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Post by Del »

Jackson Hole Economic Symposium has been happening this week. Central Bankers from around the world, leading economists, and journalists have been chatting all week.

All eyes are on US Fed Chairman Powell, who just started speaking 10 minutes ago. Everyone wants to know how hawkish he will talk about rates and inflation.

Market indexes are pulling back, which I expected.

The options market is going absolutely nuts right now. It is hilarious to watch the price curves flux all over the place. My condor calculator can't keep up.

None of this poses any risk to me. I know exactly what my contract will be worth when it expires on Wednesday. I'm not trying to buy or sell any options this morning. I'm just enjoying the show.
===================================

Options settled down, and lots of good premium available. I sold a second condor.... fingers crossed, because this is "swinging for the bleachers."

Last week busted my condor, and I had to make a lot of crazy adjustments. I ended up with $80 profit. I was looking at making $860 for the week, and all of a sudden I was looking at losing $1640 or worse.

I shouldn't try to get it all back in one week, but this situation is too tempting. By Wednesday, we'll see if I'm a shrewd trader or a crazy fool.

If this works, I'll make $1800 this week. Averaged with last week, I'll have $940 per week. This is still really good profit for the season, but my position sizes are WAY too high right now. A market shock this week (from China or whatever) could obliterate all of my gains for the year, and then some.
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sweetandsour wrote: 26 Aug 2022, 08:23
I tuned in to Fidelity's pre-market discussion, that begins at 8:15 CDT, and typically runs just past market opening at 8:30. One of the analysts began talking about SNOW, and I quickly took a look. I wanted something to get in on in the morning and possibly close out by noon with a profit, because I had things to do all afternoon. SNOW was perfect for a quick buy and sell because I know nothing about it and I only had the morning to watch it. I sold mid-morning sometime, it was ~194, but of course by the time I pulled the trigger I got ~192 and some change. So much for the milliseconds that the big boys have. I see this morning that it's gotten up to 200 now, but I can't worry about that, I made ~3% in an hour +/-, which is really what I have to make to offset taxes I think. Re my charts comment, that was an aside. I still am learning about charts, and so far it almost seems like you can make them indicate whatever you want them to indicate. I know that's not the case, but still. Re Powell's remarks this morning, I can't tell exactly if Mr Market liked them or ignored them, SPX appears to be dropping.
That's why I can't do day trading. It moves too fast and a guy has to be nimble.... and I really need time to think before I trade. I want to assess my risk, evaluate my risk/reward, make my decisions.... and then watch it for a week, with time to make adjustments.

Nothing against day traders, and more power to the successful ones. It's just not a style that suits me. I like making profit while I'm not glued to the screen.
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Post by sweetandsour »

Del wrote: 26 Aug 2022, 08:48
sweetandsour wrote: 26 Aug 2022, 08:23
I tuned in to Fidelity's pre-market discussion, that begins at 8:15 CDT, and typically runs just past market opening at 8:30. One of the analysts began talking about SNOW, and I quickly took a look. I wanted something to get in on in the morning and possibly close out by noon with a profit, because I had things to do all afternoon. SNOW was perfect for a quick buy and sell because I know nothing about it and I only had the morning to watch it. I sold mid-morning sometime, it was ~194, but of course by the time I pulled the trigger I got ~192 and some change. So much for the milliseconds that the big boys have. I see this morning that it's gotten up to 200 now, but I can't worry about that, I made ~3% in an hour +/-, which is really what I have to make to offset taxes I think. Re my charts comment, that was an aside. I still am learning about charts, and so far it almost seems like you can make them indicate whatever you want them to indicate. I know that's not the case, but still. Re Powell's remarks this morning, I can't tell exactly if Mr Market liked them or ignored them, SPX appears to be dropping.
That's why I can't do day trading. It moves too fast and a guy has to be nimble.... and I really need time to think before I trade. I want to assess my risk, evaluate my risk/reward, make my decisions.... and then watch it for a week, with time to make adjustments.

Nothing against day traders, and more power to the successful ones. It's just not a style that suits me. I like making profit while I'm not glued to the screen.
Yeah I hear you, I'm not a day trader, and am careful not to get classified as such by Fidelity, but I may occasionally act like one. When people ask if I'm doing day trading, or swing trading, or whatever, I just reply that I'm an investor. Fidelity folks always ask "what's your plan?" Makes me think of Mike Tyson quote, "everyone has a plan, until they get punched in the face".
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sweetandsour wrote: 26 Aug 2022, 11:02 Yeah I hear you, I'm not a day trader, and am careful not to get classified as such by Fidelity, but I may occasionally act like one. When people ask if I'm doing day trading, or swing trading, or whatever, I just reply that I'm an investor. Fidelity folks always ask "what's your plan?" Makes me think of Mike Tyson quote, "everyone has a plan, until they get punched in the face".
A guy needs to have a plan. It's going to be some version of "do this and make a profit."
That's when the mentor can help him with risk management -- "Here's what you can do to avoid getting punched in the face."

Suppose a guy buys a promising ETF -- like XLE -- and plans to hold it while it appreciates. That's a good plan.

