FLIR

6/16 Close…

Though we could have opened a new position today in FLIR, we decided that the action into the close wasn’t what we wanted to see after that big lot surge around 2 PM.  In this market we’ll remain cautious and wait for the good confirmations and/or consolidations.

We like consolidations into support with bounces off significant support levels much better in this kind of market than confirmation breakouts.  BO’s in a bear market usually fail, and although the recent consolidation in FLIR is what we look for, there is usually a period of churning along the tested support line before new strength is revealed.  We’re looking for that here.

Coach BD

*

Weekend Watchlist Note…

One positive note. We like the recent price action on FLIR and will be looking for a confirmation of Friday’s big volume move back above its 20-Day MA and a continuation of the stock’s steady upward movement in this otherwise weak market.

This may be a good new opportunity when there aren’t many out there in this environment.

Coach BD

If you have been listening to any market veterans these last many weeks, you have almost certainly heard many say that they have never seen anything like this market, especially with regard to the huge swings in prices and volatility.

Today was just another example of that sentiment.  The only thing we know, at least for now, is that the trend in place is still down…  until it isn’t.

Also, we haven’t seen these kind of wild swings in price since 2000 - early 2003, and we all know how those years turned out.   3+ years…  This current bear, based on all of this continuing bad news, has been showing these big volatility signs to the downside for only about 5 months…

*

With expiration tomorrow, we have been spending much of our time yesterday and today, and will spend much of it tomorrow, making adjustments to our ongoing and carryover positions.

If anyone is holding any of the trades we have entered over the past couple of weeks…   

GOOG - Exiting tomorrow with possible adjustments 

DELL - The long side of this trade will expire worthless tomorrow unless there is a huge BO above $32.50 and the position will experience a small loss after we exited the Short side of the trade for a small profit.

YHOO - We will be rolling this trade out as we believe the trade is still live though it is currently negative.

JOYG - We thought we may have the position nailed for a near Max Gain after yesterday but when today started deteriorating we decided to buy 1 MAR 65 Put for $.70 to reduce our risk even further if the price continues to fall.  Our BE to the downside is ~$62 and will now profit below that price.  The BE to the upside is now ~$68.50 with the Max Gain at $70 at ~$1.00/Contract profit.

TMA - The Net Short position was closed at near the Max Gain and the Net Long position risk is significantly reduced by our actions last week.  We will update tomorrow on the status of this position but it appears that the remaining portion of the Short side of the net Long will close for near Max Gain ($2.45/Contract), and we may hold onto the remaining Long JAN 10 - 5 Calls.

Please send us a note tonight so we can make sure you are updated in real-time as we either exit or adjust these positions tomorrow.

Coach BD 

Thanks to m37 for the comment and question regarding our strategy in finding new trade opportunities and about using the 52-week high list.

Coach BD

continue reading "Trade Evaluation Dialogue"

The Watchlist area is home to The Trade Coach’s various strategy watchlists and discussion of those stocks that are on them.

The Watchlist area is reserved for Subscribers only.

The Trade Coach 

Several of you have asked about our VIX hedging strategy and requested more information…

First, the VIX is treated exactly like any other trade, EXCEPT, we are assuming that over the course of the coming year that the VIX will trade at higher levels than last year, when it traded the first half of the year near historic lows, then with much more volatility the second half of the year.

Given our assessment and evaluation of this assumption, we believe the VIX can be entered on pullbacks (market rallies), as long as the averages do NOT breakout above OCT highs and confirm a continuation of the LT bull run which still is in place, but showing some significant signs of weakening, or perhaps reversal. 

Today we covered our short 25 Calls for DEC and banked a 50% gain in those Calls, which we had already rolled for profits since the NOV 12 peak a couple of times.  From here we wait to see what happens tomorrow, treating tomorrow as a kind of “earnings”, or event that we do NOT want to be short going in to. 

If the market rallies after the FED action tomorrow we will probably sit tight to see if the rally can breakout strongly above 14,000 on the DOW (one of the resistance points technicians have been pointing to in the classic “Head & Shoulders” pattern), and then if it can breakout to new highs made in OCT.

If we see a weak rally up to the 14,000 area, and start a reversal, we will add to our VIX position, if the rally is strong and breaks above the 14,000 level, or bolts to new highs, we’ll probably sell our Long VIX position and call it a year, and wait until the new year to reestablish a new position at lower prices.  We have hedged most of our gains in the VIX Long position through spike premium sales and are now willing to hold the position down to the 15 level, and either sell or add, depending on the market action.

*

If anyone has any questions please send those to us.  I will post more later regarding the overall strategy, but as for a buying opportunity in the VIX, I would say that to wait and see how the market reacts tomorrow.  If we get a weak rally up to the 14,000 area I would guess that the VIX will fall back to the 15-17.50 level, which may be a good opportunity to consider an entry.

More later…

Coach BD

More excellent inquires from Wayne regarding our VIX hedging strategy.  See discussion below…

Coach BD

continue reading "VIX Hedging"

In January, with the VIX hovering around 10, we entered a Long Call VIX position that would hedge our long portfolio to a ~20% decline in our collective long positions.

As we added long positions over the course of the year, we also added to the VIX position to keep us at a ~20% overall hedge to our portfolio.

We also took advantage of opportunities when the VIX spiked in FEB, AUG & early NOV to sell OTM premium for additional income and profit.

*

Our VIX hedge is ongoing and this position alone has contributed ~25% to our overall profit in our long portfolio.

The Trade Coach believes that the VIX product provides the most efficient market hedge avaliable due to its overall efficiency, cost and dynamic nature.  We also use individual stock hedges with more volatile issues, and where we can apply them cost effectively.

Coach BD

*

Specific discussion about our VIX strategy and activity is reserved for Subscribers only.  

In this area you can review and discuss our ongoing Market & Portfolio Hedges.

This area is reserved for Subscribers only.

The Trade Coach

This thread is home for discussion and commentary regarding potential and/or ongoing long trade activity, updates and other relevant long trade issues.

This area is reserved for Subscribers only.

The Trade Coach

This will be home for discussions about potential and/or ongoing Short Trades.

This area is reserved for Subscribers only.

The Trade Coach