Markets looking weak – tread carefully bulls ?

Hope everyone had a great Labor Day weekend!

I certainly did, but to be honest, I’m happiest when the market is running in full swing.

Hopefully, you were able to catch some of the live sessions over the weekend. Here at Raging Bull, we stay busy even on the holidays.

As I discussed in my Alpha Hunter email this morning, I expect market direction this week to be elusive, to say the least.

QQQ looks wobbly, and interest rates seem to be weighing heavily across the indices.

By the way, a lot of people ask me how to find a good market heat map like this.

I suggest you try to use TradingView (click here for the daily heat map), which has lots of timeframes for you to scan through and best of all, it is free!

I usually prefer trading to the long side, but right now, I’m more inclined to short any rallies than add lots of bullish trades.

I believe we’re in for some volatility this week.

As always, only time will tell.

Without the support of the bonds, I think stocks are going to have a hell of a time sustaining any sort of rally.

Just take a look at the NASDAQ vs. the 10-Year Treasuries (this chart got even worse today!).

That’s a MAJOR divergence. Knowing the bond market is typically much smarter and more forward-looking than the stock market, I plan to watch it closely.

These two lines are eventually going to touch again.

The only question is whether bonds catch a bid or the QQQs fall hard. My guess is we’ll see some continued downside considering VIX is trading so low.

If you put a gun to my head for a trade right now, I would say “short QQQ and buy TLT (bonds).” I really think this divergence is going to correct soon one way or another.

Either QQQ is going to flop (I think most likely) or TLT will rally (I doubt it).

I’m playing conservatively right now. It’s definitely not a time for heroics.

I’m keeping a close watch on both QQQ and SPY. I want to see them maintain a sustained trend above the Keltner midline on the hourly chart.

SPY definitely doesn’t meet that criterion, and QQQ doesn’t have me convinced. I just need more confirmation.

Take a look at the charts and notice the relationship between price and the Keltner midline on the hourly charts (the midpoint of the Keltner channel is the dotted blue line in the middle See it?).

As I was telling Alpha Hunter subscribers earlier, there may be some short opportunities on interest rate-sensitive tickers. These include homebuilders, technology, and mining stocks – all of which are now getting hammered today. ?

In fact, one of my top ideas this week is in the mining sector.

I had a couple of very nice wins last week in Alpha Hunters. The MSFT iron Condor win I discussed in last week’s email. A 45% gain in a single week.

I just closed out this same trade again this week for another winner.

I am about to set it up again this afternoon LIVE with all of my Alpha Hunter members. Why don’t you join us?

But my biggest win for the week was the NVDA bull put spread I alerted on August 28th.

Alpha Hunter subscribers got this alert on their app as I entered the trade.

Just as I predicted, a quick move up by this semiconductor/AI powerhouse let us close out the trade in just a single day for a 60% gain. Oh yeah, that’s what I like to see.

Last week I mentioned we’d discuss theta (or time decay) and how it applies to your trades.

As an option seller, theta is my best friend.

Once an option is bought or sold, it starts to lose value.

For each day that ticks by premium disappears. And as an option gets closer to expiration, the rate of decay increases.

For the option of selling in Alpha Hunters, this means I have time on my side. Even if the stock stays completely flat, I’ll win by attrition.

It’s just one of the advantages of the strategies I teach.

?PRO TIP: I prefer selling options with about 2-3 weeks until expiration. I find this gives the optimal trade-off between stock movement and time decay.

Option buyers have to get the timing right. Their trade could easily bleed out BEFORE the move happens.

Picking the correct direction too early is the same as being wrong. They still lose.

In our next email, we’ll cover another key technical indicator, the MACD. I’m sure you’ve heard of it, but do you know how to use it?

To follow EXACTLY what I’m looking at and see which trades I’m making, join Alpha Hunter today.

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• The Alpha Chamber – Live analysis, trading, and chat

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I am on a mission to make $10,000 in real-life profits each month with Alpha Hunter (I’ve been really good at this so far).

This is a fresh month, and I am dead-set on getting my numbers. Make sure you join me for the mission!

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