One of the trade setups this week in my “to fade” category was BVSN (Broadvision Inc.). What I use as guide for entry on the short position is the Accumulation/Distribution indicator on a 5 minute chart. Here is what a recent chart looks like with the noted pivots that I traded:
I am currently looking for a 2nd trip short today as it bangs on this 37 price level. The 1st short position was stopped earlier on the dip near 33 (2% trail stop).
Today is a big day in this earnings cycle as AAPL (Apple) reports after market close. For a little perspective on what the run up into earnings has looked like. Here is a Gallery of charts: Daily, Hourly, Weekly, and finally the Yearly.
The Bollinger Band squeeze is one of the more rare patterns I come across, but one that sets up for a really nice move. In reviewing charts this morning, I came across VRSN (Verisign Inc) that is currently in a really tight BB sqz:
The trade setup here is to play for a Breakout over the 36.50 level on good volume.
There are times that I view a particular chart and I see several possible targets and/or scenarios playing out. Ugh.
So what is the right approach? Do you just move on to the next potential setup, something more “clean”? I see nothing wrong with this approach as I often just move on to evaluating the next setup(s). However, there are times where there may be some real value in rolling up your sleeves to capture the highest probability of the next price movement (up or down).
Case in point, I bring you ALGN (Align Technology) Daily chart:
As you can see, there are 2 possibilities clearly laid out here. First, you have the Breakout (B/O) Watch over the $25.50 level. Second, you have a large Gap Fill below that will eventually get filled.
Which is more probable in the next 30 days? I’m all ears, leave me a comment.
Update: So what has occurred since? The stock did move up through the B/O level, pulled back to the 50 day moving average, and pushed then pushed back up through the prior B/O level again. So far it is holding those gains.
Here are the performance results for this week. $NKE (Nike) is on the 100 Roll & 6th man $MNST (Monster Beverage Corp) came off the bench and was a playah:
During a review of the GOOG (Google Inc) daily chart, I noticed several small gaps that remain unfilled from the October & November action. Here is a chart with the gap areas noted:
The 1st gap to note is between the high of day of 559 on 10/13/2011 & the low of day of 561.33 on 11/25/2011. The 2nd gap then occurs between the high of day on this same day, 11/25/2011 at 574.27, and the low of day on 11/28/2011 of 576.50.
Gaps are usually always filled so be mindful of how close price is to these areas. Price is currently trying to hold the 100 day moving average but looks vulnerable to fill these gaps below – and test the flat 200 day moving average (area defined by the box).
See the Update on this blog post at the end.
Since closing 2 pairs trades this week, my stable for this type of trade was looking quite thin. So I whipped out one of the tools I use – the Correlation Tracker - and looked for a stock that would be a good pair to NFLX (Netflix Inc.).
I bring you STMP (Stamps.com Inc). Here is a snapshot of the correlation between the 2 stocks:
As you can see, there is a massive range between the two stocks that can be played for some mean reversion. Based on closing prices today, January 20, 2012 you can consider the following trade:
1) Short 4 lots of STMP at 30.31
2) Long 1.2 lots of NFLX at 100.23
For those that prefer the Options approach, consider this trade:
1) Long the February 30/25 Put spread for $1.50 on STMP
2) Long the February 105/115 Call spread for $3.00 on NFLX
Update: The long NFLX portion of this trade has stopped out for me (2/10/2012), but the short STMP portion has remained. The stock is testing some support from mid-December 2011 so be mindful of this if short.
$SHLD (Sears Holdings Corp)
This stock is seeing a nice Short Squeeze on some rumors, with a little Chaser action thrown in. Here is one look at the action in a PnF chart:
For some Perspective, and a different chart view, here is a Daily Area chart with Fibonacci turned on:
Price has not even approached the 23.6% Fibonacci level yet (near 51) but looks headed there given the volume footprint. Not sure on how this resolves?
Look Both Ways.
A nice week for the Fab 5 (and the 6th man). I will do a final update this weekend. Here is a summary: