Saturday's Outcomes

Two volatility plays, WMT and TGT, expired out of the money on Saturday for maximum profit. I've updated the analyses with details. See:

• WMT: Volatility play
• HPQ, TGT: Volatility plays

-- Tim Bovee, Portland, Oregon, Feb. 28, 2015

References

My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here. My volatility trading rules can be read here.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Monday's Prospects

On Friday, Feb. 27:

Of 2,444 stocks and exchange-traded funds in my analytical universe, 50 broke beyond their 20-day price channels, 25 in either direction.

Five symbols survived initial screening, rou4 having broken out to the upside and one to the downside. Two symbols gave bull signals on the first trading day after earnings were published and so comes under special rules.

No symbols appearing on my supplemental list of innovative companies gave a bull signal and also met my earnings announcement rules.

There are no prospects for trades keyed to earnings under my Volatility Rules.

I shall do further analysis on Monday, March 2.

The next earnings season begins April 8 with the announcement by AA and runs six weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

First-round survivors: Regular rules

The lists are sorted in descending order by average yield. Regular rules means that confirmation will require trading above the 20-day price channel breakout level.

Bull HDB BPOP

Bear KKR

Innovators (bull) (none)

First-round survivors: Special handling

The lists are sorted in descending order by average yield. Rules for a breakout immediately following an earnings announcement require that confirmation on the following trading day, Reset Day, require that the price be beyond the Reset-Day 20-day price channel. A breakout following a stock going ex-dividend must be confirmed on the fifth trading day after ex-dividend day.

Bull earns RP CSU

Bear earns (none)

Bull ex-div (none)

Bear ex-div (none)

Potential trades under my Volatility Rules, keyed to events

The dates are those of the events, all of them earns announcements. Events prior to the opening bell are marked "am", during the trading day "mid", and after the closing bell "pm". The lists are sorted in descending order by average volume.

Monday pm (none)

Tuesday am (none)

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are greater than 50%, I next screen for the absence of an earnings announcement within the next 30 days.

For bear signals, I also screen to ensure the ability to do a trade because of the presence of options, without yet passing judgment on whether those options are liquid enough to support a trade.

I sort by the results in descending order by the average yield on signals in the direction of the breakout in preparation for the second round of analysis after the opening bell.

-- Tim Bovee, Portland, Oregon, Feb. 28, 2015

References

My shorter-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Friday's Finalists

BPT, with a bear signal, is the sole symbol to make it past the early rounds of screening. (See "Friday's Prospects".) However, it has failed to meet my criteria for analysis, on several grounds.

BPT is a royalty trust tied to the Prudhoe Bay oil and natural gas region. It is, first and foremost, a dividend play. The current yield is 15.25% a year, huge by Wall Street standards.

That means the only reasonable entry would be by buying shares under my longer-term rules. That strategy requires a bull signal, not a bear signal such as that given Thursday by BPT.

Also, BPT's fall from the highest price to the lowest was -16.8%. It came on news reports that JP Morgan Chase & Co. had initiated analyst coverage of BPT with an underweight weighting and a $40 price target, more than 40% below present levels.

I don't trade price moves occurring after news reports on the assumption that once the news is know, it has been priced into the market fully and the trading signal no longer has meaning.

And indeed, BPT has bounced up to 14% above Thursday's low point, a very bull movement indeed.

For those reasons I won't be opening a new position in BPT today.

-- Tim Bovee, Portland, Oregon, Feb. 27, 2015

References

My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here. My volatility trading rules can be read here.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Friday's Prospects

On Thursday, Feb. 26:

Of 2,434 stocks and exchange-traded funds in my analytical universe, 41 broke beyond their 20-day price channels, 19 to the upside and 22 to the downside.

Two symbols survived initial screening, both having broken out to the downside. One symbols gave a signal on the first trading day after earnings were published and so comes under special rules.

