My Favorite Setups
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My Favorite Setups

John F. Carter 1/9/2014

Welcome to the free video for simpler options. Let's take a look at DDD. Triple D, of course is one of the 3D printing companies. It had a really solid day today. I mean just very solid, up almost 4 percent on a day when the markets were very sloppy. Now take a look here at how -- this is where you kind of understand how you can kind of gauge what a stock is ready to do based on its Voodoo Lines.

And again if you guys remember last night when I talked about the Voodoo lines, the green ones are the second strongest, the white ones are the third strongest. So it's very kind of a normal where you come up, consolidate, pop up to the next one, and you know, come back down and test it, pop back up and then it's going to try you know, then from there this just kind of acts like a magnet. So it's like, oh OK, come down, come down, sloppy, sloppy, sloppy. We get a squeeze. The squeeze typically will propel you to the next one. And then uh...we get it there, try to break through it again and again and again and then finally some profit taking.

But where do we find support...exactly here at the third -- the third strongest -- Voodoo line. And now the squeeze is propelling us back up here. Now here's the thing. The first test of a Voodoo Line like this generally like nine times out of ten is rejected. OK. And then you might get another little test like that. But the next test generally with the squeeze...bam, takes you right up to the next one. So at this point looking for a move to 101.50 on DDD based on the Voodoo lines. And even in extreme situations these things work, I guess the only thing I can say is interestingly.

So here Netflix got the downgrade, went right into the tree line, consolidated, came down a little bit, came back. And you know, we're essentially we're just consolidating here but at this point what I'm looking for is that you can see the momentum here is switching, the squeeze is turning and generally on something like this -- and of course it depends like, OK how much selling is there and different things like that. But what I look for on something like this is that, when you have a big level like this, typically it's going to consolidate here for a while.

So one of the best things to do is that when you see a big kind of update like this, first of all you can sell puts. Because this typically holds. But this is a great time to sell Iron Condors in Netflix because it's going to sit here and hug this for a little while, while it kind of figures out what to do next. So it's a great time to sell Iron Condors that expire this week. Because the premium is kind of high but the stocks just kind of hang around here for a while.

And then Chipotle is a stock here that I kind of like. And I didn't get all -- I didn't get everything that I wanted on this. I'll show you my positions here in a second. But I noticed today that the 39 minute chart was squeezing and you can see what we've been doing since December 20th is hugging the treeline. OK. And again, remember with the tree line, where the tree line is it's a good time to do it. It's a good time to sell Iron Condors. We're just going to kind of hang out there until we get a squeeze in the direction of the daily chart. Now obviously, if you've looked at the daily chart of CMG it's higher. So all these short squeezes are meaningless. And this is kind of a weird one and short squeeze doesn't mean much. Short squeeze is meaningless again. A 39 minute squeeze down again, against an uptrend on a weekly chart and a daily chart is just -- you just ignore it. This is a long squeeze setting up though. The momentum's turning higher, you know B wave's above zero.

At this point now I'm actually looking for Chipotle to start its process of going to the next major Voodoo Line which is in this case is 550. Now it was frustrating today because I could not get my option placed filled on this. CMG's notorious for just having very wide spread. So I was trying to get a pretty decent position in the 525, 545 debit spread in the monthly calls. I could only get filled on one contract. I was trying to do it at 10 bucks. I did sell some of the 530 puts and those are the ones that expire in two days. So I actually had to revert back to the stock which ended up taking up a lot of buying power, obviously. It's a big stock. But what I'm looking for is 550. OK. And you can sell -- with the Voodoo lines and you see that like wow, 550, we got the squeeze, we got the target, you can sell puts, you can buy debit spreads, you could buy the stock. I mean it just depends obviously on the account size and what the stock is. But you know, some stocks it'll be like a $20.00 stock that you can do this on. Anyway, it's all good stuff.

OK. If you're interested in learning more about the Voodoo lines we're going to be doing our free webinar on the Voodoo lines Thursday night. As I'm talking, that's currently Wednesday. So that would be tomorrow at 8 o'clock east coast time which is 7 o'clock pm central time, OK. And in this free webinar we're going to talk about how to identify these key support and resistance levels, what exactly are these Voodoo Lines and why they work. Those lines that you see, they don't recalculate every day. They are permanent. A lot of -- in some markets they've been there for decades. OK, so it's not a lot of times with pivots and things like that when they're recalculated every day it looks great. It's like oh my god, it's amazing. But if it's there all year it's very powerful because there's just something you can bank on year after year. You can set alerts on it, etc., etc. So, why should you care about Voodoo lines? That kind of just ties in with what I was talking about. What are the Voodoo lines telling us now, especially for key markets like gold, OK, and of course the stock market. My favorite trading strategies using the Voodoo lines and of course we'll answer questions and things like that. So if you'd like to join us for this free webinar, first name, email address, register now, you'll get a link sent to you in time for the webinar and I look forward to seeing you there. Have a good night, good trading and we'll see you at the free webinar.