Are You Ready? Selloff Warning Signs!

right hello Traders it is Thursday July 11 2024 red background because we lost some money today we actually lost over $400 in this account yeah 4 so a losing day today we're going to talk about that because I'm going to share wins I'm going to share losses with you did not have a post for yesterday's trading uh and yesterday was a fantastic day up 1300 almost 1,400 bucks but today I didn't post that yesterday but I'm posting today we lost $471 I'm going to cover that talk about that with you as well got a whole another video I want to cover on chasing shiny objects but I don't want to get into it because I got a bunch of stuff I want to cover today so I'm going to cover why we lost today why we violated not necessarily a rule but we really didn't trade the way we should have traded today uh because I was Dumb and I really didn't follow kind of my my own charting knowledge I kind of went against myself and it cost me a bit a little bit today so we lost a little bit of money today not a huge deal but it's always frustrating but you know you win some you lose some uh and it made it worse because I was out walking my dog trying to close a trade while holding a leash in one hand and trying to close and I got some slippage on that as well anyway uh I'll talk about more about the shiny object chasing later but in a nutshell and I'll do a whole another video but in a nutshell what I was noticing last night was you know we're we're kind of remodeling our house I shouldn't say we're kind of we are remodeling the house there's a lot of construction we're kind of confined to our second floor and probably sitting in the bedroom watching TV watching some soccer uh there and I'm just scrolling through you know Facebook and Discord and just looking at different trades and always trying to learn something watching YouTube videos of uh some good people out there that uh I'm always looking to take on some new knowledge and you should as well and one of the things I noticed in the Facebook group was every time somebody posts hey I I've won 10 times in the last month or I'm having a great first half of the Year all of a sudden there's 50 posts what are you doing what are you trading how are you trading that okay because because everyone's attracted you know like moss to a flame that you know to the shiny object if you're always chasing the shiny object you're going to fail in trading 100% if you're trying to figure out why somebody on YouTube made some money for the last six months the last two weeks yesterday whatever if you're trying to chase people saying that they're making money and they're doing well which there's plenty of people doing that and you're going to chase what they're doing what are you doing how are you doing what you how are you entering what are you doing how does that work if you're doing that okay you're going to become an inconsistent Trader you're never going to have a strategy you're never going to have a plan you're never going to stay disciplined you're not going to stay true to your plan you're always going to be an absolute disaster and a mess of a Trader okay you have to find what works for you I've landed on what works for me there a good handful of strategies there's some other spec type things that we do okay but for the most part we've got our three or four core strategies that works 90% of the time and then there's some spec trades that we will do maybe we'll do some zero DTE maybe we'll do some put credit spreads maybe we'll do some naked puts maybe we'll do some covered strangles those are all small spec trades and I keep them very very small but stick to your core okay you want to experiment with some of these other things you got to keep them low but don't just change and overhaul your whole trading plan all right so let me get into uh we're going to update our account live for you here uh and I want to talk a little bit about what's going on uh in the market I want to share with you some of my concerns about where the market is right now I think today was a really really good day in the market uh would have been a good day in our portfolio had I not made a stupid trade uh that cost me some money today other than that you know we would be up and we put some trades on this week I think are really going to pay off uh for us and we closed some winners today as well so it's all good great stuff uh so I'm excited about where we are and I'm excited that hopefully the Market's going to pull back 300 400 points or more okay but hope is not a trading strategy so I can't really hope the Market's going to do that but if it does we are going to make some money uh in these accounts so I really love the way we are set up so let's jump into our trade tracker let me share that with you and I'm going to update it live uh with you so let's go ahead and update today uh we ended up day with our Delta at 417 so dropped our Delta a little bit uh still very delta neutral at 8% we ended our Theta today at 1471 we did put three new trades on technically two and we took two off uh today so we've you increased our Theta but just a fraction Out There Our net lick did drop today 528 557 okay and our BP usage dropped as well 30766 all right so there we are on the day and yes