found on Monday. The bottom is retested on Tuesday and again on Wednesday. By 2pm on Wednesday the bottom is in and you could feel comfortable buying Calls for the end of the week. If the move is huge on Thursday without a pull back, Friday could be a similar sell off day. If Friday is an up day, buy Call options for the next week. If it is not an up day, buy Call options near the bottom at the end of the day.

Given how much Apple has run and their new iPhone announcement, I would expect to see it pull back some before moving higher. I am looking for it to come down to 222 before buying Call Options a week or two out.

Amazon and Apple Go Higher and then...

Amazon and Apple went broke out to new highs this morning while Netflix opened lower due to the CFO leaving the company. Netflix did rise with the rest of FANG before coming down with FANG for the rest of the day after 11am. Tesla opened higher and traded down until it reversed when it got around 350/share. I believe Tesla will move up this week, but find it hard to believe that the company will go private at $420/share. I think $400 is more likely to be the go private price, but either way it is higher than where it is at and is why I will hold a small amount of shares in my portfolio.

Alphabet (GOOGL) opened up, came back to 1252 in the first couple of minutes and that is where I bought my Call Option and sold just after 10:30am for a nice profit. It came down to 1252 where I bought another Call Option with a higher 10 strike price and ended up selling it when it didn't appear that Alphabet was going much past 1254. It did trade down for the afternoon. Tomorrow might be similar to today. I like taking my profit when it goes up about 12 higher than where it starts when it starts flat. See my chart:

Apple Great, Tariffs... Good?

Everything opened lower today with news about more tariffs on China. According to the experts, China has continued to devalue their currency, lowered their interest rates and are in debt. China will have to bend or they might break. Apple appears to be immune to the tariffs as their phones are made in China therefore they employ a ton of people and they are selling high end phones in China. On top of that, Apple's service business is the where the money is growing.

With the huge earnings quarter Apple posted, analysts expect that Apple is worth a much higher multiple and today it became the first company to break the trillion dollar market cap. I am not an Apple lover, but based on the numbers Apple should be trading for around $500 a share and Amazon should be at $200.

 


Speaking of things that should be worth more, did you see Tesla? As I said, it moved down a little and shot up. It may have more room to run, Sonos (SONO) entered the market today with an IPO at $16 and ran up to just under $21 by the end of the day. It should run further over the next few days.

Boeing didn't go positive, but opened down and bottomed around 9:40am before moving up to 350. It was a nice run if you timed it correctly because it went down before ending around that peak.

Alphabet (GOOGL) opened down 10 and dipped to 1218 before shooting up. Typically when it opens higher, it will retrace to go lower than the prior close as when it opens lower it retraces higher past the prior close. In the past 2 days it has traded between 1218 and 1244. Unfortunately I failed to trust what I believed and got out too early at the first peak.

Fed Meeting and How to Trade It

With the Fed meeting ending today, stocks have a tendency of being flat or down. Before the market opened, the 10 year Treasury Note moved above 3% which is a positive sign for banks and JP Morgan moved higher at open. It did trade lower from there but it is a positive sign for the banks over the next couple of days which should lead the market higher.

Boeing opened down from Tuesday's close and pointed to moving up from open until about 10:40am. At that point it went down for most of the day. I prefer to make money quick and would have preferred to buy Call Options on Boeing and be done before 11am.

Alphabet opened up from 16 from where it closed on Tuesday due to news that Google is going to censor their search engine to be allowed to operate in China. From history I have found that when it opens higher like this, it will try to return to where it closed the prior day before going higher. Buying Puts near open would have been scary but profitable. Buying Calls at 2:10pm would be a great deal also today.

Unfortunately I did not trade Boeing today and didn't trade Alphabet correctly. I was mad at 2:10pm, but didn't panic as I knew it was going back up to 1236 by the afternoon. I escaped the day with a loss, but not as bad as if I sold at the worst time. I write this blog daily in hopes that it helps someone but more importantly I learn how to be better because I am confident that you can make money in thousands every day if you trade properly based on technical indicators and knowing tendencies.

Elon Musk and Tesla had a great conference call after releasing earnings from the second quarter this afternoon. The stock shot up after hours over 30 points. I expect to see it come down in the first 10 minutes and shoot higher for most of the day tomorrow. I will trade it if the technical indicators make sense. 

