Monday, April 30, 2012

WYN: Vacation lodgings

Wyndham Worldwide Corp. (WYN) operates a full range of vacation lodgings, from hotels and resorts through rentals and exchanges to ownerships. Among the brand names in its portfolio, in addition to its own, are Ramada, Days Inn, Super 8 and Howard Johnson.

The Parsippany, New Jersey company operates in North America and the Caribbean. Although founded originally in 1981, Wyndham went through major restructurings beginning 1999, was taken private for awhile, and only returned to public trading in July 2006.

WYN had the most bullish chart out of 34 stocks added over the weekend to the Zacks top-buy list. However, it was a fairly poor selection of charts -- many were in downtrends -- so coming out best wasn't much of a challenge.

WYN began its most recent leg up in October 2011 from $29.65 and has risen to Friday's all-time high of $50.82.

A 9.5% earnings surprise on April 24 produced an opening gap to the upside and three intra-day rises. Trading so far today has been intra-day decline that has, for the most part, remained within Friday's range.

Wyndham Worldwide has return on euqity of 16% with a very high level of long-term debt amounting to double the company's equity.

Institutional ownership is high, at 93%, and the price has been bid up to the point where it takes $1.70 in shares to control a dollar in sales.

Earnings are seasonal, peaking in the 3rd quarter -- summer -- as expected of a hotel and resort company. Third-quarter earnings have increased over the prior year's quarter since 2011.

WYN on average  trades 2.3 million shares a day, producing a wide selection of options with good high open interest and narrow bid/ask spreads near the at-the-money mark.

Implied volatility stands at 27%, in the lower half of its six-month range, and has been trending sideways for most of April.

Options traders are pricing in a 68.2% chance that the stock will close between $46.23 and $54.09 a month from now, for a maximum gain or loss of 7.8%.

Decision for my account: I consider WYN to be a potential position for my account. In light of today's intra-day decline, I won't buy until I see the rise continue. I'm not looking for a fresh breakout above Friday's high of $50.82. I do want to see an intra-day rise before entering.

Methodology
I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Sunday, April 29, 2012

Week Ahead: Jobs

This is jobs week on the econ calendar, when the most political of the economic indicators, the unemployment rate, hits the headlines.

A release with such a wide following comes with previews, giving traders a chance to try to get a jump on the official numbers.

The payroll company ADP releases its employment report at 8:15 a.m. Eastern on Wednesday, preceded at 7:30 a.m. by the Challenger report on layoffs.

The Labor Department will publish its weekly report on jobless claims at 8:30 a.m. on Thursday.

Monster.com announces its employment index sometime on Friday.

The main event, the government's employment situation report, happens Friday at 8:30 a.m. The two numbers to watch for are: 1) the change in nonfarm payrolls, and 2) the unemployment rate.

Traders watch the payrolls, and the political world watches the unemployment rate.

Last time around, 120,000 nonfarm jobs were added to the national inventory. A significant change here can be a market movers.

The unemployment rate stood at 8.2%.

Another number to look at is private sector jobs vs. government payrolls. In recent months it is government hiring that has been a drag on overall job growth.

Also of note in this busy week:

Monday: Personal income and outlays at 8:30 a.m. This includes the ever-fascinating savings rate, which says much about consumers' willingness and ability to spend us back to prosperity. Also, the Chicago purchasing managers index at 9:45 a.m. and the Dallas Federal Reserve Bank's survey of Texas manufacturing at 10:30 a.m.

Tuesday: The Institute of Supply Management's national manufacturing index at 10 a.m., along with Commerce Department's construction spending report. Motor vehicle sales will be released throughout the day.

Wednesday: Factory orders at 10 a.m. and petroleum inventories at 10:30 a.m.

Thursday: Productivity and labor costs at 8:30 a.m., followed by the Institute of Supply Management's non-manufacturing index at 10 a.m.

Federal Open Market Committee members Jeffrey Lacker, head of the Richmond Federal Reserve Bank, and San Francisco Fed Pres. John Williams speak on Tuesday, Lacker again on Wednesday and Williams on Friday, and FOMC alternate Charles Plosser on Tuesday.

Three Fed officials -- FOMC members Williams and Atlanta Fed Pres. Dennis Lockhart and FOMC alternate Plosser -- have joint appearance at the University of California, Santa Barbara at 11 a.m. Thursday.


Practical trading:

By my rules, as of Monday I can trade June calendar and vertical spreads, and August single options and straddles. Of course, shares are good at any time.

Good trading!

Friday, April 27, 2012

GNC: Supplements

GNC Holdings Inc. (GNC) sells supplements for nutrition and sports performance from 7,600 locations in 53 countries and online.

The Pittsburgh, Pennsylvania company's website today shows grimacing guys in shades on bikes, illustrating the sports emphasis of the chain's image-making.

GNC had the most bullish chart among 21 stocks added today to the Zacks top-buy list.

GNC Holdings beat earnings estimates by 16.2% in an announcement on Wednesday, and the price responded with a 9.5% opening gap.

But the stock has been in an uptrend been since the company went public a  year ago, with one major correction. The most recent leg up began Jan. 27 from $26.12 and has risen to today's all-time high of $41.95.

It is a very bullish chart, but with the caveat that there is not a lot of history to this newly public company. There is no way of knowing how its price will behave under severe stress, such as the economy experienced in the 2008/2009 crash.

GNC Holdings has return on equity of 22%, with long-term debt equal to 85% of equity. The return is in growth-stock territory, but the high debt is a serious risk to long-term growth.

Institutions own nearly all of the shares and have bid up the price so that it takes $1.95 in shares to control a dollar in sales.

The four quarters of earnings now available show no pattern. But there is too little data to look for any evidence of seasonality, so there may be a longer term pattern that has yet to emerge.

GNC trades 2.3 million shares on average. That supports a modest selection of option strike prices, but with high open interest and narrow bid/ask spreads.

The price spreads get a little too wide for my taste in the out-months, and the $5 strike price interval surrounding the at-the-money level makes it difficult to construct a reasonable spread.

Implied volatility stands at 48.5%, significantly above the six-month low of 39% but well below that period's high of 85%. It has been tracking sideways since early April.

Traders are pricing in a 68.2% chance that the stock will close between $35.70 and $47.32 a month from now, for a maximum gain or loss of 14%.

GNC Holdings next publishes earnings on July 26. The stock will go ex-dividend sometime in June, most likely, for a quarterly payout yielding 1.05% annualized.

Decision for my account: I would be willing to play GNC as shares or call options. The structure of the options inventory makes spreads too problematic for my taste. And I prefer spreads. They let me define the potential loss more precisely than singles do, and also let me make money if the price goes nowhere, neither rising nor falling.


Also, the upward gap and new high today suggests to me that GNC is ready for some profit-taking by short-term traders. 


So I'll wait until next week before deciding whether to open a position.

Methodology
I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Thursday, April 26, 2012

PII: eXtreme vehicles

Polaris Industries Inc. (PII) makes all-terrain vehicles, motorcycles and snowmobiles. Generally it makes vehicles with a lot of black in the color scheme and promotional art that brings to mind the words "eXtreme Performance".

The Medina, Minnesota company sells through dealers and distributors in the United States, Canada and Europe.

PII had the most bullish chart among 13 stocks added today to the Zacks top-buy list.

The price began its most recent leg up on Jan. 5 from $55.09, rising to today's high (so far) of $81.91.

The latter half of the uptrend has been interrupted twice with corrections lasting more than a week. The most recent pop to the top was an upside gap on April 18 following an 8.4% earnings surprise.

The price has traded within the gap-day range ever since, with the exception of a brief breakout today that was immediately retraced. Also, volume has declined sharply since the gap-day spike.

Bullish chart? Yes. Unambiguously so? No.

The price has been in blue-sky territory since the end of 2010. But a trades occur in the now, and that means it will take a persistent breakout above $81.38, the gap-day high, to turn the trend unambiguously bullish.

Polaris has an amazing return on equity of 51%, with low long-term debt amounting to just 20% of equity. These are not figures that I see often as I screen companies.

