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November Trading Review
Dec 4, 2007 - The most significant item this year is the elevated volatility, as measured by the VIX index. Not only has this rise created nearly double the number of trading opportunities...
November 2007 The most significant item this year is the elevated volatility, as measured by the VIX index. Not only has this rise created nearly double the number of trading opportunities, it has also helped us break records two months in a row. With no system changes since July 2005, our S&P eMini program has recorded over 70 points in October and over 50 points in November. We attribute this to the rise in volatility. The surprising part is that the system was developed in 2003 during a relatively low period of volatility. The fluctuation in Volatility has a direct correlation on the opportunities available in options trading. In general, when Volatility is high or rising, more opportunities are available. When Volatility is low or declining, less opportunities exist. In 2007 we've seen a surge in Volatility and this has a direct correlation with the results we've achieved so far in 2007. The OEX trading was strong as usual with only 2 losses recorded. On November 28th we had one of the easiest trades of the year, netting over 40% !!
Review: 98 Month OEX Track Record OEX Track Record -- http://www.oexstreet.com/track_record.php S&P eMini +53.50 points from 48 trading signals (1 point = $50) -- http://www.oexstreet.com/track_record_emini.php Russell eMini +1.8 points from 6 trading signals (1 point = $100) -- http://www.oexstreet.com/track_record_emini_russell.php Trading results are for demonstration purposes only. It is impossible to draw any significant conclusions from 1 month (30 days) of data. Please review our multi-year track records and make educated decisions based on the facts. Closing comments broadcast live during November: Thursday, November 01, 2007 OEX Options Results: No trade
eMini Futures Results: Good thing we knew better than to make any moves today. Have a good evening and see you tomorrow morning.
As I stated a couple days ago, trading during this environment carries a greater degree of risk. We've seen the S&P Futures move from 1510 to 1525 and now down to 1500. All in about 90 minutes. I did send the OEX Key Levels for those of you who, well you know what I mean... :-)
OEX Options Results: No trade
eMini Futures Results: As I've reported all day it has been extremely interesting to watch how the market is behaving during these uncertain times. The OEX bounced from 701 to 710 yet the highest the Advance/Decline line rose to was +900 issues. If you're a believer and follower of market internals like myself then you understand how insane that is. Yet, we understand that the market's uncertainty is what brings on these unusual events. Over the past 20 minutes the market has exhibited some form of panic buying. This will be interesting to see how the overseas markets trade following today's advance and whether or not we can get an additional day of upside. The remaining question is whether or not the financials will begin to rise and attract buying interest. If so, this will most certainly cause a buying panic. We'll see...
OEX Options Results: +$1,600 +17%
eMini Futures Results: Another one for the record books -- The OEX was down over 21 points !! How many times have you ever seen that?? We could very well see the market crash overnight. I discussed the capitulation back in August and noted that I didn't feel we really saw a great deal of fear in the market before that big reversal took place. But I had to accept that I was wrong since we saw the Dow Industrials rally 1,700 points. The way we're seeing the financials tank could very well lead to an exhaustive sell-off tomorrow. That's really anyone's guess but for the market to rally at this point it’s going to take some rather significant pieces of news or a crash. Now, with that said, it was a good day for us. The Russell eMini booked a nice profit early in the day but the S&P eMini didn't do as well. However, given its recent unbelievable success it’s not uncommon to see a small loss like today. Then, we topped it off with a very low risk Put trade that paid large dividends. Sure, we didn't catch the entire decline but we caught enough to call ourselves successful options traders and that's the name of the game.
OEX Options Results: No trade
eMini Futures Results: Was today's decline the actual bottom? It’s all guesswork beyond that. Sure, the market bounced nicely off the lows but that's not a real surprise given how exaggerated this sell-off became. There is a ton of technical damage in addition to the fundamental uncertainty. It is going to remain volatile for many months to come. We sat the day out (other than the mechanical S&P eMini trades that were once again fantastic) given the uncertainty and higher risk. Congrats to those who took the initiative to trade today with defined trading plans. As you know, I'm broadcasting to a group so I keep the risk low and remain sidelined mostly on crazy days like this. It will be interesting to see how we end the week and whether or not the bulls can recoup any more of these losses. Anything less than another 300 Dow points is going to be disappointing.
OEX Options Results: No trade
eMini Futures Results: Another failed attempt to recover from weakness. As I said earlier, the only thing that is going to pull the market out of this rut is an actual market crash or some significant piece of news. We've yet to see any panic selling. The final 30 minutes was pretty violent but there was no reason to remain long headed into the weekend. Have a good weekend and see you Monday morning.
