After Market Close October 17, 2007 |
Op-Ex Cha-Cha
We're back again doing the options expiration Cha-cha. Up, down, back up again--cha-cha-cha! It's fun if nobody steps on your toes. Today can be expected to be volatile too. For my part, I'd be looking for a low by noon unless things get out of hand. Look for rotation out of the Nasdaq and into the Dow and S&P.
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DJIA: The Dow never really went down enough to need support. |
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SPX: The S&P touched my target support area and bounced smartly. That's Bullish. |
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NDX: The Nasdaq put in a wild stick. Evidently support matters to this index. |
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RUT: The Russell drifted lower. I think it heads to the channel line. Then we see. |
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HUI: The miners are trading like trend lines and support matter. |
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RTH: The retailers were weak and look weaker still to my eye. |
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BKX: The Bankers look mostly broken. Another bad day would clinch it. |
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NNI: Nelnet was up on the day, though I'm not smitten with that stick. |
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BRKL: Brookline kept falling away. Earnings are released tonight. We might close this position out early, so check for an alert later today. |
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LBTYA: Liberty managed a nice come back. That's bullish. |
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PALM: Palm was up and we're long. |
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PBI: Pitney Bowes was up big and we're in. |
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BKR: Wild action in Mike Baker. I'm inclined to buy renewed strength. |
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DELL: Dell moved a mite too quick for us. We can try again. |
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EK: Eastman is acting funny, so we'll back away, just a bit. Still watch, though. We own this one lower. |
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DWSN: Dawson ran too far too fast. Still, it looks strong. |
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Summary:
The chartist said to me, "Something wick-y this way comes." That's a warning sign. Long wicks get us in at highs and stop us out at lows. It's options expiration week and stocks can be more volatile or even manipulated, so we want to be just a bit more careful than usual. Still, I'm constructive on this market. Breadth is still fine, and I have a reliable Buy signal for this week. It may not bring a massive rally, but a bounce is very likely in the cards. It's just that we might have some weakness first.
Be Well, and Trade Smarter Than the Average Bear!
-The ChartSmarts Team
Current Positions:
Long 50% NNI at 18.83, stop at 18.83
Short 50% BRKL at 11.69, stop at 11.69
Long 50% LBTYA at 42.77, stop at 41.06
Long 50% PALM at 15.81, stop at 15.17
Long 50% PBI at 46.36, stop at 45.03
Watch List:
BKR: Buy 50% on a print of 50.71, stop at 48.68
DELL: Buy 50% on a print of 28.84, stop at 27.69
Changes in Current Positions:
We are now 50% long PALM at 15.81
We are now 50% long PBI at 46.36
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*30 Minute Trading Rule:
In order to prevent whipsaws, we use a 30 minute trading rule. This means that, as a general rule, we are going to "sit on our hands" during the first 30 minutes of trading, this includes the lifting of stops during this 30 minute period as well. Additionally, if after the first 30 minutes of trading the range of the stock pick is within the stop and buy/short boundaries presented, the trade recommendation is valid. If the stock's range is outside of the buy/short and stop boundry, the trade recommendation is VOID. E.g. if the recommendation is "Buy a print of 10.25, with a stop of 9.95," and the stop trades up to 10.50 during the first 30 minutes, we would pass on the trade. Similarly, if that stock were to trade down to 9.90 before 10:00, the trade would also be void.
There is no 30mn rule on limit orders, but if price gaps out of the buy/stop range the trade is void.Rule on stops:
As a general rule for the model portfolio, we will lift all stops on existing positions for the first 30 minutes of trading. As a practical matter, subscribers may wish to leave their stops in place if they expect to be incommunicado or unavailable during that time to monitor positions.
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