A Note On Volume

Volume can be a useful tool for traders.  Trading volume tallies the number of shares (for equities) or contracts (for futures) traded on a given day.

Price is king, but volume can indicate the force behind a price move.  This provides valuable information.

For example, on our daily candlestick chart of JPM below, note that over the past few weeks, volume (overlaid on the chart) on down days (black bars) has been greater than volume on rebounds (red bars).

JPM chart

Chart by Steven Sarnoff h/t stockcharts.com

Low volume on a rebound is not a good sign.  It tells me the bounce is more of a short-covering rally and adds weight to the evidence in favor of a continuation lower.

As with all indicators, there is no certainty; there is only probability.

Subscribe to Options Hotline today to vie for fun and profit.

Best regards,

Steve

 

Don’t Chase

JPM price chart

Chart by Steven Sarnoff, h/t stockcharts.com

Options Hotline Update, FYI: Our JP Morgan Chase reco closed +41% in 1 day on a 2% move in the underlying shares, with an always known and strictly limited risk!

That’s Superleverage Power on Display.

Our recommended option trade for subscribers, the JPM December $110 put, triggered yesterday at $2.70 and closed today at $3.80.

JPM closed today’s session eyeing its recent low and a potential visit to the area of its August nadir.  The big banks are getting beaten down.

Resistance is now at $112.41-$114 and $116-$120.  Support is at $109-$110 and $103-$107.

Is that the type of options action you’re looking for?

I’m now in my 21st year at the helm, as the newsletter created by my father approaches its 31st year of publication.

Subscribe to Options Hotline today to vie for fun and profit.

Best regards,

Steve

Island in the SPY

As you can see on my candlestick chart below, Wednesday’s gap down negative black candle line left all of September’s price action as an island reversal pattern.

S&P 500 chart

Chart by Steven Sarnoff h/t stockcharts.com

This price picture implies the likelihood, but not the certainty of a trend change.  The key going forward will be to see how the venerable index behaves on a rebound attempt to fill the gap.  The aged bull market may be tired and we are in a distinct time period of risk.

I see overhead resistance (supply) waiting at $291.50-$295.49, basis the close.

Underlying support (demand) from today’s positive session is at $284.82-$289.12.

Subscribe to Options Hotline today to see how our readers position for fun and profit.

Best regards,

Steve

Your Almost Daily Bit of Wall Street Wit & Wisdom

Starbucks stock price chart

Chart by Steven Sarnoff h/t stockcharts.com

“Seeing lots of trendlines being drawn these days.  Please note that trendlines need at least three valid touches to be significant.”
— Walter Deemer, @WalterDeemer

An up trendline is drawn by connecting higher lows.  It represents support and may exert a positive influence on price.  A down trendline is drawn by connecting lower highs.  It represents resistance and may exert a negative influence on price.

As you can see above, on my daily candlestick chart of Starbucks (SBUX), trendlines provide important information, especially when they are tested.  They are not drawn in stone, but are valuable arrows in a chartist’s quiver.

Remember, even in these days of computer-driven algorithmic trading, technical analysis is as much art as science.

Options Hotline is quickly approaching its 31st year of publication and my 21st at the helm.  Time sure flies.  If you’d like to see how we combine the best of western technical analysis with ancient Japanese charting techniques to generate great options gains from small stock moves, subscribe today!

Best regards,

Steve

Your Almost Daily Bit of Wall Street Wit & Wisdom

Gold chart

Chart by Steven Sarnoff, h/t stockcharts.com

“Folks using intraday charts to call the top of a gold move that is unfolding on monthly charts is hilarious.  Y’all are doing it backwards!”
— Chris Carolan, @spiralcal

Options Hotline Update, FYI: Our recommended Father’s Day call on Barrick Gold Corporation (GOLD), emailed Sunday evening to our subscribers, triggered 06-17-19 at $85 with GOLD at $13.86, traded 06-21-19 at $206 with GOLD at $15.68, +142% in 4 days on a 13% move in the underlying shares, with an always known and strictly limited risk!

That’s the Superleverage power of my method on display.  If this is the type of options action you’re looking for, subscribe to Options Hotline today to see how we stay a step ahead of the crowd.

The character of the behavior of price movement in gold is telling us a big longer-term breakout is in play.  Former resistance (supply) now represents underlying support (demand).  The strong red candles on my weekly chart above depict this vividly.

