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This is a post that deals with a trading style that I like to utilize as frequently as possible: something really simple, mechanical, the “if this, do that” trade. In this case, the “if this” part is a Stochastic buy signal.

To illustrate, I bring you the Daily chart (courtesy of Tradingview):

If you are looking for a signal, and like to keep it mechanical in nature then this ought to appeal to you. Clearly at a buy point here – and based on prior entry opportunities – this would be for a Swing time-frame.

Using a Mapp to get Perspective

Since the subject of Maps has been all over the news recently, I thought it would be relevant to do a post on Perspective with $MAPP as the subject. This is one of the stocks that I am stalking and continues to look good (tried a little B/O on Friday to end the quarter, investors didn’t mind owning it into quarter end).

Let’s take a look a few different views on the Daily chart. First, a traditional candlestick chart with a few of the normal moving averages listed – and a channel that has formed:

As you can see, the 50 & 200 Simple Moving Averages have become embedded and are tracking side by side. It sure does look ready for a nice Breakout to test the 16.5 level above.

Now let’s change out the lens on the camera for an entirely different view. No moving averages, just a Pitchfork:

Does this enhance the perspective or does it take things back out of focus? Since mid-August price has been moving up with the rising TL of the fork as a guide (just a few dips below, quick recovery).

Now for a final view, I bring you the Point ‘n Figure chart:

This helps to confirm the Bullish perspective with a Double Top Breakout on 9/14 and a current Price Objective of 20.

Turn by Turn directions. excellent.

The Fab 5 – update

I hit a milestone this week in the Fab 5 strategy with the 20th position to achieve the “complete” status in the program: $COST.

The $RGLD position briefly took a peek above the key $100 level on Friday but closed just below it, narrowly missing on a Day #1 of the Roll. It had a big move up to end the week after a pullback earlier in the week. I added 2 new positions this week as the slots opened up. They are $MON and $LH.

Here is the Summary:

Here are some stats from the Fab 5 up to this point (since inception in October 2011):

  • 20 in the “complete” status with an average gain of $12.06
  • 26 in the “not complete” status with an average gain of $2.94

A list of potential candidates (courtesy of Finviz):

http://finviz.com/screener.ashx?v=111&t=AGN,ATHN,CNI,CMI,CTRX,CXO,FMX,LH,LMT,MCK,MMM,NBL,NKE,PM,TSCO,TWC,ULTA,VMW,WFM

 

Pre-Market versus Normal Market hours trading

Most traders do not participate in the market outside of normal trading hours. If this is you, you may not have any interest in this post. However, if you are curious on a perspective on this follow along here.

To illustrate just how different these 2 time “windows” can be, I bring you the 5 minute chart for $FINL:

Look at the gradual fade starting at 8 am EST to the open time of 9:30 EST. There is a sudden spike in the Accumulation/Distribution indicator as price jumps to 23.25 level. After that, a secondary fade but making a Higher Low. Now just an orderly march up.

I trade frequently in After Hours and certainly focus a lot on earnings reactions plays (both pre & post earnings). There are some good opportunities each day and they don’t always require a trade outside of normal market hours. Sometimes waiting to the open is just fine.

Enjoy the Quarter End, I hope yours was good.

Slice & Dice to make Apple Pie

Just a brief post on what I have been up to in my $AAPL long position in the IRA. Last week I sold 25% of the position (2 different exits) and came in to this week looking to sell some Puts. Why? Here is why. Since I am down to a 3/4 stock position, I want to look for a spot to build the position back up. One way I do that is by selling Puts. If I am wrong, too early for example, I get paid to be wrong (by taking in the premium). This is what I have done this week:

  • I sold the September 28 weekly 660 Put on 9/26/2012 for $4.05
  • This was a 1/4 position
  • This gives me some premium
  • If Put the stock, my cost basis is 655.95

Today I got a chance to buy back the September 28 weekly 660 Puts that I had sold – I bought them back for $1.35. My next step is to look at selling some October 5 Puts now.

