Wednesday's Prospects

On Tuesday, June 30:

Of 500 large-cap stocks and exchange-traded funds in my analytical universe, eight broke beyond their 20-day price channels, one to the upside and seven to the downside.

No symbols survived initial screening. Implied volatility of the three finalists -- GSK, WEC and SNE -- was too low to meet my criteria.

There are no prospects for trades coinciding with earnings announcements under my Volatility Rules.

With no symbols having made it past analysis, I shall do no further analysis on Wednesday, July 1.

Earnings season begins July 8, with peak announcements lasting for three weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, in month before the season begins increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, I next screen for 1) suitability of the options grid, including implied volatility of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 70th percentile or greater of its most recent rise, and 3) the absence of an earnings announcement within the next 30 days.

-- Tim Bovee, Portland, Oregon, June 30, 2015

References

My trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Binary Options S&P 500, Exit

<-Previous

Times are New York time.

S&P 500 (Nadex:US500) 10:03 a.m. entry: Long the >2055 strike for a $64.00 debit with the index price at $2066.30.

Expired 4:15 P.M. Exit: For no credit with the index price at $2,063.12.

The chart below shows the Nadex strike of indicative 2055 positioned at the equivalent index market price of $2,046.45. The Nadex indicative is the average of the 25 most recent trades on the exchange.

Although the Nadex indicative at exit was 2054.73, or 27 cents below the strike, the index price was above the imputed strike at entry, signifying a narrowing of the gap between the index price and the Nadex indicative price.

Click on chart to enlarge.

SPX at 4:15 p.m., 5 days 5-minute bars

The Elliott wave analysis shows wave 4 {-1} working out as a flat, or what I sometimes call a sidewinder. Flats are notorious sucker plays because they are by definition a series of whipsaws.

The complete of the flat will mark the end of wave 4 {-1} and the beginning of a downtrending wave 5 {-1}, the final leg of wave A to the downside.

I won't trade wave 4 {-1} any further but will trade wave 5 {-1}. A persistent move below $2,056.32, the low point of the flat so far, would likely signify the beginning of wave 5 {-1}. However, it is ambiguous, and any breakout play must be treated with caution.

Lessons Learned: Today's trade was a loss, and I've spent the time after the close trying to figure out how to remeidate it.

I think my entry was proper. It would have improved had it had a smaller risk in relation to the reward.

Also, the reversal shortly after 2 p.m. at the same level as the previous highest high of wave 4 {-1} was a tip-off that the pattern was most likely a flat. I would have done better to have exited at that point, but I failed to pick up on it.

Going forward, I shall aim for something closer to a 30:70 risk reward ratio, close to opposite of what I did today (which was 64:36). The cost of that structuring will be greater odds of the price taking out my strike, so it will call for greater nimbleness in exiting.

The strikes in Nadex are $3 apart, and one strike removed from the present indicative price is a good rule of thumb for near-even odds of success. That's what I shall aim for in my next trade, once wave 5 {-1} to the downside begins.

-- Tim Bovee, Portland, Oregon, June 30, 2015

References

My draft day-trading rules can be read here.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.

See my post "Chart Analysis: Nomenclature" for an explanation of my method for labeling waves on the chart.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Tuesday's Outcomes

Here's how my day went:

I exited a position in TLT for a profit and in MU for a loss.

I entered bear positions in ADI and EFA.

I opened a binary options day trade on the S&P 500 (Nadex:US500) and intend to let it expire at 4:15 p.m New York time. I'll post the results this evening.

-- Tim Bovee, Portland, Oregon, June 30, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

ADI, EFA Analysis

Update 7/9/2015: ADI moved above 70% of maximum potential profit, and I exited, both to reduce time risk and to free funds as the full force of earnings season approaches.

Shares declined by 4.0% over ine days, or a -155% annual rate. The options position produced a 240,0% yield on debit, for a +9,733% annual rate.

---

Update 6/6/2015: Greek voters rejection of an austerity package proposed by Eurozone creditor nations sent stocks down in both Europe and the United States, and I closed my position in EFA for a profit.

Shares declined by 0.9% over six days, or a -56% annual rate. The options position produced a 141.7% yield on debit, for a +8,618% annual rate.

---

The digital circuits maker Analog Devices Inc. (ADI), headquartered in Norwood, Massachusetts, and the iShares MSCI EAFE Index Fund (EFA), which tracks markets across Europe and Asia.