Institutions own 66% of shares -- a bit below top rank -- and the price has not been bid up to extraordinary levels. It takes $1.98 in shares to control a dollar in sales.

Earnings, to my surprise, don't show a high degree of seasonality, nor are they accelerating at a steady clip. They're higher now than they were in 2010 and 2011, but earnings have tended to form plateaus rather than trendlines.

PII on average trades 1.2 million shares a day. The options selection, open interest and bid/ask spreads are surprisingly good, high and narrow, respectively, for such a low volume stock.

Implied volatility is at a six-month low, 32%, and has fallen sharply since mid-April.

Traders are pricing in a 68.2% chance that the price will close between $73.06 and $87.86 a month from now, for a maximum gain or loss of 9.2%.

Polaris next publishes earnings on July 16. The stock goes ex-dividend, most likely, in late May for a quarterly payout  yielding 1.84% annualized.

Decision for my account: Love the financials. Options look great. But I have reservations about the very near term chart, as noted above. I'll consider opening a bull position on PII upon a persistent breakout above $81.38. 

Methodology
I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Wednesday, April 25, 2012

EXR: A space REIT

Extra Space Storage Inc. (EXR) is a real-estate investment trust (REIT) that owns and operates storage facilities.

One characteristic of the housing collapse of the last decade was an increase in the number of renters who, nearly always, are short on storage space. Extra Space has been well positioned to provide that extra space renters need.

EXR has the most bullish chart of 18 stocks added today to the Zacks top-buy list.

I last wrote about EXR in a January analysis, and the chart hasn't changed much since then. It's still going out like gang-busters.

At that time, I wrote: "EXR is a blue-sky stock. Last March it exceeded its pre-recession high of $20.55, set in 2007 and has stayed above that level since last October." That holds true today.

I bought shares of EXR in January and sold them in early February, for a 4.5% profit, as the price went into a sideways correction lasting until mid-March.

After that correction, the most recent legs up began March 12 at $26.40, rose to $29.20 on April 2, corrected down to $27.45 on April 10, and then pushed up to today's high (so far) of $30.13.

Note, however, that although the stock has traded today entirely above yesterday's high, it has declined intra-day, showing that the high lacks conviction.

In my January write-up I sounded a cautious note about declining volume. That has changed, with volume rising from mid-March into April, but declining in the last few days.

Extra Space Storage has a mediocre return on equity of 5% with high long-term debt totaling 134% of equity.

Institutions own 87% of shares and have bid the price up to where it takes $9.54 in shares to control a dollar in stocks. That's one of the highest premiums I've seen.

Earnings have risen every quarter but two since the 3rd quarter of 2009.

EXR on average trades 1.8 million shares a day. It has extremely wide bid/ask spreads and very low open interest on a pathetic selection of strike prices. That's why I bought shares last time I traded EXR, and that restriction holds true today.

Implied volatility stands at 35%. Dozes at 35% would be more accurate, as it has pretty much flatlined at a six-month low since April 12.

And that makes the wide bid/ask spreads on options extremely weird. Generally, spreads widen to accomodate uncertainty which manifests itself through high implied volatility.

Compared to the exchange-traded funds tracking major indexes, 35% is high. But histroicall for EXR, it is rock bottom.

I don't see a market-based reason for such wide spreads.

Options traders are pricing in a 68.2% chance the stock will close between $26.79 and $32.89 a month from now, for a 10.2% gain or loss.

Extra Space Storage next publishes earnings on April 30. The stock goes ex-dividend in June for a quarterly payment yielding 2.68% annualized.

Decision for my account: I won't open a position today because earnings are so near. I would consider a bull position -- stocks, not options -- after earnings, if the chart is still highly bullish. However, in practical terms, I don't have room for shares in my portfolio at this point because I'm heavily invested in diagonal spreads, which pay much better than shares. So I doubt that I'll open a position even if earnings go well.

Methodology
I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Tuesday, April 24, 2012

AIR: Prone to downdrafts

AAR Corp. (AIR) is huge service and parts department for aircraft, civilian and military. It performs maintenance and overhaul, and provides parts supply services.

It also sells and leases aircraft. It does all of these things amid a huge set of regulations designed to keep those complex flying beasts safe and airworthy. It's a complicated business with a limited market. I mean, how many of us own our own planes?

The Wood Dale, Illinois company this spring fell from favor among analysts and traders. AIR had the most bearish chart among 34 stocks added today to the Zacks top-sell list.

A glance at the five-year weekly chart for AIR shows that the company's stock has long been prone to down-drafts. It doesn't just correct. It slams down form the heights to the valley floor.

The most recent slam-down began March 20 from $21.98 and hit a correction low on Monday of $15.81. The downward course included one short pause for a slight upward correctoin, but three opening downside gaps.

So this is serious downtrending. The only question remaining is, where's the ground?

And the ground, in fact, may not be that far away. The $15 level has seen two major bounces to the upside, one in the summer of 2011 and a second in early October 2011.

Also, there was a sharp bounce upward from $15.78 in late November 2011.

So if these powerful resistance levels still hold, there may not be that much downside left for AIR. Unless, of course, there is. The validity of resistance is something that can only be assessed after a bounce or breakout has occurred.

The bounces that have occurred between $15 and $16 have happened rapidly, as violent reactions against further decline.

Under those circumstances, opening a bear position and setting close stop/losses to avoid a bounce may not be a viable strategy. The stop/loss may kick in well above the level the trader planned on.

AAR Corp. has return on equity of 9%, with long-term debt amount to 67% of equity.

The company showed a profit last quarter after three losing quarters. Prior to that, it profited in seven out of eight quarters.

Despite the falling chart and the less-than-spectacular return on equity, institutions have piled into AIR. They own 90% of shares. The price is among the lowest I've seen. It takes only 32 cents to control a dollar in sales.

AIR trades 360,000 shares a day on average. That supports only a small selection of options. Yet bid/ask spreads are fairly narrow, and open-interest is in the two- and three-figure range.

Implied volatility stands at 41%, near the six-month low. Options traders are pricing in a 68.2% chance that the price will close between $14.13 and $17.87 a month from now, for an 11.7% maximum gain or loss.

AAR Corp. next publishes earnings on July 9. The stock goes ex-dividend on April 27 for a quarterly payout yielding 1.88% annually.

Decision for my account: I would want to see a break below the latest bounce level of $15.78, and better still, below $15, before opening a  bear position. So, I'll pass on AIR today.

Methodology

I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

M: Ambiguous trend shift

Macy's Inc. (M) has stores in 48 U.S. states and territories, selling under the names Macy's and Bloomingdale's.

Like all players in the highly competitive world of retail, the Cincinnati, Ohio company's success or failure is heavily dependent on the public mood. As dark as that mood has been over the past few years, surely it has nowhere to go but up.

M had the most bullish chart of 28 stocks added today to the Zacks top-buy list.

M's price began a steady stair-stepping upward from $23.75 in late August 2011. The uptrend peaked on April 5 at $41.27. Since then, the price has corrected down to as low as $38.26.

There are two voices that immediately sing out when a rising stock falters. "Exit now!", cries one. "Buying opportunity!", shouts the other.

Both opinions miss the point, of course. A fact-based trader will add a third voice calmly asking, "What's the trend?"

The answer, of course, is that the trend may have shifted, but it is rife with ambiguity.

Long- and mid-term, M most certainly is in a powerful uptrend, and has been since hitting a recession low in 2008.

From a narrower standpoint, M can be analyzed as standing on the edge of a downtrend. A two-day decline from the April peak brought the price down to $38.50, it then rose to $40.65 (a lower high) on April 17, and then moved down to $38.26 on Monday (a lower low).

A lower high and a lower low, by definition, constitutes a downtrend.

Yet, after hitting a lower low on Monday, the price retreated upward and closed above the the previous correction low, and today's trading keeps falling into, and then out of, a spinning top candlestick pattern, with the current price hovering near the open midway between the high and the low.

This means that there is no consensus among traders on the direction the price should take.

So when I make my trading decision at the end of this analysis, I'll need to reach an opinion on whether the pull up from the lower low and the subsequent hesitation negates the undoubted fact that M is in a near-term downtrend.

