I can see where we have closed 18.72 on consecutive 5 min intervals What is the first signal you look for that the breakout has broken the resistance vs anticipating a failed breakout over previous days highs?

And as I type, 500k vol in 5 mins to 18.78

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I can see where we have closed 18.72 on consecutive 5 min intervals What is the first signal you look for that the breakout has broken the resistance vs anticipating a failed breakout over previous days highs?

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Forum/Class? Another Star Trader point up for grabs.

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I can see where we have closed 18.72 on consecutive 5 min intervals What is the first signal you look for that the breakout has broken the resistance vs anticipating a failed breakout over previous days highs?

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Forum/Class? Another Star Trader point up for grabs.

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Volume?

Sorry, what are you asking? Maybe a missed something there

My take on TWTR chart is that it's in a channel out of the bottom 13.90-15 consolidation range. It has been rejected twice by the lower trend line from the Feb and once by the top down trend over the past 12 months. It's right at the confluence of those two trend lines. It has now poked above the previous consol range that charted prio to 04/26/16. Buy volume has not been significant and I suspect that it will retest the 17.50-18 area if volume does not move in here.

The I chart sure looks like a good bottom. The fundamentals worry me though.

Oldarmy, how do you look at volume on reaction to earnings? Specifically asking about Netflix and its drop. What do you look at to determine if it is a good value or is likely to continue falling?

Major support is in the $85 range. If it loses that then that $70 gap price will loom large and would be an entry point IMO. Have to watch volume and I will because it's one of my "net free" holdings.

Thanks again for insight OA1!

NFLX held right at that major support thus far. It's bounced a buck but should the markets take a break it will likely sink back down to that support.

Anyone dabbling in VDE (Energy ETF)? Would like someone's thoughts on a long term hold on this ETF before jumping in.

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Anyone dabbling in VDE (Energy ETF)? Would like someone's thoughts on a long term hold on this ETF before jumping in.

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Since I haven't studied it all I can give you is the technical analysis.

If you pull up a lot of energy stocks on a 1 year chart you will see what VDE is showing. It is come back to it's last high resistance before the drop. It's going to break out if the rest of the sector breaks out. See the bullish reverse head and shoulders formed right now up to that orange longer term resistance.

http://imgur.com/PSz5qzG

So would you say that if you were looking at this stock your entry point would be roughly Feb of this year? Huge volume spike around that time.

The VIX is back on a bullish market pattern. Low $11's to hedge and a screaming buy anytime under $11.

When you refer to a large option position, are you talking about buying calls and then selling them prior to expiration when the value of the options increases?

How does one go about buying the VIX oldarmy?

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As posted I took KMI options off the table for a 68% gain. I had one friend who views the forum ask why I didn't ride it out for the 121% gain it gave before expiration. Because I sell at my predetermined exit that I have extreme confidence in hitting. And I LOVE selling into buying as much as buying into selling.

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I'm thinking this is an extremely important key to increasing one's chances of success.

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How does one go about buying the VIX oldarmy?

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Most trading accounts have access.

BTW - Day 3 TWTR on breakout watch. Right back up to retest resistance.

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When you refer to a large option position, are you talking about buying calls and then selling them prior to expiration when the value of the options increases?

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Absolutely. The only time you'll see me still in an option close to expiration is either a 2 day hedge trade, where time decay provides cheap hedge against a black Friday. Most of my options trades are under 4 days exposure.

Love this post. Just confirms the mechanics and mindset of being a successful trader. It's important for me to see these principles in work over and over and not lose sight of the ability to be emotionally disconnected from the trade and follow the plan that was set in place. It may mean that sometimes you don't make quite as much on the top side, but it also means that more often than not you will also miss the downside that can easily come with trying to time the very peaks of the market.

If you don't mind OldArmy, do you have any examples of when a trade or position went differently than you had planned and how you responded to that difference? Or in broader terms, are put options the main form of down side protection you use in your positions? Thanks again for all the invaluable information posted here!

Thanks for the help! Last one I'm looking at to buy before tomorrow's earnings.

Paypal (PYPL)

If I look at the 6 month chart, it appears a bullish head and shoulders formed between June 22nd and July 6th. After July 6th the stock appeared to breakout but the volume hasn't really appeared to give an indicator of a breakout. Am I too late to the party or are we just beginning? If I'm reading it correctly, the price objective on the pattern would be $2 to the upside (which it has breached).

Am I completely wrong, or am I learning something here.

On the Paypal note how about Ebay? It reports today also and has looked great.

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OldArmy, at the risk of testing your patience, but to help my understanding, would you mind looking at ABBV? I don't own any, but just happened to be looking at its chart this morning.

It had two days in the past year where it went negative on huge sales volume - 10/2/15 & 5/17/16. And the fire sale on 10/2 broke through most if not all previous lows. If I understand your system correctly, that should have been a signal that the big money was racing for the exits, correct?

However, in hindsight, that would have been an incorrect decision. The collapse on 10/2 was the low point, and several days of dramatically increasing prices followed it. The sale on 5/17 wasn't followed by an equivalent immediate rebound, but rebound the stock eventually did.

So what other indicators do you use other than volume and pushing past resistance points? Or have I missed something altogether?