No symbols appearing on my supplemental list of innovative companies gave a bull signal and also met my earnings announcement rules.

There are no prospects for trades keyed to earnings under my Volatility Rules.

I shall do further analysis on Friday, Feb. 27.

The current earnings season ends Thursday. The next season begins April 8 with the announcement by AA and runs six weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

First-round survivors: Regular rules

The lists are sorted in descending order by average yield. Regular rules means that confirmation will require trading above the 20-day price channel breakout level.

Bull (none)

Bear BPT

Innovators (bull) (none)

First-round survivors: Special handling

The lists are sorted in descending order by average yield. Rules for a breakout immediately following an earnings announcement require that confirmation on the following trading day, Reset Day, require that the price be beyond the Reset-Day 20-day price channel. A breakout following a stock going ex-dividend must be confirmed on the fifth trading day after ex-dividend day.

Bull earns (none)

Bear earns LKQ

Bull ex-div (none)

Bear ex-div (none)

Potential trades under my Volatility Rules, keyed to events

The dates are those of the events, all of them earns announcements. Events prior to the opening bell are marked "am", during the trading day "mid", and after the closing bell "pm". The lists are sorted in descending order by average volume.

Today pm (none)

Tomorrow am (none)

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are greater than 50%, I next screen for the absence of an earnings announcement within the next 30 days.

For bear signals, I also screen to ensure the ability to do a trade because of the presence of options, without yet passing judgment on whether those options are liquid enough to support a trade.

I sort by the results in descending order by the average yield on signals in the direction of the breakout in preparation for the second round of analysis after the opening bell.

-- Tim Bovee, Portland, Oregon, Feb. 26, 2015

References

My shorter-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Thursday's Outcomes

I've closed my volatility play in HPQ. See results in my update to the analysis, "HPQ, TGT: Volatility plays".

I analyzed WYNN today but declined to take the trade. See "WYNN: Bull play, shorter-term rules".

-- Tim Bovee, Portland, Oregon, Feb. 26, 2015

References

My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here. My volatility trading rules can be read here.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

WYNN: Bull play, shorter-term rules

The casino resort company Wynn Resorts Ltd. (WYNN), headquartered Paradise, Nevada and with holdings principally in Las Vegas and Macau, China. WYNN broke below its 20-day price channel on Wednesday and continued trading beyond the channel on Thursday, although with little conviction.

[WYNN in Wikipedia]

WYNN

Direction

WYNN, along with nearly all stocks, has been in an uptrend since its Great Recession low in 2009, peaking on Oct. 29, 2014 at $192.45 before beginning a counter-trend correction of major proportions.

In terms of Elliott-wave analysis, the price has completed three waves of a five-wave move. The present wave 4 to the downside will, upon its completion, be followed by a rise to still higher highs.

The sideways nature of the present portion of the correction, as magnified on the right-hand chart, has produced a series of bear signals as the price bounces along. The recent break below the 20-day price channel, marked in yellow, is only the latest of the series.

At this point I know enough to make a trading decision.

Click on chart to enlarge.

WYNN 10 years weekly bars (left), 90 days 4-hour bars (right)

Decision for My Account

It doesn't take elaborate framing techniques like Elliott wave analysis to assess this chart.

Downside support is at $133.58, a level reached on Dec. 17, 2014.

WYNN's break below the 20-day price channel came 7.4% above downside support.

Until that support level, $133.58, is convincingly pierced, I see no opportunity for a bear play on WYNN. I won't be opening a new position.

-- Tim Bovee, Portland, Oregon, Feb. 26, 2015

References

My volatility trading rules can be read here. For a discussion of the rationale behind the rules, see my essay, "Rules for very short term trades".

