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Total Alpha Program | Jeff Bishop’s Midweek Market Update

The Fed came and went like a whisper no one heard. They confirmed low-rates and a commitment to higher inflation leading to a muted market response. It’s almost like we knew what they were going to say…

Back on planet Earth, the rest of us were trading the markets in front of us. Stocks took a face plant into the close as investors shrugged off the Fed’s support.

The markets sit at a key inflection point. Let’s take a look at areas you need to pay attention to, and where you can make some healthy green.


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Key Stocks I’m Trading Right Now

Every day, I update my list of stocks that I’m watching for setups. While I normally reserve this for paid members, I’ll give you a look at what I’ve got my eye on.

Expected earnings dates listed in (…)

Stocks I want to bet against…

NFLX (April 21), AMZN (Jan 30), AAPL (Jan 28), FB (Jan 29), CRM (Mar 2), AMD (Jan 28), HUBS (Feb 12), TWLO (Feb 5), NOW (Jan 29), SPCE (Feb 25), TLT (none)

Stocks I want to buy..

CMG (Feb 4), DIS (Feb 4), MJ (none), CVNA (Feb 26), PLNT (Jan 29), UVXY (none), STZ (April 2), UNG (none), TSN (Feb 6), BYND (Jan 27), XLE (none), WMT (Feb 18), BA (Jan 29), WDAY (Feb 27), LK (??), PTON (Feb 5), KL (Feb 20), BUD (Feb 27), BKNG (Feb 26), HON (Jan 31), WORK (Mar 4), TTD (Feb 20)

Amazon already paid me well over $40,000 in the past month. I’m already in trades with AAPL, FB, WDAY…well let’s just say I’ve got a few on the books…most of which are at a profit.

One of The Best Days To Trade

The day after the Fed is one of my favorite days to put on new trades. That’s why I’m hosting a live event today. Best of all, I’ll be trading for the whole world to see. Find out how to apply all the techniques and skills to real trades.

You can watch by clicking this link.

This is going to be awesome. Not only does the timing line up here, but with yesterday’s close, the markets display a lot of volatility. That creates plenty of opportunities for some juicy trades if you know where to look.

Earnings Deluge

You might have noticed that I’ve got a lot of plays that go through earnings. We’re seeing a lot of stocks trade inside the expected move priced by the options.

The question remains whether the Coronavirus takes a huge chunk out of the Chinese economy. Estimates already suggest shaving off 2% from the already paltry 6% GDP.

That’s what made Apple’s earnings remarkable given their supply chain in China. It’s also why I sold a call spread on the company this week that’s already looking to be a nice trade.

The Strength of Gold

Gold continues to show a ton of strength and is one of the markets I’m pretty bullish on. With equities primed to stall out and uncertainty creeping back in, gold benefits as the defacto ‘safety trade.’

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This is what I’m holding after I already took some sick profits

Even if the precious metal pulled back to the 200-period moving average on the hourly chart, it would still be bullish. That’s why I’m taking dips as opportunities to load up.

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GLD Hourly Chart

Possible Bottom In Energy

Crude oil, and especially natural gas, have been searching for a bottom for quite some time now. If natural gas gets much cheaper, they’ll be giving it out with packs of baseball cards.

The record production within the U.S. could be slowing as rig counts continue to decline.

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The bottom in rigs in 2016 led to a decent rally in energy stocks through the remainder of the year, as well as the commodities themselves. While we probably have a but more to go given the stockpiles, we also have much higher global demand than we did then.

High Profits

I have to admit that I really like the cannabis industry at the moment. Times continue to change, with many states now legalizing medical marijuana if not recreational use. We’re already seeing presidential candidates talk about the issue, which could bring about change as soon as next year.

In particular, I like the ETF MJ that invests in the sector. It’s got a great risk/reward here as it’s very close to its all-time lows. Plus, it yields over 7% (though that’s likely unsustainable).

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MJ Daily Chart

Check out the recent pop that broke the sustained downtrend. With a nice retracement, this ETF looks prime for the picking. This is one of those trades that could pay out for months to come.

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Jeff Bishop’s Total Alpha Program | Making $43,000 in AMZN The Easy Way

Yesterday may have been a rough day for some traders, as the S&P 500 declined by 52 points, -1.58%, on fears that the coronavirus could weigh down the global economy.

But it didn’t have to be. In fact, I actually made over $24,389 from trading options.

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And while yesterday was the first volatile trading day of the year. I am ready for anything… whether it’s a bounce or continued sell-off.

I’ll be alerting Total Alpha subscribers on my game plan and trades throughout the day.

While the market tries to figure itself out, I want to take this time to talk to about an options trade I had on Amazon a few days ago.

But this time, we won’t be talking about options at all.

Instead, I want to discuss something called the Life Cycles of a Stock.

Study it, and you’ll be on your way to adding more 0’s to your bank account.

Breaking Down The AMZN Trade

Iron condors combine a put credit spread and a call credit spread. This creates the ‘wings’ of the trade.

Here’s a quick example.