So then mentor shows him how to program a stop-loss order. "Now you have set the maximum loss you will face, no matter what happens. If you plan works, you can keep raising the stop-loss and be sure to lock in a major portion of your profit in case the worst happens."

Maybe mentor shows you how to purchase a protective put, so your position is insured. He could show you how to sell covered calls, so you can raise extra money to pay for those put options.

If a hard punching looks likely, you could even purchase extra puts so that you can make more money on insurance than you lose on the investment.

Tell Mike Tyson that you plan to wear a helmet and some riot gear.
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Post by sweetandsour »

Del wrote: 26 Aug 2022, 13:37
sweetandsour wrote: 26 Aug 2022, 11:02 Yeah I hear you, I'm not a day trader, and am careful not to get classified as such by Fidelity, but I may occasionally act like one. When people ask if I'm doing day trading, or swing trading, or whatever, I just reply that I'm an investor. Fidelity folks always ask "what's your plan?" Makes me think of Mike Tyson quote, "everyone has a plan, until they get punched in the face".
A guy needs to have a plan. It's going to be some version of "do this and make a profit."
That's when the mentor can help him with risk management -- "Here's what you can do to avoid getting punched in the face."

Suppose a guy buys a promising ETF -- like XLE -- and plans to hold it while it appreciates. That's a good plan.

So then mentor shows him how to program a stop-loss order. "Now you have set the maximum loss you will face, no matter what happens. If you plan works, you can keep raising the stop-loss and be sure to lock in a major portion of your profit in case the worst happens."

Maybe mentor shows you how to purchase a protective put, so your position is insured. He could show you how to sell covered calls, so you can raise extra money to pay for those put options.

If a hard punching looks likely, you could even purchase extra puts so that you can make more money on insurance than you lose on the investment.

Tell Mike Tyson that you plan to wear a helmet and some riot gear.
All good. The analyst on this morning's call plainly said to expect SPX to drop to 3900 if Powell indicated long term rate increases. It almost reached there (3900) today.
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sweetandsour wrote: 26 Aug 2022, 21:48 All good. The analyst on this morning's call plainly said to expect SPX to drop to 3900 if Powell indicated long term rate increases. It almost reached there (3900) today.
It was apparent to all of the close observers that the bond markets and the currency forex had priced in plans for a long-term return to normal interest rates. But somehow, the equity markets were still hoping for a return to quantitative easing. This was a reality check for investors who had pushed P/E ratios into "irrational exuberance" territory, once again.

SPX fell to 4058, and may drop more before it picks up. The only sector that didn't drop a huge amount was Energy. Oil and gas actually closed up for the week.

I had a win and a miss this week.

The big win was moving some big retirement money into DRLL energy sector fund on Wednesday. This was dumb luck.... From Wed to Friday, my energy fund was up $1400. That same money, had I left it in the SP500 index, would be down $8800. Net $10,200 difference.

I failed to take advantage of the expected drop on Friday. I didn't have the presence of mind to simply take a short position on index futures and enjoy the ride down.
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Post by sweetandsour »

Is XLE is still expected to take off?

I'm thinking of putting in a limit order for SPY this morning at 390.
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sweetandsour wrote: 30 Aug 2022, 07:28 Is XLE is still expected to take off?

I'm thinking of putting in a limit order for SPY this morning at 390.
I am bullish on energy sector. World demand is high, especially as Europe grows more desperate. Earnings are still high.

Energy stocks have a P/E ratio of 20 or so, well below normal. Meanwhile, the tech stocks that dominate the S&P500 are insanely overpriced (NVDA has a P/E ratio of 60. Exxon is 20.)

When political winds change and energy comes back into favor, there is going to be a lot of taxpayer money put to restore the pipelines and refineries. (I don't like it, but our government shut down the infrastructure that energy companies were building with their own money. We can't expect them to fall for that "Lucy holds the football" trick again.) Taxpayers also need to replenish our piggy bank of strategic oil reserve. The best way to get some of our tax money back is to be invested in the sector.

This is a long-term, buy & hold play. Low risk, but it requires lots of patience. That's why I moved a chunk of retirement savings to the sector. Invest and forget. I chose DRLL for this, just to avoid putting big money into the hands of State Street who manage SPY and XLE under ESG principles -- voting my shares against my fiduciary interests. Vanguard has also adopted ESG, so I pulled the money out of my Vanguard ETF.

It might take 3 years to see the energy sector surge..... maybe get through a long recession and see Republicans win the White House.

Short term, I still expect EXL (SPDR energy sector) to outperform SPY. I own some XLE in my play-money fund.
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Post by sweetandsour »

Del wrote: 30 Aug 2022, 12:20
sweetandsour wrote: 30 Aug 2022, 07:28 Is XLE is still expected to take off?

I'm thinking of putting in a limit order for SPY this morning at 390.
I am bullish on energy sector. World demand is high, especially as Europe grows more desperate. Earnings are still high.

Energy stocks have a P/E ratio of 20 or so, well below normal. Meanwhile, the tech stocks that dominate the S&P500 are insanely overpriced (NVDA has a P/E ratio of 60. Exxon is 20.)

