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Posted by Brandt Hackney

Publisher of & member site Wolf on Wall Street, equities/options trader 13 yrs., 4 yrs teaching, won multiple awards for trading & indicators.

Wolf on Wall Street End of Day Post

by Brandt Hackney on July 3, 2013

in Stocks, Technical Analysis

Considering what this week was and what the dangers were, we traded these 2 and a half days near picture perfect with only two trades, a +24% winner and a +40% winner.

This is the just published, End of day post for,

(Click the link above for more information about Wolf on Wall Street)

Market Charts and XLF Put Profit/Loss
Posted July 23. 2013 by: Brandt

First the XLF July $20 Put, you may recall I was considering skipping trading this leg to the downside altogether, there was something that wasn’t sitting well with me and later I realized it was just the make-up of this week and then of course all of the events between today’s close and Friday’s open with most events catalyzing just before Friday’s open including the NFP.

At first today when I saw the 3C charts in early timeframes moving up so quickly or strongly, even off the open they were strong, I wondered if perhaps the NFP had been leaked, I don’t think that’s the case, especially after seeing how quickly the same charts turned around, as I said when I first pointed it out, I believe it’s a function of the lower volume, it tends to produce extreme moves in everything from price to indicators.

In any case, the UVXY position and XLF position were both meant to be short term positions, UVXY I closed yesterday and I think that was the perfect time…
The white arrow is UVXY (remember it was a Call option) yesterday, beautiful momentum, if I were watching price alone I’d have left it open, but 3C gave a clear signal there and it was closed for a +40% gain

If I held UVXY today, even selling early, I’d have lost a good part of that gain.

I DID NOT get a sell signal on the XLF Put yesterday so that stayed open and isn’t it amazing that as the market was doing this today….
 The market was finishing the move started yesterday as expected, from last night’s “Daily Wrap”.

This is today’s NQ (NASDAQ 100 futures) intraday 1 min chart, it should be exceedingly cclear that there was a clear effort to move prices higher in to the close. I took that 1 step further (which I can’t confirm until tomorrow) and guessed that Wednesday would close stronger than where we are now, “

So as the market tends to move together and Financials are a large part of that, “Why didn’t I close the XLF Put?” Simply because there was no signal to do so.

This is how XLF performed today…
It came within 1 cent of yesterday’s close, but didn’t move higher like the rest of the market. The only reason I closed it was 1) it was meant to be a short term trade and 2) well you know what 2 is.

The P/L came down like this…

At the fill of $.62, the gain on the XLF put was +24%

It would have been better to close XLF the minute I saw leading positive divergences on the open this morning, but I was hoping to get a good signal by the end of the close today for Friday’s action. If there’s a lesson I’d take away from this it would be…

“Know why you are in the trade, know why you chose the tool you chose for the trade (XLF Puts rather than FAZ long) and know that the first two reasons are meant to work together and the gap down this morning is the perfect move for the choice of the trade, FAZ would have been a better choice to “Wait and See” through the close today.”

Not a terrible error, but an error nonetheless.

As far as the market charts, in the first market update this morning , the post ended with this…

I wouldn’t say anything is conclusive yet, but I would say that all of the readings point more toward higher prices from here and all of them look much, much better than they could otherwise look if things were really falling apart early.

For now I wouldn’t back away from yesterday’s late (day) idea or thesis of market action (continuing the late day move higher), of course we may have to adjust, but I don’t see anything yet that suggests that course of action isn’t still the most likely, even with the less reliable a.m. trade data.”

I told you in a afternoon update that charts were surprisingly strong, but that is in some part a function of lower liquidity and that I wouldn’t take any of the signals to mean much. Also the parabolic move was noted in this post…

Finally in the last market update of the day, this was the entire update…

As I said, parabolic moves end badly. The strong signals in the market averages turned around and became just as strong on the downside (weaker market), but the move yesterday was finished and did what it was meant to do.

I’ll get charts up, but this is exactly why I said I don’t think anything that happens today will have much to do with Friday, if we had taken positions based on those signals 30 minutes ago, I’d be very nervous about them right now.

Patience is a choice, often a good one.”

Here are several examples of how fast things turned late day.
 This is the DIA 1 min (backed up to 12:15 today) showing yesterday’s negative divergence to the left and the late day positive divergence sending the market higher in to the close, this was not the typical 3:30 ramp, last night I showed you influential, market moving assets that had started this divergence as early as 1 p.m. yesterday so it did make sense that it continue today and in perfect harmony with the BULLISH SENTIMENT.

 Here’s the same chart through the close, note how fast and deep the 1 min went negative
It wasn’t just an intraday pullback as it migrated and very quickly, to the 2 min chart which is just as sharp of a negative divergence.
 It also migrated to the 3 min chart with a very deep leading negative divergence, now consider this happened in about 35 minutes, that’s incredibly fast.

 The IWM was the only average that remained “In line”- 1 min
2 min
QQQ 2 min went negative sharply
Also migrated to the 3 min
And amazingly to the 5 min in such a short period.
SPY 1 min, these are very deep leading negatives for even a 1 min timeframe to develop this quickly. This is why I hoped to wait until we were closer to the EOD to close the XLF put, hoping it would drift lower.

SPY 2 min migration and a shrp leading negative
Even out to 5 mins.
ES 1 min went negative quickly.
The NASDAQ E-mini Futures went negative even faster and worse.
I’ll have more for you once I see how credit’s underlying trade behaved as well as the other assets we monitor.
For all intents and purposes, I’m totally flat for the next expected move as I was considering earlier in the week not to trade this one, luckily UVXY calls yesterday and XLF puts made some extra gains, but I feel better flat for this trend until Friday.

If you are off early, have a great holiday.

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