Thursday, May 16, 2013

Thursday: No Trade

Eight symbols, all bull signals, survived my first wave of screening last night (see "Thursday's Prospects").

Three of the eight, CSE, LPX and MGLN, failed confirmation.

I'm looking for symbols whose options are liquid enough for trading. That means three-figure open interest for the strike prices I care about and fairly narrow bid/ask spreads. AVY, GXP and OMX have options, but they are insufficiently liquid for my purposes.

ODP is trading for only $4 plus change, and options pricing becomes unworkable at such low prices for the underlying. So I struck ODP from my list.

That left CX as the last symbol standing. It has a good chart. The odds of a profitable bull signal are even since the present uptrend began in June 2012, and the win/lose yield spread is only 6.5%, which isn't huge. 

But it was the financials that killed any potential trade in CX. The company has reported losses in all of the last 12 quarters. Return on equity is a negative 10% and long-term debt is 112% of equity. That's too awful for even my taste, and I generally give the financials quite a bit of leeway, focusing mainly on the chart.

CX falls short on my third-wave screening criteria.

So, no trade on Thursday.


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.

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.

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