  • Stock ABC trades at $100
  • You sell the $110 call contract and buy the $115 call contract
  • Then you sell the $90 put contract and buy the $85 put contract.
  • You will receive a credit for this transaction

The goal is to get the stock to land between the closest strikes at expiration, in this case, $90 and $110.

Now, I bring this up because I want to explain a little trick here. You don’t have to execute this trade all at once. Instead, it’s perfectly acceptable to start with a call credit spread and then add the put credit spread later on or visa versa.

You’re probably asking – why would I do this?

Well, the closer you are to the strikes, the more you get paid for that portion of the trade. If you have a range bound stock, you can start with one side of the trade, and add the other one when it gets closer to the other end.

Let’s use the Amazon trade as an example. The hourly chart highlights an area where the stock traded in a narrow range for the last month.

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AMZN Hourly Chart

Imagine you were just trading the stock. If you saw a stock stuck in the range, you would sell at the highs and buy at the lows.

That’s basically what we’re doing here but with credit spreads. When Amazon made its first drive higher up to $1900, I took that opportunity to sell a call credit spread. That paid me a good chunk of change since I was so close to the strikes.

When the stock dropped down to $1832, I sold the put credit spread. After that, I simply waited the trade out.

Because I used the swings in price to get fatter payouts on the credit spreads, I not only reduced my overall risk but increased my earnings. This is how you combine timing and chart analysis with credit spreads.

But the real secret is leveraging a stock’s life cycle.

Using Life Cycle Analysis

I recently did a live event where I explained the three stages of a stock’s life cycle. These are the churns it goes through as it wiggles its way higher.

First, stocks go through a reversal. This doesn’t break the longer-term trend. Instead, it creates a short-term turn. I use these to time when I sell the put or call spreads at the tops and bottoms of the ranges. You can actually see this in action on the AMZN chart in mid-January. The crossover of the 13-period moving average below the 30-period moving average signaled a reversal move lower.

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AMZN Hourly Chart

Second, we have the reset areas. After a significant run, stocks like to pull back below their 200-period moving average. These make great places to sell put spreads underneath to eat up the clock. You can see that type of move from November through December in AMZN.

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AMZN Hourly Chart

Lastly, there’s the launchpad. This happens when that same stock breaks out above the 200-period moving average and gets ready to take off. This shows up on the AMZN chart in late December.

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AMZN Hourly Chart

Knowing these three phases to the stock’s movement is essential for timing your trades.

You can check out some more examples of the lifecycle in my video replay.

Click here to watch.

Total Alpha Trading Program | Intermarket Analysis

Hold on to your knickers cause the markets are about to take us for a wild ride. With futures pointed to a massive decline at the open, we need to look at what’s in store for the indexes

The Federal Reserve delivers its first announcement of the year on Wednesday. Hamstrung by a fragile market and jawboning politicians, they’re widely expected to leave rates unchanged. The open question – will they soothe scared investors?

Jerome Powell already upended economists by allowing for U.S. inflation to rise above its 2% mandate – a statement that probably has Adam Smith turning in his grave.

Interestingly, we’ve managed to stay below historical levels, with the one exception being the period from the late ‘50s to the late ‘60s.

This leads me into the bond market as our first stop this week…a place that could rise further than we’ve seen already.

Bright Bond Outlook

Normally, I stick with the hourly chart when I look for setups that fit my money-pattern. However, the weekly chart for the bond market looks fascinating.

TLT Weekly Chart

Last week the bond market closed above the upper trendline that connected the high points of the candles since August. That signals bonds want to break higher out of this consolidation range.

Supported by an easy Fed, bond demand remains strong. With zero and negative interest rates around the globe, it’s an easy choice for investors. Plus, when the market finally pulls back, its inverse relationship with bonds will give it an extra push.

Markets Fired a Warning Shot

Friday’s close was different than the ones we’ve seen over the last month or so. Stocks traded weakly all day, closing in poor fashion.

SPY Hourly Chart

I first noticed the bearish money pattern crossover Friday where the 13-period moving average crossed below the 30-period moving average. Then, the market proceeded to fill the gap, and not only close at that level, but below the past couple of days. This is known as an ‘engulfing’ candle. When it happens like this at highs, it’s a bearish reversal.

The Nasdaq didn’t look as bad. But, it’s dangerously close to making a bearish crossover as well.

QQQ Hourly Chart

Now you may ask, why would this bearish crossover be any different than the light pullback we got at the end of December?

The difference is how it occurred. December’s ranged didn’t extend as far as this decline in a single day. The entire move in December was 1% from top to bottom over two days. Friday’s was 1.55% in a single day.

But let’s look at the other evidence out there.

A Significant Rise In The VIX

Back in December, the VIX hardly budged as the market rolled over. Compare that with what Friday’s move looked like in the VIX.

VIX Daily Chart

The strength behind this move was more powerful than December’s. The only saving grace was that it didn’t close above the 200-period daily moving average Friday. But I think that is only a matter of time.

Another point in favor of this decline comes from the VVIX. The VVIX, which measures demand on the VIX, actually declined on the rise in the VIX at the end of December. Friday the VVIX climbed alongside the VIX as markets fell.

VVIX Daily Chart

This is more indicative of a sustainable pullback. It would make sense given how in 2018, markets ran straight up for a month before pulling back. We’re pretty close to that timing now.