The directional score is calculated as the sum of the following:

• Zacks rating --The Zacks ratings are translated as follows: 1=2, 2=1, 3=0, 4=-1 and 5=-2.
• Enthusiasm rating --: A single percentage derived from the number of analysts whose opinions are in one of five categories: Strong buy, buy, hold, sell and strong sell.
• Strong buy share -- The percentage of all analysts who rank the stock strong buy. If the share is 60% or greater, the score is 1; if 40% or less, then the score is -1; otherwise, the score is zero.
• Ethusiasm momentum -- The score is 1 if today’s enthusiasm rating is larger than the rating 30 days earlier; otherwise, the score is zero.
• 30-day direction -- The trend that best describes the 30-day chart: 1 for an uptrend, -1 for a downtrend and zero for a sideways trend.
• One-day direction -- The trend that best describes the one-day chart: 1 for an uptrend, -1 for a downtrend and zero for a sideways trend.

From time to time I use the number 68.2% in using applied volatility to calculate the expected trading range. This comes from statistics and refers to the one standard deviation boundaries, which are expected to contain 68.2% of whatever is being studied. Putting it another way, given an item (a trade or whatever), there is a 68.2% chance that it will appear within those boundaries.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Thursday's Finalists

Of the four stocks under consideration today, three failed because of insufficient open interest to support the options-based trades that I prefer these days. One of the thre, PLT, failed confirmation. (See "Thursday's Prospects" for the early rounds of analysis.)

The lone survivor is WYNN, with a bear signal. I shall post an analysis as a potential trade under my shorter-term rules prior to the closing bell.

-- Tim Bovee, Portland, Oregon, Feb. 26, 2015

References

My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here. My volatility trading rules can be read here.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Thursday's Prospects

On Wednesday, Feb. 25:

Of 2,434 stocks and exchange-traded funds in my analytical universe, 50 broke beyond their 20-day price channels, 32 to the upside and 18 to the downside.

Seven symbols survived initial screening, five having broken out to the upside and two to the downside. Two symbols gave signals on the first trading day after earnings were published and one on ex-dividend day, and so come under special rules.

One symbol appearing on my supplemental list of innovative companies gave a bull signal and also met my earnings announcement rules.

There are no prospects for trades keyed to earnings under my Volatility Rules.

I shall do further analysis on Thursday, Feb. 26.

The current earnings season ends Thursday The next season begins April 8 with the announcement by AA and runs six weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

First-round survivors: Regular rules

The lists are sorted in descending order by average yield. Regular rules means that confirmation will require trading above the 20-day price channel breakout level.

Bull DDC PLT PKX

Bear WYNN

Innovators (bull) PKX

First-round survivors: Special handling

The lists are sorted in descending order by average yield. Rules for a breakout immediately following an earnings announcement require that confirmation on the following trading day, Reset Day, require that the price be beyond the Reset-Day 20-day price channel. A breakout following a stock going ex-dividend must be confirmed on the fifth trading day after ex-dividend day.

Bull earns BSFT LQ

Bear earns (none)

Bull ex-div (none)

Bear ex-div EFC

Potential trades under my Volatility Rules, keyed to events

The dates are those of the events, all of them earns announcements. Events prior to the opening bell are marked "am", during the trading day "mid", and after the closing bell "pm". The lists are sorted in descending order by average volume.

Thursday pm (none)

Friday am (none)

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are greater than 50%, I next screen for the absence of an earnings announcement within the next 30 days.

For bear signals, I also screen to ensure the ability to do a trade because of the presence of options, without yet passing judgment on whether those options are liquid enough to support a trade.

I sort by the results in descending order by the average yield on signals in the direction of the breakout in preparation for the second round of analysis after the opening bell.

-- Tim Bovee, Portland, Oregon, Feb. 25, 2015

References

My shorter-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Wednesday's Finalists

Some days, many are call, none are chosen.

My analysis of Tuesday's markets was unusual in that a full 20% of the bull or bear signals made it past the early screens. (See "Wednesday's Prospects".)

And most those 10 survivors continued to perform the next day, all but two confirming their signals by continuing to trade beyond their 20-day price channels. The two laggards are TDY and CDNS.

