Friday, December 17, 2010

FTR Watch

Frontier Communications Corp. (FTR) moved to bear phase on Person's Proprietary Signal (pps) after an analyst downgrade. The price decline stopped at the 20-day moving average and has remained within the range of the last nine trading days.

FTR on Thursday had moved to bull phase, so today's switch is a genuine whipsaw severe enough to produce trader whiplash.

ppspsarmacd obvh-a trend ma20ma50ma200
FTR $9.27

FTR lives in the Other Bull Plays section of my Watchlist. That's a polite way of saying that it used to be an income play, with a lovely 8.1% dividend, and was grandfathered in as a holding when I removed the income play category from my strategy mix. (See my essay, Myth of the Income Play.)

In truth, FTR is not up to snuff under my stricter rules for financials. Its heavy load of debt is 1.6 times equity. Return on equity is a meager 3.8%. Institutional ownership, at 51%, is OK, but not outstanding.

Under my post-income-myth rules of play, where I never consider the size of the dividend in making trading decisions, I would never have had FTR in my portfolio.

As it is, I raked in a nice 18.75¢ dividend on Dec. 7, and ever since have been looking for an exit point. Today's signal may well be it. There's no point in hanging on to this stock, which no longer meets my standards, until the next dividend a quarter away.

On the Person's chart, today's price is straddling the weekly midline.

Person's Table
ppspps openupper pivotlower pivot
FTR $9.27 $9.40 dec17 $9.77 +5.4% $9.12 -1.6%

The price has been testing the 20-day moving average beginning around 1 p.m. Eastern. So far, that level has held.

Reversal Levels
  • $9.52, +2.7% (swing high)
  • $9.27 --- You are here.
  • $9.26, -0.1% (20-day moving average)
  • $9.07, -2.2% (swing low)

My barrier to exiting FTR has been that the price kept going up. And the fact that the 20-day moving average has so far held as support is an argument for not closing yet.

I'll assess my position the last 20 minutes of trading today and make a decision about exiting. The 20-day moving average support will be pivotal to the decision.

I posted an analysis of FTR when I opened my position last month.

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.

  • h-a trend - Heikin-Ashi trend.
  • obv - On-Balance Volume.
  • pps - Person's Proprietary Signal.
  • psar - Parabolic Stop and Reverse
  • ma20 - 20-day moving average
  • ma50 - 50-day moving average
  • ma200 - 200-day moving average
  • macd - Moving Average Convergence-Divergence

About the glance: The colors indicate the state of each signal.
  • Signal Section:
    • pps, psar, macd: green for bull mode, red for bear.
  • Confirmation Section:
    • obv: green for uptrending, red for downtrending.
    • h-a trend: green for uptrending, red for downtrending.
  • Environment Section:
    • ma20, ma50, ma200: green for above the average, red for below the average.

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