there's our $471 loss on the day frustrating uh and we'll talk about that however we are still up 27% on the year so we're in on Pace for a 50% plus Gainer this year we going to make more if this Market starts going sideways and down uh we're crushing the S&P by over 10% uh right now actually we're you know at 27 versus 17 that's not really a 10% difference we're actually up almost double uh the S&P not quite so we're beating the S&P by what maybe 80% in technically all right so let's take a look at what we did today uh and I'll explain what happened in our trading so first thing that happened today was due after the CPI report came out things took off a little bit gold continues to make a little bit of a run here I like gold I love the gold charts I think it's potentially breaking out to the upside I like gold this looks pretty good uh we managed to close the naked put trade at 40% we were only in that trade for8 days so eight days to make 40% 55% return on Capital in eight days basically a week to make 5% okay if I was one of these YouTube G gurus out there I'd probably post the fact that I'm making 250% a year on my trades because I can make 5% a month or 5% a week sorry anyway uh and then bonds bonds also moved nicely higher on the session today good Bond move what' that do stopped us out of naked puts on bonds too didn't stop us out I'm sorry we took profits there at 44% 13 days in that trade to make 5% okay so I guess that's a failure we only made 120% annualized uh but again you can post that up on YouTube and probably get 90 more followers or something uh anyway two winners there however here's the loser this was a zero DTE trade that I got sucked into knowing better and I didn't I didn't follow my my uh didn't follow a couple things correctly here so number one entered this trade around 11 o'clock while the market was falling I even told members that a call Credit spread was to play but I thought maybe it had gotten away from us because we were dropping so much after the initial open but I called out a call Credit spread but did I trade that no I took a quick look at the chart and I saw that we were moving lower but we were hitting that 3 ATR band which means I thought oh maybe we're getting over oversold and I look for the market to make a little bit of a reversal which it started to right around 11 but only only one or two ticks okay only one or two ticks on the three minute chart started to reverse so I sold a put credit spread the bad thing about this trade is this was a winning trade had I let it go to the end of the day but you can't you got to stop out and stay mechanical uh and and do that uh but essentially what I did was I entered too early I did not see the signs on the 15minute chart of a reversal in the in the day which didn't happen till noon at noon that gave us the perfect entry sign to put a put credit spread trade on and that would have been a winning trade so I had the right trade I had the wrong time because I didn't really follow my own advice and I jumped in too early I didn't wait uh until I actually saw the macd and RSI reversal starting to happen and one of my rules is even even though we may go past the 3at band I probably could show you this on a chart but even though we may go past the 3 ATR band on the chart if the 3 ATR is either moving up or down by like 45% or so and you're just writing that down we don't place a trade okay that's not overbought or oversold on that so uh a couple good lessons in there for me I almost always follow my plan pretty well but sometimes you know you just make that trade and it just wasn't the right wasn't the right idea uh we never really got to an oversold RSI reading but we did reverse on the stochastic momentum indicator which is one thing we watch as well as the RSI they both reversed right at noon and that's where we would have entered the day was pretty much sideways to up from there and we would have been fine so we're our process is right but we didn't follow the process so I took a a bit of a loss today what made it worse was I want to get out at a 200 or a 2X loss and while trying to trade on my phone and walking my dog and talking to my business partner on the phone I couldn't get the the trade placed correctly and it went past my stop and went a little bit further I still got out but I got out at a much bigger loss than I wanted to so anyway a couple things there however we only ended the day down 471 bucks in realized gains hey you win some you lose some me look I mean I lost one last Friday okay I lost one a week before I had a losing day you know a week before a week before look at these days one thing you notice is that most of these losing days have all been Fridays I need to avoid trading on Friday because Fridays which is the yellows here which is the end of the week Friday have not been a good day uh for me in the market I probably just need to not even turn on the computer for Friday this time we did it on Thursday okay so we'll see otherwise would have been a nice day and we probably would have been pretty dog on close or we would have been close to probably a new all-time high today had I not had a zero DTE loser uh anyway that loser on zero DTE took us down into negative territory for the month I'm sure we'll make it