Forex Is Crazy

Yesterday I started a new chart of the day series to record this epic move, which now looks like it may be a short lived series. We did however go on to make another all time high after my morning post yesterday. The new all time high put in on the S&P 500 via the /ES was 1,685.75...the day started out very well for the bulls until fear finally showed up in the market bringing with it close to a 40 point reversal on the day: Before we made any new highs on the session this morning I went ahead and sold a 1,610 put for 20 points against my much publicized short /ES position. I also bought in my short 1,555 put for a small gain as I continue to believe and operate that staying small with no more than one contract of exposure the prudent thing to do in this trade. My new effective short price as of the close yesterday is 1,635 and my aggregated position looks like a giant short call spread: Looking at the risk profile above you will notice that I have hedged off my risk at the 1,700 l...

Starting today I will be posting a daily chart with the new high of the day. And in the event that I post the chart to early and we make another high from the time I posted the previous chart I will post a new chart the following day. This should be fun documenting this epic move to the upside. Good Luck Trading! In The Money Trades And 1 favor that we ask:  If you like the hard work we put into our blog posts and videos, PLEASE help us out by sharing them. Click the share links below and share them on FB, twitter, etc. It really helps us get more exposure and grow IN THE MONEY TRADES!

The chart that has been amusing me each and everyday I look at it. Today we have the /ES or what I refer to as the market up making yet another new all time high. I read a statistic this morning that said that the market has closed higher every Tuesday this year. So new high is in at 1,670.25. The interesting thing I have noticed the past few days is the vix has been trading higher as the market has traded higher, not sure if this is a sign of things to come or if its meaningless. I feel like the question is whether the /ES will trade to 1,700 before having a single decent downtick. I will be the first to admit that there are plenty of gains to be REALIZED in the market. But as I write this the gains we are witnessing in the market are all paper gains. Remember, you don't actually make money until you book profits. Remember all those folks that had made thousands and maybe hundreds of thousands of dollars of home equity? We all know what happened to that paper gain. Look I am happy...

This past weekend I was talking to one of my friends about earning potential, investments, and realistically how much time was actually needed to manage your own money. And is it worth it? First lets talk about traditional money management for retail investors. The incentives of the financial advisor and retail investor are not aligned. What I mean by this is that financial advisors are compensated for assets under management and not performance. Meaning they are not compensated for making you money. Furthermore they make money whether you make money or not. WHAT? So in a bull market like we have had the past 4 years these financial advisors look like geniuses. But its easy to make money in a bull market. When was the last time you heard someone tell you how much their financial advisor made them a killing when the market fell 20%??? NEVER!!! So you tell me do you think it is worth having a financial advisor? Lets say you agree with me that maybe financial advisors are not worth it, BU...

As many of you know who have been following the blog the past month or so, I have flipped from bullish to bearish. Admittedly I have been wrong as the S&P 500 has rallied over 100 points since I initiated my short. As you may recall I sold a call on the /ES at the 1,555 strike for 32 points that effectively got me short at 1,587 which was only about 5 points off of the S&P 500 all time highs. We have since then traded to NEW all time highs several times over. With the most recent high putting us 1,000 points off the March 2009 low of 665.75...putting the new all time high at 1,665.75. The thing to keep into perspective is that it took only 17 months to trade off the previous all time high in 2007 to the March low. It has taken over 4 years to recover from that fall and finally build enough momentum to make a new all time high. So what have I done while the market has moved 110 points against my short position? I have bought OTM upside calls at 1615, 1650, and...

In the not so distant future everyone in their brother were buying Apple and touting that it was going to be the  first $1 trillion dollar company. At its all time weekly closing high of $705 Apple was valued at $663 Billion . Don't get me wrong, I love apple but really a trillion dollars. The at some point the market ran out of buyers and over the preceding 8 months the stock lost $300 billion in value . Why am I telling you this? Its to make a point that things do not go up forever. Eventually we run our of motivated buyers and eventually we get to a place where people need to take profits. The crazy thing is that it usually takes an overdone and overhyped move to act as the catalyst lower. As I write this the markets are making yet another all time high at 1,637: I admit that I have no clue when this market will finally correct, but I also still favor playing the downside when thinking about risk/reward. Although my portfolio is short delta, this does not mean however that I ha...