When political winds change and energy comes back into favor, there is going to be a lot of taxpayer money put to restore the pipelines and refineries. (I don't like it, but our government shut down the infrastructure that energy companies were building with their own money. We can't expect them to fall for that "Lucy holds the football" trick again.) Taxpayers also need to replenish our piggy bank of strategic oil reserve. The best way to get some of our tax money back is to be invested in the sector.

This is a long-term, buy & hold play. Low risk, but it requires lots of patience. That's why I moved a chunk of retirement savings to the sector. Invest and forget. I chose DRLL for this, just to avoid putting big money into the hands of State Street who manage SPY and XLE under ESG principles -- voting my shares against my fiduciary interests. Vanguard has also adopted ESG, so I pulled the money out of my Vanguard ETF.

It might take 3 years to see the energy sector surge..... maybe get through a long recession and see Republicans win the White House.

Short term, I still expect EXL (SPDR energy sector) to outperform SPY. I own some XLE in my play-money fund.
I own some XLE, I think off-hand I bought at 81 and it's at ~81 now. SPY didn't quite make it to 390; I had support at 391 or 392, and it got to ~395. I ain't worried about it.

BTW, my grandson works at a local SPR, and the older guys that have been there 30+ years say it's the lowest they've ever seen since they've been there. Trump was buying and filling up the reserves during the pandemic when crude was practically being given away.
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Post by Del »

sweetandsour wrote: 30 Aug 2022, 17:40
Del wrote: 30 Aug 2022, 12:20
sweetandsour wrote: 30 Aug 2022, 07:28 Is XLE is still expected to take off?

I'm thinking of putting in a limit order for SPY this morning at 390.
I am bullish on energy sector. World demand is high, especially as Europe grows more desperate. Earnings are still high.

Energy stocks have a P/E ratio of 20 or so, well below normal. Meanwhile, the tech stocks that dominate the S&P500 are insanely overpriced (NVDA has a P/E ratio of 60. Exxon is 20.)

When political winds change and energy comes back into favor, there is going to be a lot of taxpayer money put to restore the pipelines and refineries. (I don't like it, but our government shut down the infrastructure that energy companies were building with their own money. We can't expect them to fall for that "Lucy holds the football" trick again.) Taxpayers also need to replenish our piggy bank of strategic oil reserve. The best way to get some of our tax money back is to be invested in the sector.

This is a long-term, buy & hold play. Low risk, but it requires lots of patience. That's why I moved a chunk of retirement savings to the sector. Invest and forget. I chose DRLL for this, just to avoid putting big money into the hands of State Street who manage SPY and XLE under ESG principles -- voting my shares against my fiduciary interests. Vanguard has also adopted ESG, so I pulled the money out of my Vanguard ETF.

It might take 3 years to see the energy sector surge..... maybe get through a long recession and see Republicans win the White House.

Short term, I still expect EXL (SPDR energy sector) to outperform SPY. I own some XLE in my play-money fund.
I own some XLE, I think off-hand I bought at 81 and it's at ~81 now. SPY didn't quite make it to 390; I had support at 391 or 392, and it got to ~395. I ain't worried about it.

BTW, my grandson works at a local SPR, and the older guys that have been there 30+ years say it's the lowest they've ever seen since they've been there. Trump was buying and filling up the reserves during the pandemic when crude was practically being given away.
Biden Admin is getting lots of cash for their oil. No doubt, they will use the money to off-set the gov't operating budget and claim they reduced the deficit. There will be no mention of credit to Trump for stocking up on cheap oil in case of war or emergency.

When the next Administration opens for drilling and shoulders the duty to replenish our SPR, Dems will accuse them of killing the environment and blowing up budget deficits. This game makes me angry, but there's nothing we can do but watch and invest for it.

It doesn't matter whether we drill and burn, or release SPR and burn. This shell game is just to appease the Climate Change alarmists.
=================================

SPY established support at 398 circa May 23 and again on July 21-22. It landed there again today. I see the next support region starting at 391.

XLE is still trading within its channel, but today's market drop has it near the bottom of the channel. It might drop a bit, establishing a new channel running parallel and upward. I don't think XLE will break out and drop like a rock.
Are you familiar with the concept of "channel"? It is a helpful indicator. Here's an explainer:
https://www.investopedia.com/trading/ch ... o-success/

Channels are just another way to see support and resistance. The swing highs and swing lows are stronger indicators than the channels, so don't let the diagonal lines seduce you. That said, I draw lots of diagonal lines on my charts. Very helpful for setting strikes on covered calls and upper boundaries on condors.
XLE will track with SPY, more-or-less, but keep more upward bias than SPY. SPY is still trying to digest the fact that the Fed isn't going to bail out the stock market or the economy. This recession could be long and get ugly, and interest rates are going to be "normal" (Prime Rate = 6%), perhaps higher, for a long time. XLE won't trade as it should until SPY finds its feet.

I believe the Fed's actions are long overdue. But they are all Democrat toadies, so none of them are speaking out about how Biden needs to do his part to end inflation and set America's ship upright. I think they all believe that Climate Change™ is the more serious threat.
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