Thursday, June 03, 2010

June 3rd Market Continual Updates.

It is not clear today which direction the market will go. The Intraday chart of the Dow above offers no clear clues as of 8:00am PST. I have readjusted my prediction of the Dow's high on this Bear Market rally. I do not believe we will get over 10,405 and the S&P 500 won't go over 1,116 based up upper resistance levels.

I sold my TZA Put Options a few minutes ago for $1.25/share. These I bought last week for $0.90/share. That's a 38.8% profit less less trading fees. At the same time I purchased TZA Call Options for $1.28/share for October Expiration at a Strike Price of $9.00/share. I still had some of these shares I had purchased for $0.58/share and had sold most of them at $1.90/share for a 286% profit. So being able to buy these back lower is indeed gratifying since it is my belief the market is going to go down dramatically in the future and I want to be on the right side of the market trend when it does.

Update 8:50am PST
As you can see from this Chart below, the trend is clearer, we are going to go below the "W" pattern. Notice slanted down "W" pattern.

Update: 11:00am PST

This is the latest update at 11:00am PST. You will observe from the chart below that indeed the market id go down into negative territory as the earlier update said it would. I have drawn red lines under 3 "W" patterns. The first one did slant lower and the chart shows it did go lower. The second one was slanted up and the market id go up as predicted, but the 3rd one is slanting down at this hour and foretells of the market dropping below currents levels to below the 2nd leg of the last "W" pattern. You can use this technique to trade on a more timely manner and know better where to set the Buy and Sell prices, if you can predict short term direction.

Update: 3:30pm PST
The market closed almost where it began today as indicated on the chart below. Of particular note was that my last prediction from the 3rd W pattern suggested we would go down form there which we obviously did not. So that was a failed prediction. That happens sometimes, as this is not science but an art form. Out of a dozen or more recent predictions, this was the only one which did not pan out as expected. It doesn't negate the validity of the theory however, but rather, helps show it is not foolproof.

I took the opportunity today to unload my TZA Puts which had an Oct. Expiration at a Strike Price of $6.00 for $1.28/share. These were purchased last week for $0.90/share. So I made a 39% profit on them before trading fees were included. I purchase more TZA Call Options today for Oct. Expiration with a Strike Price of $9.00 for $1.28/share. Remember I had bought these shares a few weeks ago for $0.58/share and sold most for $2.25/share. I was grateful to be able to repurchase those shares today for $1.28/share. I also still have some original shares from $0.58/share which hadn't been sold. And lastly, I purchased TZA Calls for January with a Strike Price of $12.00 today for $1.48/share. The thinking here was that the market will drop in the Fall months but may not be finished so buying some Options with a January expiration adds more insurance to my strategy.

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