Updated SP1 – MoMo Chart
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Updated Analysis.
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SP Financials XLF Multi-Time Frame Analysis
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Yesterday’s 14.35 high on the S&P Financials Index is close to the 1.618 Fib extension from the rally following the 42 trading day -17% decline in the $XLF index. The XLF declined -3.4% intra-day before closing at 13.98.
Today the US Monthly Employment Report is reported before the open and sure to make any pre-market analysis moot. With that caveat, here are today’s daily price signals and pivots for the S&P SPDR financial sector:
Daily Trading Signals
The following daily trading signals were generated for 7 Aug:
The Low Breakout Continuation Setup requires that the preceding trading day’s low needs to be exceeded to confirm a change in trend direction. The signal seeks to take advantage of a pullback in the immediate daily trend.
The Momentum Reversal Buy Signal is a stronger reversal indication than the Low Continuation & Reversal signal. This momentum reversal signals typically fire following a trend move the previous day that has traveled too far, too fast and is accompanied by an extreme short term Relative Strength Index that indicate a very high probability for a reversal. While the Low Continuation Reversal Signal points to a good likelihood for a reversal move sometime during the trading day, the Momentum Rebound Buy Signal use the 1st hour high as a specific price level that needs to be exceeded to trigger the Momentum Rebound Buy Signal.
Exceeding the high reached in 1st hour of trading triggers the Buy signal.
Today’s daily pivot is 14.06, and the weekly pivot is 12.82. Price action above the daily pivot is bullish.
The XLF’s normal trading range is projected to be between 13.74 – 14.23.
The XLF’s extended trading range is projected to be between 13.55 – 14.41.
Specific price levels and projections are discussed on the charts below.
Short term 15 Min & 60 Min
60 min symmetry support is 13.84. The Hourly charts break down with a 60 min close that level. A 60 min close Daily
The rally from the 10.83 lows on 10 Jul has gone parabolic on the daily charts, into weekly Fib price extensions between 13.69 – 14.47. A daily close > 14.47 argues for even higher targets between 16.21 and 16.72.
Weekly
The recent 42 trading day -17% decline in the $XLF index, laid the groundwork for the recent rally. However to to put the recent rallies and declines in perspective. The XLF has rallied 144% from the Mar lows into 6 Aug’s 14.35 high.
Long Term Weekly prices stay bullish > 12.10. A daily close below that level should have the index trade back to the swing lows of 10.83.
Updated 15 min, Hourly, Daily, Weekly charts with additional Fib support and projection levels are posted below.
Daily Trading Signals, Pivot Support & Resistance Levels are posted in each section.
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Hang Seng China Enterprises Index – Low Range Close, Momentum Rebound Buy, High Breakout Continuation
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The HSCEI retreated -2% from Tuesday’s rally, closing near its lows and remaining above 11,683 – 11,729 daily symmetry support. The index regains its bullish footing on a 60 min close > 12,330.
Daily Trading Signals
A number of daily trading signals were generated for 6 Aug:
The Low Range Close signal is triggered when the preceding trading day closes in the bottom of its trading range. The signal implies a strong probability that the next day’s trading will trade beneath the previous day’s low.
The 2 period ROC Bearish Indicator should be used more as a guideline, as it is a signal prone to whipsaws. The ROC Bearish indicator works best in choppy markets or after a compressed trend move has occurred. The method is based on George Taylor’s trading technique. Taylor observed there was a natural rhythm to the markets and that every 2 or 3 days (or more accurately every 2 or 3 periods) would cycle between buy and sell days.
Based on the price action over the past three days, this signal quantifies that a sell signal triggered on the close of the previous day. The bearish indication is best used in conjunction with reversal signals triggered for the current day’s trading.
