When holding a Day is Bettter

I try to keep my trading more simple in hopes of reducing errors and maximizing profits. I made a bunch of money trading Alphabet (GOOGL) in the past, but have lost much more. I appreciate sticking with stocks that move both directions in a day most of the time. This is true most days with JP Morgan. JP Morgan runs up, comes back to where it started the day, runs up again and comes down again... and might finish up.... or down. If you are disciplined, you can make money trading the options of JP Morgan.

Daily Pattern Trading

The really cool thing when trading options is that you can get a similar price after it has made part of the move in the direction you are expecting. For example, JP Morgan traded around $114.50 Monday morning. At that peak, you could have bought a 113 strike put with the expectation of downward movement for .50. It went down and then it retested that peak when it was at $114.20. During that second peak, you could have bought the same put options for .50 again. JP Morgan then went down near where it started the day around $113.30 and you could have sold those put options for over 1.00.

Today was similar as JP Morgan shot up to $114.20, came down and back up to

$113.92. At both times you could have bought the 113 strike put options for .50. Near open they were worth .79, so you must use that as a reference point where you wold need to consider getting out. Please see my  illustration of JP Morgan for 7/2/19. If you would have bought 10 of those put options for .48 ($448 cost) and sold them for .80 ($800), you see you would have profited $350. That is not a bad day job!

The problem we get is getting greedy. When there are no catalyst involved that could push the stock lower, we don't need to expect it to go lower. Take your profit and move to trade another day. I wrote that because that is not  what I did. I should have sold at .85 and would have been happy, but I was already unhappy with myself for buying at .61 instead of being disciplined and placing my buy order for .48. It would have been executed.

When To Be Greedy

If you follow certain stocks, you know they trade in a range. Certain stable companies get a little over sold and then get a huge push the next day. It happens with more stocks than you think if you pay close enough attention. AMD comes to mind and even IQ has made it to $18 before moving sharply up to $21 in a day. Verizon is more solid that those and their options are cheap.

Verizon has sold off from the $58.20 mark a few times in the past 9 months. Most of those times it finds a level of resistance on a Friday. It moves lower on Monday, but not by much. Then on Tuesday it spikes up over $1 to over $58/share. There is a safe way to play it and an aggressive profit spiking way to play.

On that Monday afternoon, you could buy $58 strike call options 2 or 3 weeks out. This would be safer because you do have time on your side to wait for the gains. I bought July 26 $58 strike calls yesterday at .28. I placed my sell order today as it was going up to get .50 and they sold while finishing the day at .68 which is more than 2 times your money.

I am aggressive too, so I bought $57 strike calls when it was trading for $56.80 on Monday at .32. If I were more patient and noticing the pattern more clearly now, I would have waited or placed my buy order with a limit price of .22. At that price, I could have bought 15 and it spiked this morning above $58 and could have sold those calls for over 1.00. That's 5 times your money in one day!!!

The subtitle is when to be greedy. I write that because I profited on this trade twice this year and both times I sold at 2 times my initial investment instead of 4 times minimum. I hope to do better next time.

There is a possibility that it runs up higher over the next couple of days, but there is also a possibility that Trump says China lied and more tariffs are coming just to tank everything quickly.

I am quite sure that 10 years from now, there will be a huge investigation on how President Donald Trump manipulated the stock market by telling certain personal stock traders the news in advance to buy puts on the market and calls when he had favorable news. The scandle will discuss how much money his family profited by this manipulation. Then right after he goes to trial and is found guilty, he will pass from heart attack or something. It just looks like a pattern of evens similar to watching certain stocks move in the market.

Tail of 2 Days

Please check out my YouTube channel for my audio description of the market this week.  

After the market close on Tuesday, Apple announced a lower revision of

their earnings expectation for the first quarter of 2019. This is crazy since we are about to enter earnings season for fourth quarter of 2018. Regardless it drove the market down hard on Thursday with the exception of Netflix and Verizon.

Apple cited reduced sales in China and the trade war having an impact. I was surprised that Amazon and Alphabet (GOOGL) weren't down more. Amazon just broke below 1500 and Alphabet didn't go below 1022. I felt this was a strong sign.

China's market went up on Friday with the expectation of trade talks sooner than later. It drove the US markets up from open and they rallied more after Fed President Powell spoke with Janet Yellin and Ben Bernanke. The market heard positive news that they are reading the market and inflation is not rising. They don't believe that rates will increase more, but they are all wrong.