FANG Exposed - Part 4

I hope you have a better understanding of the investments that make up FANG after reading my blog. I discussed why Facebook and Alphabet (GOOGL) are buys and now Amazon.

Company	Facebook	Alphabet	Amazon	Netflix
Ticker Symbol	FB	GOOGL	AMZN	NFLX
	A	B	C	D
Earnings Per Share	6.8143	37.2373	6.3429	2.3755
Price to Earnings Ratio	30.95	32.52	284.1	152.67
PE/Growth	1.34	1.89	13.15	2.78
Institutional Ownership	71%	78%	56%	77%
Gross Profit Margin	86.04%	57.41%	37.77.%	38.13.%
Long-Term Debt to Equity	0	2.46	120.59	185.52
Return on Assets	25.54%	13.39%	3.04%	5.46%
Return on Equity	28.79%	16.84%	11.86%	28.09%

Jim Crammer coins Amazon as being the death star with the expectation that any business that

Amazon gets into, it dominates. Many think that Amazon has low overhead because it doesn't have any storefronts, then they bought Whole Foods. Most people don't understand that Amazon has many warehouses and many people working at these local locations.

I believe Amazon is working smarter when they partner up with stores like Khols and Best Buy instead of trying to buy more physical locations. Amazon's best location is their website which until their most recent Amazon Prime Day has worked without a hiccup. I see their biggest strength is also their biggest liability which is the Amazon Prime subscription. The market did not see a problem with them raising the cost of Amazon Primer Membership while other companies have used as a point of attack.

EBay and Walmart constantly attack the membership price of Amazon Prime as they provide free shipping with low minimums without paying a membership fee. Walmart has many locations nearby where you may return or exchange merchandise and Amazon does not.

Amazon's web services is a huge money maker, but as the world gets more technologically advanced, there will be more choices to use including Google and Microsoft which are taking market share. Amazon is great for business, but where it enters, it creates opportunity for others to do it better for less.

Speaking of less, Amazon might be attractive if it were trading around $180/share which is 100 times less than it currently trades as indicated by it's PE Ratio. It is a growing company and is why it still has 56% institutional ownership, but it might be considered a value company if it were trading at a more reasonable share price. Amazon's earnings per share and return on equity look nice, but company debt flares a red flag when comparing to other Facebook and Google.

The last problem is when Amazon produces their earnings and everyone sees the growth, does the stock price need to reflect an increase from this level?

Alphabet (GOOGL) Day Trade to Profit

• Another day when Alphabet (GOOGL) opens down big creates great opportunities to profit from buying Call Options. Yesterday Alphabet closed at 1258 and today it opened at 1249 where it bounced from yesterday. It went straight up to 1267 at 10am before pulling back some.
  
• You could have bought another call option at 11am and if you had the guts to hold it until the end of the day you would be quite happy. There was too many opportunities for it to falter that this would not be a good trade. 
• Facebook reported earnings after the market close today where it beat on earnings but was driven down because they reported active users increase to 2.33 billion instead of 2.35 billion. This drove everything down after hours and might create another buying opportunity for Alphabet tomorrow morning. Amazon broke to a new high today and reports earnings tomorrow afternoon. We might be due for more fake pin action on Friday.

FANG Exposed - Part 3

Yesterday I broke down Facebook and today I will go through Alphabet (GOOGL).

Company	Facebook	Alphabet	Amazon	Netflix
Ticker Symbol	FB	GOOGL	AMZN	NFLX
	A	B	C	D
Earnings Per Share	6.8143	37.2373	6.3429	2.3755
Price to Earnings Ratio	30.95	32.52	284.1	152.67
PE/Growth	1.34	1.89	13.15	2.78
Institutional Ownership	71%	78%	56%	77%
Gross Profit Margin	86.04%	57.41%	37.77.%	38.13.%
Long-Term Debt to Equity	0	2.46	120.59	185.52
Return on Assets	25.54%	13.39%	3.04%	5.46%
Return on Equity	28.79%	16.84%	11.86%	28.09%

Where Facebook is on every smart device, the same can be said true for Google. Google owns Android which is on 70% of all phones and has a strong presence on Apple devices also. Google provides free services through apps ranging from maps to translation and has it's assistant built into everything. Google owns the best speaker not because of the sound. Google Home is the best speaker because of the integration of Google's Voice Assistant.

