« November 2017 »

IVolatility Trading Digest™

Volume 17 Issue 47
Bulls Still in Charge 2.0 [Charts]

Bulls Still in Charge 2.0 [Charts] - IVolatility Trading Digest™

Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.
Please read IVolatility Trading Digest™ Disclaimer at the very bottom of this page

To add comments or to ask questions please click here (or use the blog "COMMENTS" link at the very bottom of the blog page).

Review NotesSince the bulls ended the last pull back attempt after just five days there seems no better way to describe the current situation than to repeat of the title of the July 17 Digest Issue 28 "Bulls Still in Charge [Charts]." Then the Commitment of Traders report for WTI crude from the Commodity Futures Trading Commission was delayed due toThanksgiving so our crude oil update is limited to the United States Oil Fund, LP (USO) with a mark-to-market for the last week's trade idea.

Review NotesS&P 500 Index (SPX) 2602.42 rebounded 23.57 points or +.91% for the week while making new intraday and closing highs last Tuesday and again Friday. In the event of an unexpected decline the first support would be the 50-day moving average at 2555.39 and then the upward sloping trendline, USTL from last November 4 at 2550. A longer term look from the March 2009 below remains bullish.


The chart above is an updated log chart showing channel trendlines and Elliott Wave counts from Elliott Wave International, as of June 2017. From this perspective it has a way to go before reaching the 5th wave top marked somewhere around 5?.

VIXCBOE Volatility Index® (VIX) 9.67 declined 1.76 points or -15.40% for the week while our similar IVolatility Implied Volatility Index Mean, IVXM using four at-the-money options for each expiration period along with our proprietary technique that includes the delta and vega of each option now 6.95, fell 1.05 points or -13.13%.

VIX Futures Premium

The chart below shows as our calculation of Larry McMillan’s day-weighted average between the first and second month futures contracts.

With 17 trading days until December expiration, the day-weighted premium between December and January allocated 68% to December and 32% to January for a 22.83% premium near the middle of the green zone.


The premium measures the amount that futures currently trade above or below the cash VIX, (contango or backwardation) until front month future converges with the VIX at expiration. At the extremes, declines below 10 and advances above 30 are both unstable.

The next support for the bullish continuation view comes from the old reliable market breadth indicator.

breadthMarket Breadth as measured by our preferred gauge, the NYSE ratio adjusted Summation Index that factors out the number of issues traded, and reported by McClellan Financial Publications, turned higher last Monday advancing 6.87 points and then continued higher for the rest of the week closing up 80.79 points or +26.20%.


US Dollar Index (DX) 92.71 -.87 or -.93% for the week. When we last visited DX in Digest Issue 44 "Bull Rotation Redux [Charts]" it had broken out above 94 and was retesting support around 94, suggesting it was likely to soon continue higher. Instead on November 14 it declined .67 points or -.71% closing well below the important 94 support and then after consolidating declined twice again closing below the 50-day moving average last week. Since many large capitalization multinationals, especially in the tech sector are helped by currency translation tailwinds, the reversal lower continues adding support for equities. Take a look at this is the chart.


Options Trading Made Even Easier

Learn how to trade options simply, effectively and more importantly, profitably. You need to stop wasting time using bad methods and follow a proven winner. No matter your account size or skill level, this guide will have you feeling like a pro. Download your free copy of The Ultimate Guide To Trading Options and get my personal Trading Cheatsheet.

This link expires soon and you can only get this guide here

WTI Crude Oil

breadthUnited States Oil Fund, LP (USO) 11.79 +.44 or +3.88% for the week.

Last Monday it closed at 11.28 down .07 and the Dec 15 11 strike call was booked at the ask for.46. The plan is to close it on or before the November 30 OPEC meeting when they are expected to announce an extension of the production reduction agreement until the end of 2018. Friday's closing bid price was .83 representing a .37 gain or 80% in one week. Since this looks like a typical "buy the rumor and sell the news" set up, any weakness on Monday or Tuesday should be used as a sell signal otherwise close it Wednesday.

StrategyLast week's comment was about right. The odds had increased that the pull back was complete and to consider reducing or closing hedges including call credit spreads. Heading into December, seasonally one of the better months for equities, unless sidetracked by an unforeseen macro event, the S&P 500 Index is likely to continue making more new intraday and closing highs. What happens when the bulls chase all the bears out of the woods and they try to return? Based on the Elliott Wave chart the 5th wave top still looks a ways off.


With improving market breadth along with a weaker dollar and since December is a seasonally good months for equities it looks like more intraday and closing highs can be expected soon. However, this week the focus will likely be on the Thursday's OPEC meeting.

Twitter Follow us on twitter for more ideas from our scanners and other developments.

Actionable Options™
We now offer daily trading ideas from our RT Options Scanner before the close in the IVolatility News section of our home page based upon active calls and puts with increasing implied volatility and volume.

Big Data? In options we are Big Data!

"The best volatility charts in the business."

Next week we plan on suggesting more trade ideas from our rankers and scanners.

Finding Previous Issues and Our Reader Response Request

PreviousIssuesAll previous issues of the Digest can be found by using the small calendar at the top right of the first page of any Digest Issue. Click on any underlined date to see the selected issue. Another source is the Table of Contents link found in the lower right side of the IVolatility Trading Digest section on the home page of our website.

CommentAs always, we encourage you to let us know what you think about how we are doing and what you would like to see in future issues. Send us your questions or comments, or if you would like us to look at a specific stock, ETF or futures contract, let us know at Support@IVolatility.com or use the blog response at the bottom of the IVolatility Trading Digest™ page on the IVolatility.com website. To receive the Digest by e-mail let us know at Support@IVolatility.com



could you give us stocks or ways to buy in order to profit from the bitcoin frenzy?
thanks a lot

Posted by morio christian on November 30, 2017 at 04:45 PM EST


Thanks for the bitcoin question. Since the objective is to avoid taking unlimited risk we suggest waiting until the regulators examine the issues involved with listing futures and options and give their blessings. Presuming they give the go ahead, there will be plenty of time to look for strategies with limited and defined risk.


Posted by Jack ( on December 04, 2017 at 12:00 PM EST

Permalink Comments [2]

Comments are closed for this entry.

IVolatility Trading DigestTM Disclaimer
IVolatility.com is not a registered investment adviser and does not offer personalized advice specific to the needs and risk profiles of its readers.Nothing contained in this letter constitutes a recommendation to buy or sell any security. Before entering a position check to see how prices compare to those used in the digest, as the prices are likely to change on the next trading day. Our personnel or independent contractors may own positions and/or trade in the securities mentioned. We are not compensated in any way for publishing information about companies in the digest. Make sure to due your fundamental and technical analysis homework along with a realistic evaluation of position size before considering a commitment.

Our purpose is to offer some ideas that will help you make money using IVolatility. We will also use some other tools that are easily available with an Internet connection. Not a lot of complicated math formulas but good trade management. In addition to Volatility we use fundamental and technical analysis tools to increase the probability of success and reduce risk. We prepare a written trade plan defining why the trade is being made, what we call the "DR" (determining rationale) and the Stop/unwind, called the "SU".