I shall use the JUL monthly series of options, which trades for the last time 17 days hence on July 17 for my ADI analysis, and the JUL2 weeklys series, which completes trading 10 days from now on July 10 in analyzing EFA.

[ADI, EFA in Wikipedia]

ADI

ADI is a directional play because two-thirds of its three bear signals over the past year have been profitable. the winners on average yielded 4.0% over 39 days. The lose ended down 6.5% over 37 days.

Ranges

Click on chart to enlarge.

ADI at 11:42 a.m. New York time, 30 days hourly bars

Implied volatility stands at 31%, which is 1.7 times the VIX, a measure of volatility of the S&P 500 index. ADI’s volatility stands in the 87th percentile of its most recent rise.

Ranges implied by options and the chart

Week	SD1 68.2%	SD2 95%	Chart	Earns
Upper	68.18	72.42	68.63	N/A
Lower	59.72	55.48	61.26	N/A
Gain/loss	6.6%	13.2%

Implied volatility 1 and 2 standard deviations; chart support and resistance, average earns move

The Trade

Bear call spread, short the $65 calls and long the $67.50 calls,
sold for a credit and expiring July 18.
Probability of expiring out-of-the-money

JUL	Strike	OTM
	65	60.4%

The premium is $0.68, which is 27% of the width of the position’s wing. The stock at the time of purchase was priced at $64.06

The risk/reward ratio is 2.6:1.

EFA

I'm looking at EFA as a bear play because of its record of profitable bear plays. EFA has completed four bear signals over the past year. Three were successful, on average yielding 3.0% over 42 days. The one unsuccessful signal lost 2.6% over 17 days.

Ranges

Click on chart to enlarge.

EFA at 11:54 a.m. New York time, 30 days hourly bars

Implied volatility stands at 22%, which is 1.2 times the VIX. EFA’s volatility stands in the top of its most recent rise.

Ranges implied by options and the chart

Week	SD1 68.2%	SD2 95%	Chart	Earns
Upper	66.93	68.53	67.72	N/A
Lower	61.63	59.33	62.39	N/A
Gain/loss	3.6%	7.2%

Implied volatility 1 and 2 standard deviations; chart support and resistance, average earns move
The Trade

Bear call spread, short the $64 calls and long the $66 calls,
sold for a credit and expiring July 11.
Probability of expiring out-of-the-money

JUL2	Strike	OTM
	64	59.2%

The premium is $0.58 which is 29% of the width of the position’s wing.The stock at the time of purchase was priced at $63.51.

The risk/reward ratio is 2.4:1.

Decision for My Account

I've opened short positions in ADI and EFA as described above.

-- Tim Bovee, Portland, Oregon, June 30, 2015

References

My volatility trading rules can be read here.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Tuesday's Agenda

The two survivors from my overnight analysis -- ADI and EFA -- confirmed their bear signals today by continuing to trade below the 20-day price channel. Both are candidates for directional trades. I shall post analyses before the closing bell.

The S&P 500 reversed to the upside today and I have opened a bullish day-trade in the Nadex:US500 binary options.

-- Tim Bovee, Portland, Oregon, June 30, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Binary Options S&P 500, Entry

Next->

Times are New York time.

S&P 500 (Nadex:US500) 10:03 a.m. entry: Long the >2055 strike for a $64.00 debit with the index price at $2066.30.

The chart below shows the Nadex strike price of 2055 positioned at the equivalent index market price of $2,046.45.

Click on chart to enlarge.

SPX at 10:15 a.m., 5 days 15-minute bars

Wave 4 {-1} to the upside began today, according to my Elliott wave count. Although wave 4 {-1} is a counter-trend movement, two waves within it -- A {-2} and C {-2} -- move with the trend and so I can trade them under my guidelines.

-- Tim Bovee, Portland, Oregon, June 30, 2015

References

My draft day-trading rules can be read here.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.

See my post "Chart Analysis: Nomenclature" for an explanation of my method for labeling waves on the chart.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Tuesday's Prospects

On Monday, June 29:

Of 500 large-cap stocks and exchange-traded funds in my analytical universe, 72 broke beyond their 20-day price channels, all having broken out to the downside.

Two symbols with high odds of success survived initial screening, both having broken out to the downside. High-odds symbols are candidates for directional trades.

