Another interesting week in the markets!
We were bullish on DIA and SPY and had bullish stock and options trades in both.
DIA was the star, gaining 2.25% on the week, followed by SPY +.85%. And this occurred with the ongoing bearish news on trade wars, etc.
QQQ, IWM and many Sector ETFs remain in trading ranges on the daily chart.
All four Index ETFs are in uptrends on longer time frames, which is why we remain bullish on the markets until we see some signs of danger which are typically flagged in our review of market internals. The internals (sentiment and breadth) remain neutral at this time.
With the weak close in most markets, we are starting the week neutral to see where the bulls want to step up to confirm our patterns. We have provided below a large watch list for swing trades — both long and short.
Falling bonds helped the banking sector (XLF) with the higher yields. And the lower US$ helped emerging markets (EEM) and country ETFs like China (FXI), up 4%.
Cannabis stocks continued their wild rides. See the video for a review of many of them.
Dow Jones Industrials
VIDEO REVIEW OF MARKETS AND INTERNALS
[s3mv fileName=’Dan+-+Letter+Videos/Advisory+Letter+Market+Review+Video+180923.mp4′ fileType=’video’ source=’s3′ width=’800′ height=’450′ splashImage=” preLoad=’Y’ autoPlay=’N’ belowVideoHTML=” cuePoint=” redirectURL=” pauseAtCuePoint=’N’ isSecure=’Y’ bucketname=”]
NEW STOCK TRADING IDEAS
Below is a daily chart of Medtronic plc (MDT).
Trade: Over $98.00, consider buying stock.
Technical Setup: Breakout from bullish consolidation and Bottoming Tail after above r20-MA daily, bullish weekly and monthly.
Stop Loss: $95.78.
Below is a daily chart of Perspecta Inc. (PRSP).
Trade: Over $26.00, consider buying stock.
Technical Setup: Breakout following Red Bar Ignored (RBI) and Bottoming Tail daily, bullish weekly.
Stop Loss: $24.82.
Below is a daily chart of Casey’s General Stores, Inc. (CASY).
Trade: Over $129.36, consider buying stock. Option traders can purchase the Oct (10/19) $120 calls only if the spreads tighten and not pay over $.20/share of extrinsic value.
Technical Setup: Bullish consolidation after Pro Gap Breakout on +Vol. breakout on earnings on the daily, bullish weekly and monthly.
Stop Loss: $124.58.
Below is a daily chart of Paychex, Inc. (PAYX).
Trade: Over $75.57, consider buying stock. Option traders can purchase the Oct (10/19) $70 calls which has an .85 Delta and only $.25/share of extrinsic value.
Technical Setup: Gap Breakout on +Vol. daily, bullish weekly and monthly.
Stop Loss: $73.76. Note: Earnings 10/2 so exit before then.
Below is a weekly chart of Office Depot, Inc. (ODP).
Trade: Over $3.41, consider buying stock.
Technical Setup: Bullish multi-week consolidation after +WRB Igniting bar at r20-MA making a higher pivot low, followed by a higher pivot high; thus, then downtrend is broken and there is a price void above on the weekly and monthly.
Stop Loss: $3.07. Earnings 11/7 so exit before that.
Below is a daily chart of Veeco Instruments Inc. (VECO).
Trade: Under $10.43, consider shorting the stock.
Technical Setup: Breakdown in bear downtrend all time frames after Bear Pro Gap down on 8/2 daily.
Stop Loss: $11.42.
BULLISH STOCK PATTERN WATCH:
ICE, MOH, ROST, WWE, AAN, HASI, INVH, OMC, EVH, AER, MMNFF, GWPH, ADT, MSFT, CRMD, USO
BEARISH STOCK PATTERN WATCH:
NTNX, GFF, MRTN, FOX, FOXA, Z, ZG, HOME, TWTR, SNDR, LGF.A
NEW OPTION TRADING IDEAS
Below is a daily chart of Visa Inc. (V).
Trade: Over $150.26, consider shorting Oct (10/19) $145/140 bull put credit spread (25 DTE) for mid-point but limit of $.43/share (closed at $.47/share).
Technical Setup: Breakout in strong up trend following many Red Bars Ignored (RBI) on the daily chart, bullish weekly and monthly.
Option Strategy: Bull Put Credit Spread (BPCS).
Stop Loss: $145.78.
Below is a daily chart of U.S. Bancorp (USB).
Trade: Over $55.23 (intra-day resistance), consider shorting Oct (10/12) $54/52 bull put credit spread (18 DTE) for mid-point but limit of $.23/share (closed at $.26/share). Note: we will also monitor on a further retracement for an entry with higher premium.
Technical Setup: Breakout daily/weekly above r20-MA after Breakdown Failure on 9/12.
Option Strategy: Bull Put Credit Spread (BPCS).
Stop Loss: $53.96.
Below is a daily chart of Pinduoduo Inc. (PDD).
