Moving...

FYI - I am moving this blog to a new area: http://triadtraders.blogspot.com

This is now the home blog for the Central NC Traders group of INVESTools. Come join me over there!

Toe Dipping

Well Traders, I entered into SMALL positions yesterday in BHP, CLF, GRMN, PCL, PICO, SWIM and SWK. I only bought limited shares because I felt after such a pop yesterday, there may have been some profit taking today, which would drop some of these prices to even better levels in which to buy.

On another note, I made some HUGE gains in the CNBC Million Dollar Challenge by getting into BUCY and JOYG the first day before these two suckers popped today. Wish I had done the same with my real account! What was I thinking?

By the way, check out this chart of the $INDU 5-Year:The $INDU was traveling nicely in its Ascending Channel until last October when it broke out. You'll see that last week's action brought it all the way down to previous Channel Resistance (now Support). This may mean that the sell off has subsided for a bit, but in order to be sure, we need to make a Higher High now to maintain a Bullish trend. IMHO, we may sideslip here for a bit until the "Sell in May and Go Away" mantra sets in.

Here is a closer look:Happy Trading!

Dipping in my Toes...

Well Traders, I eased into some small positions today. I'll go over them later tonight!

Happy Trading!

Cash is King!

Well Traders, I'll be brief. The market is just so wacky right now that I am hanging out on the sidelines in cash while things shake out a bit. I have some ideas on some potential plays, but I don't want to jump prematurely and get sucked into a Bull Trap. Stay tuned!

Happy Trading!

No JOYG in Mudville

Well Traders, a few days ago I mentioned JOYG had made a significant breakout. On that breakout I eased into a small position waiting on the follow-up. On Monday, I sold some March $55 Covered Calls for $2.00/share which I thought was a GREAT amount of money for so little time left. You'll see that the Implied Volatility was heading up making options contracts worth some pretty good money. This also allowed me to "hedge" against a falloff if earnings went sour. Well, after yesterday's mess, JOYG earnings were also a mess so this stock TANKED by over 20% in 2 days. WOW! Look at the chart above, it's like someone jumped out a window.

Yes, I did get taken out by my stop loss (smart Risk Management), lower than I wanted to because of the $3+ gap open, but there was nothing I could do about that. The Covered Call which I bought back today for $0.15 returned 1,233% in 2 days ($1.85 "profit"/$0.15 "cost"). Of course, this only happened because the stock tanked. Still, by easing into a small position while waiting for the bounce at support (which never happened), and by making money off the Covered Call, I was able to reduce my risk and more importantly, my loss. I could have also bought a cheap protective put as well, which is something I may consider for next time I am playing over earnings as that certainly also would have helped offset losses.

This reminds me of my ANDE trade a few weeks ago when the exact same things happened...HUGE breakout right before earnings, only to be CRUSHED by earnings. Maybe this should teach me a pattern is developing here?Tomorrow is another day. I am waiting on the sidelines for now until i am comfortable the shakeout/correction/abberration is over and trends (Bullish or Bearish) are normalizing.

Happy Trading!

Another Black Tuesday?

Well Traders, today was BRUTAL. Well, it was brutal for other traders, but not really for me. I had some very solid risk management in place so even though I was taken out of about 70% of my positions, I only realized losses of 0.43%. Not bad at all. My other positions haven't been taken out yet, and in the case of JOYG, the next few days may have presented me the GOLDEN opportunity I have been waiting for.

Speaking of which, I am going to hang out on the sidelines for a day or five and see how this shakes out. If this is a healthy correction, then there will be a TON of buying opportunities for me on some of my previous stocks I follow. I am now the Lion lying in wait for the Gazelle to cross my path. When the time is right, I'll pounce.

If this is the beginning of a Bear Trend, then there are some things to look at...QID for one, which is the Bear ETF for the NASDAQ. Also, DOG, the Bear ETF on the Dow (as in DOGs of the DOW), may be worth a look.

If we do head to a Bear Trend I will be hanging out religiously on Über-Bear Tim Knight's blog, Trader Tim. If you want some awesome Ursine suggestions, that is the place to be! I made some very good $$$ last summer following him and considering he started Prophet.net and just published a book on Technical Analysis, the guy has some props to back up what he writes.