Slice, and Dice.

Rearranging the $DECK chairs

All hands on $DECK

$DECK the halls

Ok, I will stop there. Deckers Outdoor ($DECK) has been under tremendous selling pressure due to some analysts’ concerns with UGG sales. I am currently short the stock (from the break at $40) and have sold the October 35 Put at 1.90 (on 9/25/2012). Let me break this down:

  • This trade creates a Covered Put trade
  • The gain is capped on a move down thru the $35 strike, capped at $33.10 ($35 – $1.90)
  • What this also does is help offset any Relief Rally in price, to $36.90 ($35 + $1.90)
  • This creates a range between 33.10 & 36.90 wherein price can bounce around – without the need to address the position
  • This short Put does not take margin as I am short the stock

Some traders have posted some fundamental data that will surely be of interest to those that are looking for cheap stocks from a valuation perspective. So far, the market is in a battle here – just above this $35 level – to see if that is the floor for price.

 

Graphic courtesy of Wikipedia

Using the Momentum indicator

I have been evaluating the use of the Momentum indicator on a Daily chart the past few weeks. It has some good uses in my opinion, and one such use is in finding divergences that are occurring with price.

For an example, I bring you the Daily chart of $FIRE:

Notice how the Momentum Indicator makes a lower high as priced moved up to the peak in the beginning of September.

What Volume Bars can tell you about a stock

I am a big believer in making sure that the probability of success for a trade is as high as possible. I am sure as a trader, or investor, you have this as a goal as well. To accomplish this, it is imperative to have a keen focus on trade entry – whether this be in a Dip Buy or even a Break Out trade. Whatever tools that can be utilized to hone this process is worthy of a look.

One simple way to look at the probability of price movement is by reviewing the Volume Bar type/size on a Daily chart. To illustrate, let’s take a look at the Daily chart on $TWC:

What do you notice for the month of September? You have 7 Green bars in a row, as price drifts up. Then there are 2 Red bars in a row, as price consolidates. Now we have 5 Green bars in a row leading up to today, as price Flags/Consolidates here.

Since crossing the 20 Simple Moving Average, the Bulls have been very interested in taking a position in this stock. What is more likely now, what is the higher probably action for price? If it Flags further what do you do?

All aboard the American Express

One of the charts that caught my attention this weekend was $AXP as it looks to be at a very critical point here on the Daily chart. Here’s a look:

As you can see above, there are several things that stand out:

  • The RSI is squatting on 50, drifting down from above
  • The MACD has rolled over and has the potential to cross down
  • Volume has been rising on this move down in price to end the week
  • Price has fallen down back thru the upper declining Trend Line of the Wedge – back into the apex.
  • The 50 day simple moving average is just below, and looks like the next magnet for price. The lower rising Trend Line wedge just happens to be intersecting there as well. Oh boy.

I will be stalking this one this week as I think we will see some of these above items get resolved. One way or the other.

All aboard.

The Fab 5 – update

A good solid week for the Fab 5 and a nice end for $DVA as it becomes the 19th position to get the “Complete” status since inception. I end the week with the following 4 positions in the basket: $COST $MTB $PVH $RGLD.

The position in $RGLD was the big winner for week moving up $4.5 from entry. $MTB ends the week with a pin to 95 and a solid performer as well. $PVH was under selling pressure, but the October 95 Collar helps to alleviate the move of price under entry. The position in $COST took the most work as I was holding a September 95/100 Call Spread. This is where it stands now:

  • exercised the September 95 Call; BtC 100 Call for 3.30 (this is the Call I was short from the Call Spread). I then put on a new October 105/100 Collar for $.30 credit (1.07/.77). This new Collar caps the gain at 105.40 and protects on any move under 100. I am now long the stock after the 95 Call exercise.
  • The $COST position has a Complete status but I am leaving in the basket for now to see how much more of a move it can obtain now that the $100 Roll is complete.

Here is a complete summary:

I have one open slot so will be looking to fill that slot in the coming week. Here is a current candidate list: