Swing Trading Setups | SPY UUP AAPL SLV AET FXI HAL

In this week’s video wrap, we’ll look at the bear flag the S&P500 is putting in as well as the US dollar and how it is at major support right now. If the dollar does rally from here, the market will make another leg lower and we would start looking for more longs. However, if the dollar were to break down, we’d be looking for a retest of the 2012 highs.

Also in the video, I’ve got two new swing trading setups to watch for next week. These swing trading setups are based off the Squeeze indicator. We use this indicator a lot with our members for trading options. If you want to learn how to use this indicator for swing trading options, start the Free Trial and get the trades and the education.

The video below includes Captions  in case you can’t listen to the audio at work.

Weekly Market Wrap Video Transcription:

Hey guys! Today is Friday, April 20th 2012. It’s a little bit early in the day. It’s only about 11 a.m. Eastern time, so I’m doing this video a little bit early today.

S&P500 Technical Analysis:

I want to look at the SPY to start off with. In last week’s video, I was talking about – We had this little head and shoulders pattern. You can see it a little bit better in

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the Futures, where it’s a little head and shoulders. We came down. Last week I talked about we reached our minimum target for the head and shoulders and we were trading sideways. And last week, I was saying that I thought that we were going to break down a little further. That has not happened yet. We’re in a sideways action. This is starting to look like a bear flag.

Let me show you this interesting trend line. This is the November lows and we just extend this between these two bottom pivots. You can see this cuts right up through the resistance we’ve been seeing the last couple of weeks. And so, when we zoom in here, we had this moved down and now we’re trading sideways. You can see we’re in this channel right now. This is looking very bear flaggish.

And when we’re going to break down or if we break down, is to be seen. But what a good indicator would be to follow this is looking at the dollar. And right now, as of 11 a.m., the DX Futures are down and we’re basically trading at the bottom of this support area.

A Look at the US Dollar:

If we look at this on the UUP, which is an ETF (you can track the dollar), we’re basically at the support area. And this coincides with the 200 day moving average, which is this bottom line here. We have this triangular pattern. The dollar seems to be coiling up here.

If I bring in the Squeeze Indicator, let’s look back at the Futures and see this a little better. I have been saying to our members that this was looking like the dollar was gaining strength to maybe potentially fire along. That did not happen today. We’re actually down a little bit. This is what’s giving a little boost to the market today. The dollar is down about half percent, whereas the market is up about a little over half percent.

You still have some other names that are down. What’s interesting right now is you have –  Usually, when the dollar goes down, commodities and things go up. You are getting a bump in oil today, but gold, silver..

Let’s just look at silver real quick. Silver is pretty much flat, slightly down. Gold is flat, slightly down. You also have copper (FCX), which is actually down. This is what’s more like a pull back. This is probably some volatility we’re seeing, so you don’t want to make too much of it at this point.

But what I will say is that I think the correlation is still there. If the dollar breaks down, the market will rally. We’re out of critical support and this will probably play out next week. If the dollar rallies back up, you’ll see a further pull back in the market. And that’s going to go into my theory. I think we’re making another leg lower. Nothing drastic here, but you have this pivot around this 134.50 area. But ultimately, I think we probably filled this gap or maybe even come to gap when they were in this area. This area is 133.5, 134. I still have those for downside targets. (Let me get some of this stuff off).

You can see we traded below the 50. And that’s this blue line. We’re chopping back and forth between the 50. We came up back to the 20 and so we’re in a very tight range here. Earnings seemed to have been relatively decent. It’s tough to say if a company is reporting actual good earnings or if they’ve lowered the expectations so much that they’re beating  their estimates, which is what basically companies do to make themselves look better.

Last Week’s Review:

Let’s look at a couple follow-up trades from last week I was talking about.

Apple (AAPL)

Apple is the first one. My May 645, 650 call spreads are going to expire worthless today. Please check the last video for the setup on that.

iShares Silver Trust (SLV)

Also, in Silver, I had sold the 32, 34 call spread. That’s going to expire worthless today as well. If you look at Silver, I actually have a small position and some puts here. You have the Squeeze indicator looking like it wants to roll over. I still think the dollar will affect this. If the dollar rallies, this will roll over. But if the dollar falls, Silver may just chop around.

