Friday: No Trade

Altogether, four symbols survived my initial screening last night. (See "Friday's Prospects".) I've done the second round of screening, and all have been found wanting.

The details:

Cirrus Logic Inc. (CRUS): The company has been in a slump for some time but it looking up with two weeks of sharp rises on the weekly chart that preserve a long-running uptrend intact.  However, 85% of Cirrus' business comes from its role as a supplier to Apple (AAPL). Why not just trade AAPL instead?

CRUS has a good selection of options with sufficient open interest to trade. The remainder would need to be traded as shares.

Nielsen Holdings N.V. (NLSN) is in a weekly chart uptrend and has good strong historical odds in favor of success. However, its volatility is quite low, at 11%. If I could somehow construct an options position, I would find that attractive, because options spreads can earn money even if the stock doesn't move. But the open interest on NLSN's options is too low for my taste.

Sterling Financial Corp. (STSA) is in an uptrend on the weekly chart but has been running sideways for the past six months. The bull signal doesn't come with a major upside breakout, decreasing its attractiveness as an unhedged bull trade. It has quite good historical odds in favor of success.

China Southern Airlines Co. Ltd. (ZNH) is tracing a very large descending triangle on the daily chart, a pattern I've learned to avoid. More recently, it has been in a downtrend since late January. Bull trades since the triangle began have better than even odds of turning a profit. But still: Descending triangle! They give me claustrophobia.

That's the lot. None of them is awful, and my opinions are heavily influenced by my portfolio's need for hedged and leveraged positions built out of options.

So my decision: No trade.

References

My trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

At several points in my analysis I use the number 68.2%. This comes from statistics and refers to the one standard deviation boundaries, which are expected to contain 68.2% of whatever is being studied. Putting it another way, given an item (a trade or whatever), there is a 68.2% chance that it will appear within those boundaries.

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.