December Cometh with a Flurry…
…of activity. Closed a trade today, opened a couple of new ones, and took profits on an option trade.
IWM / TNA
After my early morning comments about the Russell 2000, the IWM magically proceeded to roll over — so far, that I was forced to take a position. I suspect there is further to go, but I am heeding my own words from earlier this morning — taking advantage of any IWM pullback. As you can see from the chart below, IWM “wants” to fall back a little further to 11.5, so I’m assuming I will continue building this trade. If IWM drops to Support, AND gives us another low RSI(2) reading, then I will begin building a call option position. (Note that although SPY dropped into oversold levels today — below RSI(2) of 30, the strategy that tested best for trading SPY is to require TWO days overbought before beginning to build a position. And then to build it slowly using a 1-2-3-4% progression. This suggests that empirically we could easily have further correction in the market before seeing a bouince.)
VXX / XIV
This trade popped too, and was simply too juicy to pass up. With the SPY essentially moving sideways today, Volatility has spiked up — even on the negatively biased VXX. Since it rarely stays at these RSI heights for long, I jumped on board. This is a quick trade, with RSI above 90 for Entry signal, and ready to sell if RSI drops below 50 on VXX. I have not taken a put option position on VXX because the last few times I traded it, I made money on the ETF trade, but my option trade was unproductive.
TLT / TBT
My inverse trade on TLT, using TBT, hit an exit signal today, for around 1.8% profit. Closed TLT call options for around 36% profit. As can be seen in the chart, TLT has plummeted to oversold levels, so the quick easy money has been made.
XLE / ERX
I’ve made a lot of money trading ERX/ERY. But although we’re moving in the right direction on this trade, there is still less than a one percent profit to be shown for this relatively volatile ERX trading vehicle. Nevertheless, it is based on a commodity (Oil USO) which has begun to reverse off lows — so there is a chance for a strong reversal trade here. Trying to be patient. (And XLE call options are about even, as I write this.) By the way, XLE was the strongest performing of the 9 Spyder sector ETFs — so we are in the right trade.
Finally, the dog of the group. Some news reading has revealed that Australia is the culprit here, dragging down the index. Presumably this is because various events have resulted in a continued move down in the Aussie dollar. Whatever. My technical stoploss is breaking down through the MA(200) by 1.5% — and we have just reached the MA(200) itself. So perhaps this trade will self-destruct and I can be out of it soon. (It’s like having one of your children come home for the holidays — and then biting you!)
That said, there are clearly a lot of trading opportunities for December. Hold on for the ride.