Wednesday, April 6, 2011

4/6 Trades

From among today's Top Prospects, I opened three positions: GLD (for gold, the metal), GDX (for gold mining), and M (for Macy's, or shopping till we drop).

I also looked at SLW (Silver Wheaton Corp.), which topped my chart today, and ERTS (Electronic Arts, the software games maker), but I had a hard time framing a trade that gave me a decent return for the risk. I may revisit them on Thursday.

I did revisit TM (Toyota) as a bear play from Tuesday's list, but in the end decided against taking it, based on the kind of story reasoning that I usually eschew.

My thinking went like this: TM is down because people are in a mass panic over the economic impact of the nuclear plant leak in Japan's Tohoku region, Toyota has every reason to fix its supply chain so it can start manufacturing again, they're a rich and smart company, therefore, they will fix things quickly, probably producing an upside surprise that will devastate any trader who bet against them.

Back to the trades taken:

M is a May bull put spread, short the 24 strike and long the 22. GLD is a September bull call spread, long the 143 strike and short the 148. And GDX is a May bull put spread, short the 61 strike and long the 59.

By the way, my BIDU bull position, which I opened on April 1, hit a stop/loss today and was closed for a small loss. The stop/loss level was the swing high less twice the average true range. The parabolic sar also switched to bear phase simultaneously, so two signals said skedaddle.

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