Live Class: Checkmate Strategies for Weekly Options

Andrew Falde shared in today’s Options Tribe meeting his methods for finding and managing short term options that can hedge core positions and boost probability of success.

If you attended the meeting, you heard about a great opportunity for you to dive deeper into learning how these strategies can be deployed on a very practical level.

Andrew believes there is no better way to learn than through watching live examples.

So, this Thursday at 10:00 AM Eastern, Andrew will host a live class to go through the process of finding, executing and managing trades using conditional orders on weekly options.

This class is a one Read more […]
SMB Capital – Trading Education

Markets go up and down

Written By: DragonFly Capital


We have an annual family get together of all the cousins on my wife’s side of the family each summer here in Ohio. The 8 kids (including mine) have a blast for a week while us adults relax and may enjoy a cocktail or two. Last night at my brother-in-law’s house the kids were bouncing around on pogo sticks. They got very creative, ending up playing basketball while using them. But watching them got me thinking as they went up and down.

It has almost been lost this year but it is true, markets go both up and down. Not just on a broad time scale but day to day and intraday. Trends develop and can persist, but there is no straight line move in one direction.

With the S&P 500 and Russell 2000 moving mainly sideways this year the brain has been primed to think that there is a range and when the price hits the bottom it moves up. The US Dollar and Oil have been that way too. When it hits the top it moves back down. It has been so predictable that seasoned traders are no longer waiting for it to happen but anticipating it.

But there is one market now showing us that relying on that reversal may be a death warrant to your portfolio: Gold. Gold has been moving in a broad tightening range sideways for over 2 years, since it pulled back from the 2011 high. It has recently showed signs of another leg lower and I wrote about that a couple of weeks ago here. Up and down off of 1140 and up to 1225 before reversing and doing it again. Until the last few days.


The last few days have show a major breakdown in Gold. No longer can you rely on the reversal at support and a move back higher. But remember, markets move up and down. Another leg down is also not likely to be a straight line. And the short term chart above suggests that this would be a good place for a bounce, maybe even a retest of the breakdown, before continuation lower. With the price outside of the Bollinger Bands® and the RSI oversold it is ripe for at least a pause if not a bounce. If it does, watch the 1140 level as it approaches. And remember, markets go up and down.

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Equal Pay for Female Soccer Players?

My Facebook friends have been signing petitions demanding that women soccer players be paid as much as men (apparently they didn’t realize that FIFA executives are more likely to be persuaded by briefcases full of cash). A variety of articles (example) point out that men generate more spectators and therefore more revenue, so therefore Econ 101 says that the men should be paid more.

Why does Econ 101 apply here, though? FIFA seems to be an unregulated monopoly. Various other monopolies, such as Major League Baseball, have moved money from the most profitable teams to teams in smaller media markets. The goal, as I understand it, was to make the season more competitive. But given that market economics are not applicable, what would be wrong with FIFA moving money from uber-profitable men’s teams and giving the money to women’s teams?

Separately, could it be the case that simply paying women a lot more would increase the number of spectators? A lot of sports figures are celebrities partly because they are rich and do things that mostly rich people do and that the public gets excited about. If female soccer players get a 5X boost in pay, for example, they might show up in the media a lot more often and then people would want to go the the stadium or turn on the TV to watch them play.

What do readers think? Would be it be fair or unfair for FIFA to insist that male and female soccer players, on average, are paid the same?

Philip Greenspun’s Weblog

Ghetto for dark-skinned snapshot subjects at Boston’s Museum of Fine Arts

Our Museum of Fine Arts got hold of 50,000 “found” photographs and decided to display 300 of them in an exhibition titled “Unfinished Stories.” The curators decided to create a special ghetto area for snapshots depicting dark-skinned subjects and call it “African American Experience.” The rest of the exhibition featured light-skinned subjects.

2015-07-15 17.56.17
2015-07-15 17.56.58


Philip Greenspun’s Weblog

Top Trade Ideas for the Week July 20, 2015: Bonus Idea

Written By: DragonFly Capital


Here is your Bonus Idea with links to the full Top Ten:

Costco Wholesale, $ COST,is where I shop for almost everything. We get fruit, vegetables, meat, bread and even gasoline. It may come in large quantities but that does not seem to matter much. And it is not just me. Everyone shops there. In fact I would go so far as to lay out a theory that Costco is the reason that most suburban people have an SUV, not the children.

The stock of the company had a great run higher that started in August of 2014 after a short pause, up to a peak in March. But then it started a pullback. The price fell in a long orderly channel for nearly 4 months before breaking it to the upside a week ago.