Gold Looks Glorious

I added call options in the GLD last week to my Total Alpha portfolio. Gold’s chart depicts a bullish market ready to break higher.

When I look at the hourly GLD chart, I see a bullish crossover as well as a consolidation pattern near the upper end of the trading range.

GLD Hourly Chart

GLD came close to touching the hold highs Friday. The longer it hovers here, the more likely it breaks through to much higher levels. A downdraft in the markets would certainly help this along.

Crude Looking For a Bottom

I’ll admit I’m surprised at how far crude has fallen. However, that aligns with why I would expect a pullback in stocks.

At this point, crude oil will want to test its previous lows. In the USO that coincides with $10.50-$11.00. Breaking those levels would require a lot more selling pressure than we’ve seen so far.

USO Daily Chart

Part of why I’m looking for a bottom in crude oil is its volatility. Like the S&P 500, crude oil has its own volatility measure. Right now the OVIX is at pretty high levels.

OVIX Daily Chart

That’s not to say that oil volatility is at record levels. Rather, it’s at relatively high levels. So it certainly can go lower. But, the OVIX is mean-reverting and is overextended in the short-term.

Betting Against China

Before the Coronavirus hit the wires, I already had an option bet against Chinese stocks. This paid me over 100%, and I still have part of the position.

You can learn how the same secrets to find trades like this.

Click here to learn more.

Source: TotalAlphaTrading.com | Original Link

Jeff Bishop’s Total Alpha Strategy | View Inside!

Netflix, IBM, Procter & Gamble, Southwest Airlines are just a few of the companies reporting earnings this week.

A jam-packed, despite it being a shortened week of trading.

That means there are plenty of opportunities to profit, and I don’t want you to miss anything.

So let’s get started with The Jump on the Week…


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My oh My That Lovey SPY

Last week I made a case for why I see a top in the markets within the next couple of weeks. Probabilities sit in my corner, so if I lose, it wasn’t because I made the wrong decision.

Markets closed again at their highs without showing signs of a reversal in the indexes themselves. Even though we’ve seen some major market leaders rollover, the laggards picked right up where the others left off.

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SPY Weekly Chart

I fully expect that the deluge of earnings gives investors a lot to consider. We’ll probably see laggards like Netflix make a recovery, while runners like Intel and Skyworks receive a cooler response.

The index to watch this week is the Russell 2000 (IWM). It’s within a breath of breaking its all-time highs. How it reacts afterward will tell me the expectations for the overall market.

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IWM Weekly Chart

Pay Attention to Volatility

I cannot stress enough the importance of watching volatility. The VIX, which measures trader expectations for volatility, is at extreme lows. Because this index is mean reverting, the further it gets away from the average, between $15-$18, the more likely it is to snap back. Typically, this coincides with the drop and stock prices.

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VIX Weekly Chart

Also, I watch the VVIX, which measures demand on VIX options. The higher the demand, the more traders are betting on a pop in the VIX – or at least hedging their positions.

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VVIX Weekly Chart

Political Considerations

With the trade deal signed, all attention turns to the impeachment process in the U.S. While it’s unlikely to see the president removed, any revelations seen as impactful to the president or his opponents’ chances in the November elections could move markets.

I’m a bit more interested in how China proceeds with its corporate bankruptcy fallout. Politicians seem content to let a fair amount of underwater companies go out of business, hoping that normalized risk pricing mechanisms take over. Although their growth slowed to the lowest in over a decade, they’ll likely see some boost this year from the trade deal.

Normally, I’d drop oil into its own bucket. However, I think it’s worth noting its political implications. Countries from Saudi Arabia and Iran to Russia rely heavily on the price of fossil fuel. The increase in oil prices came on the backs of growing demand and lower production, led by Saudi Arabia.

These countries hope to boost their coffers through these actions. Given the other challenges they face, I expect them to keep production curtailed for the foreseeable future.

Natural gas is its own worst enemy. With record production in the U.S., the country still faces challenges finding willing buyers. This is causing a lot of banks to reconsider project funding.

The problems for both commodities here are twofold, neither of which portends well for either industry. First, fracking technology changed the production landscape over the last decade. The U.S. became much more self-reliant in its energy production. That means the OPEC members have to contend with these free-market cowboys.

Secondly, and much more serious for the industry – climate change…or should I say the business of climate change. Increased focus around the world led to massive investments. That’s dropped the costs of lithium-ion batteries by 70% in the last decade, as well as massive cost reductions in solar panels.

This trend isn’t slowing down. The international drive to move towards renewable energy consumption isn’t limited to the west anymore. China will likely spend more than any other country in 2020 to expand its renewable energy infrastructure. Corporations now include environmental sustainability as a core value.

All this leads to slow growth in fossil fuel consumption worldwide. Short-term, we’ll see oversold bounces. Long-term, the entire face of energy will change as we know it.

Data I’ll Be Watching

The biggest data pieces come from earnings. We get a lot of financials along with the start if tech with Netflix and Intel. I want to see how consumer demand fairs, along with whether semiconductors are at the beginning or end of the commodity cycle.

Market data will provide some clues to the state of the consumer. We also get housing numbers, that should confirm a strong spot in our economy.

Stocks on watch…

Call spreads

NFLX, AMZN, AAPL, FB, CRM, AMD, HUBS, TEAM, AYX, WDAY, TWLO, NOW

Put spreads

TPX, BIIB, CMG, DIS, MJ, TLT, CVNA, PLNT, UVXY, BA, STZ, STLD, UNG, TSN, BYND, XLE, WMT

Want even more trade ideas?

Check out how I generate weekly income with Total Alpha.

This Week’s Calendar

Monday, January 20th 

  • Markets Closed for Dr. Martin Luther King Remembrance Day

Tuesday, January 21st

  • 7:45 AM EST – ICSC Weekly Retail Sales
  • Major earnings: Haliburton (HAL), FNB Corp (FNB), Comerica (CMA), Old National Bancorp (ONB), Capital One Financial (COF), Fulton Financial Corp (FULT), Interactive Broker (IBKR), International Business Machine (IBM), Navient (NAVI), Netflix (NFLX), United Airlines (UAL), Zions Bancorp (ZION)

Wednesday, January 22nd

  • 7:00 AM EST – MBA Mortgage Applications Data
  • 8:30 AM EST – Chicago Fed National Activity Index For December
  • 10:00 AM EST – Existing Home Sales December
  • 4:30 PM EST – API Weekly Inventory Data
  • Major earnings: Abbott Labs (ABT), Ally Financial (ALLY), Amphenol Corp (APH), Baker Hughes (BKR), Fifth Third Bank (FITB), Johnson & Johnson (JNJ), Nothern Trust (NTRS), Prologis (PLD), Citrix (CTXS), Kinder Morgan Energy (KMI), Raymond James Financial (RJF), SLM Corp (SLM), Steel Dynamics (STLD), Sterling Bank (STL), Teradyne (TER), Texas Instruments (TXN)

Thursday, January 23rd 

  • 8:30 AM EST – Weekly Jobless & Continuing Claims
  • 10:30 AM EST – EIA Natural Gas Inventory Data
  • 11:00 AM EST – Weekly DOE Inventory Data
  • 11:00 AM EST – Kansas City Fed Manufacturing Activity December
  • Major earnings: American Airlines (AAL), Bank United (BKU), Cadence Bank (CADE), Comcast (CMCSA), Freeport MacMoRan (FCX), Huntington Bank (HBAN), Jet Blue Airlines (JBLU), Key Bank (KEY), Kimberly Clark  (KMB), Southwest Airlines (LUV), M&T Bank (MTB), Old-Republic (ORI), Proctor & Gamble (PG), Travelers Insurance (TRV), United Pacific Rail (UNP), VF Corpo (VFC), Associated Bank (ASB), Discover Financial (DFS), E-Trade (ETFC), Intel (INTC), Intuitive Surgical (ISRG), Skyworks (SWKS)

Friday, January 24th

  • 9:30 AM EST – Markit U.S. Services & Composite January
  • 1:00 PM EST – Baker Hughes Weekly Rig Count
  • Major earnings: Air Products & Chemicals (APD), American Express (AXP), Nextra Energy (NEE), Synovus Financial (SNV), Synchrony Financial (SYF)

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Jeff Bishop’s Total Alpha Strategy Review | The Market Is About To Crack

I’m going to make a bold call – the market tops out here in the next two weeks.

Early this week, I started seeing internal market indicators flashing warning signs. Even though the indexes kept closing higher—there were some key laggards.

I told my Total Alpha Members that it was time to put my money where my mouth is.

That’s why I began selling deep-in-the-money call spreads in some overextended names.

Currently, I’m sitting on 50 spreads— betting against TSLA.

If I’m right, I make $14,500. If I’m wrong, I lose $10,500.

By the way… I have 6 trades on 6 different stocks just like this in my Total Alpha Portfolio.

So why am I such a bear all of a sudden when I just pulled down a massive $42,455 Win on AMZN being a bull?

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What would make me give up on trades like these?

Because that’s what my analysis tells me.

Let me walk you through my thought process, and see if you agree.

Leaders Rolling Over

I first spotted the leaders slowing down. We’re talking Apple, Amazon, Tesla… all the heavy hitters didn’t continue to make new highs.

Here’s what I’m talking about. Let’s look at the hourly chart of AAPL.

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AAPL Hourly Chart

There’s two critical pieces of information here. First, I want you to see that the 13-period moving average is getting closer and closer to crossing over the 30-period moving average.

That’s what I call my ‘money pattern.’ This pattern isn’t just for trade setups. It highlights potential trend changes in a stock.

Second, look at the two arrows. The left arrow points to the last consolidation area. The bottom of this consolidation is support. Now, the second arrow points to the candle that closes below that level. That is a telling break of the hourly support.

At first, you’re like ‘Who cares… one stock means nothing.’ That’s true. Now, I want to draw your attention to the same phenomenon on several other leaders.

Amazon looks significantly worse. Take a look at its hourly chart.

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AMZN Hourly Chart

You can see how Amazon already had the crossover occur. It went back to test the underside of the 30-period moving average before heading lower.