No symbols with low odds of success survived initial screening. The three finalists -- SPY, DIA and ADP -- all broke out to the downside but failed because of low implied volatility relative to the most recent major rise. Low-odds symbols are candidates for non-directional trades.

There are no prospects for trades coinciding with earnings announcements under my Volatility Rules. GIS came closest to meeting my criteria but failed because of overly low implied volatility.

I shall do further analysis on Tuesday, June 30.

Earnings season begins July 8, with peak announcements lasting for three weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, in month before the season begins increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

First-round survivors

High-odds Bull (none)

High-odds Bear ADI EFA

Low-odds Bull (none)

Low-odds Bear (none)

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, I next screen for 1) suitability of the options grid, including implied volatility of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 70th percentile or greater of its most recent rise, and 3) the absence of an earnings announcement within the next 30 days.

-- Tim Bovee, Portland, Oregon, June 29, 2015

References

My trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Monday's Outcomes

I've exited LULU for a profit and updated the June 8 analysis with results.

I have one position that shows specific exposure to the Greek financial crisis: TLT, which tracks long-term U.S. Treasury bonds. I'm declining to exit today, which has been an extreme response to the Greek-EuroZone negotiations. I want to see how things shape out. The position expires July.

-- Tim Bovee, Portland, Oregon, June 29, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Monday's Agenda

With no symbols having successfully made it through my analysis, I am not looking to enter any new positions today.

I am assessing my positions for possible exits in light of the destabilization of the Greek-EuroZone financial bail-out talks and shall report on those decisions in "Monday's Outcomes" near the end of the market session.

-- Tim Bovee, Portland, Oregon, June 29, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

The Week Ahead: Jobs, manufacturing, holiday

The most followed measure of American economic progress, the employment report, will be published a day early on Thursday, having been moved back to accommodate Friday's observation of the Independence Day holiday in the United States. Markets in London, Tokyo and Sydney will be open.

Employment statistics and the unemployment rate will be released at 8:30 a.m. New York time on Thursday, and the U.S. markets will be closed on Friday and will close 2-hours early on Thursday.

The jobs numbers will be given a sneak preview with the release Wednesday at 8:15 a.m. of the private-sector ADP employment report.

One other potential market mover is out during the week: The Institute of Supply Management manufacturing survey, on Wednesday at 10 .m.

Leading indicators (in descending order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, at 4:30 p.m. Thursday.

The average hourly workweek in manufacturing from the employment report, at 8:30 a.m. Thursday.

Manufacturers new orders for consumer goods and materials from the factory orders report, at 10 a.m. Thursday.

Vendor performance, or the deliveries times index, from the ISM manufacturing survey, at 10 a.m. Wednesday.

The S&P 500 index, reported continually during market hours.

Manufacturers' new orders for non-defense capital goods from the factory orders report, at 10 a.m. Thursday.

Average weekly initial jobless claims, at 8:30 a.m. Thursday. 

Items of interest, arranged by day:

Monday: Pending home sales at 10 a.m. and the Dallas Federal Reserve manufacturing survey at 10:30 a.m.

Tuesday: The S&P Case-Shiller home price index in 20 metro areas at 9 a.m., the Chicago PMI  at 9:45 a.m. and the consumer confidence report at 10 a.m.

Wednesday:  Motor vehicle sales throughout the day, the ADP employment report at 9:15 a.m., the PMI manufacturing index at 9:45 a.m., the ISM manufacturing index at 10 a.m., construction spending at 10 a.m.  and petroleum inventories at 10:30 a.m.

Thursday: The employment report at 8:30 a.m., jobless claims at 89:30 a.m. and factory orders at 10 a.m.

I also keep an eye on the Baltic Dry Index, updated daily, and the 5-year implied inflation rate based on U.S. Treasury yields, which presently stands at 1.73%.

Treasury Debt

Bills

• 4-week: Announcement Monday 11 a.m., auction Tuesday 11:30 a.m., settlement Thursday.
• 3-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m.
• 6-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m.

Notes

• 2-year: Settlement Tuesday.
• 3-year: Announcement Thursday 11 a.m.
• 5-year: Settlement Tuesday.
• 7-year: Settlement Tuesday.
• 10-year: Announcement Thursday 11 a.m.

Bonds

• 30-year: Announcement Thursday 11 a.m.

