For most of the people that would be the best way to invest in the markets – you research fundamentals, you dig for information, you compare long-term charts and competition, and then you make the move. You invest in several companies with the idea to hold this positions, at least 4-6 months.

For me, as a trader, this route doesn’t work – my capital is my working tool, and I cannot afford stash it away for half of the year.

So, now I am back to trading options, which are great tools to achieve higher return with well managed risk.

The chart below indicates, that the pullback we witnessed for the past 2 weeks may well be over, and some kind of rebound is going to happen soon. And by buying 3  Google Calls@Feb for 1.98$ I am betting that it has already started.

My stop is below 525$. My Targets are 550 and 570 (gap close)

After witnessing a downfall in stocks, with all support levels being broken, I turned my attention to currencies. Here is a nice long opportunity in USD/JPY.

Bought some at 91.20, have a very tight stop here at 91.10, so it either works out right away or it doesn’t. My first target is at 92.00, 96-97 longer term.

If I stopped out, will look to get back into position.

I have no idea of how long this party will be going, so I am placing my bets accordingly. Looking to short SPX futures near the 1135 area or on a breakdown below 1130 (see the chart below). Looking to add on the way down, otherwise will close for a loss.

SPX is continuing forming its rising wedge. To say fair enough, the chances of the sudden rise and the sudden fall are equal. For now I’ll stick with my view of a sudden collapse and will be looking to place short bets at a 1125 – 1135 area (see the chart below). There is also a possible Wyckoff Formation in the making.

GOLD also indicates, that the current rise might be done. See the resisting trend lines above? So, if you are into gold trading, I would suggest to short at 1122-1130.

PS. GOLD and SPX are trading at exactly the same level right now.

As for the next week, I am looking for longs. The sharp sell off in the EUR is also indicates a high possibility of a rebound. My target on the pair would be ~1.47.

Also GOLD may have also finally found support at 1090-1100 with a strong positive divergence in MACD and a double bottom pattern on a 30-min. chart. This is a pretty safe play, with the target 1150-1160 and a stop loss of 10-15 pts.

As for SPX futures, it has formed a nice bull flag, and has just broken above the upper trend line trading at 1114 at the moment. I am looking to grab some longs at a pullback to 1111-1112 level.

The throat sighs!

Here is a more detailed analysis why 1088-1090 was a good buying point

1. This is a classical “spring” according to Wyckoff Schematics. To find out whether this was a turning point, I used other tools, like MACD Divergence, which really helps to find possible short term tops and bottoms, and classical pattern recognition – we had a really nice double bottom on 5-min chart. Also, as I have written before, the Double bottoms in GOLD and EUR/USD also indicated a hight potencial in reversal.
2. This is a 50% Fibonacci retracement level. A good area to add to your longs or to enter a new position.
3. I am looking for 1107 as a first target. Again, no fancy indicators used. I was thinking of that level as a good target, because it was a previous pivot point. But now I am more confident in this level, as we have Cup and Handle Built, and according to textbooks, the next target equals the high of the Cup. So, in case you have no position right now, you might want to get in for a nice 10 pt. profit.

This looks like a possible Wyckoff Schematics in the making, in which case the latest 2-hour bar on the chart is the “Spring” (Check out my post about Wyckoff Schematics to find more). Though, we steel need to break above 1100 for this to be true.

My advice is to buy 1/2 of your initial position right now with a 5 pt. stop and add above 1100. Also, watch EUR/USD for hints any hins.

Once again, I am looking for another push higher, towards 1110. Check out the chart below. If the price doesn’t hold and falls below 1100 today, I would’t be initiating any longs, until then the longs are safe.