Seeking Alpha

Option Milliona...'s  Instablog

Option Millionaires
Send Message
Option Millionaires was started in February 2008 to provide traders with information about option trading. Led by three career option traders, whose pseudonyms are JimmyBob, UraniumPintoBeans, and Vantillian, they started one of the most popular option trading communities on the web. Now, Option... More
My company:
Option Millionaires
My blog:
Daily Read
View Option Millionaires' Instablogs on:
  • Predicting Gold's Next Move – Descending Triangle Gives 8% Swing Target

    By Christopher Diodato

    Since the start of September, gold has been floundering around in a well-defined trading range between about 1610-1750, not really deciding to trend in either direction since. Since that time, however, the gold market has been consolidating into a price pattern that allows us to project intermediate-term targets. The pattern I see is a descending triangle.

    (click to enlarge)

    There are two targets on this chart. The bull target would be activated once the price breaks above $168.50, corresponding to $1685 for the actual spot price of gold. The bear target is activated once $161 is broken, and confirmed as a strong sell signal once $159.50 is broken.

    Which direction do I see price breaking out? Well, it's looking bullish in the very short term. First off, today's price action represented a "bullish engulfing" candle pattern. After these patterns occur, there is, at least, some follow through with a short term price rise.

    (click to enlarge)

    Other momentum indicators show minor divergences in price, which usually precede a price rise. Still, that price rise might not be sufficient to trigger a breakout. What I would like to see is an advance on high volume, such as the volumes seen in the August-September rally when gold rose over $250 in one month Average daily volumes on both rallies and declines is current about half the Aug.-Sept. levels. Once that buying interest comes back, it's time to catch the gold bug again.

    Happy trading!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Dec 06 9:37 PM | Link | Comment!
  • Holiday Effect Giving Stocks Upward Bias Today - Buy Weekly Calls?

    ​By Chris D

    I'm the type of person that usually wins poker by manipulating the players. Same with playing the stock market; I take advantage of crowd psychology. Today, however, has always been one of the trading days that I come to the market to play pure probabilities.

    What's so special about today? There has been a strange "effect" noted by several analysts regarding trading days and holidays. They found that the trading day before a market holiday was usually more positively biased than most trading days. Also, it was discovered that the day ​after​ the holiday was usually negatively biased. Therefore, today, the day before thanksgiving, the market has a positive bias.

    Here are the summary statistics I gathered for the last 60 years in the S & P 500. The data goes to 2010. To download my spreadsheet from my DropBox, click here

    Average Gain0.41%
    % Losers21.67%
    % Winners78.33%
    Standard Deviation0.84%

    The trading strategy buys the S & P 500 index at the close of two days before Thanksgiving and sells out of the position at the end of trading the day before Thanksgiving.

    Notice that the frequency of winning trades with this strategy is quite high, especially when the average for other days gives us only a probability of slightly above 50% that the market will gain on the day.

    While the average gain is not too impressive, this "holiday effect" can still offer traders who use leverage a trading "edge" today. Good luck!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Nov 21 8:14 AM | Link | Comment!
  • Crude Oil Momentum Warns Of Coming Upward Reversal (Video)

    By Chris Diodato -

    Today's price action in oil was not surprising. It was a 61.8% retracement of the past ten day's up move. That's great, but does it continue lower, or start a new up trend? As I watch the internals, momentum is beginning to show that a bullish reversal may be in the works. Will there actually be peace in the Middle East come a month from today? Take a look at this YouTube video (clickable) to see the analysis on my computer screen.

    Happy trading!

    ~Chris Diodato

    Disclosure: I am long XLE.

    Nov 20 4:41 PM | Link | Comment!
Full index of posts »
Latest Followers


More »

Latest Comments

Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.