The catalyst may have been a re-connection with the 200 day SMA. It had not seen the 200 day SMA since July 2014 when that run higher started. Or it might have been the RSI hitting oversold territory for the second time in 3 weeks. Whatever the reason it is moving higher now.

And the chart looks promising for the upside to continue. The RSI is now back into the bullish range and rising. The MACD is also rising and the Bollinger Bands® have opened for the move higher. There is a consolidation going on now after that first move up. A break over the top of it would set a target of 155, a new All-Time high.

There is resistance above at 145.25 and 148.25 followed by 150.75 and 152.35 before 154.25. There is also the 100 day SMA overhead. Support lower comes at 142.60 and 140 followed by 137 and 135. Short interest is low at only 1.1% and the company reports earnings next in October.

Looking at the options chains, the weekly Expiry sees large open interest at 144 Friday. Moving out to the August Expiry the 145 and 150 Strikes have big open interest on the Call side with the 140 and 135 Strikes on the Put side.

Costco Wholesale, Ticker: $ COST

Trade Idea 1: Buy the stock on a move over 145 with a stop at 142.50.
A straight stock buy.

Trade Idea 2: Buy the stock and add an August 145/135 Put Spread September 150 Covered Call Collar (30 cents).
The collar protects the downside for a month for only 30 cents.

Trade Idea 3: Buy the August 145/150 Call Spread ($ 1.70).
A defined risk method for trading the stock.

Trade Idea 4: Buy the August 145/150 Call Spread and sell the August 135 Puts ($ 1.25).
Adds leverage at the prior low.

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into next week the thermometer is getting hotter and the so are the equity markets with the QQQ leading the charge.

Elsewhere look for Gold to continue lower along with Crude Oil next week. The US Dollar Index is breaking out higher and US Treasuries may be ready to reverse higher as well. The Shanghai Composite and Emerging Markets are both reversing higher and the coming week could determine if it is Dead Cat Bounces or the real deal.

Volatility looks to remain subdued and with a bias lower build a tailwind behind the equity index ETF’s SPY, IWM and QQQ. The QQQ looks very strong as it approaches the all-time highs of 2000 while the SPY is also strong and on the edge of a break out. The IWM looks the weakest as it moves sideways in a new consolidation. Use this information as you prepare for the coming week and trad’em well.

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Miscellaneous Aviation News

The latest AOPA Pilot magazine arrived today. Some interesting stuff…

The Icon A5 seaplane gets a good review as a flying machine. I want serial number 500!

An Atlanta-based doctor explains why he likes to fly a little airplane to Haiti and treat patients:

There are no insurance companies or hospital administrators to deal with, no reports to write, and no forms to fill out. There are only patients in need of care, and the focus is on healing. “This is what drew me to medicine in the first place,” Rizor said. “At home, it’s easy to forget that.”

Bell Helicopter is laying off 1,100 employees, “more than 15 percent of the workforce.” This announcement comes shortly after United Technologies said that they wanted to unload Sikorsky. Bell and Sikorsky got fat off U.S. military contracts while Airbus Helicopters, formerly “Eurocopter”, invested in new designs and is now the worldwide market leader (with a big recent push into China). If you want to stay competitive in the global economy, it is important to remember that the French and Germans do more than simply shovel cash into the Greek furnace!

Unlike Obamacare, where state and federal governments run web sites that have a monopoly on customers in particular states (at a cost of $ 2 billion/year?), the FAA has for decades had a system in which at least two private companies could interface to their computer systems and offer weather briefings and flight plan filing to pilots. The FAA would pay each company according to how many weather briefings it delivered because each one saved the Feds from answering a phone call. The contracts came up for renewal recently. When the dust settled, the FAA pulled the interface from the smallest company, Data Transformation Corporation, left the interface in place with the 70,000-employee Computer Sciences Corporation, and added an interface for Lockheed Martin, the 112,000-employee government contractor (Lockheed Martin previously won a contract to become the monopoly provider of telephone weather briefings, taking over work that had been done by civil servants). Lesson: Go Big or Go Home if you’re working with the federal government!

As is typical, a portion of the magazine is devoted to the “Charlie-Foxtrot” of getting planes converted to comply with ADS-B. The glorious plan is to have everyone in the system in 2020, almost exactly 25 years after it would have been technically feasible (GPS became “fully operational” in 1995). Personally I think the most exciting product in this area is the Lynx NGT-9000 transponder, about $ 10,000 installed. It has a little screen to show nearby traffic and weather, pulled from the ADS-B In feed. If this can fit in the same panel space as the standard Garmin transponders in older Cirrus aircraft then it seems as though it would be the best way to move into the 2020s.