back uh but we've only had one other losing month the entire year uh so we'll see what happens we're still you know we've still made 8,600 bucks on zero DTE anyway so that's all good one thing I wanted to share with you today though is what I'm seeing in the market you know it's not anything new this takes no genius okay you just got to be looking and you just got to uh pay some attention to what's happening out there so let me share some charts with you and we'll take a look at what's going on is why I think it's a little dicey out there to be getting long and we talked about this in depth with members yesterday and I placed some trades I placed some xl111 trades and I have some other xl12 trades that I'm setting up in a bearish trap SL hedge type mode and I put a new style hedge on this week as well so I've added a new hedge I've added some trades that are bearish in nature uh that if we start to go down are going to start to pay off significantly for our account so I love the way we're set up and you saw the fact that our Theta or our Delta is pretty flat anyway uh I would expect that our Delta will continue uh to look pretty good uh with what we have set up but let me share the screen with you guys and let's take a quick look at the markets and I'll get off the screen so you can see everything all right so here's the es Futures and we're just going to really focus on the weekly I don't really care much about the daily uh I just want to see what we're doing weekly and then potentially what we're doing monthly so here we are and you can you know we know we've been overbought for long periods of time before we started to tip over we had three- week pull down and then we rallied again from that after we bounced off to 21 EMA get overbought sell off get back overbought sell off we have never been even close to oversold except for back in like October of last year we're nowhere near the 21 em you know EMAs on either the daily or the weekly so there's really no reason to get super excited except we are starting to see this you know turning over here on the RSI and maybe the macd so maybe we're gonna get a little bit of a pullback here on the in the short term the question is where does that pullback come down I really want us to hit the 21 EMA which is around 5300 okay that would be a 350 400 Point drop from here on ES that will probably wig out half of you uh that are not going to expect something like that but I really want like an 8% drop but I just don't need it in one day and today was not a huge drop in one day we only went down less than 1% on ES so it wasn't a huge down dat on ES on the NASDAQ you went down over 2% because you got murdered on the mag 7 so your your big name text got got beat up heavily you got Apple down two almost two and a half Microsoft down two and a half Amazon down two and a half meta down almost four over 4% Google down 3% Nvidia down 5 and a half % Tesla down 8% today Netflix down 4% Costco down 4% okay Amat down you know appli you know AMD down 1% Qualcomm down four M so all your big name stocks took pretty good hit today but they're not really close to their 21-day moving averages on The Daily or the weekly okay but my one of the things I like to look at is the put call ratio and this was something uh that I have learned uh in the past so let me oops let me get to this grid here let's take a look at it here so let's zoom in well we I won't even zoom in let's just take a quick look at this um overall and this is something I really got from from John Carter many many many many years ago uh but looking at the put call ratio and you can see I've got a couple different things things on this chart so this is a daily view of the put put call ratio going all the way back basically two years to 2022 so here's in the bottom here you're seeing the SPX so this is the S&P down here right so you're seeing the S&P and below and then you're seeing the put call ratio up here it's oscillating so it's an oscillator and normally you're going to see it staying below one and above. 7 okay that range contains almost all of the time for the put call ratio but here's what we want to look at we're looking at the 10 period simple moving average which is the white line This is the 10day moving average when this is rising the Market's falling so you can see here if we drew a trend line from these lows back here and we looked at this whole piece all the way to here right look what happened in 2022 starting from January where it hit the low okay this was way below the 7 which is a pretty bearish reading okay and the put call ratio that means there's you know a little bit of an overbought Market all right so we're down here and now we're reversing and you can see the 10day moving higher and it came comes down bounc but it keeps just drifting its way higher along this trend line well as this was trending higher for all for an entire year the market was drifting lower for the whole year okay then in 2023 right after we also had a little bit of a down and an up but as soon as we hit this top here in 2023 we started to sell off on this trend line coming down on the put call ratio and the market trended up at the same time okay all the way to August in August well actually not even in August back in July we