Bullish Cross Live


1. The Bullish Cross SPY Model Portfolio
1. Short SPY @ $155.52 x 15,000 shares
Cash: $0.00
Enter Portfolio Here

2. The Bullish Cross Alpha Model Portfolio
1. Long GLD @ $161.51 x 835 shares
2. Short IWM @ $102.14 x 4,500 shares
3. Short SPY @ $161.50 x 7,500 shares
4. Long AAPL @ $67.14 x 2450 shares
5. Long UNG @ $19.54 x 5,000 shares
6. Short GOOG @ $445.30 x 360 shares
7. Short QQQ @ $85.03 x 5,000 shares
Cash: $0.00
Enter Portfolio Here

3. The Bullish Cross Trading Portfolio
1. Long Apple January 2015 $93.57 - $100.71 Spread @ $0.71 x 1400 contracts
2. Long TSLA Sep 20, 2014 $280 - $300 Call-Spread @ $4.00 x 200 contracts
3. Long FB January 2015 $90 - $100 Call-Spread @ $0.70 x 1000 contracts
4. Long PCLN July $1200 - $1250 Call-Spread @ $17.40 x 75 contracts
5. Long Facebook January 2015 $90 Calls @ 1.24 x 1000 contracts
6. Long SPY August $190 Puts @ $4.14 x 1000 Contracts
Cash: $659,185.00
Enter Portfolio Here
THE LIVE BLOG 9:30 AM - 4:00 PM

10:40 AM -- we're starting to see some bump ups off today on the hourly chart as the market/Apple both reach oversold conditions on the 60M. So we should see a little more upside -- maybe throughout today's session -- and then we may very well see a top of some kind lead to a larger pull-back. That's how these things have typically gone. I think if we see an extended pull-back in Apple, it could last a good while given how overbought Apple has become. With the SPY, it could be a quick 1-3 week pull-back.

Notice in the Apple chart below, we've gone through that whole 90-RSI followed by negative divergence cycle now. So we could really be sitting right near the end point here of this overall momentum rally. Given that all the news is behind Apple -- stock-split + WWDC -- it wouldn't surprise me to see a big of a sell-off between now and early/mid July when Apple reports earnings.

With the SPY, you could expect a bit of a rebound here as it did reach a sub-30 RSI in yesterday's last hour of trading. Notice what happens every time the SPY begins to rebound off of oversold conditions as denoted by the blue dashed lines:

What we can say here is that the SPY will need to retest the highs. If it fails to breakthrough, that could lead to a larger two-legged pull-back. If it breaks through, then we know that the SPY is on its third leg higher from the rally beginning on April 14 - April 18. Notice that on the daily chart, we're still sitting near a 70-RSI and whenever we've seen the SPY get overbought like this on the daily, we've seen much much larger pull-backs on the horizon:

At this point, we just need to be very patient. This next trade move is going to be very significant for the portfolio. We have $600k on the sidelines. The portfolio is trading at a current market value of around $1.8M right now after this pull-back in the SPY. We were at $2M+. But with the right trade in Apple with this $600K (part to go into a near-term spread, part to go into the $93.57 - $100.71 spread), we could see the portfolio skyrocket by year-end to +200%. That would put us at $3M going into 2015. A double on that portfolio next year would bring us to 600%. So you can see where the compounded returns can really put a ding in things. But it's first important that we execute this next step very well.

1:30 PM -- this comment is in response to Wings & Dansan's thread below. They ask about time-frames with Apple. This chart shows each consolidation phase Apple has had since bottoming last July near $390 a share. Notice how after these big parabolic-type run-ups, Apple tends to consolidate or trade sideways with some volatility for months at a time. Here are the consolidation phases we've seen. Remember how we harped on $570 being a pinnacle point for Apple. Once it broke above $570, it has been but empty space for resistance for Apple. That was to be expected. No selling anywhere. But at some point, the buying momentum will start to slow, traders will start to get impatient, there will be some selling and new lines of resistance will form. We will see Apple then consolidate for a period of time. It's not obvious how long that consolidation will last at this point. I'm thinking it will be short in duration given that we just came off a 5-month consolidation period:

3:35 PM -- for this week's Game of Thrones finale.

22 responses to “Bullish Cross Live

  1. Are you considering adding to the SPY put position?

    • Andy M. Zaky

      No. The SPY is trading in an unpredictable fashion right now. We need more normalized markets. When we put on the short trade, we did so because we were looking for a quick near-term pull-back. In like 80% of the time — and since the start of 2014 — whenever the SPY had become overbought on the hourly, it lead to a good $2-$4 pullback. We sort of got steamrolled this time. I just want to get out at even-Steven here. Which I think is very plausible due to the fact that (1) the SPY got too overbought on the daily; and (2) August is a good long ways away. Meaning, we have a lot of time for the SPY to test the $190 level.

