Monday, November 4, 2013

Monday's Prospects: No Trade

The lone survivor of my initial screening over the weekend (see "Monday's Prospects") can't be traded. It's a bear signal by SCOR, and the second-wave analysis shows that the options lack sufficient open interest to construct a short position. Also, liquidity is lacking for a short on shares.

Undaunted, I moved to Plan B. The screening that produced SCOR was based on trading odds beginning Oct. 4, 2011, when the present wave up began from $107.43 on SPY, the exchange-traded fund that tracks the S&P 500.

Plan B repeats that analysis, but calculates the odds from a more recent starting date, May 22, 2013, when the market began to struggle in a roller-coaster pattern that produced higher highs, but also included significant dips in the intervals between them.

SPY 3 years 2-day bars
The more recent period produced one survivor, CPT, which is also a bear signal, and which -- also -- has insufficient liquidity for a short position.

So I won't be opening any new positions today. We're in the midst of earnings season and that always makes it hard to find an acceptable trade. But as private traders we have an advantage over the pros -- we can head back to the living room and drink coffee when there are no good trades; no boss or client is leaning over our shoulders saying "get to work now".

We an afford to wait for trades that meet our standards, and that's a huge source of strength for private traders.


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

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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