TIPS

• 30-year: Settlement Tuesday.

Fedsters

A single Fed official, a lone Sworn Brother of the Night's Watch, keeping vigil on the rhetorical Wall that protects American monetary policy, makes a public appearance during the week.

St. Louis Fed Pres. James Bullard, a Federal Open Market Committee alternate, delivers opening remarks at this Homer Jones Memorial Lecture series in St. Louis.

Analytical universe

This week I shall be analyzing new bull and bear signals among 500 large-cap stocks and exchange-traded funds.

Good trading, and enjoy the holiday.

-- Tim Bovee, Portland, Oregon, June 28, 2015

References

My trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

License



All content on Tim Bovee, Private Trader by Tim Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com

Monday's Prospects

On Friday, June 27:

Of 500 large-cap stocks and exchange-traded funds in my analytical universe, 12 broke beyond their 20-day price channels, two to the upside and 10 to the downside.

No symbols survived initial screening, the five finalists all having low implied volatility.

There are no prospects for trades coinciding with earnings announcements under my Volatility Rules. CAG came close but failed due to low relative implied volatility.

With no survivors, I shall do no further analysis on Monday, June 29.

Earnings season begins July 8, with peak announcements lasting for three weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, in month before the season begins increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, I next screen for 1) suitability of the options grid, including implied volatility of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 70th percentile or greater of its most recent rise, and 3) the absence of an earnings announcement within the next 30 days.

-- Tim Bovee, Portland, Oregon, June 27, 2015

References

My trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Friday's Outcomes

I exited an earnings play on ORCL for a loss after a post-publication gap carried the price down to slightly beyond the profit zone. The analysis update includes results and a chart.

-- Tim Bovee, Portland, Oregon, June 26, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Binary Options: Draft rule change

The draft rule set for day trading that I discussed a few days back specified which the Elliott waves I could trade. I limited it to the 3rd and C waves at certain levels, typically the most

I'm changing the proposed rules in a way that broadens and generalizes the wave choice.

The rule on wave selection is as follows:

Within the waves that are the top-level components of the primary trend, these rules apply:

1. Trade only waves that are in the direction of the primary trend (i.e., no counter-trend flips), giving preference to those that are in the top two sub-levels within the waves making up the primary trend. The waves that may be traded are waves 1, 3, 5, A and C.
2. All waves at the top level within the primary trend may be traded.

I'm eliminating item #3 and placing the expanded wave list within item #1. 

In a primary trend, the odd-numbered waves are in the direction of the impulse, and waves A and C are in the direction of the correction.

It is important to note that within an A or C wave are five numbered subwaves, and among those subwaves the same rule applies: Waves 1, 3 and 5 can be traded, and waves 2 and 4 cannot.

On the current S& 500 chart, the end of the present wave 5 {-2} -- signaled by the end of wave 5 {-3} -- marks the end of wave 3 {-1} within wave A. It will be followed by a counter-trend correction to the upside, wave 4 {-1}. Within wave 4 {-1}, I can trade waves 1 {-2}, 3 {-2} and 5 {-2}.

I'm reluctant to jump back on wave 5 {-2} when it is this far advanced, so I'll wait for wave 5 {-3} to end, and then catch the ensuing wave 1 {-3} of A {-2} to the upside, which will begin, as always, with a Joe Ross hook.

Click on chart to enlarge.

S&P 500 AT 9:55 a.m. New York time

-- Tim Bovee, Portland, Oregon, June 26, 2015

References

My draft day-trading rules can be read here.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.

See my post "Chart Analysis: Nomenclature" for an explanation of my method for labeling waves on the chart.

The website of Joe Ross, who defined the Joe Ross Hook, may be found here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Friday's Prospects

On Thursday, June 25:

Of 483 large-cap stocks and exchange-traded funds in my analytical universe, 18 broke beyond their 20-day price channels, five to the upside and 13 to the downside.

No symbols survived initial screening,, all seven finalists having failed due to low implied volatility.

There are no prospects for trades coinciding with earnings announcements under my Volatility Rules.

With no survivors from the early rounds of analysis, I shall do no further analysis on Friday, June 26.

Earnings season begins July 8, with peak announcements lasting for three weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, in month before the season begins increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, I next screen for 1) suitability of the options grid, including implied volatility of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 70th percentile or greater of its most recent rise, and 3) the absence of an earnings announcement within the next 30 days.