However, none made it to the finals, for reasons that mainly had nothing to do with price movements.

My second round of analysis includes a look at factors that show suitability for my present strategies: Liquidity and the bid/ask spread.

If I'm trading shares, then liquidity is of minor importance. The universe I analyze has already been pre-screened for average volume of 100,000 shares a day or greater. Any stock with six-figure volume is certainly tradable.

If I'm trading options, then the requirements are tighter. Options, as derivatives, are always less liquid than shares, and that fact imposes a need for greater caution on the part of the trader.

For options-based strategies, I prefer to trade strike prices with open interest near the money of 100 contracts or more.

I also require that open interest cover enough strike prices for me to construct spreads of various sorts. My rule of thumb is to require that at least four of the seven out-of-the-money strike prices that are nearest the current price have three-figure open interest.

Turning to the bid/ask spread on options, I require that the front-month at-the-money bid/ask spread on calls be be under 10% -- no double digits allowed. It's a rough and ready rule of thumb that gives me a quick assessment of an options grid.

Of the 10 symbols under consideration today, two had overly wide bid/ask spreads: IDCC and KLAC. The other eight all had insufficient open interest.

I plan to open no new positions based on Tuesday's markets. There are no potential trades from among my list of innovative companies, and no potential volatility plays among the company's announcing earnings after the close today or before the open tomorrow.

-- Tim Bovee, Portland, Oregon, Feb. 25, 2015

References

My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here. My volatility trading rules can be read here.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Wednesday's Prospects

On Tuesday, Feb. 24:

Of 2,434 stocks and exchange-traded funds in my analytical universe, 50 broke beyond their 20-day price channels, 34 to the upside and 16 to the downside.

Ten symbols survived initial screening, all having broken out to the upside.

No symbols appearing on my supplemental list of innovative companies gave bull signals and also met my earnings announcement rules.

There are no prospects for trades keyed to earnings under my Volatility Rules.

I shall do further analysis on Wednesday, Feb. 25.

The current earnings season ends Feb. 26. The next season begins April 8 with the announcement by AA and runs six weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

First-round survivors: Regular rules

The lists are sorted in descending order by average yield. Regular rules means that confirmation will require trading above the 20-day price channel breakout level.

Bull IDCC LEG CALM KLAC ENI TDY CDNS MMC DLB CINF

Bear (none)

Innovators (bull) (none)

First-round survivors: Special handling

The lists are sorted in descending order by average yield. Rules for a breakout immediately following an earnings announcement require that confirmation on the following trading day, Reset Day, require that the price be beyond the Reset-Day 20-day price channel. A breakout following a stock going ex-dividend must be confirmed on the fifth trading day after ex-dividend day.

Bull earns (none)

Bear earns (none)

Bull ex-div (none)

Bear ex-div (none)

Potential trades under my Volatility Rules, keyed to events

The dates are those of the events, all of them earns announcements. Events prior to the opening bell are marked "am", during the trading day "mid", and after the closing bell "pm". The lists are sorted in descending order by average volume.

Today pm (none)

Tomorrow am (none)

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are greater than 50%, I next screen for the absence of an earnings announcement within the next 30 days.

For bear signals, I also screen to ensure the ability to do a trade because of the presence of options, without yet passing judgment on whether those options are liquid enough to support a trade.

I sort by the results in descending order by the average yield on signals in the direction of the breakout in preparation for the second round of analysis after the opening bell.

-- Tim Bovee, Portland, Oregon, Feb. 24, 2015

References

My shorter-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

HPQ, TGT: Volatility plays

Update 2/28/2015: My options position on TGT expired out of the money for maximum profit. Shares rose by 0.5% over the 10-day lifespan of the position, or a 49% annual rate. My options position produced a 100% yield on debit, for a 9,125% annual rate.

---

Update 2/26/2015; HPQ's price fell dramatically reporting revenues that missed analyst expectations. The performance was blamed in part on the strength of the U.S. dollar compared to other currencies.

