Friday, March 14, 2014

Friday's Prospects: Round 2

The symbols surviving my first round of analysis (see "Friday's Prospects") faced two challenges.

First, Thursday was a heavy down day, and on Friday came the inevitable reaction to the upside. That means many non-confirmations.

Second, it is more difficult for symbol to qualify as a bear trade. The options must be much more liquid for me to successfully set up a bear position. A bull position is possible even if there are no options.

I've decided to analyze the offshore drilling contractor Seadrill Ltd. (SDRL). Its historical odds of a profitable bear trade, at 50%, came in just below my threshold in the initial analysis. I pulled it from the side analysis of highly liquid bear signals when none of the symbols from my main stream of analysis made the grade.

The runner up was the business data information company NeuStar Inc. (NSR). In the end it failed the second round for two reasons: 1) The bid/ask spread on its options is slightly higher than I like, and 2) It had a huge downward gap in late January after earnings were announced of the magnitude that typically means a sideways market for some months thereafter.

I'll post my analysis of SDRL prior to the closing bell today.


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 decisions for his or her own account, and take responsibility for the consequences.

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