Thursday, April 21, 2016

Friday's Prospects

On Thursday, April 21:

Of 480 large-cap stocks and exchange-traded funds in my analytical universe, 36 broke beyond their 20-day price channels, four to the upside and 32 to the downside.

One symbol giving a trading signal with high odds of success survived initial screening, as did one having low odds of success. Each broke out to the downside.

There is one prospect for a trade coinciding with an earnings announcements.

I shall do further analysis on Friday, April 22.

Earnings season began April 11. The higher pace of announcements will continue for about four or five weeks from that date.

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Trading signal survivors

High-odds
Bull
(none)

High-odds
Bear
PAYX

Low-odds
Bull
(none)

Low-odds
Bear
WBA

Potential trades 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".

Friday pm
(none)
Monday am
HAL

Assessment

All three prospects have low implied volatility relative to their most recent range. I shall analyze any that improve enough to meet my standards in trading on Friday; those that fail to meet my standards will be rejected without a full analysis. I shall discuss my final decisions in the Agenda post after the opening bell.

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 in the top or bottom thirds, suggesting a directional or non-directional trade, respectively, I next screen for 1) suitability of the options grid, including open interest of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 60th percentile or greater of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade.

-- Tim Bovee, Portland, Oregon, April 21, 2016

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts

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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 decision decisions for his or her own account, and take responsibility for the consequences.
License

Creative Commons 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

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