  2. Should PCLN’s price action today concern us, or is this normal after a big acquisition announcement?

    • Andy M. Zaky

      From a timing point of view, I think this pull-back we’ve been seeing is working to our benefit. Because we don’t want that pull-back to start as we get closer to expiration. There’s going to be a pull-back after the big move we just saw. I’m happy it’s happening now rather than later. Also, PCLN is merely testing the 50-day right now and today’s action is a mere 2% down which isn’t that high based on PCLN’s normal volatility. At this point, not very concerned.

      • Andy M. Zaky

        If anything, we may add to our PCLN position here soon because PCLN is now oversold on the hourly which in recent history has lead to massive bounces. We’ll wait for now, but we may add to our $1200 – $1250 spread.

        • Thanks. I was looking at this pull back as a buying opportunity, but I wanted to make sure I was not mis-reading the situation. I will wait for your move before adding. Thanks for the response.

  3. Andy,
    Please expand a little more on what you expect for this AAPL bounce off of 30 RSI on the hourly. Also,
    what are your expectations for how low we go on this sell off. Currently, AAPL is trading at 91.75. Thank you.

    • Andy M. Zaky

      Wings — for the hourly chart, Apple could sell-off a bit more and maybe even get down to a 20-RSI. If that happens, it will probably rebound something like $3.00. Then at that point, we may see another leg down. I do think Apple will test the 50-day moving average at some point which is down near $83-$85 area which would be a re-test of the low $600’s at some point. Then from there we could probably see another rally to test all-time highs. Something like that makes sense. Apple has been on an non-stop run from $73 up to $95. A retracement down to $86ish before making another move to $100+ does make a lot of sense here. After each of these huge legs up in Apple, we’ve seen the stock test the 50-day in the not-so-distant future. On an intermediate-term basis, Apple always comes back to test the 50-day. It’s currently at $83.82. But by the time Apple comes around to testing it, that could mean $86ish a share.

      • Andy…in respect to timing on this pull back and the next leg up, can you give a best estimate on the timing. I know that is guess work for the most part, but is it reasonable to see Apple at 100 by July Exp. ?

        • Andy M. Zaky

          Well the timing thing is incredibly difficult. Here’s why. We’ve seen these moves in Apple before. In fact, since Apple hit bottom at $390, the entire move can be drawn out as four distinct legs with long periods of consolidation in between. Sometimes that consolidation lasts anywhere from 1-3 months. The last one was a very long time. We hit a high point in early December ($570) and didn’t retake that level until after Apple reported Q2 earnings. That consolidation period was a massive symmetrical triangle that lasted 5-months.

          So the concern here is that we could be entering another period of consolidation. that’s not to say there’s no opportunities. In fact, between Dec and April, Apple bounced around with some heavy volatility. It got down to $490 after Jan earrings and rallied back to $550, pulled back again etc.

          Yet, the prior two consolidation periods only lasted 1 month and 2-months respectively. So it just depends on how long this consolidation period lasts.

          IT’s not even obvious that we’re in one yet either. Just because Apple is pulling back here, doesn’t mean we’ve entered a consolidation phase. We need to see a hell of a lot more selling before we can draw that type of a conclusion.

          We could see Apple simply just rally next week and reach all-time highs by the end of June. But look at the daily chart closely and notice how these consolidation periods begin, and this little three day pull-back is beginning to sort of look like that.

          Basically, at this point, we need more information. Three days isn’t enough to draw any solid conclusions. Rather, you should be looking at it from the possibilities point of view. One possibility is that this is just a near-term pull-back and the parabolic run we’ve been on isn’t over yet. Another distinct possibility is a 1-month consolidation or a 2-month consolidation. I don’t think we’re in that same six-month consolidation that we saw between Dec – May, but it’s possible.

          Those only typically happen once every year to two years. So I think that one is behind us. Now we may get these small 1 & 2 month consolidations.

          • Thanks for the detailed answer….I entered some calls for July anticipating a continued run toward $100….I will watch closely the anticipated rebound and it’s strength and use it to exit if it appears to be only that…..a bounce. Of course, I’ll be looking for your interpretation of that move, before pulling the trigger. Thanks Dan

          • Andy M. Zaky

            Dan — take a look at the chart I posted in the 1:30 pm update for you. It should make more sense.

          • Even a short (1-3 month) consolidation would warrant an exit on my calls I think…..only
            have about 5 weeks till July Exp. Hoping for a quick reversal and run starting next week with out consolidation or will exit on the next bounce. We will see. Appreciate the chart….was aware of the long consolidation.

  4. Hi Andy,
    Saw your PCLN comments above. At what 60min RSI will you be interested in increasing/adding to the position (at 23ish right now)? Would your decision be different if we had no position at all (I am currently out of PCLN and looking at this as a new opportunity). Thanks!

  5. Andy you don’t expect the gap to be filled?

  6. Andy,
    AAPL is at a 24-25 RSI on the hourly as we head into the close. At this point, do you see Monday as a likely better buying opportunity for a $2-$3 pop?

  7. Happy Fathers Day to all the Dads……Andy, enjoy the weekend.

  8. Epic