OEX Options Results: +$400 +7%
eMini Futures Results: Last week I commented that the market would continue to decline until it either crashed or we received a significant piece of news. The crash will be obvious if it does occur. The significant piece of news will also be obvious because we will see a period of panic buying to the tune of +300 Dow points. But until this occurs we will see the market fail over and over. We had a decent morning but the NAZ 100 failed to participate and it lead the broader market lower. One thing is for sure and that's Put buying. It seems no matter what strike you buy or when you buy it, it appreciates. Of course, that won't always be the case but until proven otherwise... Today was another successful one for day trading. The S&P eMini produced a gain of +12.75 points.
http://www.oexstreet.com/blog/images/picture-744649-744774.png
That already puts us over +30 points in November !! The party continues. The Russell eMini was less fortunate but it was pretty evident going into the trade that it would have a hard time given the program buying we were seeing in the market. But we came back with a nice OEX option trade
http://www.oexstreet.com/blog/images/picture-794735-794852.png
So, it really doesn't matter if the market goes up, down, or sideways -- there are opportunities if you know where to look.
OEX Options Results: No trade eMini Futures Results: If you've never witnessed panic buying before, well you just did !! WOW Give one to the bulls and one of magnitude at that. Can you say SHORT COVERING ?? I've been looking for a +300 point Dow day and that occurred today. The OEX was higher by 20 points near the close! As soon as the NAZ 100 broke above the 2,040 resistance, that I illustrated earlier, we were off to the races. The OEX Key Levels worked wonderfully today. The calculated intraday high was 687.25 and the actual turned out to be 691.10. Not bad! Here is an illustration of how well the levels worked and shows the hesitation of the market near these levels. http://www.oexstreet.com/blog/images/picture-779967-780082.png This morning I noted that there was a strong chance of the Dow rallying to 13,200 (when the Dow was 13,110). I never imagined we'd get to 13,319! http://www.oexstreet.com/blog/images/picture-715414-715520.png That was a nice surprise for the bulls. Congrats to those of you who took the tools and made a profitable trade out of it. We've not seen much consolidation following large breakout days in a few weeks. What I mean by this is while the market has fallen over the past 2 weeks we've not seen any buying interest. Typically when you see large one day moves you get one or two days of consolidation. That hasn't been the case lately. Therefore, we would normally expect tomorrow to be one of consolidation but given the recent pattern we have to believe that the market will actually rise again tomorrow. We'll see... Wednesday, November 14, 2007 OEX Options Results: -$240 per contract eMini Futures Results: The bulls failed to get it done today despite the gap higher open. The most obvious lag today was from the NAZ 100. It traded lower from the opening bell. The gap this morning was way too extended and traders took the bounce as an opportunity to unload. If you measure the gap and the actual low it was 60 points so it was a lot worse than it looks on the surface. Very seldom can you be successful without the NAZ 100 moving in your favor. This is exactly why we lost with the OEX today, nothing mystical there. The S&P eMini system remains on fire. I'm not 100% sure but I believe today was our single best day ever with +21.50 points. Heck, +21.50 points is a good number for a month let alone a day! We're not half way through the month yet and we've already gained +60.75 ES points. Unbelievable considering the system only uses time and price, no indicators, and all of the signals are delivered within 5 minutes of the opening bell. Shows you how simplicity really works! Thursday, November 15, 2007 OEX Options Results: 1 Win +$180 and 1 Loss -$130 eMini Futures Results: There is nothing wrong with being 'wrong' as long as you're willing to admit it. Today I was wrong. Unfortunately, my 'prediction' that the OEX would see 675 before 685 (680.53 at the time) was correct but we were not positioned to participate. As you know, I am seldom completely wrong with an OEX trade. When I am its imperative we understand what happened. Today the market's volatility is what toyed with our results. This is the reason I opted not to participate in this late day sell-off. Friday, November 16, 2007 OEX Options Results: No trade eMini Futures Results: Ah the games (manipulation) that we constantly see. My 'guess' that we'd see 680 as the penned strike was correct. At the time of my 'guess' the OEX was at 675.33. http://www.oexstreet.com/blog/images/picture-782577-782687.png As I stated earlier, it seemed apparent that the 680 strike had more relevance than the 675. Talk about leverage! If someone bought Call options about 15 minutes into the close they had an explosive return as the OEX bounced about 5 points. Expiration related or not, I really liked the price action into the close, especially on the NAZ 100. But again, rallies will get sold until proven otherwise. I do think we're getting closer to a rally but that's also what I thought several weeks ago before the credit crisis re-immerged. So it’s really a guessing game and there are managers getting paid 10s of millions each year to figure it out and they keep dropping the ball. With next week being shortened by the Thanksgiving holiday it is a perfect recipe for a rally if the bulls are so inclined. Monday, November 19, 2007 OEX Options Results: No trade eMini Futures Results: It would have been a nice trade on the break below 675 that I discussed this morning. Unfortunately when there are 4+ weeks until expiration you have to play the hand you're dealt. Crash or significant news…. Those are the two available options to spark a rally. Otherwise, any bounce is likely to be sold. Excerpt