web99 by GeorgeJuly 20, 2014

Routines and Prep:Scanning for Opportunities

Here is a chart of NFLX. What setups do you see?Can you find them through scanning?

What action would you take?

NFLX 30 minute

My two main trading methodologies are:1. Abnormal volume breakoutsfrom low volatility.2. Continuation plays in strong growth stocks.A subset of #2 is a market timing approach using VIX spikes.At left are the main scans used with thinkorswim. Scans can be combined for more stringent filtering.We will create a new custom filter for RSI today to find oversold and overbought conditions.

Scan for MOBO with Pocket pivot - daily

Scan for Pocket pivots in last 30 minutes for tickers with weekly options.

Squeeze with PSAR above price (within 3 bars) daily

Scan for Squeeze with PSAR above price - week

Here is an example of the type of return possible:AKS (a Jesse Stine pick) up over 90% on the first run;

up over 30% on the next run and still not finished.

AKS weekly

The market has been choppy lately, necessitating shorter term trades. Note two VIX spikes, SPY oversold.

VIX hourly

SPY hourly

Several significant earnings on the slate for next week, from schaeffersresearch.com:NFLX, CMG, HAL, RMBS, MSFT, AAPL, CROX, DPZ, BTU, BA, FB, QCOM, BIIB, DAL, FFIV, FCX, GILD, TRIP, CAT, V, AMZN, BIDU, POT, ALK, CLF, DECK, DHI, JBLU, LUV, PHM, UA, and UAL (several airlines).Suggest writing them down day by day in preparation for potential moves after earnings.

A more comprehensive list of earnings for the coming week, from leavittbrothers.com/blog.For Monday morning, put BBT, GPC, HAL, HAS, LII, MAN, NVR, PETS, PHG, SIX, XRS, and TA on your watch list.For Tuesday morning, note CMG, NFLX, CROX, RMBS, DPZ, EDU, BTU, TCK.Also read Before the Open for potential moves for the day.

Portfolio of sector ETFS. Leaders: managed Healthcare, Brokers, technology. Laggards: Biotechs, banks, goldminers.

Portfolio of country ETFs. Leaders: India, Turkey, Brazil.Laggards: Russia, Chile.

Portfolio of commodity ETFs. Leading: Coffee, bear silver and gold miners, aluminum, uranium. Lagging: miners, natural gas.

Before the Open available at leavittbrothers.com/blog.From this report for Friday July 18th, was watching AMZN, AMD, GOOG, IBM.We will use this report Monday in our market prep.

Stocks featured in Before the Open on Friday July 18th.

Thirty minute chart of GOOGL over earnings. Retracement was close to 50%, followed by move along

upper BBs. Avoid holding options over earnings!

GOOGL 30 minutes

Chart of GOOGL 600 calls. Note volatility crush after earnings - stock price went up, calls went down.

Waiting for a retracement, potential for a four bagger.

GOOGL 600 calls - 30 minutes

Before the Open from Thursday July 17. Note info about Russia - RUSS was a potential trade on the day, from 11.50 to 12.50.

LVS gapped down and did a full gap fill afterwards.

Before the Open from Wednesday July 16.Note preview of earnings, economic reports.

Thirty minute chart of SPY showing moves from oversold and overbought. First target is usually 50 SMA; second target

Bollinger band. How could you profit from these moves?

SPY 30 minutes

SPY 196 calls movement on Thursday July 10th, a potential 150% return. What would your risk be, what is the reward/risk ratio?

SPY 196 calls - 30 minutes

Chart of SPY 197 calls from Friday July 18th. Entry, exit?Risk? How many contracts would you buy?

What are the features of note on this NFLX chart?How would you trade these moves? Can you scan for them?

NFLX 30 minutes

Chart of NFLX 455 puts after initial move down. Potential entry: 3.60; exit 13.50.

NFLX 455puts30 minutes

Chart of NFLX 435 calls. Potential entry for 3.70; exit for 8.25. From an oversold position on the NFLX chart.

NFLX 435 calls30 minutes

Second NFLX move from Friday July 11th, Monday July 14th. Entry for 2.40, exit for 8.20. This move came out of a

squeeze. Can you scan for this setup?

NFLX 450 calls30 minutes

Thirty minute chart of GDX.What do you see; how would you trade this move?

GDX 30 minutes

One way to leverage the move in GDX: with 3X ETF JNUG or NUGT. Entry for 27.45, exit for 34.40. Entry for 26.64; still holding.

GDX trade initiated Tuesday July 8th for .32 and sold two days later for 1.57.

GDX 26 calls30 minutes

Scan for 30 minute Pocket pivots in tickers with weekly options. If done before the close, more tickers would appear,

such as NFLX and GDX. This scan was done Saturday.

Finding overbought extremes using the Money Flow Index (MFI). Choose study;

enter parameter, click Value, enter 80. Save.

Scan for oversold conditions (less than 20) using the MFI and weekly charts. Sorted by % change.

From the scan, NQ is oversold with a possible GCL, potential upside to 11(upper BB), 14 (50 SMA).

NQ weekly

On a daily chart, NQ broke out on Friday with a PP,upside to 7 (50 DMA).

NQ daily

Drilling down to a 30 minute chart, NQ was oversold and came out of a squeeze with a Pocket pivot. Potential 25% return.

NQ 30 minutes

Also from the scan, ZLTQ is oversold and looks ready to break out from a squeeze with a MOBO/PSAR entry.

Upside targets 19 (upper BB), 24 (potential 50%).

ZLTQ weekly

From finviz, these are the preset screens I use on a regular basis.Screens for Abnormal volume, gaps>5%, 50 DMA cross, 52 week highs, up (down) 5% for the dayare done at market close each day and sometimes during market hours.Up 10% for the week is done after Fridays close. What am I looking for?1. Abnormal volume breakouts from low volatility.2. YTD best performers.3. Buyable gaps (ref Morales/Kacher)4. MAP patterns at the 50 DMA (ref Elliott)5. ONeil fundamental screen6. Tickers hitting new highs7. Performance for different time periods

On Monday July 21st we will look at a list of potential candidates to trade based on Before the Open. We will do a

5 minute and 30 minute scan for Abnormal Volume and look at the charts of tickers from the scan with potential entries.

Session will begin at 5:45 Pacific (8:45 Eastern) and run until about 7:30 Pacific (10:30 Eastern). This is not an ideal time to be looking for longs as ADDC was >2000, SPY more OB than OS.

You are invited to Special George Lea Open Webinars this Sunday and Monday.Sunday will be prep for the week and Monday 8:45am will review the marketas it opens. Please reserve a seat for this webinar for they willcompletely fill. Web99 clients have a reserved seat, but please reserve aseat too.

To reserve seat please go to home page magentatrader.com or click on thelinks below. You may select on both to reserve seats for both events.

Sunday Web99George 6pm EThttps://www.magentatrader.com/lists/lt.php?id=ZkgNUk9VVgwHTlcGAw

Monday Web99 George with Realtime 8:45am EThttps://www.magentatrader.com/lists/lt.php?id=ZkgNUU9VVgwHTlcGAw

Here are the links for Sunday and Mondays Magenta Trader webinars

Next sessions...

Monday July 21, 2014at 8:45 a.m. Eastern, 5:45 a.m. Pacific

Finding setups through scansPremarket preparation/opening 30 minutes

Sunday August 10, 2014Sunday August 24, 2014