The rules are the rules when it comes to chart analysis, but rules are made to be broken.

Macy's has return on equity of 22% but with high long-term debt, amounting to 131% of equity. Like all major retailers, earnings are seasonal, coming in the Christmas shopping season. Macy's has shown higher 4th quarter profits over the year-ago quarter for two years running.

Institutions own 90% of the shares, yet the price remains low. It takes but 61 cents to control a dollar in sales.

The stock trades 5 million shares a day on average and supports a wide selection of options with narrow bid/ask spreads and high open interest -- an options traders dream come true.

Implied volatility stands at 32%, well above the six-month low of 26% in late March. It has declined from its recent high of 34%, on April 16.

Options trades are pricing in a 68.2% chance that the price will close between $35.02 and $42.16 a month from now, for a maximum 9.3% gain or loss.

Macy's next publishes earnings on May 9. The stock goes ex-dividend in June for a quarterly payout yielding 2.07% annualized.

Decision for my account: I want to see a breakout past the correction high before I'll consider opening a bull position on M. (See my discussion of the near-term trend, above.) So if the price pushes above $40.65 I'll conclude that the odds favor resumption of the uptrend. And a break above $41.27 will confirm that conclusion.

Methodology

I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Monday, April 23, 2012

SNE: Ailing giant

Sony Corp. (SNE) once filled the consumer technology niche that Apple now owns, dominating the hearts and minds of the hip and the young. Remember the Walkman?

Anymore, the Tokyo, Japan electronics company is a bit stodgy and struggling to make a living. It once floated on its cutting edge tech. The argument can be made that the blade has grown dull. When I look at Sony, I see an ailing giant.

Which is not to say that Sony isn't still a powerhouse. It makes TVs, cameras, semiconductors, batteries, data recording systems, game consoles and the games that run n them, films, TV programs, music, sofware... It sells insurance, both life and the other kinds, banking services and advertising agency services.

It innovates. It invented the Blu-Ray disk, for Pete's sake!

So it seems so contrary to my expectations to see Sony on the Zacks top-sell list. It doesn't have the most bearish chart among the 16 stocks added to the list over the weekend. That "honor" goes to a Spanish company called Repsol YPF SA (REPYY).

But REPYY has no options, and therefore lacks the tools I need to construct a bearish position to my liking. So I'm analyzing Sony, trading under its American depository receipt SNE. Also, Sony is a lot more interesting.

SNE peaked in 2000, traded sideways from 2003 to 2008, declined into 2009 to a low of $15.64, rose again to $40.45 in 2010, and then fell again and today is trading at less than a dollar above its recession low.

Truly, this is one of the saddest long-term charts I've ever seen.

SNE began its most recent leg down on Feb. 29 from $21.79, stairstepping a couple of times  before moving into downward plunge from $21.32 on March 28. The leg hit a low in today's trading of $16.28.

To me, the key feature of the chart is the lows from 2009 onward. SNE bounced from $15.64 in 2009, and again from $16.16 in 2011. Today's low, so far, of $16.28 is within easy range of a similar bounce if that level of resistance still holds.

Sony has a negative return on equity, a loss on equity of 23%. Long-term debt amounts to 49% of equity, which is high but not crippling.

Institutions own only 6% of shares in SNE, but serious big-time institutions will trade on the Tokyo exchange, where Sony's ticker number is 6758. At this price, it takes 21 cents in SNE shares to control a dollar in sales.

Sony has shown a loss in seven out of the past 11 quarters.

SNE on average trades 4.1 million shares, enough to support a good selection of option strikes with 3-figure open interest and narrow bid/ask spreads.

Implied volatility stands at 36% and has been rising since hitting a six-month low of 31% on April 16.

Options traders are pricing in a 68.2% chance that the stock will close between $14.80 and $18.20 a month from now, for a 10.3% gain or loss.

Given the sharpness of the rise in implied volatility, I would play SNE as a net debit position, such as a bear put vertical spread.

Sony next publishes earnings on June 8. The stock goes ex-dividend, most likely in September, for the semi-annual payout yielding 1.92% annualized.

Decision for my account: However bearish the analysts might be, the two bounce levels discussed above seem serious to me. I will defer opening any bear position on SNE until it, at the least, breaks below $16.16 and even better, below $15.64.

Methodology

I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

NCR: Not just cash registers anymore

NCR Corp. (NCR) got its start in the 1880s as National Cash Register. These days the old mechanical cash register, with its happy ka-ching!, has been reinvented as the point-of-sale solution, and NCR makes those still.

But the Dayton, Georgia company also produces ATMs, airline self-check-in machines, self-checkout lanes for grocery stores, software to help run retail outlets, hospitals, travel companies and marketing operations, e-commerce systems. Oh, and they'll also sell you two-sided paper for thermal printing.

NCR had the most bullish chart of 14 stocks added over the weekend to the Zacks top-buy list. I found it amusing that wunderkind AAPL, which was added back to the list after dropping off, has ca chart that didn't even make it past the first round of competition.

NCR is in the eighth trading day of an upward push that began April 12 at $20.43. The peak so far came Friday at $23.55 after earnings hit analysts' estimates spot-on.

Friday's move was a decisive break-out from a plateau that has held sway since early February. The question, as always with decisive breakouts, is whether they were really decisive at all.

("Decisive" is one of those slippery adjectives defined by unknowable future events, which, come to think of it, is a fairly good definition of a "meaningless".)

But back to the main point. The breakout level was around $22.50. If the price remains above that level, then it was a decisive breakout. If it falls back, then it was a head-fake.

The chart shows pre-recession resistance at the $28 level.

NCR has return on equity of 8% with a high level of long-term debt, amounting to 98% of equity. If I were a long-term player, then I would turn away immediately at those numbers.

Happily for NCR's market cap, institutions don't share my opinion. They own 81% of shares. Even with that high rate of institutional ownership, the shares are available for cheap. It takes only 66 cents to control a dollar in sales.

NCR'S business is seasonal, peaking in the 4th quarter. And that quarter has shown high earnings over the year-ago quarter for two years running.

NCR trades 2.1 million shares on average, sufficient to provide a good selection of options with open interest running to 3- and 4-figures. The bid/ask spread is wider than I like, amounting to 20% for the at-the-money May calls.

Implied volatility stands at 31%, near the top of its three-month range. It has risen sharply since mid-April from a six-month low of 12%.

Options traders are pricing in a 68.2% chance that the price will close between $20.90 and $24.98 a month from now, for an 8.9% gain or loss.

Decision for my account: I like the chart, especially the fact that it is early in the price rise. I dislike the bid/ask spread. I won't enter today because of the broadly down market. I'll consider entering on Tuesday if the day shows a net rise within or above Friday's trading range.

Methodology

I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Sunday, April 22, 2012

The Week Ahead: Big guns

This is a week when the Big Guns of economic reporting are rolled out: A two-day meeting of the monetary policy committee, capped by a news conference with Chairman Bernanke, plus durable goods orders and the GDP.

Wednesday's Federal Open Market Committee announcement at 12:30 p.m. Eastern, the release of FOMC members' economic forecasts at 2 p.m. and Chairman Ben's newser at 2:15 p.m. have, I think, the greatest market-moving potential.

We are in a period when the recession lies behind us and the recovery is taking hold. The FOMC's job is to take away the cake and punch just as the party start's getting fun. When will the Fed begin to tighten? How hawkish will they be in stomping on inflation?

Wednesday's Fed events will provide important windows into the committee's thinking.

Durable goods orders, also out Wednesday, at 8:30 a.m., provide a window of another sort: Into corporate and consumer comfort with the course of the economy. The big ticket capital expenditures known as durable goods won't be ordered unless there is confidence in economic growth. The report may focus on durable goods, but I think of it more as an assessment of psychology.

The gross domestic product report, at 8:30 a.m. on Friday, provides the first comprehensive look at how the economy fared in the 1st quarter. The GDP figure will be revised twice in ensuing months, but it is this initial advance report that tells the tale.