I think the article below does a better job than I could explaining the landscape of the market. As of the March data on investor margin levels, we hare at $380 Billion vs the 2007 All Time High of $381 billion. You have got to assume with the markets continuing to edge up since April that we have surpassed the all time high. As we all know, leverage is a double edged sword and many investors are going to feel some pain when the market finally has a decent trade lower and the margin calls start flying from their brokers. So without further ado, here is the article from the Wall Street Journal: High levels of margin debt on the New York Stock Exchange are raising concerns about the state of the rally. Stephen Suttmeier, technical research analyst at  Bank of America   BAC   +0.87% Merrill Lynch, notes leverage, as measured by NYSE margin debt, rose 28% in March from a year ago to $380 billion. That figure is slightly below the July 2007 peak of $381 billion. Market analyst...

I am short all of the above with various strategies. These charts are starting to look pretty ridiculous. My assumption is that eventually we will have a two sided market where sellers will take control for a bit while the bulls catch their breath. I continue to just wait as we continue to grind higher. Not much else to talk about with markets still at all time highs and the vix super low, doesn't bode well for selling much premium. Only have about 25% of my capital committed. Good Luck Trading! In The Money Trades And 1 favor that we ask:  If you like the hard work we put into our blog posts and videos, PLEASE help us out by sharing them. Click the share links below and share them on FB, twitter, etc. It really helps us get more exposure and grow IN THE MONEY TRADES!

I am short and it is not working . But while I am a little frustrated, I am at the same time amazed with this run to the upside. The new high for the week was put in just shy of $86 at $85.99. May 1st was a day of hope for the bears where JNJ traded a buck lower, we all thought it was day 1 of decent trade lower (but it was just a head fake). I continue to be long the May '13 $85 puts and it now seems like we are going for a hail mary on this one given its resilience to the upside (probabilities say it only has a 17% chance of hitting $82.50). But then again, what do the probabilities say about this thing finishing higher for a 19th consecutive week in a row? But after getting short this name starting on 4/8 at the time when it was only up 14 consecutive weeks in a row, I am committed to the trade. Eventually this thing will crack. I would love to see some profit taking in this name for a move $5 lower, that would be ideal :) Other than hoping for that down move between now an...

Many of you have been reading this blog may have noticed that my blogging frequency has increased over the past few weeks as I got short the market. As you can imagine I am down money since getting short the market, this is the time when most people pull away from posting. But my goal is to stay active and involved and show you that trading is not always rainbows and butterflies. It is times like these that the things I have been sharing over the past couple of weeks are so important. You need to trade small relative to your account. I have a decent short position in the market and my portfolios are set up to make some awesome returns if we finally turn lower. But something I would like to point out is that my account is 70% Cash.  I learned a long time ago how important it is to live by the rules you preach. Because of my discipline I am able to continue to hold my positions, I have time and capital on my side. I can't stress enough how important it is not to get to big....

Believe it or not, but the market continues its grind higher only 3 points off its all time highs after a nice move lower during yesterdays session. If the market continues to grind higher this does not bode well for my overall portfolio as I am leaned to the short side. I think as I write this I am about 200 SPY deltas short. With that said I decided to sell a 19/20 put/call strangle with a kicker buying the 23 call to define my risk to the upside. Now you may be asking yourself why I would add more negative deltas. Well my thought is that we are either going to have a move that finds velocity to the downside which will cause volatility to pop (think February move with 35% pop) which would be good for my overall portfolio and leaves my max risk on this trade at $90 to the upside. Or the other scenario is we keep grinding higher with little one day sell offs with small pops in vol in which case I don't think vol really goes anywhere between now and Jun expiration. My break eve...

What a run this market has had not just in 2013 but really since October of 2012. If you take a look at the chart that I have shared below you will notice that we started this uptrend we are currently in at 1123 on 10/3/13. As of last night the all time high is 1,595.50, thats 472.5 points or +42%. That is a very impressive run indeed. In 2013 alone we are up 135.25 points or about 10%. Q2 is over and its a new quarter. The question everyone is asking themselves is whether the run up can continue or is the market getting tired and ready for a nice corrective and consolidation move? I honestly don't know how you can commit any new capital to the longside at all time highs. Will the seasonal sell in May go away provide the needed environment to bring this market in? Only time will tell, in the meantime I will continue to remain negative delta. Good Luck Trading! In The Money Trades And 1 favor that we ask:  If you like the hard work we put into our blog posts and videos, PLEASE help ...