The Momentum Reversal Buy Signal is a stronger reversal indication than the Low Continuation & Reversal signal. This momentum reversal signals typically fire following a trend move the previous day that has traveled too far, too fast and is accompanied by an extreme short term Relative Strength Index that indicate a very high probability for a reversal. While the Low Continuation Reversal Signal points to a good likelihood for a reversal move sometime during the trading day, the Momentum Rebound Buy Signal use the 1st hour high as a specific price level that needs to be exceeded to trigger the Momentum Rebound Buy Signal.
Exceeding the high reached in 1st hour of trading triggers the Buy signal.
The High Breakout Continuation Setup Signal requires that the preceding trading day’s high needs to be exceeded to confirm a change in trend direction. The signal seeks to take advantage of a pullback in the immediate daily trend.
Today’s daily pivot is 12,063, and the weekly pivot is 12,105. Intra-day price action above the daily pivot is bullish.
The HSCEI normal trading range is projected to be between 11,750 – 12,187.
The HSCEI extended trading range is projected to be between 11,583 – 13,354.
Specific price levels and projections are discussed on the charts below.
Short term 60 Min
The 60 min charts are currently bearish, but turn bullish above 12,330. A 60 min close
Daily
After nearly reaching extended weekly & monthly Fib 1.618 upside projections with last week’s 12,458 high. The HSCEI bounced at daily support @ 11,732. A daily close
Weekly
The weekly oscillator crossed bullish on Friday 17 Jul and is now bullish overbought. Weekly symmetry support is 10,088 – 10,402. A weekly close
Hourly, Daily, Weekly charts with additional Fib support and projection levels are posted below.
If a traditional investment – such as Stocks, Bonds, ETFs, Proprieties, Precious Metals – is not for you then you should check our Foreign Exchange and High Yield Investment categories.
Stock Option Valuation Part 3 of 5
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In this lesson we will cover how the strike price of an option affects its value.
**Concepts to Remember**
“Call options” increase in value when the underlying stock it’s attached to goes up in price, and decrease in value when the stock goes down in price.“Put options” increase in value when the underlying stock it’s attached to declines in price, and decrease in value when the stock goes up in price.
Strike Price
The strike/exercise price of an option is the “price” at which the stock will be bought or sold when the option is exercised.For example, an IBM May 50 Call has a strike price of $50 a share. When the option is exercised the owner of the option will buy (Call option) 100 shares of IBM stock for $50 a share.
In the previous lesson we revealed that the strike price is one of the factors that affect the options value, particularly its relation to the current market price of the stock.
The strike price is part of the option contract it does not change, however the stock price fluctuates on a daily basis.
There are three different terms for describing the stock price to strike price relationship:
- Out of the Money
- At the Money
- In the Money
Out of the Money (OTM)
A Call option is said to be out-of-the-money if the stock price is lower than the strike price of the option. For example, suppose the stock price is $40 and the strike price is $45. You would have the right to “buy” the stock at $45. If you exercised your right and bought the stock for $45, you would already be at a loss (out of the money) of $5.You wouldn’t want to exercise your option because you could buy the stock cheaper on the open market. It is out of the money, exercising it poses no benefit to you.
For Put options it’s the opposite. A Put option is out-of-the money if the stock price is higher than the strike price of the option. For example, suppose the stock price is $40 and the strike price is $35. You would have the right to “sell” the stock at $35. Why would someone want to buy a contract to sell a stock for $35 when they could just sell it for $40 on the open market?
At the Money (ATM)
A Call or Put option is at-the-money if the stock price and the strike price are the same. Or it’s the strike price closest to the current stock price. For example: Stock price $40, Strike Price $40 or Stock Price $40.98 and Strike Price $40.In the Money (ITM)
A Call option would be in-the-money if the stock price were trading above the strike price. For example, suppose the stock price is $40 and the strike price is $20. You would have the right to “buy” the stock at $20. If you exercised your right and bought the stock for $20, you could immediately sell it for $40 on the open market and make (be in the money) $20.Another way to explain it is that you could say your option is $20 in-the-money because you can exercise your option and buy the stock for $20 less than the current market price.