from intraday: Did you know that sometimes your trading vehicle is your limiting factor? Tuesday, November 20, 2007 OEX Options Results: +6% eMini Futures Results: If you enjoy volatility then you had a blast today! That 13,100 Dow resistance was right on the money. Certainly no one expected a 250 point pullback. But then again no one probably expected a bounce of 200 points in the final hour. I know a lot of you enjoy scalping the market intraday. There is nothing wrong with that as long as you have a plan. It is my belief that during volatile times as these its best to use tight stops and let your profits run. There really is no other objective way of trading this market. Normally we'd expect the market to be quiet tomorrow with a positive bias. Since these aren't normal times for the market anything is possible. I do expect light volume but that can be easily manipulated. We'll see... Monday, November 26, 2007 OEX Options Results: No trade eMini Futures Results: Another failed rally! Not a surprise. The bear raid took place sooner than expected and they certainly brought the big guns. We could once again easily see the market crash overnight. It will be important to monitor the trading action overnight. Tuesday, November 27, 2007 OEX Options Results: +$50 per contract +7% eMini Futures Results: The bear raid indeed surfaced this afternoon but the bulls came to fight. Can we really get excited about today's advance? Sure, it was a nice change of pace but we saw this same thing last week before falling to multi-month lows. The impressive aspect of today's market is the fact that this morning key area of focus, Dow 12,800 and NDX 2,000 , played such a significant role and the levels held all session. It has been a while since we've seen key technical levels actually remain meaningful intraday. Of course the next hurdle is Dow 13,000 and we must not forget that each and every bounce has been sold into for several weeks. One day doesn't make a trend nor break a trend. Wednesday, November 28, 2007 OEX Options Results: +40% eMini Futures Results: What an exceptional day the market managed to put in! As I stated earlier, you couldn't ask for an easier day to make $$. As you may recall, I noted that within the first 30-minutes of trading the Advance/Decline line on the NYSE exceeded +2,000 issues. This is nearly unheard of. We were quick to pick up on this obvious lead and enter Call options on the OEX which lead to a gain in excess of 40%. Remember, successful options traders target base hits. If you play the game long enough you'll hit an occasional homerun like we did today. The market has seen an exceptionally large rebound from Monday's low. Specifically, the Dow Industrials have bounced 550 points in two days. It will be interesting to see if any bear raids develop near these areas of overhead supply. Thursday, November 29, 2007 OEX Option Results: No trade eMini Futures Results: We have to conclude that the bulls came to play ball today. It was imperative not to lose any of yesterday's advances. I noted this morning that the pattern over the past few weeks included the selling of any and all rallies. These patterns remain in tact until broken. The bulls needed to break this pattern today to make this +550 Dow Industrials advance from Monday's low significant. I noted today's movement would be dictated by 13,300 on the Dow Industrials and 2,100 on the NASDAQ 100. The charts clearly illustrated the significance of these levels. Today was quite easy to pattern but the low risk opportunities just weren't there. Friday, November 30, 2007 OEX Option Results: No trade eMini Futures Results: It was interesting how critical the 2,100 level on the NDX and 13,400 on the Dow Industrials were at dictating today's market movement. Earlier I mentioned that the tech sector is what drove the Dow and S&P from their earlier advance. It was a surprise to see this much profit taking following this morning's opening surge. http://www.oexstreet.com/blog/uploaded_images/picture-722515-722615.png OEX Street ...thanks
for the trust you've shown in MrSwing. p.s. Membership to oexstreet.com now includes auto trading access to our russell eMini system, NUTUS ER....
Disclaimer:Please note that charts and commentary provided by the moderator are for educational purposes only. Any trades placed upon reliance on the moderator’s charts or information is taken at your own risk for your own account. Past performance is no guarantee of future results. While there is great potential for reward trading stocks, futures and options, there is also substantial risk of loss and you must decide your own suitability to trade. Future trading results can never be guaranteed. This is not an offer to buy or sell stock, futures, options or commodity interests. Most trading systems are based on historical formulas which have worked in the past. However, what has happened before may or may not happen again. You can lose all your money trading stocks, futures, and options and you must decide your own suitability as to whether or not to trade. Only trade with true risk capital you can afford to lose. Only trade markets you can properly afford to trade. Properly funded trading accounts typically perform better than those that are not. Never risk more than 2-3% of your account on any one trade. Always define your risk before entering a trade and place a stop to limit your risk. There are no guarantees or certainties in trading. Trading involves hard work, risk, discipline and the ability to follow rules and trade through any tough periods during a system’s draw downs. If you are looking for a guarantee, trading is probably not for you. Most people lose money trading. One of the reasons is that they lack discipline and are unable to be consistent. A system can help you become consistent. Ironically, worrying about the monetary aspect of trading can contribute to and cause a trader to make trading errors. Therefore, it is important to only trade with true risk capital.
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