Traders' Library Blog

Stocata S&P 500 Analysis: June 30, 2018.

Last week I wrote: "The gaps at the start of wave A are still not closed. This is a bad sign because, if it is not happening now it may take a long time in the future pointing in the direction of a long term downtrend reaction. The first targets are the 100 average and the price support around the same level, next the 200 average and again more price support existing at that level. Medium term we should expect a wave C down past the low of wave A around 2450. That would complete the C-wave with the same size as the A-wave. Read my updated comments here for the weekly chart and monthly chart  for more information regarding the longer term view."

Note I have removed all Google adds. Please let me know if you still would encounter one on any page of the site.

The gaps at the start of wave A are still not closed. This is a bad sign because, if it is not happening now it may take a long time in the future pointing in the direction of a long term downtrend reaction. The index went below 2700 and closes the week lower at 2718. There is support from the 100 day average, the low side of the volatility band and previous gaps and price levels. There is also a hidden divergence with a higher index bottom and a lower indicator bottom. We can expect some further correction the coming week(s). Possibly we will see a wave 2 retrace. In that case the index will stay below the top of wave b. Medium term we should expect a wave C down past the low of wave A around 2450. That would complete the C-wave with the same size as the A-wave. Read my updated comments here for the weekly chart and monthly chart  for more information regarding the longer term view.

Sylvain Vervoort   http://stocata.org/

The George Costanza School of Trading

I have been trading for 47 years. I have read a million books on trading. I have watched a million hours of analysts and portfolio managers talk on TV. And they nearly all say the same things.

 

Buy dips. This is perhaps one of the most constant refrains. You should buy dips.

 

Buy stocks when they go down. They are cheaper! They are on sale!

 

And, if they go down more, you should buy more! Your average purchase price will be lower! Dollar cost average!

 

But I think they are really Ph.D. grads of the George Costanza School of Trading. They are doing the exactly opposite thing to creating profits.

 

I’ve created a short fun video showing Lesson #1 of the George Constanza School of Trading. Click here to watch!

 

I think you will have fun with it!

 

Here's the link.

 

Thanks!

 

Good trading,

Courtney

Stocata S&P 500 Analysis: June 23, 2018.

06/02 I wrote: "Last week I mentioned that the gap of the week before was not closed but that this could still happen the past week. The gaps at the start of wave A and the start of wave a, are still not closed, not a good sign and, it may take a long time before being closed in the future. The first down target is the 200-day average and the low side of the Bollinger band. The target for the C-wave correction is around 2450, completing a C-wave with the same size as the A-wave, also the 161.8% Fibonacci target over the last top and the start of the b-wave. Read my updated comments here for the weekly chart and monthly chart  for more information regarding the longer term view."

Note I have removed all Google adds. Please let me know if you still would encounter one on any page of the site.

The gaps at the start of wave A are still not closed. This is a bad sign because, if it is not happening now it may take a long time in the future pointing in the direction of a long term downtrend reaction. The first targets are the 100 average and the price support around the same level, next the 200 average and again more price support existing at that level. Medium term we should expect a wave C down past the low of wave A around 2450. That would complete the C-wave with the same size as the A-wave. Read my updated comments here for the weekly chartand monthly chart  for more information regarding the longer term view.

Sylvain Vervoort   http://stocata.org/

Biggest Myth In Options Trading

 “You should never buy options, only sell them.”

 

They then go on to explain that 70-80% of options expire worthless. They point out that professional traders, particularly options market makers, are nearly always net short options.

 

This concept shows a stunning lack of knowledge about options! Let me explain so you don’t fall prey to it.

 

First, their two arguments are correct.  But their conclusion is wrong.

 

It is true that the vast majority of options expire worthless. The implication is that you should therefore sell options rather than buy because the vast majority of your trades will be profitable.

 

This is also true but doesn’t really address whether or not you will make money. Here’s the reality.

 

The profits and losses of shorts and longs have to be equal! If you were to short every option you would have mainly winning trades but your winners would generally be small and your losers would be bigger than your winners.

 

On the other hand, buyers of options generally have more losing trades than winners but the size of their winners are larger than the size of their losers.

 

The profit and loss of short and longs are symmetrical but, in the final analysis, equal.

 

Buying or selling options needs to be considered not that it is just short or long but what other edges you have in the market, such as direction or an opinion on the future value of implied volatility.

 

So how can you make money in options? Simple! Sign up for our exclusive membership programs at Options University.

 

Click here for more information.

 

You will be receiving so much that I can’t really detail it all. But this short video will reveal everything.

. Click here to watch.