Inflation is muted because of the huge drop in oil, gasoline and other commodities. As they rise, they will show in I is real as well as s full employment will drive up the price of goods. The Fed will raise rates as planned 2 to 3 times this year.

With more rate increases, the market will experience more volatility. The

best case for a sustainable rally in the market is from great earnings, larger sales and a trade deal with China. Sales will work themselves out as Americans will experience the largest tax reduction and spend that money.

Trading: Thursday was such a negative day that you could have bought Puts at open or waited for everything to come back near the open price to buy Put Options. Selling at the end of the day was best.

Friday proved to be completely opposite of Thursday and Call Options were the best. I traded QQQ on Thursday and Home Depot on Friday.

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.

Trump Policies and Market Performance Pt2

By Donald Trump getting his tax reform bill passed at the end of 2017, it added another leg to the market growth that we may not see end for years to come. Everyone with money to invest has enjoyed positive returns for the past 10 years since the mortgage failures of 2008. A new level of excitement came through with the passing of the tax reform bill that reduces corporate and personal income taxes. From the first day of trading in 2018, the market went straight up to hit a peak on January 27th.

The market started to dip in February, but pulled back harder after the first round of earnings were announced. This first round of earnings in

2018 was for the 4th quarter of 2017 which caused a high level of confusion for investors. Investors were expecting higher earnings, which wasn't going to be the case as companies had more incentives to write off capital expendentures in 2017 rather than carry them into 2018 where they won't have as big of effect due to the lower tax rate. This was amplified after Alphabet (GOOGL) reported their 4th quarter earnings. from that point, everything dipped lower. 

In the middle of the 2017 4th quarter earnings season, Trump changed the Federal Reserve Chairman to Jerome Powell. The market likes to test new Fed Chairmans and this was definitely the case as he came into his job with the desire to raise interest rates as many times as possible to strengthen the dollar. Then we finally got into the changes from the tax bill as companies started reporting their 1st quarter earnings in April. 

The market started moving up again around the 1st quarter earnings, but every time it tried to move forward, it would retreat with new tariff news. The market doesn't like uncertainty and tariffs have uncertainty written all over them. The market was over sold in February but did come back to retest those lows as the new tax rate led to many companies changing accounting procedures to maximize their tax break. 

The drop in corporate taxes in the 1st quarter earnings created a higher level of expectation in the 2nd quarter earnings reports that were almost impossible to reach. This was especially true in technology stocks as many of them have beat their earnings estimates, but would guide down expectations for the remainder of the year. Everything has a tendency of rotating as we have seen rotation move away from retail. I would expect the rotation to move back to technology stocks in the 4th quarter. 

We are coming to the end of the 3rd quarter which means we are about to enter its earning season. I would expect to see everything continue to move up for the remainder of the year as the earnings reports will be better and better. Disappointment by few companies will not affect the market as in the past 6 months. By the end of the year, Donald Trump will forge a new trading agreement with China which will send the market higher. 

If a new trading agreement is not made with China, the market will go higher in the 1st quarter of 2019 as the auto stocks will boom with their most profitable quarter ever due to the lower personal tax rate creating larger refunds and when people get large tax refunds, they buy new cars. 

If you don't know what to invest in, pick a no cost mutual fund with Schwab, Fidelity or Robinhood. If you don't have your money working for you, you have nobody to blame but yourself.

Friday and Monday Market Summary

China appears to be preparing for a trade meeting as they have stopped devaluing their currency. The market had some nice gains on Friday as many Chinese stocks bottomed and started moving up like Alibaba. Alibaba ran up after reporting earnings on Thursday and came down sharply 13 points. It opened around 175 on Friday, came down below 173 and finished by moving up that continued Monday when it passed 180. I picked up a September 17 dated call option with a strike price of 180 on Friday. I hope it breaks through to 187 by Thursday for me to sell it.

Alphabet (GOOGL) on Friday opened higher, moved up and back down near where it closed Thursday around 1221 then went up to 1234 and finished the day above 1236. Monday Alphabet moved similar to Friday when it opened around 1244, up to 1247, came down to 1241 at 9:40am and ran up for the rest of the day. I have Friday's chart to the right and Monday's right under it.

I mentioned over a week ago that Twitter looked like a great deal under $33. It went down to $32.35 and has been up since as it closed today above $35 on it's way to 42.

Ford moved up since Thursday as it touched $10/share again today with the news about the Mexican trade agreement. Tesla moved sharply lower today but settled the day just under Friday's closing price. Analysts are saying what I said a while ago about Elon Musk should worry about making cars and hire someone to handle the public. I also said that Tesla should remain public and now Musk agrees as he posted on his blog Friday evening.