Other events of note:

Tuesday: The S&P Case-Shiller home-price indexes for 20 metro areas at 9 a.m., and new home sales and consumer confidence at 10 a.m.

Wednesday: Petroleum inventories at 10:30 a.m.

Thursday: Weekly jobless claims at 8:30 a.m. and pending home sales, contracted but not closed, at 10 a.m.

Friday: The employment cost index -- that's wages, salaries and benefits -- at 8:30 a.m., and the University of Michigan's consumer sentiment report at 9:55 a.m.

We're still deep in 1st quarter earnings season, so expect the unexpected in that area to have major impacts.


Practical trading:

By my rules, as of Monday I can trade May calendar, butterfly and vertical spreads, covered calls and diagonal spreads and iron condors, and August single options and straddles. Of course, shares are good at any time.

Good trading!

More Liquid Buys: DFS, LOW, AET, CBS

In a posting on Saturday I set out my discontent with the trading prospects my methods were producing.

In response, I built a pool of 51 stocks rated top buy or buy by analysts, and from those used my bracket method to select those with the most bullish charts.

The Saturday posting listed the champions. Today's posting analyzes the runners-up.

I've found in working with charts that the difference between a champion and a runner up is usually a hair's breadth. Well, sometimes a pencil's breadth. So the four stocks that follow have charts that, in my opinion, qualify as among the best of the better.

Discover Financial Services (DFS) is the Discover card and Diners Club card -- products that stand well below Visa and Mastercard in the hierarchy of easy credit. The Riverwoods, Illinois company also has a direct banking segment and operates a global credit-card payments network, PULSE.

I last wrote about DFS on April 13 (read it here), and nothing has changed since then. the price continues to hold in a sideways pattern, where a move above $33.34 counts as a very near term breakout and above $34.43 as an unambiguous resumption of the bull trend.

I won't repeat the analysis here and shall refer the reader to that earlier posting.

Decision for my account: I own DFS as a diagonal spread and would be willing to open a bull position on the current trend.


Lowe's Companies Inc. (LOW) is a home improvement retailer, selling from 1,745 big-box stores, most in the United States  but with a few in Canada and Mexico.

One statistic I find fascinating: Mooresville, North Carolina company's stores amount to 197 million square feet of retail selling space. That's a lot of stuff just waiting for happy consumer to open their wallets and buy buy buy.

I think the theory behind Lowe's is that buy buy buy they must. Everyone has delayed spending amid the uncertainties of the recession. As growth continues to pick up, the theory goes, homeowners will begin flocking the Lowe's to buy supplies so they can make those much needed repairs and improvements.

LOW's most recent leg up began Jan. 10 at $24.75 and peaked April 16 at $32.29 before beginning a so-far shallow recession that has lasted four days.

The price is approaching its pre-recession peak of $35.74, set in 2007, so there is a lot of historical resistance to further gains, at least if you buy the theory that old price levels constitute effective resistance. From my short-term perspective, I'm unconvinced that they do.

LOW has return on equity of 11% and carries a slightly high load of long-term debt amounting to 46% of equity. If I were looking for growth stocks for the long term I would turn away from those figures.

Institutions own 77% of shares -- also a bit low for a growth stock. The price is discounted. It takes only 76 cents in shares to control a dollar in sales.

Earnings are cyclical, peaking in the 2nd quarter, the spring season when a homeowner's fancy turns to projects. Q2 earnings per share rose in 2010 and 2011 from the year-ago quarter, but not by a lot.

LOW on average trades 10.6 million shares. That high level of liquidity gives it an excellent options selection, high open interest and narrow bid/ask spreads.

Implied volatility stands at 26%, which is near six-month lows. It has been falling since April 16. Options traders are pricing in a 68.2% chance that the stock will close between $29.27 and $34.03 a month from now, a 7.5% gain or loss.

Lowe's next publishes earnings on May 21. The stock goes ex-dividend on Monday, April 23, for a quarterly payout yielding 1.77% annualized.

Decision for my account; I intend to open a bull position on LOW. With implied volatility falling I would tend to play LOW's for a net debit, perhaps as a bull put spread. I would also look at it as a diagonal spread prospects.

Aetna Inc. (AET) is a health- and life-insurance behemoth. The Hartford, Connecticut company is listed in the Fortune 100.

AET's chart screams uncertainty. It has been stairstepping up since its 2009 recession bottom in a series of rapid advances and selling panics.

Like all companies in the health industry, Aetna faces great regulatory uncertainty. They know what their regulatory environment will look like of the Obama-era health reforms stands. But given the Republican party's strong vow to repeal as much of the reforms as possible, that known regulatory ground could melt away in a vote.

The outcome of this year's congressional and presidential elections will do much to resolve the uncertainty.

The most recent advance began March 29 at $46.26 and peaked the next day at $51.14. The price then corrected down to $47.07 (a higher low) on April 16, and has since resumed a sharp rise, up to $49.64 on April 19.

Normally, I would say that prudence dictates waiting for a breakout above $51.14 before entry. But given the explosive nature AET's advances, a trader can only open a position before the next advance and hope it materializes, exiting if the price turns down again.

On the chart, even with the pullbacks, AET has been in an uptrend since 2008.

Aetna has return on equity of 20% -- the low end of my range for growth stocks -- but with a bit too much in long-term debt, amounting to 44% of equity.

Institutions, however, love the company. They own 89% of shares. Yet the price is very cheap. It takes only 51 cents to control a dollar in sales.

The company's earnings are seasonal, but in an inverse sort of way. The 4th quarters earnings are low, and the other three generally form a plateau. The three-quarter plateaus were higher than the prior year in 2010 and 2011.

AET on average trades 2.7 million shares. The options selection is excellent, open interest is adequate and bid/ask spreads are narrow at the money.

Implied volatility stands at 31%, well above the six-month low of 25% set on March 21. Volatility has been falling since April 19.

Options traders are pricing in a 68.2% chance that the stock will close between $44.84 and $53.58 a month from now, an 8.9% gain.

Decision for my account: I conditionally intend to open a bull position on AET. Given the falling volatility, I would structure it as a net credit trade, perhaps a bull put spread. One note of caution: AET closed Friday with a spinning top candlestick, with the price unchanged from the opening bell. That is a hesitation pattern, and could signal a reversal, which would negate any plans I might have to open a bull position immediately.


CBS Corp. (CBS) is a media company. It is CBS TV and radio, of course, but also Showtime, The Movie Channel and the CW network on cable, the publishers Simon & Schuster, Pocket Books and Scribner's, and Westinghouse Electric Corp.

The New York City company got back into the movie production business after an absence, leading off with the 2010 film "Extraordinary Measures".

CBS's chart has completed seven days of recovery from a sharp correction that carried the price from a swing high of $34.17 on April 3 down to $3.25 on April 10. The pre-correctoin leg up had carried the price from $23.35 on Nov. 23, 2011.

The prudent trader will wait for a break above $34.17 before entry. Those of a more speculative bent, like me, might well get in ahead of time and see what develops.

CBS has return on equity of 13% with long-term debt amounting to 60% equity. Institutions own 85% of shares. The price is at a premium. It takes $1.52 in shares to control a dollar in sales.

Earnings were generally on the rise, with a few failures, into 2011. Earnings per share peaked in the 2nd quarter, and then fell a bit. The most recent quarter was high but had not yet equalled the 2nd quarter peak.

CBS trades 7.9 million shares on average, sufficient liquidity to support an good selectoin of options, adequate open interest and narrow bid/ask spreads.

Implied volatility stands at 32%, well above the 23% six-month low set on March 16. Volatility has been in a plateau since the April 10 peak of a rise from that low.

Options traders are pricing in a 68.2% chance that the stock will close between $30.24 and $36.28 a month from now, a gain or loss of 9.2%.

CBS next publishes earnings on May 1. The stock goes ex-dividend in June for a quarterly payout yielding 1.2% annualized.

Decision for my account: I intend to open a bull position on CBS. It's hard to know what to do with the implied volatility being so neutral, and I'll reserve a selection of position structure for when I actually make the purchase.

