2/8 – 3:10 p.m. New York time
I entered no positions and exited none. I considered entering a bear call spread on one of the two fossil fuel ETFs that I track: UNG and OIH, but declined both trades without a full analysis. UNG has a very low implied volatility percentile, and OIH has bid/ask spread too wide to meet my standards.
I have entered earnings plays using shares on HUN and MATX. HUN publishes earnings on Feb. 23 before the opening bell, and MATX, on Feb. 20 after the closing bell.
Each shows an uptrend on the daily and 3-hour Fisher Transform metric.
The share prices of HUN and MATX followed those of the broad market, despite the contrarian indicators. I exited for a loss in each case on Feb. 9.
In retrospect, there was a tip-off to what occurred to be found int the beta metric, which I don’t routinely check. It showed both stocks to be super-confirming of the S&{ 500, HUN with a 2.76 beta, and MATX at 1.31. Going forward,
I shall add beta confirmation to my decision process when I’m getting contrarian signals from other metrics.
| sym | entry | exit | result | annualized | entry date | exit date |
| HUN | 32.99 | 30.57 | -7.3% | -1,339% | 2/7 | 2/9 |
| MATX | 35.87 | 34.30 | -4.3% | -799% | 2/7 | 2/9 |
By Tim Bovee, Portland, Oregon, Feb. 7, 2018
Update 2/12/2018: The markets’ broad downtrend from Jan. 26 reversed slightly to the upside in what I consider to be an upward correction within a downtrend. In Elliott wave terminology, I see the rise as being the 4th wave up within a larger A wave to the downside.
I exited the options position at $0.80 with shares at $157.94. The exit price was at 47.0% of maximum potential profit.
Shares declined by 2.0% over five days, or a -148% annual rate. The options position produced an 88.8% return for a +6,479% annual rate.
I don’t plan to trend the 4th wave upward correction. I expect the next move to be a 5th wave to the downside, and I shall attempt to trade QQQ once that wave begins.
I have entered a bear call vertical spread on QQQ, using options that trade for the last time 16 days hence, on Feb. 23. The premium is a $1.51 credit and the stock at the time of entry was priced at $161.21.
I made the decision to enter the trade in my account based on Fisher Transform signals that are downtrending at the weekly, daily and 3-hour levels of granularity.
2/7 – 3:20 p.m. New York time
In today’s outcomes, I entered an options position on QQQ and shares positions on HUN and MATX. I exited no positions.
Update 2/12/2018: The gold markets began a downtrend from Jan. 25, a day before the stock markets, and have followed a similar Elliott wave pattern, reversing slightly to the upside in trading today. what I consider to be an upward correction within a downtrend.
I exited my bear position for a $0.54 debit with shares at $125.30. The maximum potential profit was 14.3%.
Unlike stocks, gold appears o be in a long-running sideways pattern. The decline that began Jan. 25 appears to be the beginning of a downward leg, although at what level I cannot yet determine. The last highest high was in July 2016, at $125.64 on GLD. The prior lowest low was $100.23 in December 2015. Any movement beyond those boundaries would mean that something very interesting is happening with GLD.
Shares fell by 0.6% during my six-day holding period, or a -38% annual rate. The options position produced a 16.7% return for a +1,014% annual rate.
The weekly Fisher Transform (FT) continues to show GLD in a downtrend, and I shall use that as my definition of what the major trend is, given the ambiguities on the chart. That discrepancy between the daily FT and the weekly was my justification for exiting my bear position. In practical terms, it means I shall use the weekly FT as my directional bias while trading the daily FT signals.
I have entered a bear call vertical spread on GLD, using options that trade for the last time 38 days hence, on March 16. The premium is a $0.63 credit and the stock at the time of entry was priced at $126.09.
I made the decision to enter the trade in my account based on its Fisher Transform reading..
MGM Resorts International (MGM)
Update 2/12/2018: MGM began its downtrend on Jan. 29, three days after the blue-chip indexes joined in and has followed an identical Elliot wave pattern, placing it in an upward correction within a larger downtrend.
I exited on a bull signal from the 3-hour Fisher Transformer (FT), choosing to exit without waiting for a 1-day FT signal because the position had already exceeded my management level of half of potential profit.
As it turns out, when I exited for a $-0.24 debit with shares at $33.34, it was at 64.2% of maximum profit, which I consider to be a rousing success.
I count the wave as a 4th wave to the upside. Since the 2nd wave in the pattern was a highly directional zig-zag, the 4th will tend to be more of a sideways pattern. “Tend” in this case doesn’t mean “always”; there are exceptions.
Shares declined by 5.1% over seven days, or a -266% annual rate. The options position produced a +179.2% return for a +9,342% annual rate.
I shall next revisit MGM prior to its next earnings announcement.
I have entered a bear call vertical spread on MGM, using options that trade for the last time 18 days hence, on Feb. 23. The premium is a $0.67 credit and the stock at the time of entry was priced at $35.13.
I made the decision to enter the trade in my account based on the Fisher Transform and expectations of a negative earnings surprise..
MGM publishes earnings on Feb. 20 before the opening bell.
International trade, the week’s lone major economic report, will be published Tuesday at 8:30 a.m. New York time.
Tim Bovee, Private Trader 
You must be logged in to post a comment.