The week ahead

The period of turbulence in June made regular profits in pairs futures trades possible. The current calm, low volatility period would appear to be less advantageous for traders; time spreads and trend trading in various time frames are reasonable choices.

However, we are graced with earnings announcements. During earnings periods, volatility in particular stocks is elevated. Traders can set pre-announcement trades that seek to capitalize on volatility compression that follows the announcement typically and/or price moves. These strike me as risky insofar as one bad call can burn up the gains several good calls. (Of course, there are steps to reduce the losses, including the following).

One can also engage in earnings after the announcement by fading or following the moves of big overnight gainers. I have yet to try to both fade and follow a gap up, but it seems like a reasonable tactic insofar as the price action in post-earnings gap ups is typically, according to my limited experience, down/up, down/up and then up up up. Is one a pig to trade it both ways?

The bulls get theirs

The bears get theirs

The pigs get slaughtered

It is also possible to scalp options (and futures) intra-day. A few basic facts about our present situation should be recalled: The Federal Reserve Bank continues to produce liquidity in the economy and market. This is bullish. The price of oil  should move below 100 dollars a barrell; for the number provides a psychological anchor for the most crucial currency/commodity in the world; and what’s more, it is in the interest of oil producers to keep prices down sufficiently to not provoke massive government programs in alternative energy programs.

This week, I plan to fade and follow gapping stocks, scalp options in SPY, and manage some small time and vertical spreads in stocks with interesting charts, stories, and extremely priced options (via scans for low/high volatility).

Some secondary lines I will follow this week include watching highly rated IBD stocks for favorable options pricing or gap fades. I will also follow crude, gold/silver, and bonds for trend trades and information about possible economic turns. 

Thirdly, I will monitor stock volume and inertia index information to place favorable swing trades in retirement account.

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Notes: 1. Most attacks on big government are meant to protect big oil and all its downstream customers, subsidiaries, sister companies, suppliers, and shareholders. And 2., the political battle in this country is eventually going to be drawn between oil and alternatives. In the US with so many people armed, this could become a shooting war. A repeat of the civil war is fairly easy to imagine in structure and scope–big dying but profitable industry supported by fanatical and violent disenfranchised whites, etc….

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