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Volume is the final "trigger" for actually entering a stock I've been looking to get in. I don't see volume on some random stock and dive in, although someone could probably out-pick most of the TV "experts" by doing it just that way. Wanted to make that clear.

Ok, ABBV - Talk about being range bound? Since it IPO'd and made it's initial nice run it has been completely cut off at $71. If that stock ever breaks $71 purely on a technical level I'd be all over Call Options at $75 out 1 weeks (closest Call Option) cause it will shoot above $75 within a couple of days. I'l look at some fundamentals and let you know. On July 11th it filled the gap set August 21st and that's why it's pulled back last few days. I wouldn't be surprised to see that $71 high tested again soon.

EBAY just answered your inquiry by beating on earnings. That was an impressive breakout after an impressive 20% uptrend move. Be interesting to see if some sell the news tops it off tomorrow for a pullback.

Disclaimer - EBAY is one of my "net free" holdings.

PYPL has been a mirror of EBAY....go figure, AMIRITE?

All of the competitors to PYPL have fallen short in it's space. I suppose thats to be expected given the EBAY advantage. $42 will get you $50.

Got in before the close. Hopefully it works out. Ebay up 5.3% AH's.

I have been watching Kellogg's for a while now. Lots of speculation that they would be a takeover target, most recently by craft. That rumor was squashed today and the stock took a big hit. I think they would be a perfect target for Coca-Cola to match the diversification of Pepsi. Any insight from the board?

Wait, OldArmy, are you trading only the options are are you trading the stock too?

To be risk free the trade would have to double and you sell half, am I missing anything?

Are you options in, out or at the money?

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Wait, OldArmy, are you trading only the options are are you trading the stock too?

To be risk free the trade would have to double and you sell half, am I missing anything?

Are you options in, out or at the money?

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I own the stock. The options trades I make are in addition to the long-term holdings taken at key points of a breakout or reversal to assist my overall objective in recapturing my invested dollars. Most options are the closest out of the money strike price and generally no longer than the next Friday expiration.

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If you don't mind OldArmy, do you have any examples of when a trade or position went differently than you had planned and how you responded to that difference? Or in broader terms, are put options the main form of down side protection you use in your positions? Thanks again for all the invaluable information posted here!

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Oh a WHOLE LOT go differently than planned. This year has been about the easiest trading I've ever experienced. I haven't had one of these long-term set up trades fail yet. But I'll go to the recent past to give you an example of a stock that did go differently than initially planned. TWTR You can go back to another stock thread where I compared FB's early struggles to what TWTR was facing. I took a position in the high $15's in the 1st quarter this year and posted that similarity.

On earnings day the stock had slowly moved up to the $17's. They met earnings but the new leadership was hammered with questions on monetizing strategy and the stock dropped into the $14 after hours. The volume was huge the next day and believing my research I added to my position and keyed off that volume to take on a sizeable option "juicer". Well take a look at the chart and it looks like a patient in the ICU on life support for the next 3 1/2 months. If you don't know what a flat line does to an options trade then you don't want to! I exited the option 4 days later taking a 34% loss.

I stayed with the long-term holdings plan because, while that major volume bottom did not provide an immediate recovery, it stabilized and solidified a clear bottom. Basically it became a waiting game. In June we had a perfect bull breakout signal and I took nearly an identical options position which gave me a 48% return in 2 days where I exited.

Today the short-term resistance is easy to see on the 5 day chart. However it's impossible to know where the longer-term resistance will form. You can look back and see that the $20 mark would serve as a "full speed ahead" mark, because most resistance clutter exists primarily between this current short term resistance up to that $20 mark.

I suppose the lesson is that with all of the tools and options available you can correct a mis-step and avoid a disaster. Hope that was a direct answer and provides a guide into how I approach each trade.

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I own the stock. The options trades I make are in addition to the long-term holdings taken at key points of a breakout or reversal to assist my overall objective in recapturing my invested dollars. Most options are the closest out of the money strike price and generally no longer than the next Friday expiration.

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Just so I don't have to go back and read through the posts to remember correctly, your option positions are buying the calls, correct, never selling covered calls? How often do you hedge to the downside with buying puts?

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I own the stock. The options trades I make are in addition to the long-term holdings taken at key points of a breakout or reversal to assist my overall objective in recapturing my invested dollars. Most options are the closest out of the money strike price and generally no longer than the next Friday expiration.

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Just so I don't have to go back and read through the posts to remember correctly, your option positions are buying the calls, correct, never selling covered calls? How often do you hedge to the downside with buying puts?

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I do it all depending on stock position. Take TWTR again since it's "in play" right now. I do not own 50% of my total shares free at this point. Had my initial call option worked out I'd be close. I've eyed selling some $18 covered calls on 25% of my position when they were at $1.06. That would be receiving $19.06 for those 25% and factor my $14.88 average entry price down with that $4.18 net profit/share. If I had a pure read that this resistance was firm then I would have but I am much more patient than many might believe.

I guess the common sense rules would be the higher up a stock I hold climbs the likelier I will be either selling a percentage of shares or begin a covered call strategy rinse and repeat (hopefully) until time to finish off the 50% net free position.