Monday, July 19, 2010

Q Watch (Qwest)

Qwest Communications International Inc. (Q), the data networking company, has whipsawed back into bull phase on Person's Proprietary Signal (pps). Earnings are scheduled for Aug. 4 before the open.

Q $5.56

The company is trading at low volatility. The current average true range is a mere 9.5¢ the past 14 days, compared to 13¢ over 200 trading days. That works out to 1.7% for the 14-day atr, and 2.4% for the 200-day atr.

So as volatility goes, this is really low. And yet volume is quite high, exceeding 21 million so far today.

I've discussed elsewhere my theory that the way to profit from earnings surprises is to buy low volatility and then sell out when volatility rises. By no means has Q been a ho-hum surprise-free sit-in-my-portfolio forever kind of stock. Its earnings do produce surprises.

So, it seems to me to be an interesting play at some point before the earnings announcement, perhaps as straddle. Or people with a bullish opinion could certainly go long the stock.

Q presents a largely sideways picture on the three-month chart. It's pre-recession high was $10.45 in May 2007, it hit a low of $2.05 in October 2008, and has since rebounded a bit. (Of course, this is a stock that peaked a $66 during the height of the tech boom. Ah, good days, good days!).

The pps moved to bear phase on Friday, and so today's bull phase was an extreme whipsaw. The parabolic sar has been in bull phase for eight days. The macd is in bull phase and rising. And the fast stochastic, having dipped into neutrality on Friday, has moved back up above the 80-line, a bullish sign.

Today's high puts the stock at its highest level since the spring of 2008.

Reversal Levels
  • $7.41, +33.3% (Dec. 2007 high)
  • $5.57, +0.2% (today's high)
  • $5.56 <== You are here.
  • $5.40, -2.88% (Friday's low)

The Great Reflation: How Investors Can Profit From the New World of Money
OK. The credit bubble burst. Housing, burst. Shockwaves reverberated. Markets collapsed. What lies ahead as we reemerge from the wreckage.

Tim Bovee, Private Trader tracks the 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.
  • psar - Parabolic Stop and Reverse
  • adx - Average Directional Index
  • pps - Person's Proprietary Signal
  • ma20 - 20-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
  • trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
  • adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
  • psar, pps, macd: green for bull mode, red for bear
  • sto: green for overbought, red for oversold, yellow for the neutral zone.

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