Trading Strategy – More Trading, More Action, More To Come!

Welcome back and happy Monday everybody. What a great way to start the week! Lots of trading in the Live Trading Room this morning between Ryan and I firing off lots of things. We talked about this being a great summer to be a trader and this is just the tip of the iceberg. We have so much more to come, especially with this ultra-low volatility as it resolves itself, and things such as the APPL split. Lots of things to discuss and trading strategy to go over.

First things first, with APPL, my thoughts on this continue to remain the same. I am still pretty darn bullish in APPL. In my nightly swing trading video I sold puts earlier, back in May and obviously the market took off to the upside, we had the right idea.  What I’ve been hearing the last several weeks is “don’t buy this because it is just going to sell of really hard when the stock splits”. But I have to be honest, I’m not sure that I’m comfortable with that logic. For instance, I have a brother in law who is an aggressive enthusiast with AAPL and was accumulating shares when it was several hundred dollars a share. He liked it then, you can imagine he loves it now when he can purchase so much more at any given time. There were a lot of people for whom APPL was out of their range before and it’s now in a much more affordable range for them. Plus we have these great opportunities for support that haven’t been touched now for almost 2 months. Lots of rising support which is something I look for in my options trading strategy, let alone trading the underlying instrument.

If I am going to trade the underlying instrument, I would rather see a pullback, personally, as a short term trader. As an investor, that is not a factor here, even as multi-week swing trader. But as a short term trader, holding for a couple of days, my trading strategy would be that I would really like to see a pull back to some rising support. From an Options perspective, the moment I can sell puts far enough out of the money I will be looking for whole new fresh opportunities in this once again.

Let’s take a look at the Euro. In the euro right now, we are only about 8 ticks away from an area where I will have an interest in this again. We’re going to see if we can get down below that 1.3580 level at a time where I am awake a conscious and see if we can get some trending back down through. This whole bar, this entire area is an accumulation bar. So, at any given time, there is always a risk of a retracement. What does that mean in English? It means my trading strategy is to trail stops a little bit tighter than I would normally do. I’m not going to give it as much room to run because I know some of the key retracement points are at the top, the middle and the bottom of the wick. Not to mention that this is also the 1.3550 area which is another natural place to see rejection, so we will be trailing stops on any shorts pretty tight.

With Gold, we are consolidating; it had a very tight inside day with another distribution bar. So, we are looking to see if we can get above the 3 days’ worth of highs between Thursday, Friday, and Monday or if we can break down below this accumulation/distribution bar and that is what we are going to be focused on going into tomorrow.

Crude Oil is looking wonderful. Crude Oil is right back near these recent highs. Our trading strategy is going to be to see if we can get back above this 1.05 level and push our way back toward the 1.10. There could be some great trading up there if we could make that happen. Right now we went pretty far, pretty fast, we have a stochastic spike and due for a little bit of a retracement, but if we keep grinding up there, especially tomorrow in advance of the Wednesday inventory report, we’ll be looking at trades there as well.

As we take a look at the Stock Index Future, we’ll start off with the Russell. It opened up and just took off like a rocket, firing off on all of my indicators. Everything was firing off to the hilt. What a great way to start the day between Ryan and I with the Live Trading Room. Then as we continued on into the session, we got a little bit of selling into the afternoon. Some of the markets became distribution bars, such as the DOW. Not quite on the Russell, but the DOW and the S&P became distribution and doji stars, so periods of indecision.

Looking At Tomorrow’s Trading Strategy

So, what is going to happen tomorrow as the markets play catch up to this area. My trading strategy is kind of the same strategies that I shared with you last week. That’s just it. The strategies are very consistent, and that is what we are looking for, consistency. Most traders are struggling from a lack of consistency. Yet, I give the same message time and time again, we see generally the same results and that’s what we’re looking for. So, what I am going to be doing walking into tomorrow is looking to see if we hold these speed lines walking in the door here and then start to take off again because certainly very few people are believing the run to the up side. From my perspective, in the weekly charts, we pushed above the resistance here, the distribution bar so I was looking for further upside. So, as you can imagine, I had no problem looking for longs into this morning, in fact that is the only kind of trading that Ryan and I did was long side trading.

Now, as we go into tomorrow, the trading strategy is going to see if we do start to break back down below the slow speed lines on some of these charts. Remember, they’re all going to rise up tomorrow morning with this parabolic move. So, if we can get down far enough to actually start breaking below those.

Otherwise, I am going to be right backs to looking for long side trades again, if we start firing off those setups again in the morning. So that is kind of the thing, watching where we are in relation to the speed lines, if we start getting down below, into the kind of neutral zone which is between the 2 speed lines, then I might become a kind of equal opportunist and see what the 2 and the 5 minute charts look like for long or short side trades. But nonetheless, the bottom line is, no matter how you slice it, this is just the tip of the iceberg.  We have so much more to come. This is going to be a fantastic summer, between what you are seeing right here and the ultra-low $VIX we’ve got a summer of fun and surprises ahead of us. What a great time to be a trader. Have a great night. I look forward to seeing you again for more excitement in the Live Trading room tomorrow morning or in tomorrow night’s videos. Take care everyone.

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