EASTER BUNNY...
As we go past the long Easter Weekend holidays, there were a lot of hunt going on. What hunt? Easter egg hunt of course. The Easter Bunny hiding its yummy easter chocolate eggs to be found and then enjoyed. Of course these kind of hunt are for kids mostly, unless you are still a kid inside, but kind of odd if you fight with the kids for easter chocolate eggs right?
For grown ups, lets go hunt for other kind of goodies. My favorite hunt will of course be value stocks. The market is once again coming down with an array of delicious stocks for us to choose from. Similar to the last 2 SPX bottoms in 24th February and also 14 March, we are almost half way down now but if you look deeper and find harder, there are plenty of stocks which is at its lows already. Go start your hunt for your favourite stocks to buy!
Another down week where SPX closed 93 points down to 4392. It is now sitting below 50 MA, which seems more bearish than bullish from the last price action on Thursday just before the long holidays. Perhaps it may just be a situation where market takes risk off after a short rally on Wednesday and due to the long weekend, but lets see where it goes this week.
ES Mini Futures (/ES) opened lower on Sunday, either a sign of continued weakness or probably market is still recovering from the long weekend overhang. Trading for week to be around 4300 to 4500 range, cautiously bearish mode.
In a short period of 2 weeks, we lost back 9% of the 17% rally up from mid March. Easy come easy go. Many NDX component stocks were back to where it was already before the last strong rally.
MSFT @ 280 (14 March @ 275)
GOOGL @ 2534 (14 March @ 2519)
ADBE @ 420 (14 March @ 411)
SBUX @ 79 (14 March @ 79)
Watch for reversal patterns when they bottom down again and stronger if SPX/NDX shows signs of reversals also. But be careful not to trigger too early in case, market makers want to takeout the previous lows or the index goes to lower lows. Alternatively, strategies like bull put spreads or cash secured puts will give some additional safety margins.
With the next forthcoming rate hike in May lingering, NDX would tend to be weak until the 2nd rate hike is implemented.
Market is still going to safe haven like healthcare and consumer discretionary. However, Healthcare seems overbought and may tumble quick when NDX turns bullish.
ON DEMAND BACKTESTING....
Backtesting is one method we often use to test a particular strategy on a stock over time. It is also an effective tool for new traders who wants to see how a trade perform or behave over time. Instead of testing it on an active paper account on current date and wait in time to see how the trade perform, we can just go back in time and backtest it using live to minute data. You can even use it to test daytrade strategies if you want as the backtest can be checked as it it was running live.
Thinkorswim has a great backtesting tool which is "OnDemand". This means you can go back to a particular date as it you were trading live during that day and then move back forward in time to see how the trade P/L performed.
Below, we will show you a sample video Ondemand backtesting on Thinkorswim platform of an Iron Condor on Microsoft entered on 28 February and then simulated to exit on 8 April. Video link here
TRADERS TALK
Did you hear last week's Traders Talk?
We had a great topic and so much insight on trading was given out.
Listen to Traders Talk Series 43 if you have not done so. View Past Traders Talk here.
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DISCLOSURES
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options: https://www.theocc.com/components/docs/riskstoc.pdf
MYstyework is an Online Financial Literacy Educator and materials provided is solely by MYstylework and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. MYstylework, through its contents, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. MYstylework is not in the business of transacting securities trades or an investment adviser.
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