No Break Yet 9-30-14

ES and SPX struggled in both directions today. They broken both overnight high and low and closed below 50 SMA. I guess we will see the real force of selling in the next few days since the quarter end window dressing is out of the way. I had credit spreads in both side but none got filled. I will get to sell it again further out tomorrow if we break down.

Grains went wild after USDA's grain stock report at 12pm but all settled to the downside. Corn made a new season low and it's at a 5 yr low now. Both soybean and wheat popped higher in the first hr after the report but failed to hold their gains. I made an emotional trade on wheat today. My plan was not to trade any grains in the first hr after the report. I bought a wheat 460 put to average my cost when I saw my position was underwater. My subconscious was telling me my rules but I went ahead placed the order anyway. Other than that I was pretty calm today. I am glad I exited bunch of bull puts and bought more puts yesterday. Otherwise I would have been worried possible margin calls today. Now I have more firing power when the opportunity present.

A Loosing but Feeling Good Day 9-29-14

Grains bounced across the board for about 1% supposedly in short covering ahead of USDA's Grain Stock Report tomorrow. I took advantage of it exited some of my underwater positions and bought more puts. I had a total of 25 trades in grains. It's the largest trading day I have had. I booked a lose of over $21K and built my margin back to near $100K. I feel much safer now. I am not eager to take the rollover positions. I probably would wait after USDA WASDE Report on Oct 10th. The wait may not be comfortable but would provide a better odds for my recovery. This has been the biggest loss I have experienced. There many lessons need to be absorbed. I will regroup to dig myself out of the hole.

My plan for tomorrow's Grain Stock Report: I will continue to exit my bull puts and sell bear calls in corn and soybeans if the report gives a surprise to the upside. I may also buy more puts in corn and sb. The picture of wheat is not very clear as it's affect more by the globe market. In a likely scenario of the downside, I will hold my puts to squeeze more profit but roll a small number of bull puts further out. The bigger event is the Oct 10 WASDE. I may exit out some far out of money puts between the two reports.

Indices are holding up so far against seasonal. ES and S&P had triple bottoms. I was expecting the double bottom to be broken today. All of my bull puts in S&P didn't get filled since the bottom held. I would consider to exit my S&P 2015 spread if we don't get a break down in next couple days. Tomorrow is the month and quarter end. It's likely to be a window dressing day. I can always get back in if the price move up further.  

Weekly Review 9-27-14

This week I started to realize how bad was my grain holdings after I finished to quantify my bull/bear ratio. My bullish positions are more than 100% more than my bearish positions in wheat and soybean options. The only thing I did right was not getting into bull puts with corn but bear positions. There are several reasons that I could think of and learn from. 1, my losses in corn was the smaller one when the down turn started in May. Therefore my gambler's emotion and the urge of win back were not as strong as the others. 2. I realized corn's downtrend earlier through gathering market information. There are more market data and comments in corn since it's the largest corp in the US. As for wheat and soybean losses, first, I was overwhelmed with gambler's win back right the way emotions. Second, I was overly concerned about keeping cash balance at certain level. Thirdly I was overconfidence of expecting resistance levels to hold based on my barely one year experience in grain trading. After looking at seasonal studies, especially the historical charts last week I realized how low the prices could go down. It's scare. I decided to get out of these positions and wait in the sideline. I also plan to add more puts positions to hedge my losses. My steps are still too small as my habit of waiting and hoping for any bounce to save few bucks. I got very frustrated as the price actions have not given any relief for weeks. I must implement my plan aggressively next week as more downward movement likely to happen with harvesting continues. I will buy back my as many underwater positions as my margin allows. Shut first, as it later.

Equities moved into volatile stage last week. Bears and bulls have engaged a tag war so far and no clear winners yet. I started to trade SPX credit spread instead of ES due to my margin limit, better % of ROI and limited risk. Of course my commissions would be slightly higher. I also plan to make my credit spreads into Iron Condo when and if the market allows. My rules of engagement and stop loss principles will remain the same. I have traded in small size (3-5 cars) so far. I need to study and observe more of this particular contract. It may be somewhat similar and different from ES.

My next week's goals are still to recognize my emotions and thinking process during my trading, pay more attentions to my subconscious especially when it's not agree with my trading decision. I have been more patience last week. I waited for VIX to come to me even though I didn't get any fill. I withheld my urges to get out some grains puts for smaller profit with fear of losing it. I realized that my objective is to hedge my bull puts and I waited.  



 

Another Friday 9-26-14

It's commodity options expiration Friday. I closed  all grain options for this month. I barely break even adding all bear calls and put. Without counting the wheat rollover, it gets a $4K profit. I bought one more wheat and soybean puts for Nov and exited a wheat Dec bull put which was way underwater. I am waiting for the market go down further before I get back in. The big losses will show up in next two months. I am watching for margin limit and cash loan balance to gradually exit my losing positions.

Indices have been up and down as bulls and bears fighting for directions. ES had a bigger pull back this afternoon. I sold some above 2015 SPX bear calls expecting this pull back would stop at mid of BB. One of them I didn't wait for the price to come to my place thinking it won't come up this far. But it blow out my price level and made me looking at a risky position. I am still under emotion influence subjective views when placing orders. However, the up trend is still intact and the downside move could be short lived as it is. I will manage my risk next week.

A Head Fake 9-25-14

Sales resumed in indices with S&P down 1.6%  today. It appeared that yesterday's pop was housing news related. ES closed around 50SMA and touched Fib 62% RT on daily and 38.2 RT on weekly. I assume that we may see more of the down side near term. I tried to sell SPX and RUT puts but no fills. I was not eager to get in. I am waiting for the price come to me instead of chasing it.

Grains continued the bearish trend despite of good export report. Soybean and wheat made new contract lows and corn was barely holding it. Wheat popped back to its previous low on an additional export sale news. I exited out my wheat $500 bull put with a 10X loss. Stopping rules was not followed. I am waiting to get back in after Oct USDA report according to my new plan. I tried to take stops of my other underwater contracts but no fill yet. I shall be aggressive tomorrow on both buying puts and exit bull puts. It's likely that the prices will go down further next week as USDA Grain Stock Report is scheduled on Tuesday and harvesting progresses.

Indices Reversal? 9-24-14

ES reversed to the upside after testing overnight low in the morning. The much better than expected new home sales report triggered the pop on top of testing 50 day EMA and BB low. ES closed above yesterday's high at CHVA. It's hard to tell if the double bottom or HS formation would work. Could it chop in the same range bound again?

Grains popped today on options expiration short covering and reaching some long term support areas. I sold some bear calls in all three majors and bought puts in wheat, no fill in corn and soybean. I finished my bull/bear ratio spreadsheet and it showed that I am still too heavy in bull puts. The ratio is more than 100% on bull side. Market is still in a very bearish mood. According to several sources on Agweb there are more downward price movement as harvesting progress. Corn and soybean are expected to go below $3 and $9 respectively. Wheat is not bottomed yet but I don't have a number. Based on my study of wheat's historical price chart it could go to low $4 as there are plenty supplies around the world. I am considering to exit half or all of my bull puts in wheat and soybean and take the losses and wait for the bottom settles. In the meantime I will enter the same numbers of puts in attempt of recovering part of my losses. The risk of getting margin calls are likely if I hold these positions through out the next down legs. The loss could get up to $50K initially but it's better than doubling it which could be devastating. I will calculate the scenario to see how much cash I need to cover half and all of my positions.  

Selling Follow Through 9-23-14

Indices had a follow through selling around 1%. It's into the 3rd losing day accounting last Friday. ES appears with more room to the down size base on Fib and B band. I had a lucky entry on a SPX 2025 bear call credit spread for Oct 3rd. It got filled on an early push up to BB mid. My bull puts or the 2nd leg of Iran condo didn't get filled on the sell off. I will try again in next couple days.

Grains continued leaking. Wheat was the only one in holding mode. I bought a Nov 450 put and sold a Dec 540 call set. This price is lower than my Dec bull puts of 560. I didn't get a chance to look for grains historical charts during the day. I will do it tonight. Corn and soybean's additional monthly contract finally appeared on IB quote board but no price and options listed yet.

A Turning Point? 9-22-14

ES made a 1% downward move on this Monday. It may be the starting point of the Sept/Oct effect. I decided to explore trading SPX & RUT credit spreads in QII account instead of selling ES futures due to my margin tied up in grains. It made me realize that trading credit spreads of SPX and RUT may give me a better % of ROI, lower margin requirement, and fixed risk. However, my commission cost may be higher since I need to buy two contracts to make one trade. I will have to study SPX and RUT price movement further. I assume to get $80-110 credit per trade which will be equal to 8-11% return per trade. The down side of this strategy is that I can't trade it after hours in case of a major event. Also, SPX appears has much less spread in my $10 range. RUT is more volatile and I have traded it in my personal account. It requires more patient.