It’s important to view price movement from different time perspectives: monthly, weekly, and daily.  Consider the lines of average price movement, along with price movement irrespective of time and you begin to approach a complete picture.

Best regards,

Steve

GOLD Gets Going

Options Hotline Update, FYI: Our recommended call on Barrick Gold Corporation (GOLD) trades +131% in 3 days, on a 12% move in the underlying shares, with an always known and strictly limited risk.

Market moves accelerated following a friendly Fed statement.  Falling Treasury bond yields are weighing on the US dollar.  This is helping boost stock prices and it benefits gold, as well.

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Let the Chips Fall

Micron stock chart

h/t stockcharts.com

Options Hotline Update, FYI: +140% in 2 months on Micron puts

This morning, financial news was blaring about continued US/China trade tensions pressing Tech stocks to the downside. The move lower in Micron reached our $33 price target (see 03-24-19 Options Hotline) and our readers received an email Profit Alert that we would consider the position closed.

The Micron July $40 put, triggered 03-25-19 at $3.00, traded 05-23-19 at $7.20, +140% in just under 2 months, with an always known and strictly limited risk!

That’s the Superleverage power of our method on display.

You can see on my daily candlestick chart of Micron (MU) above, subsequent to our recommendation MU had a quick decline and rebound.  Shares then settled into a consolidation, before breaking down, over the past few weeks, to our objective.

Over the years I’ve found that patience tends to pay.  If this type of options action is for you, subscribe to Options Hotline today.

Let me know if you have any questions. My email never sleeps.

Best regards,

Steve

The Superleverage Power of Call Options

Avengers Endgame poster

Avengers Endgame Chinese Poster h/t Disney/Marvel

Disney June $115 call

Options Hotline, March – April, 2019

The Superleverage Power of my method was on display this week, as Options Hotline subscribers multiplied their money with our call recommendation on shares of Walt Disney Co.

On Friday, DIS soared like Captain Marvel going full binary.  Following the unveiling of its streaming service, DIS rose 11% from the previous day.  This action helped shares reach our $130 per share price objective (see 03-10-19 Options Hotline and 04-12-19 Options Hotline Alert).

Our recommended DIS June $115 call, triggered 03-11-19 at $4.50, with DIS at $114, traded 04-12-19 at $17.00, with DIS at $130.  That’s +278% in a month, on a 14% move in the underlying shares, with an always known and strictly limited risk!

We’re always seeking to stay a step ahead of the crowd.  Here’s what it looks like on my daily candlestick chart for Disney:

Disney price chart

My daily candlestick chart for Disney, h/t stockcharts.com

So Sarnoff, what is Superleverage?

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Your Daily Bit of Wall Street Wit & Wisdom

coffee cup

My coffee cup at our spot by the Sea of Cortez.

“Way down here, you need a reason to move.”
— James Taylor, Mexico

NOTE: I’ll be driving down the gritty paradise of Baja, unplugged for a week.  Hopefully, they’ll let us back in. Your Daily Bit of Wall Street Wit & Wisdom will return on Monday, April 8th.

Market price also needs a reason to move.  That reason is the human behavior of buying and selling.  I’m not smart enough to know all the factors which influence why people act the way they do.  That is why I use Japanese Candlestick charts to study the character of the behavior of market price movement.  Candlesticks account for the actions of the Algos (algorithmic trading by computer), as well.

Japanese charting techniques vividly depict who has the advantage, buyers or sellers, and are a great tool to determine when and where the balance of power is likely to shift.

Have a great week ahead!

Best regards,

Steve

 

Is The Market Rally Ready To Shift Into Reverse?

Shift to reverse

Shift to Reverse

Are stocks off to the races or set to reverse course?

Analysis and Outlook for the QQQ (Nasdaq 100 ETF):

The Qs are rebounding sharply from their Christmastime low to today’s high. We see shorts getting squeezed and the weaker hands being weeded out.  Tech stocks have steadily moved through resistance to reach higher levels of supply. In the aftermath of December’s waterfall decline, they’ve driven a good distance up in a short amount of time.

A big boost in central bank balance sheets, in large part courtesy of stimulus by the People’s Bank of China, has pumped in the liquidity needed to stave off impending disaster for investors.  The key question now is, “How high are we going to go?”

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