Google also owns Waymo which is projected to be huge by itself. It also owns Nest which has the best thermostat and now video door bell. Most importantly Google owns YouTube which is it's best performing section next to search. To double down on YouTube, Google owns YouTube TV which takes advantage of the growing space of cord cutters.

Based on all of this, you probably understand why institutional ownership is the highest for Google among the members of FANG. When looking at the numbers, the Earnings Per Share scream buy coupled with the low amount of debt the company carries.

Google partners with a number of companies including the largest retailer in the United States Walmart. Do they have a monopoly? I don't know, but can you make it a day without searching Google or using a Google product? I can't either, so it must be a buy.

Trading Google and Verizon Post Earnings

Alphabet, Google's parent company, had a blow out 2nd quarter earnings report. The stock shot up post market to 1272 and opened near there on Tuesday morning. It wasn't necessarily a buy there. Based on the sharp movement downwards, it indicated that it would go down. The best bet would be to buy a Put option when it comes back near where it opened which happened around 9:40am. If you bought that, you could hold it for 20 minutes and sell it for a huge profit at 10am.

At 10am you could have bought Call options on GOOGL and held those for 20 minutes and sold those for a huge profit when it returned to 1271 and then be done for the day. Below show the same chart broken down by 1 minute intervals. The up and down movement was too crazy for the rest of the day even though it trended all the way down to 1249 before turning back up.

Verizon reported great earnings before the market opened Tuesday morning. It opened higher, but fell hard below Monday's close. This was a buying opportunity because it was due to go back up near where it opened. You could have bought Call Options with August 10 expiration for around 20 cents and turn around and sold them for 50 cents by the end of the day. If you did that with 100, you would be quite happy.

I hope this helps as this is the first blog where I broke down how to trade it.

FANG Exposed - Part 1

Jim Crammer coined the acronym FANG for Facebook, Amazon, Netflix and Google (now Alphabet) and many follow these stocks for gains when the rest of the market stalls. I find it funny when these companies are similar but there financials are different. So let's take some fundamental numbers of them and you tell me which one makes sense based on the numbers to invest:

	A	B	C	D
Earnings Per Share	6.8143	37.2373	6.3429	2.3755
Price to Earnings Ratio	30.95	32.52	284.1	152.67
PE/Growth	1.34	1.89	13.15	2.78
Institutional Ownership	71%	78%	56%	77%
Gross Profit Margin	86.04%	57.41%	37.77.%	38.13.%
Long-Term Debt to Equity	0	2.46	120.59	185.52
Return on Assets	25.54%	13.39%	3.04%	5.46%
Return on Equity	28.79%	16.84%	11.86%	28.09%

Tune in tomorrow to find out which is which, but which one would you invest your money into?

To me, A is the winner with B closely behind. I remember Crammer mentioning that he likes companies with a PEG (Price to Earnings Growth) over 2, but his favorite company Apple is below that. I feel that a number below 2 might be better because if your PE ratio is overextended, it doesn't matter what your growth number is because your PEG will still be high.

When I was in school, I was told that you want companies that have a PE ratio below 10. These days those only exist in high dividend companies that don't have growth. Dividend are great, but growth is how you build wealth. Therefore PE ratio along with the Institutional Ownership would eliminate number 3.

The bottom numbers are interesting and exciting. Company A has no long term debt where company C and D appear to be leveraged heavily. Would Company C and D be in this group if they didn't have so much debt?

If you take out the first line, Company A beats the rest of FANG. Ultimately you invest in shares of companies to share their earning power, so Earnings Per Share puts Company B far ahead of the rest.

Based on these numbers, which one would you take?

Alpha Delivered!

• Today marked CNBC's Delivering Alpha Conference where we got to see Jim Crammer interview the president's chief economic advisor Larry Kudlow. The FANG erupted up and came down quickly before finding footing and moving higher. They did end the day flat. The banks moved up nicely and Boeing opened up, came down hard and took off again to the upside. 
• I found Boeing has some great morning movement this past week similar to FANG. Boeing was $3 higher in the Premarket trading, fell on its face and took off when the Stochastic indicator was at the bottom. I will be looking forward to trading Boeing next week as Alphabet options will be too expensive for me to mess with. 
  
  
  
  
• Alphabet did a typical Wednesday where it opened up, traded down and moved higher by the afternoon.