Grains had another down day as normal now. Wheat popped briefly at open due to a sale to Egypt, the first in 6 month. I rolled over my Oct 510 to May and booked the loss. I also bought couple more wheat and soybean puts for Nov in anticipating another down thrust on better harvesting numbers and next USDA report. Corn and soybean made another contract lows. I want to study historical price charts before I do more rollovers. The grains' down trend seems much severe than I anticipated. Giving the fact this may be the best production year ever I need to prepare for the worst.  

Weekly Review 9-20-14

Equities continued the up trend this week. ES made new highs and closed above 2000 which was the target of many predicted. What's next? It's likely consolidate on top or have a pull back base on Friday's price action and seasonality. I will take stop of my SPX 2015 bear call if we have a new high next week.

Grains made new contract lows and no relief on sight. I will not add any new bull puts positions except contract rollovers. I have a very much over weighted grain portfolio which is underwater.

My biggest mistake was not taking the stop of wheat 500 bull puts according to my plan. It's ITM now. I will exit it if we get a pop next week as the contract expiration near.

I did well on my corn puts which had a 300% on the last piece of 360. According to the plan I closed all of my Sept puts in  grains to lock in my profit and avoid any time decay although the timing of some of the trades could be improved by better reading charts. The key achievement is that I followed my plan and locked in some profit.

Next week, I will study the concept of spread to further hedge my grain portfolio and try to quantify my hedging puts.

I will continue to observe and recognize my emotional reactions. This is a key element of my trading success.

A Small Range OpEx Friday 9-19-14

Scotland decided to stay and Alibaba had a great IPO. I thought it would be a big day for this quadruple witch Friday. It turned out to be a boring, small range day. I had only one trade of ES in S-5. My available margin is below $50K now as grains went down further and I exited more of direct puts.

All of the three major grains made new contract lows. I exited my last Sept corn put of 360 for a 300% return. I got sucked deeper in soybean and wheat. CME is going to add more monthly futures for corn and soybean this weekend. It may help me to spread my risk a little better. I don't know how much volume these new listings will generate initially.

Follow Up 9-18-14

Indices stayed up in small range. FOMC's statement gave market reasons to go up since there is no immediate rate hiking. ES pushed up to a new high before closing and after hour. We may see a big pop overnight if Scotland voted No and Alibaba IPO will inject new energy to the market. Tomorrow is also the quadruple witch options expiration. Market usually act erratically. I may take the opportunity to put in bear call or bull put depends on which way the market is leaning toward. One problem is that I have only $5.5K available margin left after I closed three soybean puts today. I will wait to close my under water SPX bear call next week to let the dust settle down and squeeze out some time value off it. It was a bad entry which I against-ed my intuition the other day.

Grains had a follow up day but to the down side. I really need to set up a list of my bull/bear positions to monitor my risk/reward ratio. I started one today but haven't got the layout right.

A Doji of FOMC 9-17-14

The long waited FOMC is over. It ended up with a slightly higher doji like bar. I didn't have any trade although I prepared some credit spreads and ES hedging orders. I recognized and held my urge to release my orders before the announcement.

Grains had another day of consolidation. I don't like such price actions because it erode my puts values. I will need to exit my Sept's puts before this weekend. Tomorrow's grain export report may move the grains.

A Rally To Get Ready 9-16-14

Indices were expected to be choppy or downward somewhat. Around 10AM, the news of Chinese central bank announced that it would increase 500 million yuan liquidity to banks in China to stimulate the economy. The market rallied immediately. ES popped about 15 points without a pull back. Now ES is parked at the top of its last CHVN. It looks like ES is ready to retest the high of 2002 made 9-3 or make a new high if Fed provide some good news tomorrow. Otherwise we may see a sell of based on seasonal, pending Scotland vote and Alibaba IPO. Either way, my job is to manage my risk. I didn't place any order for indices today according to my plan.

Grains tried to pop following overnight's action but failed to rally. Wheat made a new low of 491.5 intra-day. Corn and soybean made couple points gains in a consolidation mode. I closed my soybean 1000 put at $2525, a 200% pay off. Every bit helps to curb my losses.

Waiting for Fed 9-15-14

It looks like seasonal September pull back is in play while market is waiting for Fed FOMC this Wednesday. S&P, Dow are in holding mode but NQ and RUT had a 1% down day. One factor is that money is rotating out for Alibaba IPO in tech sector. I didn't follow my plan of waiting for FED today. I saw a pop on SPY and sold 2 bear calls, 2015, 2020 to complete the 2nd leg of my Iron Condo. They may not hold if S&P push to a new high after Fed Wednesday. On the other hand my RUT 1120 bull puts entered last week are in danger after today's 1% drop to 1146.5. I will monitor the risks for the next two days.

