Market Reversal?

Hello. Today, the market put in a negative close with a narrow price movement. This type of price movement is indicative of a bearish doji candle. This type of candle stick price movement indicates the potential for a bearish reversal. If you are a trader in the market, you would be setting your stops to protect your principle and profits, as well as looking for securities to short. Also, this has caused me to reflect on another potential chart pattern.

Within the past three weeks a blog I follow mentioned something that bears mentioning here. The blog, Options Trading Beginner, had a two part article on what is called a Triple Top Pattern (You may read both articles by clicking on Part 1 and Part 2). This type of pattern, not to be confused with the Head-and-Shoulders pattern I mentioned in the previous post may be occurring in the markets. I personally was hoping for breakout movement, but we don't always get what we hope for. That is why we set stops.

As far as my portfolio is concerned, I am yet closer to breaking even for the year with three more months to go. As expected, my Covered Call position on NG has reached it's $5 strike price, putting it in contention for being called away from me 36 trading days from today. As mentioned in the previous post, I am okay with that as I have become more interested in owning stock that pay dividends, which NG does not, and I have already made a satisfying profit with it.

My Call option on CVX has just turned negative, but not yet at my stop price. If this reversal candle turns out to be a dud, I should again see profitability from it next week. My Call option on DIS, on the other hand, has maintained profitability. Since it has already broken out, I am inclined to believe that it has the potential to continue higher. But, of course, I am no longer the fool, and have a stop in place to protect the profit that I do have.

I also have a new Call order that executed today. This one being on T. Although the price movement today wasn't as powerful as I had hoped for, nor was it as high, it is above the declining trend line I identified in my charting of it. And, as is my current strategy, I have a stop order in to protect the majority of my principle should the prevailing trend of the market drag it down.

What I am doing now is, doing my due diligence in finding securities in my watchlist that I could set Puts against as my capital becomes free if this market decides to turn south. I've been told that is what a wise investor does. That is my opinion, you can take it or leave it.

Disclaimer: See bottom of page.