Weekly newsletter of MYstylework - Issue #81
MARKET MANIPULATION AT ITS BEST
MARKET MANIPULATION AT ITS BEST....
When there is less market activity or trade, it's time to chill as there is no point to watch the trading screen continuously. So I was scrolling on Netflix and stumbled upon this movie on the Gamestop Saga. This is the documentary show which talks about how the Gamestop event happened back in 2020/2021 and how much money was made or loss by retailers and also hedge funds.
You should watch this if you had not because there are a few lessons to learn from the show. I won't be a spoiler to tell you what the whole show is about but the lessons are real.
#1 Market is Manipulated Everyday
#2 Retailers lose most of the time (only few will profit, with some skills to play alongside market manipulators) Most buy at tops and sell at bottom...
#3 Greed will kill you (there is no easy money from the stock market)
Go watch the Series and let us know what is your takeaway from this. Post it on our facebook page.
SPX - 3585
Okay, we are now under severe attack and have lost our base 1 (3600 level) and our enemy is sitting right in front of base 2 which is the weekly 200 MA. Does the SPX have any energy to defend this because if it does not, there is likely no bottom from here. The only times SPX have breached 200 MA was during 08-09 financial crisis and it took 3 years to move back above. From the point of crossing the 200 MA, it took roughly 9 months to bottom and thereafter its all the way up for the next 10+ years. Thinking about it, the pain is going to be less than the potential rewards coming and there is no real rush to throw your whole warchest in until you see a real reversal.
So this week just sit back and see the two sided action for the bulls to defend the 200 weekly MA and the bears to fight its way down. Protect your longs if you need to and just make some money while this fight is on.
Non-farm payroll is expected on Friday. If we see unemployment start to tick up that's to show that the economy is starting to sizzle down and that the Fed's aggressive rate hike is working. How the market wants to play this is entirely both side. At one side hyping on recession to bring the market down or on the other side promoting that the Feb may relax in the rate hike when positive inflation data is expected to come in. Whatever it is, just take opportunity on the daily swings and volatility is still the best and safest plays. One minute you can short the market and the other minute you can turn long!
This week's trading range is 3500 to 3650.
NDX - 10971
NDX has already broken below weekly 200 MA level and we have not seen this even during Covid crash. The good thing is the market seems more prepared this round as the market has already been down for the past 9 months gradually to negative 35% from the highs. We can also see that the market reaction to NDX crossing below 200 MA is not causing any big panic as many of the stocks are already at their 52 weeks lows and VIX closed relatively unchanged last Friday at 31.61. The last time NDX crossed below weekly 200 MA, VIX spiked to 78!
The market players which has got their pain points reached has probably exited the market much earlier and for those remaining ones are the ones who can hold a bit more.
Keep an eye on VIX levels to gauge the market sentiment. Anything above 35 would be some signs of further pain in the market and some more selling could happen. Anything below, we would say the further downside may be less drastic or painful for the market. Watch the next down support level at 10677.
If we pullback and close above 200 MA weekly, even better with a bullish pinbar, that would pull the market back for a small bear rally up as current conditions are extremely oversold.
We expect this week's range to be at 10550 to 11350. Futures opened red on Monday.
BACKRATIO AND NEUTRAL TRADES
Another backratio WIN this week. We took off the QQQ backratio we enterded together with the SPY backratio back on 19 September for a $170 profit. That's another 6x profit on the debit entry price of only $0.30. 11 days trade, that's not bad for directional.
We entered into another speculative backratio on BIOGEN (BIIB). Actually we forgot to put on a bullish trade early part of the week before the FDA announcement of their Alzheimer drug which happened on Wednesday which skyrocketed the price by 80+... If we had, that would be a nice speculative win. Backratio can be used for speculative plays on expected big moves on stock and pharma plays has lots of potentials for such moves up and down.
As we missed the upswing for BIIB, we put on a bearish backratio waiting for the price to retrace back. The position was entered for a $1.80 credit and is already in profit now, but we want to get more profits waiting for it to shelve 20-30% of the price movement down. We also see from the past, each spike up would follow with some form of retracements the weeks after. So we extended the expiry to December expiry to give more time for the trade to mature. Lets see how this plays out in the following days or weeks.
Checkout the strategy here.