Grains popped in small amounts today. I sold some couple calls and bought puts in soybean and corn. We may see some consolidation in next few days. I will exit some puts for this month's contracts before the weekend.

Weekly Review 9-12-14

For the past week, indices are getting weak but still in up trend and bull flag pattern. Market is waiting for FOMC next Wednesday and Alibaba IPO in next two weeks. Scotland's vote could affect the market short term as well. My ES allocation is pretty much loaded and don't have much room to add on due to my heavy positions in grains.  I will wait until Wednesday to see the directions of the market.

In the grains front, WASDE upped grains production estimates and pushed the prices further down. The worst is yet to come according to grains' seasonality and current harvest projection. I will continue to add short positions on any pull back and rollover my underwater contracts. My results for the week:

Right:
1. Monitored my risk in indices. Had ES and RUT credit spread working. I was patiently waiting for price to come to me. I kept reminding myself that I don't have to get fill today and had more time to see where is the market going.
2. I held my urge to fight the down trend of grains. Instead I added puts on any pop and before the WASDE.

Wrong:
1. I still could not correct my bad habit that I would close my eyes and jump in a trade despite my instinct of cautious and timing.
2. I didn't follow my rules of taking stop in my wheat 510 bull puts. I had orders in place before WASDE but didn't enforce to close it before closing of the day. I still have the mentality of hold and hope. Things are normally getting worse when I try to avoid the pain of taking a stop.

My main goals for next week are:
1. Monitor my emotions and recognize them;
2. explore my instincts against certain actions. Hold off my actions when I have doubt about my actions.

Tug War 9-12-14

ES reversed yesterday's up thrust. It started moving down out of gate. The down move was in an orderly fashion. Buyers stepped in in the last hour and took it to yesterday's low. It was like a tug was this week. There was no force in control. I guess trade is waiting for next week's FOMC. I will be in waiting mode before next Wednesday. I sold an October 3rd 1870 put this morning when yesterday's low had a strong push up. I thought it was a turning point but it failed at PP. I then entered the same order at $450 in S-5 account.

Corn and soybean consolidated today. The weekend frosting forecast held these contracts. Wheat made a new low of $5.00 but closed at yesterday's low. It looks like $5.00 price won't hold. I scaled out one each of my corn and soybean puts of this month to lock in some profit and preventing time decay over the weekend. I will have to take a stop on a pop or rollover of my 310 bull puts. Another undisciplined loser.

The Big USDA Report 9-11-14

Today is the unforgettable 9-11. Can't believe it has been 13 years now. The event has changed America forever.

USDA's WASDE Report release today at noon. The reaction wasn't as big as I expected. All of my exit orders didn't get hit. There were only three bear calls dried up. I didn't want to chase my exit orders based on my expectation of a follow up sell off. However the market opened up tonight with corn and soybean bounced back to pre-report level in anticipation of a cold weather forecast. Wheat is slightly down on reduced export forecast. I will take a stop loss of wheat 310 which is ITM with today's drop.

Indices grind up today. I didn't take the early sell because my available margin is at $80K. I want to reserve some in case of further roll over in grains. I am still not very good at accurately calculating my hedge and margin levels. Need to work on those more.

Another Lower Low & Lower High 9-10-14

ES closed strong although it formed another lower low and lower high. Bulls took it to HOD at closing. The up trend may resume if we get another up day to break 2003. I didn't have any fill in ES but sold a bear call of SPX at 2035.

Grains are still hopelessly in the down trend. Production numbers are getting better each time but demands are not been taken into consideration. I bought more puts for each grains toady in anticipation of another leg down after USDA's WASDE report. I have a bull puts of 410 in wheat need to be out before the report. I raised my exit price twice but didn't get fill today. Wheat continued to make new contract lows. Another unlikely scenario is that we may see a pop after the report if we get a high estimate in demand. I will continue to fade it but wait after the dust settled.  

Lower Highs 9-9-14

Indices formed another lower highs today after Apple's Iphone 6 announcement.  ES had a drop, pop and drop day. In the bigger picture, ES is still in its balance area of 1975-2012. It is likely to test the lower boundary of this area in the next couple days. We may look at range bond actions in this CLVA. RUT looks a little more bearish but still in its balance area. I finally had a fill for the 2nd leg of  1120 Iron Condo in my E Trade account. It has 10 days and 3% room to the down side. I will watch for the risk and follow my rules for stop out.