Note: Oshkosh starts on Monday and that’s traditionally when a flood of product announcements occurs.

Philip Greenspun’s Weblog

To See a Bear Market, Look to Gold Not Stocks

Gold prices slid to new lows today in an ongoing downtrend and bearish money flow.

While a lot of traders are expecting the stock market to peak and reverse, many traders may be missing the ongoing downtrend in Gold that is confirmed and in motion.

Let’s chart Gold from three perspectives and see what’s going on (and what levels to watch):

Our simple Daily Chart perspective reveals an ongoing downtrend of lower lows and lower highs along with bearishly sloping moving averages.

However, a key support level developed near $ 1,140 where buyers intervened and bounced prices higher in November 2014 and March 2015.

Traders perhaps were hoping for a repeat performance of the bounce rally – which is absolutely logical – but today shows the bounce did not yet occur.

At this point, we’re likely to see a “Bear Trap” outcome (see the stock market in October 2014 and recently in July 2015) which would trigger IF price pushes back above $ 1,140 instantly… or a breakdown and continuation of the ongoing downtrend and bearish money flow.

See yesterday’s multi-market update post for a broader perspective.

Before we take a look at the Weekly Chart structure, let’s update our Color Structure Chart of Gold:

This is an update from yesterday’s Color Structure Multi-Market Grid.

The main idea is that Gold is downtrending and is on a “Red Sell” swing in the Color Structure Chart.

At the moment, price is into the lower Keltner Channel (band) but piercing under the support floor near $ 1,140.

This is a bearish price development taking place on a clear positive momentum divergence so we’ll be more alert than usual (and perhaps less directly bearish as we would be without a positive divergence).

Now, let’s pull the perspective back to the Weekly Chart for additional clues to what’s happening:

Buyers supported gold at the $ 1,200 level through 2013 but sellers overpowered buyers with another breakdown and new low in late 2014.

Through 2014 and early 2015, buyers once again supported gold at the $ 1,140 level as noted above, but so far buyers are losing the battle to the bears with today’s breakdown.

The focal point will again be $ 1,140 for the “Bear Trap” (false breakdown) possible outcome and if we don’t see an instant movement back above $ 1,140, then the $ 1,100 target is fully in play.

For one more perspective on Gold (and related markets), see the prior update

“Multi-Timeframe Color Ribbon (Trend) Update for Gold, SP500, and Oil”

Watch the $ 1,140 level and under it $ 1,100 as the ongoing downtrend in gold continues (distribution).

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Corey Rosenbloom, CMT
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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Donald Trump proves the “white male privilege” theory?

With women already serving as CEOs of some of our nation’s largest corporations, e.g., IBM and HP, and soon to be serving as CEO of the federal government, one might argue that the era of white male privilege is behind us. But on the other hand, Donald Trump seems to be getting a lot of press. Aside from the fact that he is a white guy, why would Americans care to hear about what he is doing/saying?

Trump is pretty rich, of course, but he would probably have been richer if he had taken the money he got from his successful dad and parked it in an S&P 500 index fund (analysis). And he has used the U.S. bankruptcy court system to skip out on paying back creditors four times (Forbes). We scold the Greeks for not paying their debts but we celebrate Trump despite his abuse of bondholders. We look for business tips from a guy who could have been richer by staying home, smoking dope, watching TV, and playing Xbox. Does Trump’s success prove the wisdom of the movie Being There?

Louise (the former housekeeper, watching Chance on television): It’s for sure a white man’s world in America. Look here: I raised that boy since he was the size of a piss-ant. And I’ll say right now, he never learned to read and write. No, sir. Had no brains at all. Was stuffed with rice pudding between th’ ears. Shortchanged by the Lord, and dumb as a jackass. Look at him now! Yes, sir, all you’ve gotta be is white in America, to get whatever you want. Gobbledy-gook!

Guide to estimating the fraud factor in whatever you hear about Trump:

[Separately, maybe Trump’s four bankruptcies support the idea that Greece shouldn’t keep begging for bailouts from the IMF and Europe. Stiff the fools who lent the cash, but keep the fun stuff that the cash paid for!]

Finally, could it be that Americans love watching Trump parade on TV because they say “That’s exactly what I would do if I had a rich dad”?


