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Stock Market Trading Tips, Advice and Recommendations
The broad stock market has had a much more positive technical background this month. The intermediate-term indicators have been positive and on official buy signals. They have slipped some here and there but never rolled over to sell signals. Then this week's strong rally brought them back from the brink, and they remain positive.
I have attempted to be in and out but not without stress. And yes, the market is in an uptrend and how long it remains there its only the same market that will be able to tell us. Indeed this uptrend has been painful to me not until it has passed. Below I will narrate how things unfolded from April 02, 2008 as illustrated in another page which I have designed to help beginners and average readers make money online.
April 02, 2008: Neutral positions/Calendar Spreads to the downside have done very well by benefiting from time decay. I now have been stopped by the stop loss/upside breakout of 2363.52 plus 0.1%. Remember that with Neutral Positions/Calendar Spreads, you make money regardless of price direction. The only way to lose is if the prices of the underlying moves too far in either direction in which case the stop loss will have stopped you before it happen. You can also structure these trades so you have a very wide profit zone, with a high probability the price will stay in the profit zone. In addition, you will rollover, if necessary, to manipulate the profit zone.
April 02, 2008: All downside trades were closed. New Neutral positions/Calendar Spreads were established to the upside. The stop loss was placed at 2155.42 less 0.1% equals 2153.27.
April 9th 2008: The longer trend is uptrend in Nasdaq Composite (read QQQQ and or $NDX), SP500, Dow, Russell 3000, etc, as the prices are above the Variable Equilibrium Centre. The highest high of the current ended crest is higher than the highest high of the previous crest. Armed with the low of 2311.45, I now waited for this low to be broken the next day so that I get filled. So the next day, April 10th 2008, I gamble and establish positions to the upside at any price below 2311.45. If I could, I could follow the market tick by tick and get the lowest low for the day. If I do not get a price lower than 2311.45, then I should wait for the next day, April 10th 2008, to see if I can get a price lower than 2311.45. Stop Loss/Breakout to the downside was to be placed at 2155.42 less 0.1% equals 2153.27.
April 10th 2008: Nothing doing. The market manages a low of 2324.39 which is above the low of 2311.45. The next day, Friday, April 11th the market recorded a low of 2286.19 and I get filled at between 2311.45 and 2286.19. To be specific, I sent market limit orders at 2293.12 which was about one hour before the close of the market for the day. The market was moving very fast and all my long positions on QQQQ were instantaneously filled. Two minutes in the market, the short positions were yet to be filled. The market continued to drift downward and by the close of the market, each of the long September 46 QQQQ calls that I had bought had each lost $9.50 - so if I had 30 calls then I was down $285 for being in the market for one hour. My market limit order to sell to open June 46 calls expired without selling the June QQQQ 46 calls but all the same I had to pay my broker a few cents for that limit order. Perhaps it would be important to state here again that I use the algorithm logic that says if this or that happens to Nasdaq Composite, buy or sell QQQQ, and so on and so forth.
The next day was a weekend, and yes, I was to hold those QQQQ options that were fluctuating in price at lightening speeds like propane and naked flame. Now that I am down a "few" dollars for every contract, I was feeling irritated and was contemplating locking this loss by selling the covering short calls on Monday. But because I believed I was sure of what the market was doing, I decided to leave those QQQQ calls at the mercy of the 2155.42 less 0.1% equals 2153.27 stop loss. The following Monday and Tuesday, it was very gloomy for me as I watched the market drift deeper down. These two days you will have no appetite or enough sleep - there is too much heat in the stomach. And by Wednesday, the market hurriedly lifted itself up and by Friday I had a nice profit of $102 for every contract - so if I had 30 contracts I had a profit of $3060 for being in the market for six trading days. It was a nice profit but I believe I should not have accepted to hold uncovered call options for more than two minutes in the first place.
And where is the stock market today? Up to today, April 18, 2008 the Neutral positions/Calendar Spreads to the upside have been rolled over to the upside once in an effort to remain in the profitable zone. April 18, 2008, Friday, the exit point to the upside has been confirmed by the chart Where the Stock Market is Today. The action to take is: - close long positions, at any price above 24.1278 on Monday April 21, 2008 or thereafter. Neutral positions/Calendar Spreads to the upside should be retained. And by long positions I mean long stocks, long calls, short puts, etc., etc. The stop loss should be retained at 2155.42 less 0.1% equals 2153.27.
Friday, May 30th, 2008
On May 22, 2008, we had this signal: "open long positions, at any price below 2444.99 on Thursday May 22, 2008 or thereafter." We got filled on Friday, May 23rd, 2008 at between 2444.99 and 2430.36 (because Thursday's low of 2448.84 took milliseconds).
May 30th, 2008: Friday, the exit point to the upside has been confirmed by the chart 4 crests Monday, June 2nd, 2008, or thereafter, close long positions, at any price above 2530.16. Neutral positions/Calendar Spreads to the upside should be retained and rolled over every time both legs get "on money". By long positions we mean long stocks, long calls, short puts, etc., etc. The stop loss should be moved from 2264.02 to 2430.36 less 0.1% equals 2427.93.
And should you have a question you need to ask, feel free to ask for you will be answered. It is through asking that I have been able to have what I have. This information is provided free to help beginners and average traders who might be inexperienced in the complexity of the stock market movements make some money in the stock market. The stock market is a proven wealth builder and can and should benefit all participants. It is only fair that each one of us should be entitled to a piece of the action.