-- Tim Bovee, Portland, Oregon, June 25, 2015

References

My trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Binary Options S&P 500

All times are New York time.

The S&P 500 (Nadex:SPX) opened the day with a strong rise to the upside. This is contrarian to the downtrend that has been in effect since the June 22 peak, so under my draft rules, posted last night, I can't enter a binary options bull position to take advantage.

Click on chart to enlarge.

SPX at 9:57 a.m., 4-days 30-minute bars

Todays uptrend is wave 4 {-2}, and it will be followed by wave 5 {-2} to the downside. Under my rules I'll be unable to trade the 5th wave, also, because they tend to be short and tricky (although not always; there are 5th-wave extensions).

-- Tim Bovee, Portland, Oregon, June 25, 2015

References

My trading rules can be read here.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.

See my post "Chart Analysis: Nomenclature" for an explanation of my method for labeling waves on the chart.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Thursday's Prospects

On Wednesday, June 24:

Of 483 large-cap stocks and exchange-traded funds in my analytical universe, nine broke beyond their 20-day price channels, two to the upside and seven to the downside.

No symbols survived initial screening, with the finalists all failing because of low options liquidity.

There is one prospect for a trade coinciding with an earnings announcements under my Volatility Rules. The company changed its publication schedule, so the analysis, which may be found here, and trade have been done.

With no survivor among the trading signals and the work of the earnings play already done, I shall do no further analysis on Thursday, June 25, except possibly for day trading binary options.

Earnings season begins July 8, with peak announcements lasting for three weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, in month before the season begins increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, I next screen for 1) suitability of the options grid, including implied volatility of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 70th percentile or greater of its most recent rise, and 3) the absence of an earnings announcement within the next 30 days.

-- Tim Bovee, Portland, Oregon, June 24, 2015

References

My trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Thinking About Binary Options

The current rule set may be read here.

Regular readers will know that I'm new to binary options, and that day trading has not been my preferred method.

As I use the Nadex binary options platform to help earn money during the idle hours of low volatility between earnings seasons, I have no rules and am in the process of drafting them.

Here is the rough working set of rules that I'm using at this point, including lessons learned from my second trade on Wednesday, which was loss-making. These will change over time, and I'll post those changes on Private Trader.

Note that I say nothing about which contracts I trade: Daily, weekly or intra-day. I remain agnostic on the issue, although I have up to now traded the daily contracts exclusively.

Operational rules:

1. Use Elliott wave analysis for the framing.
2. Use Joe Ross hooks for the trading signal.
3. When the two methods conflict, the Elliott wave analysis prevails.
4. Go short when an uptrend produces with a bar closing with a lower high.
5. Go long when a downtrend produces with a bar closing with a higher low.
6. Upon entry aim for a debit of $40 to $60 per contract.
7. Exit when the credit is within $5 of maximum profit.
8. Exit when Elliott wave analysis shows that the reason for entry is no longer valid.

Trade Selection:

A completed primary trend on the SPX (Nadex:US500) is defined by the peak of wave 5 at $2,129.87 on June 22, 2015, ending a five-day uptrend of five waves of the same degree that began from $2,027.49 on June 15, 2015. The primary trend will be redefined from time to time to meet my trading requirements.

Within the waves that are the top-level components of the primary trend, these rules apply:

1. Trade only waves that are in the direction of the primary trend (i.e., no counter-trend flips), giving preference to those that are in the top two sub-levels within the waves making up the primary trend.
2. All waves at the top level within the primary trend may be traded.
3. Trade only 3rd and C waves within the sub-levels of the waves making up the primary trend.

In other words, the primary trend is a movement at the {+1} level. The waves making up the primary trend are at the base level, such as wave 1 or wave 3 or wave A. The top two sub-levels within the waves making up the primary trend are wave 3 {-1} and wave C {-1}, and wave 3 {-2} and wave C {-2}.

This chart from late June 2015 shows the levels.

Click on chart to enlarge.

S&P 500 on Wednesday, June 24, after the closing bell, 10 days 1-hour bar

-- Tim Bovee, Portland, Oregon, June 24, 2015

References

My trading rules can be read here.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.

See my post "Chart Analysis: Nomenclature" for an explanation of my method for labeling waves on the chart.

The website of Joe Ross, who defined the Joe Ross Hook, may be found here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss