Last Week Was the Start of a Likley Wild Month Dear Savio, What a wild week! It was so full of twists and turns that it felt like an episode of 24. If you watched that TV show, you’ll recall that each season covered 24 hours of action-packed drama where the plotlines changed constantly. It’s not every week where a supercharged presidential debate is followed a few days later by the president coming down with a potentially deadly virus. No wonder the market was all over the place. As a short-term trader, I try to “scalp” profits – that is, to profit off of small price changes – as much as possible when the market is not trending. PLUG Calls And that’s just what we did with the call options on Plug Power Inc. (PLUG) that I recommended on Monday, September 28. As the market opened up on the morning of Thursday, October 1, I watched as those PLUG October 9 $15 Call Options were heading to $0.40. I know that the price can fluctuate pretty quickly, which is why I sent out a reminder to sell half once they hit that target. I know many of you may not be at your desk watching these options, so I was giving you a heads-up to take profit. When I sent out this reminder, the offer on our $15 calls were at $0.40. See the option chain below. 
As a short-term trader, I use Person’s pivots and Camarilla pivots to guide me when to enter and exit trades. Computers are using these levels to buy and sell. You can actually see the volume increase whenever a stock hits one of these pivots. In the chart below you will see that they play “pivot pong.” They bounce from one pivot to the next pivot back and forth. It’s a bit of an algorithm battle. The best trades to take are when the coast is clear, with no pivots in the way. 
Besides pivots, stocks love to trade off of major price levels. Computers buy and sell off $0.50 and $1 increments. That is why Plug Power stopped at $14 and came down to $13.50 before it bounced back up again. And so, we never actually hit that $0.40 target, which is why we sold half of our Plug options later on Thursday for a 34% return. On Friday morning, October 2, President Donald Trump tweeted that he tested positive for COVID-19. 
However, we saw the heaviest levels of Dark Pool activity in the SPDR S&P 500 Trust (SPY) the day before. Did somebody know this news was coming out? Below is a table of SPY Dark Pool activity. On Thursday, October 1, we got a 17 million SPY shares trading in the Dark Pool at $335.24. This is $5 billion of late-reported trades that are originally from Wednesday, September 30. When the Dark Pool levels get heavy on the SPY, the iShares Russell 2000 ETF (IWM), or the Invesco QQQ Trust (QQQ), the Nasdaq ETF, we know we are headed for a large move in the markets. 
In The Dark Pool Trading Primer, this service’s “owner’s manual,” I walk you through what a correction looks like before it happens. I also warned you a few weeks that the Dark Pool prints were getting heavy on the major indexes. Due to this extra heavy Dark Pool activity, I have decided to remain nimble and light in my recommendations. Now, let me share an interesting seasonality chart of what usually happens to the S&P 500 during an election year. Over the last 59 years, the S&P usually is quite choppy in election-year Octobers. We obviously do not have a chart of election years with highly contagious viruses, but I would imagine that COVID-19 will only increase the whipsaw action we normally get this time of year. What is really cool about the chart below is you will see that the market pretty much replicated the seasonality pattern this year. We had a correction from February to March followed by a major rally, only to have another correction in September. I love when seasonality and the Dark Pool coincide with each other. I would never recommend trading on seasonality alone, however. Always follow the Dark Pool. 
And so, on Friday morning, October 2, I recommended exiting the second half of our Plug calls to break even… and for a 21% total blended gain. Once we make some profit on half of our position, I hate to lose on the other half. That’s why we got out of Plug when we did. SLV Calls On Thursday, October 1, I made a new trade recommendation on iShares Silver Trust (SLV) after seeing the largest silver Dark Pool prints that I have ever seen in my trading career. Right now, the SLV share price remains above the Dark Pool activity. However, if it does go below the recent Dark Pool prints, I’ll likely recommend putting on a strangle. Keep your seat belts on this month. We could have a very bumpy ride! Until next time… Happy trading!
Stefanie Kammerman,
Editor, Dark Pool Trader
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