Mexican Pennant (EWW)Looks to me like it's gotta break out sooner or later, one of few world indices not to bounce (mainly because of oil prices). Dipped into some calls Friday, but we may have to wait another week before it breaks out... we'll see.
If oil goes up, so will Mexico and Brazil (EWZ) for sure.
EWW trade ideas
THE WEEK AHEAD: USO/XLE/XOP, EWW, XLUEXCHANGE-TRADED FUNDS ORDERED BY IMPLIED VOLATILITY RANK:
USO 67/167
EWW 57/73
XLE 57/87
XLU 57/53
GLD 51/32
EWZ 50/85
XOP 49/105
SMH 47/58
GDXJ 44/86
XLF 41/53
FXI 32/39
GDX 31/66
TLT 30/25
BROAD MARKET EXCHANGE-TRADED FUNDS ORDERED BY IMPLIED VOLATILITY RANK:
IWM 59/60
EEM 46/49
SPY 47/58
QQQ 46/44
EFA 39/45
FUTURES ORDERED BY IMPLIED VOLATILITY RANK:
/NG 72/67
/CL 67/157
/GC 51/31
/ZS 51/19
/ES 47/56
/SI 41/51
/ZW 40/32
/ZC 29/27
VIX/VIX DERIVATIVES
VIX finished the week at 46.80 with the entire /VX term structure in backwardation.
MUSINGS:
Shown here is an EWW short put in the May cycle paying 1.00. Camped out at the 23 delta strike, it has a break even of 22.00 and has a 4.54% return on capital in a cash secured environment. Alternatively, the May 15th 22/29 short strangle is paying 1.54 at the mid.
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Long /CL at $20/barrel via out-the-money short puts or short put verticals may turn out to be the "trade of the year" after (in my case) being taken to the wood shed playing it non-directionally/rangebound between 52 and 63. Only time will tell; it's come up substantially off its lows already with it remaining to be seen whether OPEC+ can get its shit together and quit with the self-harm.
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In the IRA, it looks to be touch and go for acquiring stuff on my shopping list. (See Posts, below). I've stuck my lines in the water; the best I can hope for is to get some bites at April opex. If I don't get assigned, I'll re-up with a rung to replace any expiring worthless if the market stays down here. Simultaneously, I'm looking to exit my TLT position, which has a cost basis of below $110/share, thinking that the capital can be better deployed elsewhere, but don't want to do that if I don't pick any other dividend-generating underlyings to replace it. Looked at from that perspective, my "personal" yield on the TLT position in light of my particular cost basis is 2.98/$110 or about 2.71%, which isn't horrible.
Don't buy just buy because it is cheapcoz cheap can get cheaper......
If you have been to Bangkok streets market and are a good bargainer, then you are likely to bargain your way down the street, taking the cheapest offer that the shop owner is willing to offer you. Tip : Don't look back if you are not going to accept her offer or bargain further with her.
Same thing for trading as well. Just because it is cheap, do not fall into the trap of being an early bull (like what many are advocating to buy now). Nothing wrong if you subscribe into the DCA model (dollar cost averaging). But most retail traders I met or know have limited capital to trade in the market. That means, the smaller your fund size, the timing of entry becomes more important.
Like Bill Ackman tweeted : Bill Ackman
@BillAckman
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4h
I am beginning to get optimistic. Cases appear to be peaking in NY. Almost the entire country is in shutdown. Hydroxychloriquine and antibiotics appear to help. There is increasing evidence that the asymptomatic infection rate could be as much as 50X higher than expected.
The more retail traders sell to them, the more they can buy at cheaper price from you. And because they have deep pockets and can buy in stages, they need help from retail traders in terms of volume. But the opposite holds as well. Retail traders have smaller positions and thus a buy or sell decision has to be more careful , isn't it ? Unless you have lots of cash to burn, that is a different story.
Anyway, someone Pm me last nite to look at Mexico and my view is bearish on it. Latest article here . A 3.9% contraction on the economy is no joke and with its slow decision making process, more help are needed across the business owners and the people there. Already , death rates and new cases are not slowing down in Mexico.
Trade cautiously , traders !
EWW Mexican BreakoutGot into this this morning after the Trump news, chart pattern looks good for a breakout (along with a bunch of other stocks).
EWW has low options premium and good liquidity, you guys know this isn't the first time I've played with this. I get better returns than playing with SPY, DIA, or IWM options.
EWW Mexican Jumping BeanWas gonna be a day trade but I'm holding overnight, guessing a gap up tomorrow.
Bouncing from oversold conditions.
Pay attention to these foreign market ETFs, they have good options liquidity (EWW, EWZ, etc) and tend to move more than the US market. keep in mind they are not currency hedged though....
OPENING (IRA): EWW DEC 20TH 39 SHORT PUT... for a .57/contract credit.
Notes: One of the ex. U.S./Canada exchange-traded funds I looked at over the weekend with a yield that exceeds both TLT and U.S. broad market. Selling the 20 delta or so here, looking to acquire at a discount over where the underlying is currently trading. Cost basis of 38.43 if assigned; otherwise, I keep the premium ... .
Interesting ChannelsLooking at these lines drawn all over, using the monthly ,weekly, daily, and 4-hour, we see that the shares are hitting a strong multi-decade support area and are trading at the bottom of several different channels. I think, that a buy at these levels, shows a significant margin of safety for future growth trends as Mexico will benefit from its proximity to the US and being a trade partner with the largest economy in the world.
Maybe I am wrong and this continues down another 15% to a point of huge support, or maybe it crashes through to levels not seen in decades. However, with a 15% stop loss from this period, you could see a potential 6:1 risk:reward in buying a position at these levels for a long-term swing trade.
Trade war opens opportunity in Mexico (EWW)Mexico is relatively cheap compared to other emerging market stock exchanges. In addition, I agree with several analysts that Mexico could be the winner of the trade war between USA and China.
My investment strategy indicated a buy signal for EWW on May 21, with a target price of ~48 USD/share (expected profit of ~7.5%).