web99 by George

July 20, 2014

Routines and Prep:
Scanning for Opportunities

NFLX 30 minute

Here is a chart of NFLX. What setups do you see?

Can you find them through scanning?
What action would you take?

My two main trading

methodologies are:
1. Abnormal volume breakouts
from 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

AKS
weekly

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.

VIX hourly

SPY hourly

The market has been choppy lately, necessitating shorter

term trades. Note two VIX spikes, SPY oversold.

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.

GOOGL 30 minutes

Thirty minute chart of GOOGL over earnings.

Retracement was close to 50%, followed by move along
upper BBs. Avoid holding options over earnings!

GOOGL 600 calls - 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.

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.

SPY 30 minutes

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 196 calls - 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?

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

NFLX 30 minutes

What are the features of note on this NFLX chart?

How would you trade these moves? Can you scan for them?

NFLX 455puts
30 minutes

Chart of NFLX 455 puts after initial move down.

Potential entry: 3.60; exit 13.50.

NFLX 435 calls

30 minutes

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

NFLX 450 calls

30 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?

GDX 30 minutes

Thirty minute chart of GDX.

What do you see; how would you trade this move?

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 26 calls
30 minutes

GDX trade initiated Tuesday July 8th for .32

and sold two days later for 1.57.

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.

NQ weekly

From the scan, NQ is oversold with a possible GCL,

potential upside to 11(upper BB), 14 (50 SMA).

NQ daily

On a daily chart, NQ broke out on Friday with a PP,

upside to 7 (50 DMA).

NQ 30 minutes

Drilling down to a 30 minute chart, NQ was oversold and came

out of a squeeze with a Pocket pivot. Potential 25% return.

ZLTQ weekly

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%).

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 day
are 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 screen
6. Tickers hitting new highs
7. 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.

Here are the links for Sunday and

Mondays Magenta Trader webinars

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 market
as it opens. Please reserve a seat for this webinar for they will
completely fill. Web99 clients have a reserved seat, but please reserve a
seat too.
To reserve seat please go to home page magentatrader.com or click on the
links below. You may select on both to reserve seats for both events.
Sunday Web99George 6pm ET
https://www.magentatrader.com/lists/lt.php?id=ZkgNUk9VVgwHTlcGAw
Monday Web99 George with Realtime 8:45am ET
https://www.magentatrader.com/lists/lt.php?id=ZkgNUU9VVgwHTlcGAw

Next sessions...
Monday July 21, 2014
at 8:45 a.m. Eastern, 5:45 a.m. Pacific
Finding setups through scans
Premarket preparation/opening 30 minutes
Sunday August 10, 2014
Sunday August 24, 2014