For neutral trades, it is taking a bit longer as we continued to run down for whole of September month. However, with a mini bear rally, before 21 October closing, we will be getting another home run even on neutral trades. To make our exit faster, we have cut off all the short legs (ie. bear call spreads or our iron condors) and the trades are slightly ITM on the bullish legs (ie. Bull Put Spread). Without the baggage of the bearish legs, any recoveries in the bullish legs would bring back the trade into profits quicker and we need not wait till expiry to exit the trade as rallies are mostly short lived.
The Iron Condor we entered on 6 September is now left with the Bull Put Spread as we exited the short Bear Call Spread leg last week. The overall trade is at $68 loss and we track this using the Options Chain on Tastytrade platform. The Option Chain is a good trade tracker and you can track the trade position with each rolls and adjustments so you know exactly how well the trade is doing since entry.
This Iron Condor Trade was featured during Traders Talk on 6 September. Watch here or trade entry on Tik Tok below.
Today's Options Trade 6 Sep 22. Iron Condor on SPY (Neutral) @tastytrade #optionstrading #optionsstrategies — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "Today's Options Trade 6 Sep 22. Iron Condor on SPY (Neutral) @tastytrade #optionstrading #optionsstrategies". Iron Condor on SPY | Options Expiry 30-45 days | 45 days optimum | .... Determination, will and strength, corporate VP, 10 minutes(994398).
Tik Tok Videos
We started another content channel off Tik Tok. Follow-us on the channel so you will get notified of any videos posted. Also, share it with your friends our new channel. Follow here.
Trading options with 68.2% probability using Expected Move 😎 #optionstrading #trading101 — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "Trading options with 68.2% probability using Expected Move 😎 #optionstrading #trading101". Expected Move | How to trade options | trading options | .... Corporate Uplifting Inspirational Motivational Pop Rock Piano Violins Theme Song.
mystylework.trade (@mystylework.trade) on TikTok — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade). Butterfly Trade | How to setup low cost high returns options trade | Learn to trade options | .... Lazy chill out, romance overseas celebrity, 10 minutes(1019319).
Winning Options Strategies everyday. Creating high probability low risk trades 😎 #optionstrading #optionsstrategies #elonmusk @tastytrade — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "Winning Options Strategies everyday. Creating high probability low risk trades 😎 #optionstrading #optionsstrategies #elonmusk @tastytrade". Elon Musk | Stock trading | Another WIN 😎 | .... Sunrise.
Twitter shareholder's meeting for takeover by Elon Musk 13 Sep 22, 10am. Lets trade... #optionstrading #optionsstrategies @tastytrade — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "Twitter shareholder's meeting for takeover by Elon Musk 13 Sep 22, 10am. Lets trade... #optionstrading #optionsstrategies @tastytrade". select Nov 18 expiry | Sell ATM call strike 43 | recheck ATM price on open on Monday | .... TikTok's song-like tropical house(974524).
J.Powell's Message yesterday in 1 minute... @tastytrade #optionstrading #optionstrading #stockmarket — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "J.Powell's Message yesterday in 1 minute... @tastytrade #optionstrading #optionstrading #stockmarket". Fed Message??? 🏦 | Responsibility For Price Stability.... | Inflation Target | .... Suns.
What to expect for this week's market.. #optionstrading #optionsstrategies — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "What to expect for this week's market.. #optionstrading #optionsstrategies". SPX down 141 points (3.37%) last Friday after J.Powell speech | Monday another 27 points drop | but we see some slight support at 4000 level above daily 50 MA | .... Change My Mind.
Option Trade on JD - watchlist at last Traders Talk on 9 Aug. Closed today $922 profit 🤑 #optiontrading #tradingstrategy — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "Option Trade on JD - watchlist at last Traders Talk on 9 Aug. Closed today $922 profit 🤑 #optiontrading #tradingstrategy". Option Trade JD covered potential trade during 9 Aug Traders Talk Entry 9 Aug Exit 26 Aug Profit $922 | watch till end to see the trade we did 😉 | Option Trades Adjustments - Based on Price Actions | .... YOU'RE MY SUNSHINE.
Hawkish remarks by J Powell crushed the market - pullback expected until Next FOMC in Sept 21. Watch for key points raised #optionstrading #optionsstrategies — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "Hawkish remarks by J Powell crushed the market - pullback expected until Next FOMC in Sept 21. Watch for key points raised #optionstrading #optionsstrategies". Key Points For Traders | Here's what JP said.. | > rates will go up until inflation is down to 2% | .... Flip through.
TRADERS TALK
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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.