How to Turn a Down Day Positive

• With President Trump's tariff announcement yesterday afternoon sending most everything down today presented huge buying opportunities if you were ready to move at market open today. 
• Boeing had a huge day yesterday and gets affected big by tariff talk. Today it opened down $6 and shot up immediately to be short lived by 9:40am where it started its turn down. Ten minutes to make a profit is good, but turns ugly if you keep holding expecting it to come back up. Unfortunately I experienced the ugly going from a profit of $450 to a loss of $550 today.
  
• Alphabet (GOOGL) on the other hand gets sold off on trade news even though it doesn't have any direct business that would be affected. It was down from open and took off from there. I bought Calls when I saw it was going up and sold where I thought it peaked on the first 2 peak. I was not in on the 3rd peak that occurred at 10:30am, but did take advantage in the afternoon pop for a small gain over $100.
  
  
  
  
• LEARNING LESSON: When the Option you bought went up big came back to where you bought it, sell it ASAP before it goes down further  

Strong US Economy Outweighs Tariffs

• Tariffs on China went into effect at midnight and things were looking down at open until a great labor report came out at 8:30am. The timing of the labor report was so perfect to offset the tariff news that the market went higher. China placed tariffs on US imports to offset the US tariffs and some industries like soy beans and lobster are crying. Germany wants to eliminate tariffs which is a positive sign for auto makers, but I don't believe it is positive enough when the largest populated country in the world is going to target our vehicles. 

•  Trading Alphabet looks very similar to last Friday. It opened down and that is where I bought 5 Call Options like last Friday. It felt some resistance around 9:55am before pushing higher where it stayed for the rest of the day. If you didn't make it by 1pm, you were not today as it did little for the rest of the day. I did look at Amazon and Netflix charts to justify the movement of GOOGL.
  
  
  
  

•  There was a small moment of gain that was possible when GOOGL fell below 1153 with less than an hour to go. If you could have bought a Call Option with a strike price of 1152.50 for a dollar,, you could have placed a sell order with a limit of 2 and doubled your money.

Something Extra for Tues/Wednesday

• It was announced Tuesday after the market close that GE will be replaced in the Dow Jones Industrial Average by Walgreens. Due to GE's dismall performance over the past few years, this was not a surprise to many. The news did drive GE lower and Walgreens higher in after hours. CNBC's Fast Money crew feel that the one to leave typically performs better after the dust has settled. Mad Money's Jim Crammer happen to do a peice that included Walgreens using Fibonacci chart patterns that suggest more upward movement. This was performed before he got the news that Walgreens was replacing GE in the Dow Jones, so it appears more real.
• Starbucks dropped after the market close as they announced they will be shutting down 150 stores that are not performing as well. Starbucks is opening a store every 15 hours in China and is thought they might be subject to government boycotting should the tariffs go into effect. Starbucks was the Fast Pitch by Pete Najerian this afternoon. So any dip should be seen as a buying opportunity.

Dow Drops Again to Start the Week

- Retaliatory tariffs from China started everything down on Monday. Boeing was a big drag as was Intel.
- Intel might have been down, but most tech stock ran way up. Amazon and Facebook hit new highs. Alphabet was up big the whole day after the announcement that they are investing $550 billion in JD.com. Alphabet has a lot of catching up to do with the over bought Amazon.
- Best Buy was the leader when it comes to retail today. Macy's and others ended the day near even which brings me to think that Best Buy has runs like a hybrid retail FANG stock.
- JP Morgan started lower and had a good run back to the 108 mark. I expect it to get up to 110 this week.
- Other than that it was a boring day as most stocks were trying to play make up to Friday's close.

Tuesday Selloff

• Auto stocks were up (except Tesla) on news that China was going to lower tariffs on imports. Who knows if they will stick?
• Banks were up when everyone else was down from the vote on the restrictions removed from the financial crisis of 2008.
• Everything else started higher and ended lower. Home Depot (HD) moved down quickly as it was announced that the CEO of JC Penny's is leaving to become the CEO of Lowe's who reports earnings tomorrow morning. I see this will create further opportunity for Home Depot after Lowe's earnings is reported. I would expect Home Depot to go further down and reverse course Wednesday around noon.
• Boeing moved down further due to the trade talks or just cooling down. Either way I thought it moved too fast last week and Monday. I would expect it to go further down on Wednesday and change direction around noon also.
• Micron (MU) moved up yesterday and further after the market close on Monday. It held on to the gains while Nvidia went further down on Tuesday.