The dollar has been following and Silver has just been trading sideways. And remember Silver does have some industrial value. So if factories and manufacturing is down, Silver will be down as well. I am short Silver right now. We’ll see how that plays out next week.

Aetna (AET)

One other trade that I took more as a day trade (It was actually like a two-day trade and I talked about this last week.) was Aetna. Basically, Aetna had broken out on this candle. You can see that the Squeeze Indicator was trending up in the oscillator part and then it finally fired long. We talked about waiting for the pull back. And we got the pull back right into this previous breakout level and actually came down to the 50 and then we broke out since.

This was a short trade for me. I’m actually out of that now, but I wanted to just show how when you do get this breakout, it’s very important to wait for the pull back and wait for the right time. And you can use things like moving averages to take your entry. You could have started accumulating here at the 20 day moving average, maybe accumulated a little bit more here. I played this with options, obviously, but that  end up turning out well.

I’m actually, like I said, out of this now. I didn’t want to go long into the weekend. But I still think this might be a decent trade and maybe we’ll get a pull back to the 13 day EMA here and maybe we’d move forward. It looks like earnings is coming out next week on Aetna, so I probably would wait after earnings on that.

New Option Plays for Next Week:

Let’s looks at a couple of trades to look out for next week. We’re going to look at two that we’re going to be stalking.

Halliburton (HAL)

Halliburton is one. You can see Halliburton had this breakout a couple of days ago on earnings. Whenever a stock breaks out on earnings, I look for the pull back. And we are pulling back now. You can see we’re in the Squeeze. The Squeeze is trending higher. What I would look to do is potentially pick up some calls or possibly sell a put spread. I’d have to look at the options a little better. But you can look at some in-the-money calls. I would probably go out May, possibly June.

Basically, we came up. We hit the 50 here, pulled back. The first hit of a major moving average or trend line, you’re going to fail. And that’s what we did, so I’d expect a little support here. This is around the $33 level – 13 days at the $33.18. The 20 is right at $33. If you can get in there around $33, look for some long calls. Again, I’d give yourself a little bit of time and I would actually go slightly in the money on this.

Let’s look at the Trade Option Chain. Depending on how long this takes, if we pull back early next week, then you can probably get in the May’s. I would look for a delta 70. You’re probably looking at the 32’s. These are going for 250 right now.

If you want to calculate what those would be, right now we’re trading at $33.77. If we were to drop $0.77 – Let’s go back to the option chain. If you change this to theoretical price and we say by next week – Today is 20th, so let’s just say Monday (adjust the date) – and then if the stock were to drop $0.77 (or minus .77), you can see that those would be going for about $1.91. Right now they’re trading for $1.50, but you may be able to get in those for under $2, for $1.90. That’s early next week if Halliburton pulls back to that 20 day moving average.

FTSE Xinhua Index (FXI)

Let’s look at the next one I’m interested in: FXI, which is the China ETF. FXI has a similar setup. Let’s look at the chart real quick. And I had pointed this out to our members this week, where China had this breakout candle, consolidated here. We did not take a trade in this because we were in some other trades already.

But again, the Squeeze is moving up. The Squeeze actually fired long here. First hit at a 50. We’re expecting a pull back. You may not pull all the way back to the 20, but this rising 13 day moving average will be a good level to pull back at. Or possibly, you actually have this resistance around the 37.67, 37.50 area. So if you get a pullback to here, you might want to take an entry. Again, I would be looking for in-the-money calls or potential put spread sell.

But if you want to look at in-the-money calls on FXI, you go with May. Again, you want to look for delta 70. You’re probably going for the 37’s, maybe 36’s. Now if this takes a few days to develop – These only have 28 days left and so you may want to go with the June just to give yourself some more time. You’re going to pay a little bit more upfront, but you’ll have more time. That’s basically what you’re paying for. But by going with the delta of 70 here, you’re intrinsic value is worth more, so you have less time to lose there.

That’s a Wrap:

Those are my thoughts for the week. You guys have a great weekend. We will catch up to you next week!

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Swing Trading Setups | SPY UUP AAPL SLV AET FXI HAL

Swing Trading Setups | SPY UUP AAPL SLV AET FXI HAL

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