This stock looks much weaker and likely headed for the gravitational line.

Do yourself a favor, take a look around and see if you can spot some of these. They’re most prominent in the tech sector at the moment.

VIX Holding Its Ground

Under normal circumstances, the VIX and markets have an inverse relationship. This means that as the VIX climbs, stocks fall. When stocks rally, the VIX falls.

Right now, that’s not the case. We’re seeing the same markets up 10-20 points every day on the S&P 500. But the VIX isn’t playing ball. While it hasn’t rallied hard, it’s not dropping either.

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VIX Hourly Chart

I know that the VIX can fall lower than $12. Heck, it spent most of 2017 below $11. But when I see stocks rallying every day, and the VIX not rolling over, it makes me wonder.

Not to be left behind, the VVIX – which measures option demand on the VIX – is also rising.

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VVIX Hourly Chart

This is my favorite leading indicator for the markets. You can see how the VVIX already jumped and is about ready to create a money pattern crossover to the upside. That signals more demand for VIX options (normally calls), which should indicate traders buying protection against a downturn.

Safety Rally

Let me take it a step further and discuss the gold trade. Gold continues to be on an absolute tear. You often see traders stash money here when the market goes down as a ‘safety trade.’

Right now, we’re seeing a lot of buying in gold.

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GLD Hourly Chart

Initially, it looked like gold might roll over… and it still might. But it’s rallying while the rest of the market is as well. If it gets any more steam, we’ll see a bullish money pattern crossover here as well.

Let me give you one last piece of evidence to support my thesis. Bonds tend to trade inverse the stock market. While this isn’t always true – and certainly hasn’t been the last few years because of the Fed – short-term, you will see money hide there.

Right now, bonds look really bullish.

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My Conclusion – Hide The Kids

With so many stocks overbought, and a run that’s virtually gone on for 90 days straight, we’re due for a correction. 2018 ripped higher in January only to get throttled in February. That’s precisely what I see happening here.

I’m working with my Total Alpha Traders to get a portfolio that profits from the next move. You can join us before the big money is made.

Join me for my upcoming options masterclass. You get a full week of live education hosted by me.

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Jeff Bishop’s Bullseye Trades Program | Profit Using Gravitational Lines

If I could give you one indicator to use for the rest of your life, it’s would be the 200-period moving average. I don’t think there’s any other indicator out there that gives you better insight into a stock or overall market.

It’s what I call my ‘Gravitational Line.’

Today, I want to explain how I use it to my advantage—from understanding trends to using it as a key level. More importantly, I’m going to share with you the most crucial aspect of making it work—context.

You can learn more about Bullseye Trades by clicking here.

You see, many traders look at the 200-period moving average as an absolute indicator. They don’t realize that you have to step back and look at how the stock traded recently relative to the gravitational line.

Did the stock cross multiple times? How long has it been since the last touch? How far away is it?

All of these questions are essential to effectively using the 200-period moving average in your trading…


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Gravitational Lines Calculations

Before we get to the fun part and how we can use the gravitational line as a trading tool, we’ll need to see how it’s actually calculated—don’t worry though, you don’t need to do any math whatsoever.

The 200-period moving average refers to the simple moving average. The calculations are pretty straightforward. You take the closing price for the last 200 periods and average them. This creates a point for that period. Connect the dots, and you get the 200-period simple moving average.

You can find them on most stock charting software as a standard indicator. They may be labeled as SMA for simple moving average.

When you pop it into a chart, it will look something like the green line in this SPY chart.

Traders like using the 200-period moving average as a guidepost. It takes a long time to turn around. Shorter time-frame moving averages like the 13-period moving average react quickly to price change. When you get sustained trends, you’ll start to seem them play out on the 200-period moving average over time.

Understanding Trends

The first step to identifying reversal patterns is to figure out the overriding trend. You want to find a setup where the long-term trend remains intact, but the stock makes a retracement within that framework.

Even with the recent pullback, the stock remains in a bullish trend overall.

How can I tell? First, I look to the 200-period moving average on the daily chart. ROKU not only hasn’t hit it since the beginning of 2019 but remains solidly above that indicator. Many traders, not just myself, use the 200-period moving average as a line-in-the-sand for determining trends.

Now, the key is that the stock needs to be trading above the 200-period moving average consistently. Stocks that waffle back and forth, crossing it multiple times, aren’t necessarily bullish.

Overall the stock looks more bullish than bearish. However, I wouldn’t say there is a clear, overriding bull trend here. Nor would I use the gravitational line to trade against. You can see how the stock crosses the line multiple times. This reduces its importance.

On the flip side, the gravitational line can become resistance. Stocks with protracted downtrends will often bounce off the 200-period moving average on spikes.

Selecting Your Time-Frame

The charts I’ve shown you so far are for daily periods. However, the gravitational line really works on any time-frame. The key is to understand how it lands in context to the larger trend.

For example, let’s use the ROKU daily chart from before. We had a clear, uptrend that’s still intact.