A Put option is in-the-money if the strike price is higher than the market price of the underlying stock.
How ITM, OTM, and ATM, Affect the Option Value
The more an option is in-the-money (ITM) the more expensive it will be, because it has more value to the holder. This value is called intrinsic value.The farther an option is out-of-the-Money (OTM), the cheaper it will be.
An at-the-Money (ATM) option, price wise, is in the middle and is slightly cheaper than an “ITM” option.
Your particular investment strategy will determine if you pick an ITM, ATM, or an OTM option.
That’s it for this lesson. I’ll be offline for a few weeks recovering from shoulder surgery so I will continue the series when I return.
Happy Trading, Travis
http://www.pursuingwealth.com/
If a traditional investment – such as Stocks, Bonds, ETFs, Proprieties, Precious Metals – is not for you then you should check our Foreign Exchange and High Yield Investment categories.
Can China Markets provide direction for Global Equity Markets Again?
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At the March lows the Chinese markets were displaying a positive price divergence with the US equity markets. Now the Hang Seng China Enterprise Index is at major weekly and Fib resistance while the US is struggling just underneath 1014 – the 38.2% Fib resistance area.
HSCEI overbought, 60 Min pattern turns solidly bearish < 11,732
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OMXS30 breaks 866 resistance and powers to new highs
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Monday’s -3% move lower and Wide Range Bearish Reversal after achieving post crash highs and a 38.2% retrace of all time highs @ 849, did not presage a multi-week reversal. Tuesday’s price action did not make new lows and respected bearish symmetry/hourly resistance at 866. On Thursday, the hourly close above 866 negated the bearish symmetry resistance from Monday’s powerful reversal and led to new highs on Friday.
Daily Trading Signals
The following signals were generated for 3 Aug:
The Low Breakout Continuation Setup requires that the preceding trading day’s low needs to be exceeded to confirm a change in trend direction. The signal seeks to take advantage of a pullback in the immediate daily trend.
Today’s daily pivot is 879.08, and the weekly pivot is 871.78. Price action above the daily pivot is bullish.
The OMXS30 normal trading range is projected to be between 875.53 – 888.57.
The OMXS30 extended trading range is projected to be 870.55 – 893.55.
Specific price levels and projections are discussed on the charts below.
Short term 15 & 60 Min
60 min Fib Projection of 883.69 was met on the break of 866.19 symmetry resistance. A 60 min close > 863.69 targets 892.91.
Daily
The daily oscillator is bullish. Daily symmetry support 836-37, 824. If 824 is exceeded 802.
Weekly
849 is the 38.2% retracement from the 1321 all time highs in Jul ’07 and the 566 Nov lows ’08. Even in very weak markets, minimal 38.2% to 50 % price retracements are expected. The OMX has finally reached a minimal typical bear market retracement. Continued closes above 849 mean a test of 939 -the 50% retrace of all time highs. The Weekly chart breaks down with a daily close <>
The Weekly oscillator is bullish.
Long Term, continued daily closes above > 767 is bullish.
Updated Hourly, Daily, Weekly charts with additional Fib support and projection levels are posted below.
If a traditional investment – such as Stocks, Bonds, ETFs, Proprieties, Precious Metals – is not for you then you should check our Foreign Exchange and High Yield Investment categories.
S&P AM Decline respects bullish symmetry
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The 13.8 pt decline from yesterday’s high is emotionally charged because of the proximity to the “magic” 1,000 level. But in reality the decline is no different than the several other 13 to 15 point declines since the 8 June low.When that pattern changes, then the bears may get the upper hand. Right now you still see a pattern of higher highs and higher lows on the 60 min charts. You don’t have to agree with the price action, but must respect its potential.
If a traditional investment – such as Stocks, Bonds, ETFs, Proprieties, Precious Metals – is not for you then you should check our Foreign Exchange and High Yield Investment categories.
