Navigator™ Swing Strategy – 25% SPY and 25% DIA January Monthly Calls – Add on Dips to the 5-Day Line / Navigator™ Day Trading Strategy – No Trading Today.
I woke up to almost a six-hour overnight power outage. Naturally, I first made sure I had paid the bill. Since I live in my computers, I tend to be an absent-minded professor from time to time.
Since that wasn’t the case, it turns out the power company was repairing something overnight – or so they say. It is the third time the power has been out since I returned to Southern California these past few months. I am starting to think Trump was right – “Honey, can you look outside to see if the wind is blowing the windmills for power? I want to trade this morning.”
By the way, what happens to your electric car that is supposed to be charging overnight? I am sticking to a hybrid for now. Plus, my hybrid SUV irritates the Commies around here.
Anyway, since I usually work until 11:00 pm and start my mornings at 3:00 am, I find myself less than ideally prepared today. The power went off at 10:00 pm and did not come back on until 4:00 am. The circumstances mess with my Trading Chi.
Fortunately, that might be ok since this is Quadruple Witching day. We get this day four times a year when almost everything in the derivatives universe either rolls or expires. It has tended to draw the markets down of late, which may explain yesterday’s rollback of Wednesday’s spectacular gains. One can only hope.
We reduced our 40% position in each of the S&P 500, and Dow January calls to 25% each at the open yesterday. I was glad we peeled off a third of the position, as the market went nearly straight south for the remainder of the day. Fortunately, we held the best indices for the moment. The Dow losses were negligible, and the S&P 500 losses were tolerable. The NASDAQ 100 and Russell 2000 bore the brunt of the damage, both closing below their five-day lines.
At this writing, the S&P 500 is below its five-day line in overnight trading, and the Dow is right on it. This area is where we either add to the positions or stop out. And it will be hard to determine on a day such as this, where the market tends to behave more like a market of stocks dancing around expiration than a stock market. Let’s see how it goes.
And that big dilemma is still on the table. We have been experiencing a bull market in the major indices and a bear market in most stocks. While rotational from growth stocks to value stocks, yesterday’s reversal saw the indexes’ clobbered by the fat five – Apple, Amazon, Facebook, Nvidia, and Tesla. Those stocks are 25% of the S&P 500 and 40% of the NASDAQ 100 indexes, respectively. Their influence is unpleasant unless the stocks are going up.
Swing Traders
Let’s see how the day goes, even though it won’t tell us much. The S&P 500 and Dow Industrials have the convergence of the five-day line, 21-day line, the Weekly Expected Move low, and the Navigator Algo Trigger to support them at the current price. It might be best to leave well-enough alone today and go with the specific option’s expiration script where we dip on Monday and turnaround on Tuesday. Staying with our calls that expire in a month requires evidence that the rotation underneath the market is enough to compensate for the weakness in the generals.
Day Traders
It would be best if you were starting your weekend already. You should not be day trading today if you are not executing a specific “pinning” or other options expiration strategy. By the way, 4600 looks interesting for the SPX on a pinning trade.
Enjoy your weekend, and recall that I will only be publishing as needed until January 3rd, when all of our new services and the live trading room will start.
I will put out a short video on the macro picture over the weekend.
A.F. Thornton