Grains made new contract lows again. Soybean November contract closed below 1000 at 995 for the first time. My direct puts are looking good. I will wait for this Thursday's USDA report to start scale out this month's contracts. On the other hand, my bull puts are further under water. I rolled over another wheat Dec 570 to March 530. I will buy more puts of Nov, Dec for grains tomorrow if we get a pull back.

Inactions 9-8-14

ES is still in range bond. It had a sell off until noon and buyers took back a half of it. It still looks like a bull flag to me. Of course it can break down any day. I didn't have any fill today.

Grains gave back all of the gains made last Friday as the frosting was a false alarm. Even the good export report couldn't lift the prices much. I have no fill in this front either.

Are Bulls Back? 9-5-14

Market often surprise me. ES broke yesterday's low after a disappointing job report. My expectation was a down day after testing mid of the day. Instead it kept pushing up from 1988.5 to 2007.5. It shows that bulls are back in control after the indecision of the last several days. It looks like ES is going to retest or break its high of 2011 with ECB's rate cut last Wednesday. I get to watch the risk of my bear calls next week.

Grains also made unexpected upward push on frost forecast in major crop growing area over the weekend. However they only retested their break out area so far. I will have to exit my puts if they continue the upward next week. I faded today's pop up with selling bear calls of all the three and bought ZS, ZW November puts.

Weekly Review 9-5-14

The week of Sept 1-5 was a light one in terms of realized profit. The only expired contract was an ES bear call. I also closed couple of grains' bear calls at 1/8 and scaled out direct puts at 35-100% right before Friday's pop on the news of possible frosting. It further proves the importance of following rules.

ES was sold off on every new highs but bulls stepped in on every pull backs as well. It's a tug war at top. I am aware of seasonality of later September pull backs. It's a tendency, not a certainty. I am still learning to switch my market bias and hypotheses according to price actions. I have reacted slowly so far.

Grains made new contract lows after USDA's Grains Progress Report. I scaled out some of my puts to protect my profits. I also bought couple more puts for next month's expiration on Friday's pop. USDA will release another WASDE this Thursday, Sept 11. It's widely anticipated for a higher production estimate. I need to roll over some of my ITM, underwater Dec wheat and soybean bull puts before the report.

Pay attention to my instinct of against certain trade idea and give it a deeper thought. Make it a clear thinking process.

A Bear Engulfing Day 9-4-14

ES made a new high in the morning and broke last two days low in the afternoon. It was similar to yesterday's pattern and buyers stepped in to take it back to prior day's range in the last hour. It's a tug war now. I made a strangle of 1890 and 1940 for Sept 30. Need to watch my risk as volatility is increasing.

Grains sold off for 2nd day. The three majors made new contract lows. I scaled out one put in each contract with 35-100% returns. However they are not significant comparing with my underwater positions. I will add more puts on any pull backs. Grains popped 0.5-1.6% tonight. I may get a chance to fade them tomorrow. Traders are positioning for next Thursday's  USDA WASDE Report. Are we going to be in a choppy period until then?

Grains Broken Down

Grains broken down after yesterday's upbeat grain progress report. All three major made their contract new lows. Wheat and corn lost 3% and 2.6% respectively. Soybean recovered partially in the last hour. This downward move put more pressure on my rollover bull puts. So far, I have $1.1K paper loss in wheat, $4K in soybean. I have some bear calls and puts to offset but they are not even in a 1:2 ratio. Luckily I didn't place any bull puts in corn and  I did right in part that I didn't enter any bull puts before Dec options for wheat and sb based on seasonal. I will continue to roll over my positions further out and fade any pops for contract before Dec expiration.

ES broke its drop and pop pattern and closed lower today. Today's new high and rejection made a shooting star bar. It could be a sign of topping and reversal. I didn't have any fills in ES today. I will be more patient going into Sept since it's considered the worst performing month in stock market seasonality.

A New Month 9-2-14

ES had a small pull back on this Tuesday after Labor Day. It repeated last Friday's pattern of drop and pop. I didn't catch any of it. Buyers are still in control. I was sick with diarrhea and didn't do much work after 12 pm.

Grains were down. Corn tested its daily IHS low. I am not sure if it would hold. USDA released its weekly grain progress report and raised its estimates for grain conditions. Grains opened lower again on the evening session.