Trade: Consider shorting Oct (10/19) $17.5/15 bull put credit spread (18 DTE) for the closing mid-point of $.15/share. Note that this still generates 6.4% ROC with the short strike being 31% OTM (small Delta of -.08 implying a statistical 92% chance of expiring worthless) and under multiple levels of major support. More aggressive traders can consider shorting Oct (10/19) $20/15 bull put credit spread for the closing mid-point of $.60/share with a stop at $20.68.
Technical Setup: Continuation of Master Trader Buy Setup and bullish engulfing reversal bar on the daily.
Option Strategy: Bull Put Credit Spread (BPCS).
Stop Loss: $19.30.
Below is a daily chart of Nutanix, Inc. (NTNX).
Trade: Under $45.91, consider shorting Oct (10/19) $52.5/57.5 bear call credit spread (25 DTE) for mid-point but a limit of $.45/share (closed at $.50/share).
Technical Setup: Bearish consolidation in lower half of -WRB Igniting breakdown on +Vol. on the daily, Breakdown after Shakeout/Topping Tail weekly and monthly.
Option Strategy: Bear Call Credit Spread (BCCS). Note: This is also a pattern you can short if you prefer.
Stop Loss: $52.15.
Below is a daily chart of Canadian Pacific Railway Limited (CP).
Trade: Over $210.50, consider shorting Oct (10/19) $200/190 bull put credit spread (25 DTE) for a limit of $1.10/share (closed at $1.22/share).
Technical Setup: +WRB close from consolidation above r20-MA daily, bullish weekly and monthly, strong sector.
Option Strategy: Bull Put Credit Spread (BPCS).
Stop Loss: $206.58.
Below is a daily chart of International Business Machines Corporation (IBM).
We will be watching for setup to consider shorting Oct (10/12) $147/142 bull put credit spread (18 DTE), will advise.
Technical Setup: Breakout daily/weekly.
VIDEO ON OPEN AND CLOSED TRADES AND ADJUSTMENTS
Because your success is vital to you – and us.
Before selling options or credit spreads, we urge you to review the valuable and detailed information that we have provided for you in your Member’s Area.
You will find it by scrolling to the bottom of the page to Master Trader Subscriber Resources.
The link is Money Management Considerations When Selling Option Credit Spreads for Income.
It explains Master Trader Money Management, Trade Management, understanding the use of Contingent Orders, and much more.
If You’re in a Rush to Start
A quick simplified approach to calculating contract size is to simply base your contract size based on the number of shares permitted in your Trading Plan as if you were trading the stock or ETF.
Simple Share Sizing = $ Risk / Stop Loss
The amount of money that you are willing to risk – divided by – the stop loss amount. For example, $100 / .20 = 500 shares
Credit Spread example, if your Trading Plan allowed you to trade 543 shares of AAPL based on the stop loss, then simply round down to the nearest hundred and short an equivalent number of contracts of the option.
Since 1 contract represents 100 shares of the underlying, this would be five (5) contracts.
Since you have enjoyed this Service, please review the following for more detailed education — and profits!
The open positions in our ETF Investment Trader are doing fantastic with huge open gains. It is designed specifically for those wanting to profit from longer-term trades with a focused group of diverse ETFs to take advantage of numerous trading
Master Trader’s “techno-fundamental” approach to the markets will allow you to profit with our selection of the best ETFs to invest or trade now!
For product and subscription information to this incredible service, please see ETF Investment Trader, Click HERE, or see https://mastertrader.com/ETFinvestor
Thank you for being a loyal subscriber and feel to email us with any questions or comments on anything.
Learn how Master Trader Technical Strategies – MTS with Credit Spreads can make consistent money
Click Here – to Access the Program that puts you on the Master Trader Income Path.
Master Trader and You Building Your Financial Future Together!
Happy trading! If you have any questions or comments, please e-mail Greg Capra at Greg@mastertrader.com or Dan Gibby at Dan@mastertrader.com
All the best,
Greg Capra
Managing Director of Master Trader
Trading the Pristine Method — Origin and End
Dan Gibby
Chief Options Strategist
Follow Greg on Twitter, YouTube, and StockTwits
Twitter: @GregCapra
Stocktwits: Greg_Capra
NOTE: Master Trader will show opening and closing prices of all stock and options trades. We recommend that all traders and investors use proper share sizing for positions and money management. However, we cannot recommend what that is for your particular trading style, risk tolerance, or account balance.
We urge you to calculate your own share/position size based on your individualized risk parameters, Trading Plan, and familiarity with the proposed trade strategy and risk. Advanced Management Strategies (AMS) covers in detail foundational and advanced position and money management.
NOTE: Master Trader and its representatives may have existing positions in actual or other trade recommendations before or after suggested herein. Additionally, we may manage them differently for internal purposes based on different risk parameters than noted herein.
All trade ideas and content are for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, option or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds. Investment or trading information provided may not be appropriate for all investors, and is provided without respect to individual financial sophistication, financial situation, investing time horizon or risk tolerance. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. Master Trader Consulting, Inc. is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardize Options and the Risk Disclosure for Futures and Options found here: CLICK HERE.