Methodology

I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Saturday, April 21, 2012

Liquid Buys: TYC, TJX, UNH, GPS

Regular readers will know that my usual methods of finding trades -- selecting the most bullish chart among new additions to the Zacks top-buy list -- has been failing me of late.

Perhaps it is my own tilt in favor of liquidity. Perhaps the analyst community, upon which Zacks relies, has turned its attention more to mid- and small-cap stocks. Perhaps it is a phase of the moon or the positions of the planets in the Zodiac.

No matter. When Plan A doesn't work, there is always a Plan B, and a Plan C, if needed.

Following are the most bullish charts of 51 stocks ranked as buy or top buy by analyst consensus.

I selected using my usual bracket method -- see the "Methodology" section at the end of this posting for a more detailed description -- breaking the mass of symbols into four smaller brackets. The four stocks analyzed here were the winners of those brackets. In another posting this weekend, I'll take up the losing semi-finalists.

Tyco International Ltd. (TYC) is one of the massive "we do everything within our area of expertise" global conglomerates. The Schaffenhausen, Switzerland based company on security systems -- against both fire and theft -- as well as sensing and flow control, which can be seen as being related to the fire protection segment.

They also make electrical and metal products that can be seen a essential for carrying stuff to put out fires and signals that all is well or ill from one place to another.

"Specialty" for companies like Tyco is defined very broadly indeed.

TYC's most recent leg up began in September 2011 at $38.51 and rose to a swing high of  $58.66 on March 28.

From that point it corrected sharply down to $53.02, and then resumed its rise for the past eight trading days, reaching a high Friday of $55.88.

The caution trader will wait until the swing high of $58.66 is broken. The all-time high of $63.21, set in January 2001, provides potentially major resistance, if you believe that resistance levels hold sway for years. I'm not entirely sure that such is the case, but my opinion isn't universally shared.

Tyco has return of equity of 10% -- a steady pace but hardly the stuff growth stocks are made of -- and long-term debt worth 30% of equity. My preference is for debt of 10% of equity or less, but for short-term trades the debt level tends to be irrelevant.

Institutions own 87% of Tyco's shares, yet the price remains low relative to sales. It takes $1.48 in shares to control a dollar in sales.

Earnings have remained fairly stable for the last three quarters, rising gradually prior to that with a tendency to form plateaus.

On average TYC trades 3 million shares, enough to give a fair selection of options with good open interest and a fairly narrow bid/ask spread.

Implied volatility stands at 23%, slightly above six-month lows, and has been declining since April 11. Options are pricing in a 68.2% chance that TYC will close between $51.56 and $59.02 a month from now, a 6.8% gain or loss.

TYC next publishes earnings on April 26. The stock goes ex-dividend on April 25 for a quarterly payout yielding 1.81% annualized.

Decision for my account: I'll consider opening a bull position on TYC after earnings are announced. The question is whether to go for a net debit or net credit position. Implied volatility is low, suggesting a net credit, but is falling, suggesting a net debit. I'll decide which when (and if) I trade.

The TJX Companies Inc. (TJX) is clothes shopping for the budget conscious. And who isn't budget conscious these days? Think T.J. Maxx and Marshalls in the United States, Canada and Europe.

Being a retail outlet, TJX is extraordinarily sensitive to changes in the public mood. My take is that the public is so disgruntled and moody that it can't get much worse without everyone taking to the barricades in a replay of Les Miserables. So I'm optimistic about retail and other mid-sensitive plays.

TJX began its most recent leg up in September 2011 at $25.55, hitting an all-time peak of $41.58 on April 18. The rise was punctuated in early April by a three-day correction.

TJX Companies has return on equity of an extraordinary 47% with rather low debt amounting to 25% of equity.

Institutions own 96% of shares, yet the stock is cheap, just like Marshall's clothing, costing but $1.33 in shares to control a dollar in sales. Earnings have accelerated sharply the last three quarters.

TJX on average trades 5.2 million shares, with good open interest and a fairly narrow bid/ask spread but with a mediocre options selection.

Implied volatility stands at 27%, which is near the six-month low. It can be counted as either falling gently or undulating aimlessly, depending upon one's frame of mind.

Options are pricing in a 68.2% chance that the stock will close between $37.78 and $44.26 a month from now, a 7.9% gain or loss.

Given the low and meandering nature of the implied volatility, I would play TJX as a net credit position, buying volatility low in the hope of selling it high.

TJX Companies next publishes earnings on May 15. The stock goes ex-dividend on May 8 for a quarterly payout yielding 1.12% annualized.

Decision for my account: I intend to open a bull position on TJX if the present uptrend holds into next week. Most likely I'll structure it as a bull call spread expiring in August. I may also look at it as a diagonal spread.

UnitedHealth Group Inc. (UNH) is one of the massive health-insurance companies that dominates the American system of medicine.

The Minnetonka, Minnesota company controls a commanding position in the industry. It is also under regulatory stress as health-care reform in the United States seeks to control the cost of becoming and staying well.

UNH completed its most recent correction in November 2011 and on Nov. 25 began another rise from $43.55 up to Friday's high of $59.71. That leg up was punctuated by three minor corrections.

The price is at its pre-recession high of $59.46 set in December 2007 and is near its all-time high of $64.61, set in December 2005. I don't totally discount the possibility that UNH is in a range of heavy, though aged, like a fine wine or Roquefort cheese resistance.

UnitedHealth Group's return on equity is 19%, just below growth-stock territory, but with slightly elevated long-term debt amounting to 45% of equity.

Institutions own 87% of shares, but the price is at a steep discounts. It takes only 60 cents in shares to control a dollar in sales.

I attribute that in part to massive uncertainty about what regulatory environment lies ahead for UNH. It depends upon the outcome of the American election, both for president and two houses of Congress. Ultimately, Dear Reads, if you are a citizen of the United States, it depends upon you.

Earnings remained at a plateau during 2011 but jumped sharply the first quarter of 2012.

UNH on average trades 6.5 million shares, enough to provide an adequate selection of options with high open interest and fairly narrow bid/ask spreads.

Implied volatility stands at 26% and on Friday rose slightly from its six-month lowest low. Options are pricing in a 68.2% chance that the price will close between $55.07 and $63.95 a year from now, a gain or loss of 7.5%

UnitedHealth Group next publishes earnings on July 19. The stock goes ex-dividend, most likely in September, for a quarterly payout yielding 1.09% annualized.

Decision for my account: I intend to open a net credit position on UNH. I shall most likely structure it as a bull call spread, although I'll also look at it as a possible diagonal spread.

The Gap Inc. (GPS) is clothing, accessories and personal care poducts with a touch of the cool. Its holdings including the Gap stores, Old Navy and Banana Republic. The San Francisco, California company has outlets in the United States, Canada, Europe, the Middle East, Africa and East Asia.

The company began a rapid rise on Feb. 2 with, appropriately, an opening gap that carried the price from a prior-day close of $19.45 to an opening of $21.48.

The most recent leg up, following a nine-day correction, began April 12 at $25.62 and has carried the price to Friday's high of $27.95. That level brings the price above its pre-recession levels, although the all-time high, $53.75, was set in 2000.

GPS is most decidedly not a blue-sky stock.

The Gap has return on equity of 24% -- growth stock territory -- but with a higher level of long-term debt than I like to see, amounting to 60% of equity.

Institutional ownership is rather low, just 57% of shares, and the price is also on the low side; it takes 94 cents in stock to control a dollar in sales.

Earnings are seasonal, peaking like most retail in the 4th quarter. This year's Q4 earnings were down sharply from the year-ago figure.

GPS on average trades 7 million shares, sufficient liquidity to provide an excellent selection of options with high open interest and narrow bid/ask spreads.

Implied volatility stands at 37%, well off the six-month low of 31%. It has been declining since April 17. Stock traders are pricing in a 68.2% chance that the stock will close between $24.89 and $30.81 a month from now, a 10.6% gain or loss.

Gap next publishes earnings on May 17. The stock goes ex-dividend sometime in July for a quarterly payout yielding 1.8% annualized

Decision for my account: I intend to open a bull position on GPS. I'm uncertain about whether to for a net credit or net debit playing. My choice will depend upon what implied volatility is doing the day open the position.