Finally, there was a MAJOR bump in the FEAR factor in the markets as evidenced by the $VIX and $VXN. If you were in positions today and wanted to sell a Covered Call on say Radio Shack (probably the ONLY stock in the Green today), you probably made some SERIOUS jack on selling the call. Options just became more expensive. Sucks if you are buying, GREAT if you are selling!

Happy Trading

JOYG - Like I Was Saying...

Well Traders, this was EXACTLY what I was waiting for! Remember yesterday I mentioned I was waiting for JOYG to break above the horizontal resistance line with heavy volume. Ta da! There it is! So, I entered a partial position today, and we'll see what happens tomorrow. If it continues to head up, I'll buy a little more. If it heads back down towards new support, I'll buy even more. Then, I'll wait for a "bounce" off support and fill an entire position in the stock.

You'll notice that I have two other diagonal resistance lines to contend with. Should the stock break the first one, I have a nice $10-$12 potential until the second resistance line. First though, I need to break the first one.

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VLO is another stock in which I hold a position in. I am mentioning this because it had a MAJOR breakout today. The stock FINALLY broke over its "Double Top" on heavy volume. here is the 3 month chart:You'll notice the stock broke BOTH the horizontal and diagonal resistance lines. Why is that significant? Take a look at the 9 month chart:See what I see? That's right...NOTHING. Nothing until $62.50-$63.00. By that I mean there is no resistance. This stock could make some pretty heavy headway here. Couple that with an AP article in Yahoo Finance about a potential stock buyback by the company of close to 15-20%, which is up from an estimated 5% buyback, an upgrade of the stock price target from $79 to $82 and crude hitting $60 a barrel, and you had the makings of a wonderful day if you own the stock. If VLO sniffs anywhere near $80, this guy will be getting his family some serious Christmas gifts!

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Keep It Simple!

Sometimes I get pretty involved in searching for the "perfect play" in what amounts to "missing the forest for the trees." INVESTools does a pretty awesome job of finding those "trees" that lead to profits. Here is a picture of Suntech (STP). I have highlighted the "peaks" in green boxes, and the "bottoms" in red boxes. You'll notice that the second "peak" was higher than the previous one, and so was the second "bottom." Technical traders recognize this as potentially being the start of a Bullish trend. When the INVESTools chart fired off 3 "Green Arrows" highlighted in 3 gray circles, that is an "official" entry signal. Here is the chart:
If I had entered this play then, I am supposed to exit when the stock breaks its trend, or fires off three "Red Arrows." Well, according to the INVESTools method, I would still be riding this gravy train of profits.

Happy Trading!

New Trades DVN, ZUMZ (JOYG on Deck)

Well Traders, I pulled the trigger on two new trades today, DVN and ZUMZ.

I liked DVN because it is at the bottom of an Ascending Channel which is $12.50 high. Since I am at support, I have low risk on this trade. I will either get stopped out 3% below support OR, if the stock closes below the diagonal support line for two (2) consecutive days, I will get out.

This actually has two possibilities for profits. The first is a Pennant play, which means the stock will hit diagonal resistance and fall, at which point I may get out for a small profit.

Or second, and very exciting, is for the stock to break above diagonal resistance and head for the Channel Resistance which would capture $12-$15 in profits! At that point I may sell the stock and wait for the pullback, or sell an ITM Covered Call and buy it back once the stock retraces back to Channel Support. Here is the chart:ZUMZ which I have been watching for awhile, has made another "bounce" today, so I got in again. This has a modest $4-$5 profit target at which time, I may consider selling a Covered Call. The only concern I had was that there is a "Bearish Divergence" with the MACD meaning those peaks are getting smaller, even though the stock is going up in price. It is just something to be aware of. Anyway, here is the chart:JOYG is a stock that is very high on my radar. This is a GREAT stock fundamentally (8/2, 3.62, 4.0) and looks to be making a run at breaking TWO resistance lines, a horizontal and diagonal one. If it breaks those two on good volume, that would be an entry point. I would play this as a TREND trade, so I would play it through earnings if the signal occurs before that day, then maybe buy a couple of protective Puts just in case. Here is the chart:The BIG ONE that got away...FRK:

I swear to GOD I had this on my BUY list for this morning only to see that Vulcan Materials made an offer to buy them over the weekend. The cost to me...$19!!! Check this out!ONE of these days I'll get this lucky (by the way, "luck is when preparation meets opportunity" - Seneca the Elder").

Happy Trading!