bottomed below the 7 and we started to reverse our way higher and we did that all the way to October okay so for all of August September and October we moved higher on the put call ratio and the markets drifted lower and then you hit this over one which is overbought reading and then you drifted down and you're still drifting today and now over the last several days not only have we been trending down which means the Market's been trending up okay we now hit some pretty extreme low levels I mean you are now seeing a the low on the put call ratio that has not been seen since January of 2022 and what happened in January of 2022 okay that was the start of a yearlong basically the bare market now am I calling for a bare Market not necessarily however what I am saying here is the Bottom's not in yet you're still falling okay which means the market can still continue to get a little bit overbought here on the market well this thing might start to curl up like it's just done so you can see that today yesterday and today we finished the day with a higher uh put call reading which means you're starting to get a little curl here okay on this 10day moving average it's starting to curl up I would say if we get another day or two moving higher or even a week moving higher on this okay that should be a negative for the market that should signal that potentially we have at least a bit of a pullback coming now does that pullback just come down tag the trend line and bounce off of it or go back and tag the the 21 EMA or something that's fine okay I would be fine and then we bounce higher makes me a bit nervous that we're such an extreme level and the last time this happened was 2022 I am not calling for the great bare Market of 2024 the second half however things don't look perfectly great out there and the other thing this is not a main indicator for me to take a look at but if you follow the buffet indicator okay and if you follow the buffet indicator you can do it in a couple different Fashions I take look at it from current market valuation.com you can search for the buffet indicator and it'll tell you how it's done but essentially what it does is it takes the total US Stock Market Value and divides it by the GDP okay so when the Market's getting overvalued 50 some trillion dollars way over the annualized gross domestic product okay you start to hit some pretty extreme levels on this okay you are way above you're now two standard deviations above the historical trend line okay when that happens the markets are getting overbought now can they stay overbought sure we've been overbought on this Market okay since back here somewhere in about 2014 okay it there's long periods of time going up okay on this thing but you can see when we hit some of these higher values like we did in 2000 okay or like we did in you know 2022 you know 2022 extreme level rolled over and you know what happened in 2022 what happened in 2020 what happened here in 2008 so you can see that when we hit some of these Peaks and roll over you can have a you know now some of these have been shallow so again nothing to to fear but this is two standard deviations right now above okay the historical trend line okay so we are definitely overvalued in here so again is this the endall be all indicator no essentially what we're looking at here is the Market's overvalued the put call is at an extreme reading the buff indicator is at an extreme reading I would say it's just prudent to exercise some caution which is what we have been doing all week this week right so we've been putting on trades that of a heavy trap or bearish component to them we've been putting on Hedges this week we're not changing and altering our campaign style trades we're not doing any of that okay what we're doing is we're shaping the overall portfolio we're moving away from some of the in fact if I can share okay I'm looking at my allocations here and Es is only 23% of the total account and so only 23% of my account and I I share this periodically so you guys have all seen this but es is only 23% of the entire account it's not even half the account so if the market really starts to sell off well not even a quarter of my account is in in the S&P 18% is in bonds okay bonds are going to love this kind of stuff okay I'm still very bullish on TLT I'm very bullish on bonds I added more naked puts on bonds today I have plenty of TLT trades on so I'm fine I think bonds go up I think rates will come down okay I'm also heavy into oil 177% on oil oil kind of loving this move okay oil's been in a pretty good bullish Trend I'm also 11% in gold and I love gold we added another naked put in gold today after taking a win on a current naked put and gold looks like it might be breaking out as well right then I'm in the you know the Euro the aie dollar you know and then a couple other little things in here and then bill is also so treasury bills is also 177% of my buying power so again I just want to make sure that you guys understand that it's not all about chasing the shiny object and ignoring what's going on I'm simply and I'm not playing the news I didn't even I don't even know what the CPI was okay we had plenty of members talking about the CPI and what they felt that that was going to do again stop your opinion does not help anybody trade opinions do not help your trades okay stop having an opinion and look at the chart and trade what you see what do you see in the chart and I just showed you what do you guys see in the chart right now what do you see in this chart I see an overbought Market that's still Rising on the weekly but rolling over on The Daily it's still strong but it's a little Toppy and we have a very very distinct Shooting Star inverted Hammer candle starting already this week that if we don't have a big rally tomorrow this will be a pretty good reversal candle right here that's also not a great sign so if we start to sell off next week which is possible okay you're going to see people start to scream in pain because their their Market's down 2% if you took a hit today it's not like you didn't see that it was overbought okay but yet you kep buying stuff right I'm adding trades that I think are going to complement My overall portfolio not adjusting my 112s and they have traps anyway okay I'm not getting super crazy on adding standard 112s no what I am adding is adjusted 112 style trades lower credit bigger trap anticipating that maybe we get a little bit of a market pullback do I think the Market's you know I think we're heading into a recession I've been of that mindset for a year now and we haven't done it okay however at this extreme readings on the uh on the Buffett indicator typically a recession follows uh almost every single time on those so you got to just keep an eye on some of the things it doesn't mean it's going to happen you trade what you see and don't guess just trade what you see which means don't go crawl into a hole because Tom said Market's going to zero okay it means start to be a little more cautious but don't change your whole trading plan I didn't change my core strategies all I'm doing is with extra BP that I have I'm shaping the overall look of my portfolio a bit I'm moving away from some of the es bullish stuff I'm adding larger trap sizes larger PDS trads and a little bit of a different hedge style in there if we look at oil looks pretty bullish okay if you look at bonds I think bonds look pretty good I it wants to break this symmetrical triangle to the upside it's getting to the point where I don't know if I want to keep selling strangles in here but I will for now okay gold night look at it broke out of this we've been talking about this volatility box for weeks and weeks and weeks folks and it broke out today big breakout on gold today I think you now have the momentum squeeze is tight and ready to fire if gold gets going this thing's going to Rocket I think new highs in Gold are around the corner so I like where gold is U aie dollar cranked up today and then sold off uh a bit on the session and the Euro kind of did the same thing but they broke out of these ranges and and ran higher it's all good okay we're up really nicely both of those trades and then NASDAQ look how overbought this stupid thing has been okay and every time it cranks down here and we start to fall and the momentum picks up we get big selling weeks ahe I think this could be the start of another selling week we'll be looking at the 21 to 50 and we'll be looking at this trend line to see what is actually going to hold up here plenty of support plenty of support areas here okay don't go into the bomb shelter and stock up on water right now but what I want you to do is I want you to be cautious so red background a losing day today I dropped $475 on a $530,000 account I will live to play again another day tomorrow we actually have DP to spend I will look to see what shows up tomorrow but we added uh multiple trades today and uh I think our our portfolio is right where we want all right if this was helpful to you click the like button down below drop a comment be happy to read those if there were you know if there's a good question in there uh worth responding to I will try to respond as best I can uh to you guys I'm not here to give you Financial advice but I'm happy to read your comments uh down there I can't tell you how to manage your trades and you have to be able to do that you want to learn how to do that even more in depth come join us in the Discord where we're giving you trading l lons every single day and a ton of knowledge all right we'll see you guys later if you're not a member here of the YouTube channel subscribe help me out help others out and be on the list to get new alerts because I'm coming out with a new video maybe even later tonight but for sure in the morning about chasing the shiny object which I need you to stay away from okay turn off your Facebook okay turn off your Twitter okay stick with me and we'll make you rich byebye

Channel: Tom King Trades

Views: 3,630

Keywords: options trading, options strategies, stock market, trading, live trading, trading tips, technical analysis, options for beginners, futures trading, options on futures, option trading for income, how to trade futures, futures trading for beginners, how to trade options on futures, how to manage trades, how to sell options on futures, selling options on futures, buffett indicator, market sell off, how to handle market correction

Id: sDP4_T83vNk

Length: 31min 28sec (1888 seconds)

Published: Thu Jul 11 2024