Methodology

I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Friday, April 20, 2012

TSCO: Farm and yard

Tractor Supply Co. (TSCO), despite having a name that creates visions of the hardy American farm family plowing the prairie to feed the world, isserving a portmanteau market.

The Brentwood, Tennessee company really does have supplies that are used by people running real tractors, but it also has stuff needed for the upscale suburban big back yard. Not to mention clothing, pet supplies, and toys for the little kiddos.

So if I'm a serious farmer, will Tractor Supply be my first stop? Or are the company's 1,085 stores in 44 states mainly feeding lifestyle and image aspirations? The first, more specialized market is narrower but likely with greater margins. The second model serves a broader market but one with greater competition that keeps margins lower.

And with such a diffuse range of product types, can it serve both markets well?

Tractor Supply had the most bullish chart among nine stocks added today to the Zacks top-buy list.

TSCO, which has been rising since its recession bottom in 2009, began its most recent leg up on Jan. 6 at $69.31, and has risen steadily up to Thusday's higher high of $101.20.

The stock has been in blue-sky territory -- setting all-time highs -- since September 2010.

The company is a money maker, with return on equity of 23% and no long-term debt. That makes it a growth stock by my definition.

Institutions own 84% of the shares and yet the price doesn't carry an outrageous premium. It takes only $1.68 in shares to control a dollar in sales.

Earnings show a seasonal pattern, peaking each year in the 2nd quarters -- think spring planting. That quarter's sales were up in 2010 and 2011 over the year-ago quarter. The 2012 results won't be out until July, but analysts are forecasting another rise.

On average TSCO trades 1.4 million shares a day. That's enough to give a reasonably good options selection with three- and four-figure open interest.

The bid/ask spreads are a bit wide, amounting to 8.8% on the May strike nearest to current price. Compare that to a 0.5% spread on the comparable strike for SPY, the massive exchange-traded fund that tracks the S&P 500.

Implied volatility is above the six-month lows but has been falling since April 11. Because of the marked decline, I would tend to play TSCO with a net debit position, such as a bull put spread.

Options are pricing in a 68.2% chance that the price will close between $90.77 and $108.47 a month from now, an 8.9% gain or loss.

Tractor Supply next publishes earnings on April 25. The stock goes ex-dividend sometime in June for a quarterly payout yielding 0.48% annualized.

Decision for my account: I won't trade TSCO this close to earnings. More broadly, I'm passing because of the wide bid/ask spread. I prefer narrower spreads so that I need less price movement to overcome the cost of the transaction. Otherwise, I like the chart and love the financials. I would probably open a bull positions, post-earnings, if I were interested in doing a shares trade.

Methodology

I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Thursday, April 19, 2012

RRR: Zacks' bad call

RSC Holdings Inc. (RRR), which rents equipment in 43 U.S. states and three Canadian provinces under the name RSC Equipment Rentals, had the most bullish chart of 10 stocks added today to the Zacks top-buy lists.

However, it has a merger agreement with competitor United Rentals Inc. (URI), and the deal is scheduled to be completed  by April 30.

So, this is not a trade for me. I don't play news reports. I'm a trend-based trader. And whatever RRR's chart looks like today, that chart will be coming to an end very soon.

Bottom line: I think RRR was a very bad call by Zacks.

Zacks' selection system is largely automated -- plug in the parameters and see what pops out -- and  they apparently didn't adjust for RRR's impending absorption, thereby illustrating a flaw of any automated system, be it based on chart indicators, analyst opinion or company financials.

Algorithms can only go so far. At a certain point, they cannot substitute for human judgment.

I really dislike all the other charts added to the Zacks top-buy list today, so I won't be writing about any of them, either.

And as for Zacks: Shame on you for not performing due diligence in constructing the top--buy list, or at least for failing to explain why RSC Holdings had a place on it.

A final thought: This is the second day in a row when the most bullish chart on the Zacks top-buy list has been flawed, raising the question of whether Zacks in the present market environment is in fact a reasonable screening tool.

Methodology
I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Wednesday, April 18, 2012

EMC: Information plumbers (updated)

Update: EMC missed analysts' estimates when it announced earnings this morning, and the stock slid by nearly 5%. In my decision yesterday, I said I would wait for earnings before opening any EMC position. That proved to be the right choice. In light of the earnings announcement, I won't be trading EMC at this point. Here's the Bloomberg story.

EMC Corp. (EMC) designs the electronic plumbing of the Information Age, developing, installing and supporting the infrastructure that lets companies store and move their data. EMC will announce earnings before the opening on Thursday.

Many companies have put off IT expansion plans during the recession. The recession is over and the recovery is limping forward. In my book, this is a time when "plumbers" like EMC can expect growing business as their customers catch up with un-met needs.

The Hopkinton, Massachusetts Fortune 500 company is ranked, by Fortune, as the third most admired computer company in the world.

EMC ranked among the four most bullish charts of 20 stocks added today to the Zacks top-buy list.

None of the charts was unambiguously bullish, and I've written about two of them, CBS and DDS, previously this year. I've selected EMC out of the top tier because it has bounced up from a correction in the last week and also has room to the upside for a major move if it successfully breaks above $30.

EMC began its present uptrend on Dec. 29, 2011 at $21.49, peaking at $30 on March 28. A correction four trading days after the peak brought the price down to $27.93 on April 11. Since then, the price has risen to a post-correction high of $29.40 on Tuesday.

What's interesting is the history above $30. EMC has already broken above resistance set as it recovered from the stock's depth of under $6 per share after the tech bubble burst. A rise above $30 leaves little in the way of resistance all the way up to the tech bubble peak of $104.94 set in September 2000.

So, a fresh breakout and room to exercise its ambitions.

There is, of course, also room to question whether 12-year-old resistance means anything. If it doesn't, then that's even more bullish for EMC, since it anything above $30 can be treated as blue-sky territory.

EMC has return on equity of 14%, which puts it below my growth-stock standards. Long-term debt, however, is quite low, amounting to only 10% of equity. So the lower return is palatable.

Institutions own 80% of shares and have driven the price up so that it takes $3.04 in shares to control a dollar in sales.

EMC's earnings show a seasonal pattern, peaking in the 4th quarter. That quarter's earnings have been on a steady rise for two years.

The stock is highly liquid, with average volume of 18.4 million shares. The is reflected in the options inventory, which has narrow bid/ask spreads and heavy open interest.

Implied volatility stands at 29%, around the mid-range for the past three months. It has been declining sharply from Tuesday.

Options are pricing in a 68.2% chance that EMC will close between $26.59 and $31.45 a month from now.

EMC next publishes earnings before the open on Thursday. Given that, it is hard to say whether to assume a greater decline in the volatility, suggesting a short, net credit position, or a reversal, implying a long, net debit position.

Decision for my account: I plan to open a bull position of some sort, but not until after earnings are announced tomorrow morning. And that decision, of course, is tentative, depending upon what the earnings are and how the market responds. Overall, though, there is nothing at this point that I dislike about EMC as a trade.

Methodology
I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Tuesday, April 17, 2012

JBHT: Keep on truckin'

J.B. Hunt Transport Services Inc. (JBHT) runs trucks that carries goods throughout North America. It is one of the largest transportation companies in the United States.

JBHT had the most bullish chart out of 23 stocks added today to the Zacks top-buy list. The paint company Sherman-Williams Co. (SHW) was a very close second.

As manufacturing recovers from the recession, there is more business for truckers like J.B. Hunt. The Lowell, Arkansas company is providing one of the basic services that allow the economy to keep on truckin'.

JBHT's most recent leg up began March 8 at $50.58. The price has risen to a higher high today of $57.43.

Comparing the JBHT and SHW charts was a difficult piece of analysis.

SHW's current leg up began Dec. 16, 2011 at $84.65 and hit a higher high today of $118.44.

Ultimately, I chose between them, based solely on the charts, on these properties:

1) JBHT has had a more recent correction and so may have more potential rise before profit-taking set in. SHW's rise has aged more. Stocks charts aren't like fine wines. Generally, in charts, the younger the better.

