Tim Bovee, Private Trader: Friday's Finalists

Friday, February 27, 2015

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.

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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.