Three blogs and a little over a month have passed. Since the first one, we have kept an eye on the market and reviewed a few trades. We have also planted a few veggies with profits from trading the EH system and watched them grow. And finally, last week we experienced first-hand the importance of trade management as a key to survive and thrive in the long run.  

 We did all this with a, let’s say, very generic and introductory tone. And particularly on the compounding aspect, with a very small “position size” at the beginning. Naturally, same as trading, I wanted to get familiar with gardening, improve my skills, get a feeling of it before going big, you know? But, folks, it is time for me to spice things up… 

Before doing so, let’s start with a quick review of the Dirty and Clean lists, looking for some potential set-ups as we do every week. And then, I have something cool to share with you. 

 

General Thoughts about the market 

I will be honest with you, I am not trading much directional this month. Mostly Condors, Tackle 25 and covered calls with SPWR. Although it has shown some strength during the last two weeks, I am still neutral to (very) cautiously bullish in this market. But this week I am starting to see a few set-ups that could potentially become very nice entry points next week, at least in my eyes. 

 

AMD 

Last blog I said I would wait for a retracement to evaluate issuing naked-puts. Well, I am still waiting for a retracement. It has gone nothing but up since earnings and it is now approaching a strong resistance at $13.85. I will just wait for either a retracement or a break-out above that price before trading it.  

X 

I am waiting for either a break-out above $38 or a retracement back to $32-$33. You may call me Chicken McFly but the tariffs topic is still hot, and also the chart looks ugly. So, having so many trading options, I will be picky. One way to play it could be to issue naked-puts below the strong support of $31.5, but me personally…I rather wait for a nicer set-up. 

FCX 

There is a very strong support/resistance around $16.80, which was broken after missed earnings. Last week it finally went back up to test that level. I honestly thought it was a K.O.D. type of set-up, but it broke above it and it’s there. We had a red candle today, ideally I would wait for one more red candle to go back precisely to $16.80, and confirmation of going back north. If that happens, I will jump into it as a cheetah into a gazelle…sorry vegans!  

SLV 

While I’m a long-term believer in owning physical metals, I don’t necessary like SLV for a long term holding nor compounding. It doesn’t mean that it should necessarily be part of the “Dirt List” but today,  with the main goal of getting money out of it so we can put it elsewhere, I needed to allocate here. Also, this trade is slightly deviated of the pure EH system but It pursues the exact same goal, so I will add it in the blog …don’t judge me, ok? Traders gonna trade, remember? 

Regardless in which list you put it, SLV has been bouncing between $15.2 and $15.9 very consistently since early Feb. If you look at the chart, it has been very loyal to those two price levels (support and resistance) and it has picked my attention this month. The issue with a traditional credit trade (naked-put, bull-put, even Iron Condor) is that the premium on SLV absolutely sucks most of the time. So instead of sucking up premium out of it in advance, I thought…what if I swing trade it with a debit trade (either buying calls/puts or buying/selling the stock) between support and resistance?? And that’s what I did last week for the first time. Since I traded only a few calls, the profit was not much dollar-wise. But I do not measure any of my trades in dollar-amount, but in ROI%. I could use another blog to detail why I do this, if any of you want me to.  

Anyways, I bought calls of SLV on 5/25 with a “Doji” at support, and sold them on 5/22 right before it hit resistance, bringing a 22% ROI in a week. Needless to say that, as soon as it hits one of the two price levels again, I will swing trade it. Those profits go to the garden !! 

TSLA 

Channeling between $270ish and $300ish. I tried to swing trade it last week but I got stopped out the day after with a big nasty red candle, and it has been sleeping over $277 since then. I trust that Elon will calm down a little bit, but I trust the support levels even more. This week I issued a $240/230 bull-put spread, trusting that both $275 and $250 supports will hold, as they have done before. If they don’t, well I will take a loss before it hits my strike price. 

SPWR & FSLR 

Last week I exited my SPWR naked-put play with profits. Unfortunately, due to the poor management we talked about last week (link to previous blog), I lost 80% of that profit. So, I literally profit the same that I would have if I would have sold only 1 contract. Still a small profit, plus a lesson learned…I’ll take it. That, and I took profits on my covered call in my growth account. 

This week, I see a similar pattern forming in both FSLR and SPWR. If we draw a channel trending up, and we connect all the HSL, we see that today they are both hitting the bottom of that channel. You see it? SPWR chart is a little messy, but we can see not only that it bounced two consecutive times, but also that the bottom of the channel matches with another previous support ($8.40) and the 50 SMA at the same time.  

Bottom line, I am liking these charts and I will look forward to trade one of them next week, upon confirmation. 

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See, I read many blogs from the coaches at Tackle (I am a big fan of TC by the way…) and each one of them has a particular way to write. I could probably read a blog and know who wrote it, no matter what the topic is. They reflect a bit of the author’s essence, beliefs and background.  

For this one specifically, Bob’s footprint is strongly related to his beliefs not only for this system, which I share, but also to his background of philosophy degree. It that point I am a little different than him: my background is a little more let’s say structured and absolute, as I am an engineer. I enjoy working on projects, I always have…taking a bag full of things and try to put them together in the most efficient way so it can work and produce something. I like challenges, numbers, timelines…I love strategy.  

So, since I am trying to leave my footprint on this blog, I am going to engineer the heck out of it…and I will do so by giving birth to what we will call from now on “Operation Market Garden”. And, just like the British during World War II, we will thrive. 

 

Operation Market Garden: Description 

If you haven’t heard about this before, please go ahead and check it out in Wikipedia. But long story short, it was a strategic and tactic operation that the allies used during WWII to defeat the Germans. Now, I am not using this name because I particularly like the British or dislike the Germans, but purely because of what the operation itself represented. At the end of the day, it consisted of a very complex mission which success depended on perfect planning and coordination, and extremely accurate execution. 

The operation was a project itself with goals, resources, strategic planning and execution of two main sub-operations: Air attack, called MARKET, and a ground attack, called GARDEN. 

In our own version of Market Garden, we will also use two different methods: Trading the system to get resources (Money from the MARKET) and use these resources to compound and concur land (Grow a bad-ass GARDEN). The project will have different phases, which will be detailed, described and perfectly quantified in the upcoming blogs. Here’s a hint of what we will cover: 

• Objectives of the project: to build a bad-ass garden in my roof-top.

• Project Cost: what do we need, where will we get it and how much it will cost.

• Investment required: How much money and time we will need to build it. And how are we going to get it via the markets. 

• Execution: We will execute the project week by week, trade by trade. And measure absolutely everything. 

Different than when Bob started his journey with this system, I do not have years of trading experience in my belly. So, it will be a big challenge for me to execute this. But I will do my best and I promise you one thing, I will keep it 100% real. If trading goes bad, I will show it in the blog and execution will be delayed. And if trading goes good…well, we will have to build the new Babylon. 

And as every idea, this one started with a sketch. I am lucky enough to have a talented wife that med it easy for me to visualize the goal…check it out. 

 Who’s ready to start Market Garden with me? 

 

Cheers,  

Franco