2) Although SHW has set higher highs yesterday and today, both days are showing decline intra-day (so far at least in today's trading). JBHT is showing an intra-day decline for today only.

3) JBHT's volume has risen with the rising price, dropping to a lower level only with today's decline. That tells me that sentiment predominates on the upside. SHW started showing declining volume four days ago, despite a rising price.

These charts are are so similar that distinguishing between the them is good exercise for chart readers.

JBHT shows return on equity of 46% but with a high level of long-term debt, amounting to 111% of equity. Institutions own 66% of shares, but the price remains relatively low. It takes $1.42 in shares to control a dollar in sales.

Earnings have grown in four of the last six quarters and was down slightly in the most recent.

Average volume is 1.1 million shares, which is liquid but not highly. The options inventory carries 12 strikes for may expiration, half of them without open interest, with strikes set at $5 intervals.

The bid/ask spread is 5.5% for the at-the-money May calls. Compare that to a 0.7% spread for the S&P 500 exchange-traded fund SPY.

Implied volatility is at 29%, near the six-month low. It has been trending sideways since mid-March. Options are pricing in a 68.2% chance that JBHT will close between $52.60 and $62.26 a month from now, an 8.4% gain or loss.

With implied volatility so low, I would want to structure my position for a net credit.

J.B. Hunt next publishes earnings on July 16. The stock goes ex-dividend in August for a quarterly payout yielding 0.98% annualized.

Decision for my account: I've opened a long vertical (bull call) spread expiring in August, short the $60 call and long the $55 call. One bonus of the current price and volatility configuration is that I was able to structure a position with a 1:1 risk/reward ratio.

Methodology
I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Monday, April 16, 2012

TITN: Farm equipment

Titan Machinery Inc. (TITN) sells farm equipment through 96 stores in the upper Midwest and Rocky Mountain region. If you're in the market for a tractor, this West Fargo, North Dakota company  is ready to step up and close the deal.

TITN had the most bullish chart among 15 stocks added to the Zacks top-buy list over the weekend. Actually, that's a bit of a mis-statement. It had the only bullish chart among the 15, which either says something about Zacks' selection methods or the state of the market.

It's hard for me to craft a backstory about Titan Machinery without using the phrase "I imagine". The agriculture sector isn't one of my strengths.

But I imagine that a lot of farming enterprises put off buying new equipment during the depths of the recession, and with the recovery taking hold, I imagine they are now starting to make those capital purchases in a context of pent-up demand.

It is the same paradigm that caused durable goods orders to rebound in February.

Certainly Titan's earnings show a pattern of decline and recovery, falling through the middle quarters of 2011 and then recovering thereafter in a series of higher earnings reports.

TITN  began its most recent leg u[p on March 8 at $23.96 and has risen with only one minor correction to Friday's high of $36.92, helped by a 15.5% opening gap following an April 11 report that showed a 59% earnings surprise.

A three-day rise added 16.4% to the gap, meaning the stock has risen nearly 32%  in less than a week.

Return on equity is 16%, but the company has achieved that at the price of heavy long-term debt, amounting to 183% of equity.

Institutions own 76% of shares, but the price is dirt cheap. It takes only 45 cents in shares to control a dollar in sales.

Average volume is 1.2 million shares. The options selection is a bit limited, even at that level, with only nine strike prices available for May, and most of those are priced at $5 increments, which is wide for a $35 stock.

Bid/ask spreads aren't cripplingly wide, although they are a bit wider than I like, and open interest is minimally acceptable near the at-the-money mark.

Implied volatility has recovered sharply from its six month lows below 45% and today stands at 51%. Options are pricing in a 68.2% chance that TITN will close between $29.91 and $40.19 a month from now, a 14.7% gain or loss.

More succinctly: This is a very volatile stock, with all the opportunities for profit and risks of pain that volatility brings.

Titan Machinery next publishes earnings on June 11.

Decision for my account: I'm passing on TITN at this point. The rapid rise of the past few days suggest to me that there will be a period of profit-taking and correction. 
Also, although the options inventory isn't horrible, it's not great, either. The wide strike intervals would make it difficult to construct a vertical spread to my liking. 


However, I think the stock is worth revisiting a week down the line to see what the price has done. A correction and reversal, or a fresh breakout above $37.92 would make a position more attractive, even with the options difficulties.

Methodology
I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Sunday, April 15, 2012

May Diagonals

'Tis the season for lining up my diagonal options spreads for May. I spent 90 minutes doing the research on Saturday, with Metallica blaring in my ears. (I find that Meticallica gives an edge in trading performance.)

For most of my holdings, beginning Monday I'll roll the short options expiring in April over to May expirations. Those holdings are AAPL, DFS, INTC, QCOM, QQQ, STX and WDC.

I'll close two of my diagonals. The prices have moved in a way that make it impossible to create profitable positions with acceptable risk. So both the long calls and the shorts will be closed for EFA and IWM.

Those closures and my profits provide space for several new diagonals. As always, I'm looking at stocks having average volume of 3 million shares or more.

I'll buy the call options expiring in August, or the nearest month after that if there are no August options, selecting the strike having a delta of 70.

I'll sell the May calls having a delta between 30 and 40.

In any case, I'm looking at stocks having favorable analyst ratings and with uptrending charts, and I want the diagonal to have a risk/reward ratio of no greater than 4:1.

My short list of possibilities, based on Friday's close: LEN, LNKD, QCOM, SBUX and WFC.

After opening the diagonals, I'll immediately insure them by buying out-of-the-money puts. The question, as always, is how much insurance can I afford?

Generally, I look for a put having about a quarter of the delta of the long call and expring in the same month. The cost of insurance will generally be almost as much as my first month's income from selling a call, but since I get to sell several times and only need buy insurance once, it works out be profitable.

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.

The Week Ahead: Earnings, not Econ

Retail sales, housing and industrial production are prominent in the week. Truth be told, it is the earnings releases that will dominate the markets, rather than economic releases.

The Commerce Department's retail sales report will be released at 8:30 a.m. Eastern on Monday. This is the broadest measure of retail activity and shows whether Americans are returning to the shopping aisles or continuing their course of frugality and debt reduction.

The most significant of the housing reports, existing home sales, will be out at 10 a.m. on Thursday. The housing sector has been lagging the economic recovery. An unexpectedly high number here will mean that the recovery is picking up some breadth.

Other housing reports: The Homebuilders' housing market index at 10 a.m. on Monday is a broad measure of housing activity; and housing starts at 8:30 a.m. on Tuesday tracks the beginning of new home construction -- it is a leading indicator, the builders hope, for future new home sales.

The Federal Reserve's industrial production report is scheduled for 9:15 a.m. on Tuesday. Softness here means the recovery may be failing to take hold.

The Philadelphia Fed Survey of market conditions in the mid-Atlantic region, out at 10 a.m. Thursday, is considered to be a good stand-in for the economy as a whole.

Weekly jobless claims will be released at 8:30 a.m. Thursday. This report always grabs headlines. Personally, I'm not so sure that it is of great significance to the economy and markets. I mean, anyone who is going to be laid off has already been laid off, for the most part, yes? New jobless claims at this point are hardly representative of broad trends. That's my theory, at least.

Other reports of interest:

-- Monday: The Empire State (New York) manufacturing survey at 8:30 a.m., Treasury's report tracking capital flows into and out of the country at 9 a.m., and business inventories at 10 a.m.

-- Wednesday: Petroleum inventories at 10:30 a.m.

-- Thursday: Leading indicators -- my favorite minor report -- at 10 a.m.

Two Fedsters take to the podium, both on Monday:


Cleveland Fed Pres. Sandra Pianalto, a member of the Federal Open Market Committee, speaks at 12:30 p.m. Her resume shows institutional ties early on to the U.S. House Budget Committee. After that, she rose through the Fed system.


St. Louis Fed Pres. James Bullard, an FOMC alternate, speaks at 3:30 p.m. He also is a child of the Fed.

Both took office under President George W. Bush.


Practical trading:

By my rules, as of Monday I can trade May calendar, butterfly and vertical spreads, covered calls and diagonal spreads and iron condors, and July single options and straddles. Of course, shares are good at any time.