Right now, the stock is trading under the 200-period moving average and looks rather bearish. If I want to play short-term, I can be short against the 200-period moving average all the way down to the daily moving average at $114. However, down there, I would expect the longer-term gravitational line to outweigh the short-term one.

Ideally, I want both the long and short term trends to align. However, we don’t always get that lucky. The key is to avoid trading against the longer-term averages using short-term time-frames. Otherwise, you run the risk of the trade reversing in your face.

The Right Amount of Time Since It Touched

I’ll share a little secret with you. Ideally, I want the stock not to have touched the gravitational line for about 25-30 periods of whatever time-frame I’m looking at. The longer it’s been since the touch, the more likely the gravitational line becomes a trade level.

That doesn’t mean it works every time. But trading is about probabilities. Create the right conditions, and you’ll generate more wins than losses.

This Is How I Identify My Bullseye Trades

Many of my Bullseye Trades use this exact method as an entry, a stop out, or a target. These are trades I aim to get a +100% return each week. So with one trade idea for the week, I want to make these the best ones possible.

You can learn more about Bullseye Trades by clicking here.

Source: RagingBull.com | Original Link

Jeff Bishop’s Total Alpha Trading | Jump on the Week

We are almost to the main event you’ve been waiting for… earnings season.

This week we get a deluge of corporate reports starting with our financial institutions. Will the banks confirm the Fed’s rosy outlook or will they be a bunch of Debby Downers?

This week’s jump begins with our favorite banks from Citigroup to Goldman Sachs giving their annual reports.

Unlike the quarterly earnings reports— annual reports give us more insight into a company’s performance and outlook.

The question we all have to ask – will earnings results reflect a market that is near all-time highs?

With the surge in equities we’ve seen over the last two months, things had better be smelling like roses.

Otherwise, we’re in for a blistery winter.


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The Impact of Low Rates

Banks need to face the reality of lower interest margin spreads for probably the next few years. Given this is a major source of income, plus any of them that dropped trading commission revenues, we have to ask how they plan on making any money?

When you yank back on the normal sources of profits, good old greed tends to take over and push players to bad actions. We need to look no further than the financial crisis from ten years prior. In fact, we’ve already seen an uptick in interest for those esoteric financial products.

Analysts currently forecast 7.3% earnings growth for Q4 with revenues growing at 1.2%. Through 2019, the S&P 500 Financial Sector (XLF) largely kept pace with the S&P 500 itself (SPY).

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SPY (Purple) vs XLF (Orange) Daily Chart

I’ll be especially interested to hear commentary on lending towards oil and gas drillers in the U.S. With reports that projects aren’t turning the production originally forecasted, I want to know if this is both true, the expected contraction in lending, as well as any banks with excessive exposure.

The other area of interest will be trading revenues. This helps me understand the shape of the trader’s market and the scale of passive investments.

The more money tossed into these follow-the-market ETFs, the more exposure I see to the downside.

How Bad Are The Transports

Normally, transportation stocks accelerate in a booming economy (or at least Dow Theory says so). Yet, this sector barely topped half the gains achieved by the S&P 500 in 2019.

Image

SPY (purple) vs IYT (orange)

Maybe it’s the hangover from the Amazon effect. But everything from rail to airlines fails to make headway, even when their oil input costs are at historic lows.

Something seems amiss here for me. We certainly haven’t become less of a consumer nation. Yet, the policy failed to help the manufacturing decline in the country, and I haven’t seen anything other than bustling airports.

I know of the driver shortage that’s plagued trucking for the last decade. But, either the transports are plagued by similarly inept management, there is some structural change affecting completely different areas all at the same time… or as I suspect, it’s the only sector telling us the truth.

Inflationary Data

Markets will retain their bullish tone until the Fed decides that their two-year experiment that’s grown into a decade long project needs to come to an end. Every piece of possible inflation brings us a look at how close we are getting.

With Consumer and Producer Price Indexes delivering data this week, I want to see how high they go, as well as how high the Fed is willing to take it. The 2% target now seems to be a suggestion, as Powell noted his willingness to let inflation push beyond the red-line.

And Lest We Forget…

There is always an opportunity for politicians home and abroad to screw up the markets with a tweet or a grand feat. While impeachment shouldn’t bring any surprises, everyone was caught off guard by the U.S.-Iranian conflict to start the year.

I don’t expect that we see any major kerfuffles from Brexit to Congress. But, that’s the thing about unknown events…you don’t see them coming!

Stocks on watch

Call spreads

NFLX, AMZN, AAPL, TEAM, FB, AMD, CRM, SWKS

Put spreads

TWTR, FANG, EXAS, TPX, BIIB, COST, ULTA, ZS, CMG, IWM, AMZN, HUBS, DIS, MJ, AYX, TLT, CVNA, PLNT, UVX

Want even more trade ideas?

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Week’s Calendar

Monday, January 13th 

  • Nothing to see here..