Philip Greenspun’s Weblog

July 17 Flat Market Update and Big Mover Stock Scan

Despite the strength of technology leaders Google and Facebook (among others), the S&P 500 is perfectly balanced and flat today despite the NASDAQ’s bullishness and new all-time high.

Let’s scratch the surface and look beyond the headlines to what’s trending today:

Traders in the NASDAQ and Tech Sector Stocks are probably having a lot more fun today than index futures traders!

Nevertheless, we always start with a top-level picture of what the index – especially the S&P 500 – is doing and then drill-down to specific sectors and stocks within sectors from there.

Right now, there’s nothing exciting going on in the S&P 500.  Price is consolidating after a stellar rally.

Negative divergences (into resistance) undercut the rally and make us more cautious.

However, the strength in Tech Sector names (we’ll see shortly) keep us from being bored during today’s range session.

Follow along with members for more precise daily planning, analysis, and education.

Let’s see what our Breadth Chart reveals about current market strength (or weakness):

Speaking of Technology, even with big headline gappers and strength in Google (GOOGL) and Facebook (FB), the Tech Sector “only” shows a positive breadth reading of 33% (of stocks positive right now).

This is a big divergence and non-confirmation, or signal that not all is bullishly enthusiastic with the broader market.

Financials, Energy, and Utilities (which were yesterday’s leaders) are the weakest sectors today.

Ok without further ado, let’s highlight our algorithmic stock scan’s top candidates (all Tech names).

Here are today’s strongest trending (intraday) names – candidates for pro-trend continuation: (BIDU), Google (GOOGL), Yahoo! (YHOO), and Facebook (FB)

Bearish downtrending candidates include the following stocks from our “weakness” scan:

Solarwinds (SWI), Comerica (CMA), Agnico Eagle (AEM), and Range Resources (RRC)

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Corey Rosenbloom, CMT
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

Afraid to Blog

Macro Week in Review/Preview July 10, 2015

Written By: DragonFly Capital

Last week’s review of the macro market indicators suggested, heading into the heat of Summer the Equity markets looked vulnerable on the short time frame and just sideways on the longer timeframe. Elsewhere looked for Gold to continue the broad consolidation with a downward bias while Crude Oil looked to move lower. The US Dollar Index looked to continue to consolidate in a tightening range sideways while US Treasuries were consolidating but biased lower. The Shanghai Composite was crashing and showing no sign of letting up yet while Emerging Markets might bounce in their downtrend. Volatility looked to remain low but above recent levels and with a risk of more upside, easing the tailwind it has given the equity indexes. The ETF’s SPY, IWM and QQQ, themselves all appeared vulnerable on the daily timeframe with the QQQ the strongest looking flat. On the longer timeframe the QQQ was also looking the strongest but had pulled back to trend support with the IWM looking weaker. Perhaps some rotation out of small caps and into technology and larger caps was to come.

The week played out with Gold drifting lower while Crude Oil took a dive lower and then consolidated. The US Dollar moved slightly higher to resistance before a small pullback while Treasuries broke overhead resistance but then pulled back. The Shanghai Composite continued lower finding its 200 day SMA and then bounced while Emerging Markets finally found a bottom and bounced slightly. Volatility remained low but in the recent higher area over the SMA’s. The Equity Index ETF’s pushed to lower lows before recovering to finish the week mostly unchanged to slightly higher. What does this mean for the coming week? Lets look at some charts.

If you like what you see sign up for more ideas and deeper analysis using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

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Dragonfly Capital

New York Times suggests that companies other than the New York Times hire transgender workers

“The Struggle for Fairness for Transgender Workers” is an article by the New York Times editorial board, which has chosen not to hire any transgender workers, about how other employers should be forced to hire such workers. It is unclear why the business folks at the Times haven’t been attracted by the opportunity to profit by hiring workers that no other employers (because of their deep-seated prejudices that the non-transgendered staff at the NYT has ferreted out) are willing to hire. If the Times is correct one would think that a business with a 100% transgender workforce would have remarkably low labor costs.


Philip Greenspun’s Weblog

Cool Technology With Some Great Ideas

In the past few years SMB has built some remarkable trading tools. We led the pack in moving to HTML5 years before others (can use on smartphones and tablets). But beyond the cool technology in Scanner, Radar, and Real Time it is the actual idea flow that comes from very experienced traders. Traders who have spent years learning how to identify the best risk/reward setups.

If we look at the past few days in the market there has been a lot of anxiety and a lot of volatility. During this sort of environment to have access to an AM Meeting where I explain short setups in ACE, CNC and TSLA with key levels can be invaluable. I also Read more […]
SMB Capital – Trading Education