Good trading!


Friday, April 13, 2012

DFS: Credit cards

Discover Financial Services (DFS) is a third-tier credit card company. I say "third-tier" because credit cards are like the Solar System. You have the big gas giants -- Jupiter and Saturn (Visa and Mastercard) -- and after that it's just rocks and ice and other assorted space debris, such as Earth, Mars, and the Discover and Diners Club cards.

The latter two are mainstays of the Riverwoods, Illinois company's business. But Discover is more than cards. It has a direct banking segment and operates a global credit-card payments network, PULSE.

DFS had the most bullish chart of six stocks added today to the Zacks top-buy list. I should say "re-added", because Discover Financial has been a perennial favorite for months, slipping on and off the list like a comet in the galactic clouds. (And enough with the space metaphors, already!)

I last wrote about DFS in February in an analysis that reached a positive conclusion about the company. That was at $29.35. The price has since moved to a high of $34.43 on March 23 and then dropped back in lockstep with the broad weakness in the markets.

It is presently trading at around $33, having come off of a correction low of $32.17.

DFS has been in a clear uptrend since Jan. 10, and nothing about the present correction changes that assessment.

Discover Financial has an extremely high return on equity of 30%, but with heavy long-term debt amounting to more than double equity -- a situation not uncommon in the financial sector.

Institutions own 86% of the company's shares and have bid up the price to the point where it takes $2.46 in shares to control a dollar in sales.

Although DFS lacks a commanding position in its sector, it has clearly found a business model that works. Earnings have accelerated every quarter but one since the 2nd quarter of 2010.

The company has undertaken several share buy-back programs. The most recent began last month and is scheduled to run through march 2014.

DFS is highly liquid, trading 4.9 million shares a day on average. There is an adequate selection of options with high open interest and narrow bid/ask spreads.

Implied volatility is at the bottom of its six-month range, at 29%. Options traders are pricing in a 68.2% chance that DFS will close between $30.26 and $35.74 a month from now, an 8.3% gain or loss.

Discover Financial next publishes earnings on June 21. The stock will go ex-dividend in July for a quarterly payout of 1.21% annualized.

Decision for my account: I've owned DFS since February. I'm presently playing it as a diagonal spread, long the July 29 call and short the July 33 call.

Methodology
I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Thursday, April 12, 2012

ACAT: Liquid but slushy

Arctic Cat Inc. (ACAT) makes and sells snowmobiles and all-terrain vehicles. The half-century-old Thief River Falls, Minnesota company has dealerships in the United States and Canada.

It is a business that puts Arctic Cat in the want-to-have category of products, not the got-to-have. So it was hammered hard by the recession (the stock dropped to $2.40) as consumers cut back on discretionary and play-time spending. And it has recovered powerfully with the return of optimism and a growing economy.

And if things turn down again, perhaps under pressure of a renewed recession in Europe, then I would expect Arctic Cat to skid downslope dramatically.

ACAT had the most bullish chart of seven stocks added today to the Zacks top-buy list.

Its most recent leg up, from $18.99 on Dec. 26, 2011, has carried the price up to an all-time high of $44.76 on April 3. The stock has been trading in blue-sky territory since the first of the year.

On the books, Arctic Cat is a solid company with growth-stock aspirations. The return on equity is 16%, and the company has no long-term debt. Institutions own 80% of the shares but the price remains reasonable, at $1.40 in shares need to control a dollar in sales.

The company's business is seasonal, peaking in the 3rd calendar quarter (the corporate 2nd quarter). And earnings have been accelerating in that quarter since 2009, compared to the prior year.

So far, there is a lot to love about Arctic Cat, but that love starts to chill once I turn to the options list. The selection is sparse, bid/ask spreads are wide and open interest is low. I would be hard pressed to construct a viable options position on this stock, so were I to trade, it would be as shares, with no direct way to insure them through out-of-the-money puts.

Volume averages only 218,000 shares a day -- which is liquid, but slushy.

Implied volatility is high, at 76%. And that's down form the six-month peak of 85% on April 11. It is a case where the volatility really doesn't match the chart. It looks instead like something I would expect to see on a stock that has suddenly plummeted from its peaks. ACAT hasn't plummeted.

Options traders are pricing in a 68.2% chance that the price will close between $32.78 and $51.82 a month from now, a 22.5% gain or loss.

Arctic Cat next publishes earnings on May 14.

Decision for my account: I'm not trading this one because of the poor options inventory. I'm also concerned by the abnormal pattern of implied volatility in relation to the price movement. It may be OK. I just don't understand it. I like the chart and the financials. If this level of liquidity fit into my strategic mix, then I would give further thought to opening a position.


Methodology
I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.

Wednesday, April 11, 2012

CISG: Upside reversal

CNinsure Inc. (CISG) is an insurance services company headquartered in Guangzhou, the city which, under the name Canton, served as the Chinese gate way for Hong Kong when it was a British colony.

Insurance services means that CNinsure provides the sales for and insurance adjustors for companies that underwrite insurance policies. In addition, CNinsure owns controlling interest in several insurance underwriters.

CISG had the most interesting bull chart among 18 stocks added today to the Zacks top-buy list. I say "interesting" because on a day where everyone else is recovering anemically from yesterday's sharp price drops, CISG is experiencing a strong upside reversal at the end of a long slide.

Most of the charts I reviewed were in uptrends, but their bullishness looked quite bit like yesterday's news.

But a word of caution up front about CISG. As goes the Chinese economy, so goes CNinsure. It's markets are domestic. And the conventional wisdom on the Street is that the Chinese economy is heading toward a correction.

That's a long way of saying that today's breakout can easily become tomorrow's failure.

CISG has been on the decline for nearly two years, which two corrections slowing the fall. The most recent major leg down picked up momentum last August and in a month carried the price down from $13.10 to $6.09.

Since then, CISG has oscillated sideways between about $6 and $9, wich the most recent low happening yesterday (April 10) at $5.90.

Today the price leaped up to $6.37, or 8%, unprompted by any news. It has since pulled back as shorter-term traders take profit but remains well above yesterday's trading range.

I called the movement a reversal because the price hasn't broken past any resistance yet. The prices to watch are minor upside corrections peaking at $6.68 on March 27 and at $7.12 on March 19.

Major resistance stands at $7.45, the March 13 reversal of a sharp rise that carried the price up 24%.

The cautious trader won't give CISG a glance until the price has broken decisively above $7.45. The more aggressive trader will see the run up to resistance as a 20%+ opportunity for profit and will enter now.

The company's finances are fairly abysmal. Return on equity is a negative 15% -- that's a loss on equity.  Early reports in 2011 were positive, however, at 8% and 11%. So perhaps this is siply an anomaly. The company caries no long-term debt.

Institutions own 42% of the U.S.-traded shares. The price is has a low premium. It takes only $1.23 in shares to control a dollar in sales.

Quarterly earnings have been all over the map, without a trend.

Like many foreign companies trading as depository receipts on U.S. exchanges, CISG is not very liquid. On average 119,000 shares are traded each day.

As one would expect, CISG's options inventory is limited, with wide bid/ask spreads and low open interest. That for me means that CISG would be a shares play, with poor opportunities for insuring the position with out-of-the-money puts.

Implied volatility stands at 75%, in the mid-range of its track this year. It has been on a gentle decline since mid-March. There is a 68.2% chance that the price will close between $4.94 and $7.74 a month from now, a wide range, but that's what such high volatility means.

CNinsure will next publish earnings on May 23.

Decision for my account: The financials are horrible, and the bullishness of the chart relies on one day's price rise, hardly an unambiguous trend. It is at this point that most analysts will issue a stern warning: "This is a speculative play that carries great risks." But in my experience, that applies to any market position, no matter how "conservative". 


For my part, I want to see a trend -- no just one day -- before entering. So a higher high and higher low on Thursday, in relation to today's trading range, would increase my comfort with opening a shares position. A third high-high-higher-low day would let me label it an uptrend. Until that happens, then I'll bide my time and not open a position.


Methodology
I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.
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.