Called up MELI from the bench (6th man) to replace FDX as it hit a stop on the pullback on Friday (2/17). Both PXD and NKE had Calls sold against that expired – and will leave them in and do the same for March. ROP will be given one more week for the 100 Roll, otherwise it will be replaced. SHW did breach 100 on Friday but closed below – so close, battle stations!
Breakout !!! Loved playing that game as a kid. Now I play a different sort of Breakout – with stocks. Here is a good B/O (Breakout) candidate setting up that I came across this morning:
I won’t mention that potential Golden Cross …
Go long on the break over 43.50 and set your stop according to your Risk Management parameters. For me, I would use the rising 20 day moving average below.
One more comment here, for the FA (Funadamental Analysis) point of view: forward P/E of 139.52 so be mindful of that.
I have received several inquiries this week for specifics on the various watch list that I use. Here is my B watch list (they are named by the alphabet, just the way I have them grouped is unique to me only):
This list happens to be sorted by % Change Close and gives me a feel for how money rotates in and out of these stocks from day to day. Stocks in a pullback, like DECK (Deckers Outdoor) today, help me cull a list for Dip Buy plays in the future – just one way I use this list.
Hope your Options Expiration day is going ok.
I see a lot of engulfing bullish sentiment building up in 2012 – which is great as long as you manage your Risk.
However, what I wanted to cover today is the Bullish Engulfing candle. Not sure what I mean? Maybe this will help:Above is the Daily chart of EMKR (Emcore Corp). Notice the candle for today and how it “engulfs” the prior days candle (Doji). There you have it, a nice clean Bullish Engulfing candle.
Have not done one of these posts in a while so I thought I would put one together from a trade today in CF (CF Inds Holdings Inc). Below is a 5m chart show just RSI and Volume:
Simple, easy to follow price action. I have done 2 long trades today, and currently hold a final 1/3 that I will look to hold overnight. A trail stop is set at 176 on the balance.
Here is a look at where things stand in after hours for NILE (Blue Nile Inc):
As you can see, investors were not pleased with the earnings results and pushed the stock under $30 a share in after hours at one point. Some dip buyers have come in to the stock and it is now hovering near the $32 price level. Quite a haircut, and another example as to why one should only hold through earnings if you have downside protection (or some other form of hedge).
One of the trading lists that I keep is one that I call my “to fade” list – stocks that I want to “fade” a move on. Although this is predominantly for short positions, there are times where I will fade a waterfall in price looking for a bounce (or more).
One such stock that has been on this list is KORS (Michael Kors Holdings ltd). In late January I posted this chart with commentary that I was going to trade what I saw at the time (was on a B/O watch over 30). Now let’s fast forward to today to see what has transpired since:
The positive reaction to earnings produced a large gap up move and the stock finished up over 27% today on big volume. For those that held into earnings, congrats.
I had some great twitter exchanges this weekend that centered around the use of strategies, how to prepare to use them, the execution of, etc. One of the things that I noticed during these exchanges is how some interpret my use of a particular strategy – and how if differs from their implementation. Not that there is anything wrong with this, was just something that stood out to me.
This got me to thinking about this: I am “blending” strategies together and creating hybrids (making it more complex, or simplifying)? To answer this, I took some time evaluating several current trades that incorporated the use of options where I had a directional bias – but instead put on a trade with a more conservative Collar (own the underlying, sell an upside Call and buy a downside Put) and let it ride.
Since I keep a Trading Journal, I reviewed my notes on these trades to see what my motivation was and why I was apparently more cautious than normal (I get feedback from time to time that I can be quite aggressive … who me?).
Was I thinking the market was topping, were we getting too extended? Although some of the goals of each trade were similar, the rationale behind putting them on in the first place is quite different. So can there be a different reason to put on a trade (i.e. buying blood & play a bounce versus normal healthy pullback so buying the dip) but a similar implementation? I say yes.
Here is a look at the trades that I reviewed in this exercise:
- Long DECK with a Feb 80/85 collar
- Long CREE with a Feb 26/28 collar
- Long RCL with a 29/30 collar
- Long PPO with a 40/45 collar
A few of these look to be called away at February expiration (price above the upside Call strike) and the others are close to that upside Call strike. Capped gains? So be it. Downside protection? Absolutely.
I hope your month is going well and thanks for reading.