I closed out my position today for a loss. The low price reached today, the lowest since earnings, was $34.09 as of this writing, 5.4% below the lower boundary of the two standard deviations range based on options pricing. That range at the time I opened the position was expected to contain 95% of trades until the options expired.

An outlier is a risk of this style of trading. HPQ produced an outlier, big time. There's no lessons learned to be taken away from this. Statistically, outliers will be more rare than stocks that trade as expected, and if I structure my trades to account for that, then I will profit more often than not.

The results: Shares declined by 12.6% over the two-day lifespan of the position, or a 2,293% annual rate. My options position produced a 186.5% loss on debit, for a -34,034% annual rate.

---

The computer hardware and software technology company Hewlett-Packard Co. (HPQ), headquartered in Palo Alto, California, publishes earnings on Tuesday, Feb. 24, after the closing bell, and the big box general store chain Target Corp. (TGT), headquartered in Minneapolis, Minnesota, publishes earnings prior to the opening bell on Wednesday, Feb. 25.

Both have Weeklys among their options inventories, and I shall trade the FEB4 series of options, which trades for the last time on Feb. 27, three days hence.

The goal of my trades is to construct a direction-neutral position with a zone of profitability at expiration covering all of the one standard deviation range implied by volatility and options pricing, or the 30-day hourly chart support and resistance range, whichever is wider.

[HPQ, TGT in Wikipedia]

HPQ


Ranges

Click on chart to enlarge.

HPQ @ 11:45 a.m. New York time, 30 days hourly bars

Implied volatility stands at 31%, in the 77th percentile of the prior rise.

Ranges implied by options and the chart

Week	SD1 68.2%	SD2 95%	Chart
Upper	39.28	40.35	38.85
Lower	37.14	36.07	37.31
Gain/loss	2.8%	5.6%

Implied volatility 1 and 2 standard deviations; chart support and resistance
The Trade

HPQ has risen in price after all of the past four earnings announcements. Analyst opinion and the chart are directionally neutral. I get better risk/reward ratios and higher premiums with directionally neutral iron condor than with a directional short vertical that gives some downside protection. This becomes especially important with expiration so near. So I shall try the iron condor first.

Iron condor short the $40 calls and long the $41 calls,
short the $37 puts and long the $36 puts
sold for a credit and expiring Feb. 28
Probability of expiring out-of-the-money

FEB4	Strike	%
Upper	40	78
Lower	37	69

The risk/reward ratio stands at 7:2. The proposed position cover all of the one standard deviation and chart ranges.

TGT

Ranges

Click on chart to enlarge.

TGT at 12:15 p.m. New York time, 30 days hourly bars

Implied volatility stands at 27%, in the peak of its rise.

Ranges implied by options and the chart

Week	SD1 68.2%	SD2 95%	Chart
Upper	78.01	40.35	77.39
Lower	74.29	79.87	74.94
Gain/loss	0.0%	0.0%

Implied volatility 1 and 2 standard deviations; chart support and resistance
The Trade

TGT has risen after half of its earnings announcements of the past year, and fallen after half. The analysts and charts produce a bearish score of -0.2, on a range from -1 to 1. The lack of the clear directional guidance, in combinations with the short period until the options expire, points toward an direction-neutral iron condor.

Iron condor short the $78 calls and long the $79 calls,
short the $74 puts and long the $73 puts
sold for a credit and expiring Feb. 28
Probability of expiring out-of-the-money

FEB4	Strike	%
Upper	78	68
Lower	74	70

The risk/reward ratio stands at 17:20. The proposed position covers all but a cent of the one standard deviation range and all of the chart range.

Decisions for My Account

I've opened positions in HPQ and TGT as described above.

-- Tim Bovee, Portland, Oregon, Feb. 24, 2015

References

My volatility trading rules can be read here. For a discussion of the rationale behind the rules, see my essay, "Rules for very short term trades".