Tuesday, January 14th  

  • 7:45 AM EST – ICSC Weekly Retail Sales
  • 8:30 AM EST – Consumer Price Index December
  • 4:30 PM EST – API Weekly Inventory Data
  • Major earnings: Citigroup (C), Delta Airlines (DAL), JP Morgan (JPM), Wells Fargo (WFC), First Republic Bank (FRC)

Wednesday, January 15th

  • 7:00 AM EST – MBA Mortgage Applications Data
  • 8:30 AM EST – Empire Manufacturing Index for January
  • 8:30 AM EST – Producer Price Index for December
  • 10:30 AM EST – Weekly DOE Inventory
  • Major earnings: Bank of America (BAC), Goldman Sachs (GS), PNC Bank (PNC), United Healthcare (UNH), US Bankcorp (USB), Alcoa (AA), Blackrock (BLK),

Thursday, January 16th 

  • 8:30 AM EST – Weekly Jobless & Continuing Claims
  • 8:30 AM EST – Import Prices, Retail Sales for December
  • 10:00 AM EST – Business Inventories November
  • 10:30 AM EST – EIA Natural Gas Inventory Data
  • Major earnings: Bank of New York Mellon Corp (BK),
  • Home Bancshares (HOMB), Morgan Stanley (MS), PPG Industries (PPG), CSX (CSX), Ozark Bank (OZK), People’s United Financial (PBCT)

Friday, January 17th

  • 8:30 AM EST – Housing Starts & Building Permits for December
  • 9:15 AM EST – Industrial Production and Capacity Utilization for December
  • 10:00 AM EST – U. of Michigan Confidence
  • 1:00 PM EST – Baker Hughes Weekly Rig Count
  • Major earnings: Citizens Financial Group (CFG), Fastenal (FAST), J.B. Hunt Transport (JBHT), Kansas Southern Rail (KSU), Regions Financial (RF), Schlumberger (SLB), State Street (STT)

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Jeff Bishop’s Total Alpha Trading | Midweek Market Update

Tired?

That’s what many traders thought when describing this 11-year bull market run. And with geopolitical tensions rising, it felt on Friday we might see it breakdown.

Not only have stocks been able to shake-off the headlines—we’re back to all-time highs.

And you know what?

I positioned myself to capture gains no matter which way the market went. It just so happened this recent push higher helped me capture a gain of over $32,000 this past week in Total Alpha.

Image

Although the trade was doing quite nicely beforehand!

But now we have to ask – where does that leave us?

A look back in time

From the end of December 2017, markets ran four straight weeks higher, closing each week near the highs, and finishing up 7.5%, and 20 points on the SPY. The SPY then nosedived as much as 11.76% over two weeks before closing down 8.77%

Image

SPY weekly chart

Right now we’re only up 0.62% and about 2 points on the SPY. Using the closing print of $322.41 on January 3rd, a 7.5% run would put us up at $346.59. If we saw the same decline from that point, the SPY would fall to a low of $305.83 before closing at $316.19.

That doesn’t seem that bad from where we are now. But trust me, it feels like the end of the world at the time.

2018 isn’t that different from what we should see this year. That was another election cycle, albeit a smaller one. Plus, economic data improved markedly, which follows current expectations. The only downside was the market reaction to the Fed raising rates in December which created a panic.

A potential reversal in gold

For the past few weeks, we’ve seen gold march higher, even as stocks kept making new highs. Overnight gold futures spiked hard on the news of the Iranian attack. However, gold took the opposite road as the markets, doing a faceplant into the dirt.

What caught my eye was the weekly candle forming on gold futures.

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Gold Futures Weekly Chart

This is a pretty significant development. If gold closes out the week down at this level, it could mark a stark reversal in the yellow metal. That’s in contrast to the obvious bull-run that led the last few weeks.

Crude got the smackdown

The slow grind higher in crude futures hit a brick wall in a similar manner to gold. However, a correction in the commodity was long overdue…and I don’t think the bull run is over.

Here’s what I’m looking at.

Image

USO daily chart

First, I saw crude oil run down to and bounce off the 30-period moving average. That’s a positive sign for crude oil. I like to see charts hold the moving average. In this case, the 30-period moving average has held for several months.

However, even if that were to fail, there’s a nice trendline underneath that connects the lows of the candles. That comes right in near the 200-period moving average, which also provides support.

That’s why I like the oil and gas drilling sector (XOP).

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XOP daily chart

I do want to see a pullback, possibly all the way to the 30-period moving average. That would set this up nicely to make a run back up to the 200-period moving average and possibly beyond.

Bonds don’t look as bad as you might expect

Normally, bonds sell off when stocks rise. That certainly was the case yesterday. However, it wasn’t the tragedy that we typically see.

Image

TLT daily chart

The upper trendline that connects the highs of the swing points held once again, leading to a multi-day selloff in bonds. It certainly looks like they will head lower to at least the 200-period moving average.

Right now I’m eying the $130 area. It’s a nice round number that also lines up with an area of consolidation. That would be the ideal spot where I would expect to see support.

An interesting end to the VIX

At the end of the day markets gave up a bit of their gains. That happens from time to time. What I thought more important was how that translated to the VIX and VVIX.

Image

VIX Hourly Chart

The VIX itself made a double bottom and then took off back to the northside. That’s a bit more aggressive than the move we saw from stocks at the end of the day.

Similarly, the VVIX made a double bottom and made a stark reversal to finish down less than 1%.

Image

VVIX Hourly Chart

This could just be an anomaly. However, I think this plays out in the next couple of days. While we got a relief rally, these indicate that markets might want to pull back off this recent run.

So where does that leave us?

Still at the mercy of the Federal Reserve. As long as they keep expanding their balance sheet, stocks are free to move higher. That doesn’t mean we won’t see pullbacks along the way…and I’m certainly bulletproofing my portfolio.

I want to create a consistent stream of income from my Total Alpha Portfolio. That’s why I’m incorporating new trade ideas and strategies that let me ride the run and manage my risk.

You can learn these exact same tactics and trade today.

Click here to join Total Alpha.

With a market filled with so many twists and turns, I don’t think you can ever have a shortage of good trade ideas. My highest conviction trade idea is coming out in a few days, and if I’m right on this one, it could return a fast triple-digit return. Click here for the details.

Jeff Bishop’s Total Alpha | How To Create Consistent Payouts From My Trades

Volatility is BACK.

All you had to do is look at the Dow futures last night, which were down 400 points—only to see them trading flat this morning.

While most of the talking heads spent the first week of 2020 comparing it to 2018, and how this market was destined to go higher—politicians had another agenda.

So when the news of a potential conflict with Iran hit the news wire, I was prepared.

No… I don’t have any connections in Washington tipping me off.

I didn’t need to.

Instead, I maintained a balanced portfolio consisting of long and short positions.

Sure, I have a bias but I let my indicators and favorite patterns dictate where I put my money in.

But being balanced is just one way to navigate through a volatile market.

Being selective and finding low risk and high-reward setups is another recipe for success in this market.

As well as, taking advantage of opportunities specific to the current turmoil.

Why?

Because the market hasn’t priced in the real possibility of war.

If that happens, investors could find their portfolios upside down.

I don’t want that to be you. That’s why sharing my gameplan for trading a choppy, news-driven, and politically intensified market.

Managing a series of long and short positions

This year I plan to maintain a more neutral portfolio, where I carry long positions in some stocks, and short positions in others. Traders refer to this as ‘Delta’ neutral, where delta refers to the amount an option’s price will change per $1 movement in the underlying stock.

You can read more about delta and delta neutrality in my free article here.

The question I got after writing this article was which stocks do I choose to go short and which do I go long?

I select the stocks based on their individual charts and other qualitative information. For example, I’m usually bearish on Netflix ever since they reported poor earnings. Traders continue to sell into every resistance.

NFLX daily

The orange arrows note where the stock ran into resistance in several spots along the way. Each of these areas ran into resistance for different reasons. Here’s a few different ways that you can look for resistance areas:

  • Previous swing highs and lows
  • Fibonacci retracements
  • Moving averages (especially the 200-period simple moving average)
  • Consolidation areas
  • Gaps

These also work for finding support areas.

However, the most important component – trend. I always look at the longer-term trend for the chart. Most of the time, this dictates whether I’m short or long a stock.

Now, I also use a set of secondary factors to select the stock. These includes:

  • Liquidity (trade volume)
  • Sector
  • Options available
  • Relative strength

Ideally, I want a balance of trades across different sectors and stocks, unless I have a specific reason not to. That creates diversity in the trades and minimizes volatility in your returns.

Profiting from the Middle East Conflict

We’ve already seen crude oil prices take off on the news of the U.S. strike. However, crude had already been building a nice uptrend for the past few months.

USO daily chart

Most professional traders trade crude oil futures. However, I prefer to work with liquid ETFs like the USO. These ETFs offer me the flexibility of options and require less capital than futures contracts.

I also like to play stocks that benefit directly from a rise in crude oil prices. This includes oil and gas exploration companies and drillers. The XOP ETF works really well as a trading vehicle here.

XOP daily chart

This ETF already ran 20% since the lows in December.  Picking individual companies can be tricky. With tightening lending from U.S. banks, we could see a wave of companies go under. That’s why I prefer to use the XOP as a basket trade.

The other beneficiary from global conflict is gold. Investors love to stash their cash in gold as a ‘safety trade.’ Additionally, gold tends to rise when traders expect future inflation since gold is priced in dollars. With the Fed flooding the markets with easy money, this is another tailwind.

GLD monthly chart

You can see how Gold (through the GLD ETF) is breaking out of its consolidation pattern. That leaves a lot of runway to make its way towards the all-time highs set back in the early part of the decade.

The last option I like is defense companies like Lockheed Martin (LMT), Raytheon (RTN), Honeywell (HON), and others. If we enter into a prolonged conflict, these companies stand to benefit from any increase in government defense spending.

LMT daily chart

You can see how Lockheed Martin already spiked on the first event. Large scale events certainly benefit the company’s bottom line.

Incorporating this into my 2020 plan

My goal for 2020 is to create more consistent, dependable payouts from my trades. That involves a lot more market neutral strategies.

I’ll be diving into this each week with Total Alpha Members, showing them strategies that backtested an over 90% win-rate.

You can join the action by becoming a member of Total Alpha.

Click Here to Join Total Alpha (watch this webinar – BEST OFFER HERE!!!)

Source: TotalAlphaTrading.com | Original Link