I frequently see debates ensue between those that take a FA (Fundamental Analysis) approach versus those that rely solely on a TA (Technical Analysis) view of stock charts. Today I found myself needing to pay attention to both sides in earnest as I was involved in 2 trades that required a lot of focus, but more importantly I needed critical data from both.
I have been short BKS (Barnes & Noble) since Feb but had started to see a lot of rustling from those that were looking to get long. I keep an eye on the charts daily, but elected to ferret out more information on the FA side of things. Although I don’t see a real case for a viable business there, there is still chatter of a possibility for a LBO as a possibility. I am not one to answer whether that makes sense or not, but I would not want to bet against that possibility at this juncture. A view of the chart for 4/19 & today show that someone has a belief in that possibility. So I have closed that short position for now, but will certainly keep an eye on it for a revisit.
There are days where it seems there is an opportunity fest all day. Today was one of those days. I picked up on some PUT option activity in OCZ (OCZ Technology Group) and saw various messages on twitter regarding a Seeking Alpha article on possible fraud. I do follow this stock regularly so I was comfortable in just following the herd into the May 10 PUT options. The waterfall move wasted no time in forming and the stock headed down to the 6.5 level rather quickly.
A bounce occurred at 6.25 and the stock began to retrace. I began to sell some of the option contracts. I sold most of these contracts in the $3 range. I then began to review some of the FA information that was being put out on twitter and elected to play a retracement from the long side.
Although I made the decision on my PUT option exit based on technicals in the chart, my decision to then consider a long position was based on technicals AND information from reading the SA article as well as other valuable information reviewed (HT @firstadopter). Below is the how the chart of OCZ ended for the normal trading session:
So technically, I made some of my decisions from a fundamental perspective. LoL