The directional score is calculated as the sum of the following:

• Zacks rating --The Zacks ratings are translated as follows: 1=2, 2=1, 3=0, 4=-1 and 5=-2.
• Enthusiasm rating --: A single percentage derived from the number of analysts whose opinions are in one of five categories: Strong buy, buy, hold, sell and strong sell.
• Strong buy share -- The percentage of all analysts who rank the stock strong buy. If the share is 60% or greater, the score is 1; if 40% or less, then the score is -1; otherwise, the score is zero.
• Ethusiasm momentum -- The score is 1 if today’s enthusiasm rating is larger than the rating 30 days earlier; otherwise, the score is zero.
• 30-day direction -- The trend that best describes the 30-day chart: 1 for an uptrend, -1 for a downtrend and zero for a sideways trend.
• One-day direction -- The trend that best describes the one-day chart: 1 for an uptrend, -1 for a downtrend and zero for a sideways trend.

From time to time I use the number 68.2% in using applied volatility to calculate the expected trading range. This comes from statistics and refers to the one standard deviation boundaries, which are expected to contain 68.2% of whatever is being studied. Putting it another way, given an item (a trade or whatever), there is a 68.2% chance that it will appear within those boundaries.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Tuesday's Finalists

For symbols that gave signals on Monday are under consideration today. All four lack sufficient open interest on their options to support a trade. I won't be opening any new positions from the list and plan no further analysis of them. (See "Tuesday's Prospects".)

Two stocks, HPQ and TGT, publish earnings between now and the next opening bell. I'll be examining them as potential trades under my volatility rules and shall post my findings later today.

-- Tim Bovee, Portland, Oregon, Feb. 24, 2015

References

My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here. My volatility trading rules can be read here.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Tuesday's Prospects

On Monday, Feb. 23:

Of 2,434 stocks and exchange-traded funds in my analytical universe, 36 broke beyond their 20-day price channels, 26 to the upside and 10 to the downside.

Five symbols survived initial screening, four having broken out to the upside and one to the downside. The bear signal occurred on the first trading day after earnings were announced and so is handled under special rules.

No symbols appearing on my supplemental list of innovative companies gave bull signals and also met my earnings announcement rules.

There are two prospects for trades keyed to earnings under my Volatility Rules.

I shall do further analysis on Tuesday, Feb. 24.

The current earnings season ends Feb. 26. The next season begins April 8 with the announcement by AA and runs six weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

First-round survivors: Regular rules

The lists are sorted in descending order by average yield. Regular rules means that confirmation will require trading above the 20-day price channel breakout level.

Bull SWKS CFN CVA JBHT

Bear (none)

Innovators (bull) (none)

First-round survivors: Special handling

The lists are sorted in descending order by average yield. Rules for a breakout immediately following an earnings announcement require that confirmation on the following trading day, Reset Day, require that the price be beyond the Reset-Day 20-day price channel. A breakout following a stock going ex-dividend must be confirmed on the fifth trading day after ex-dividend day.

Bull earns (none)

Bear earns DNOW

Bull ex-div (none)

Bear ex-div (none)

Potential trades under my Volatility Rules, keyed to events

The dates are those of the events, all of them earns announcements. Events prior to the opening bell are marked "am", during the trading day "mid", and after the closing bell "pm". The lists are sorted in descending order by average volume.

Tuesday pm HPQ

Wednesday am TGT

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are greater than 50%, I next screen for the absence of an earnings announcement within the next 30 days.

For bear signals, I also screen to ensure the ability to do a trade because of the presence of options, without yet passing judgment on whether those options are liquid enough to support a trade.

I sort by the results in descending order by the average yield on signals in the direction of the breakout in preparation for the second round of analysis after the opening bell.

-- Tim Bovee, Portland, Oregon, Feb. 23, 2015

References

My shorter-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss