The markets

The turmoil in Syria is keeping the markets down. The transports were down the most at 0.32% and everything else was down to flat. UVXY, a measure of intraday volatility, was up by 7.36%, quite a lot for the UVXY – again that comes off the back of the US reaction to Syria; the US firing missiles at a Syrian airfield. The VIX, a market fear gauge, was up 3.87% because of geo-political fears. The VIX is at historically low levels. On its chart, it is being squeezed between two Bollinger bands, but will the market move down and will the VIX take off to the upside?

The S&P 500 is still struggling to get above that resistance zone of about 2,360. On a 15-minute time frame chart, you can see an ascending wedge pattern which is obviously bearish. If it was to break this it could easily move down to 2,340. The line in the sand on a daily chart is 2,350. If it was to move below this significant support level, it could easily come down and test 2430, which is around the 49 EMA. This is something to focus on tonight. Look at that bearish pattern and watch for a break below 2,350. That is what you need to key off.

There was also a lot of open interest on the SPX at 2,350 which helped keep it down. If you get a lot of open interest on the calls and the puts, you get something called pinning and it gravitates towards that strike price. So we saw a lot of open interest at 2,350 on the SPX.

A great Friday trade – AKRX

On Friday I noticed some bullish patterns on the stock AKRX. On the day chart there was bull flag after bull flag on a five-minute chart. This was a fantastic trade on Friday. You need to train your eye to see patterns on charts. They show you human emotion. We are able to see a continuation or reversal in a stock or index. Charted patterns are powerful and something I use a lot to find trades and make money. It is either a continuation of the current move (if it is moving higher look for it to move higher) or it’s a reversal pattern. We are constantly looking for chart patterns.

Today we should also be checking to see if gold on the GLD is going to move above that 120 resistance level. If it does then we need to look for gold stocks. 120 could easily move to 125. I have some specific gold stocks that are setting up good charting patterns and I’ll be keying off these today.

BG delivered 1,800 profit in a day

One trade students and I did key off on Friday was BG. I told our students a few days ago that BG, being an economically sensitive stock, could break an important ledge pattern. I said if it closed below 78 I would buy the 80 put options for the April contract. It broke that 80 level on Wednesday, the same day we were talking about it. One student bought at $2.20 and closed the trade out at $4.65 – that is more than 100% profit in a day. One of the keys I teach students is to roll down our options, to lock in profit and still stay in the trade. This is an important concept that professional option traders use, and something I use all the time and pass on to students. You always want to be reducing risk; that is how you make money. Today I will again show my students how to roll down the put option, lock in the profit and create a riskless trade. That means you cannot lose from that point on, but you are still in the trade in case it keeps moving.