Friday, May 23, 2014

Friday's Prospects: Round 2

Only two of the 14 survivors of my first round of analysis failed confirmation on what is proving to be a very slow pre-holiday session in the markets. (See "Friday's Prospects" for a rundown of the first-round results.)

The two that failed confirmation are CVTI and AHC, both from the small-cap list.

The lone bear signal in the batch, SALE, began trading in July 2013, less than a year ago, and so ran afoul of my rule requiring at least a year of history in any symbol I trade.

Three symbols had produced bull signals on bearish charts. I'm unwilling to do contrarian plays. The three offenders are DDD, LVNTA and NSR.

That left eight signals, all but one rated neutral by Zacks Investment Research, the service I rely on to provide me with a shortcut on fundamental analysis.

That one standout is ILMN, with a strong bull rating from Zacks. True, it is selling for more than triple the "fair" price implied by growth, and the bid/ask spread on the options is a bit wide, although I may be able to work with it.

Of all of the second-round survivors, it strikes me as being the one most worth a closer look, and I shall be writing an analysis of ILMN today, posting it prior to the closing bell.

Another contender was XLV, the health-sector exchange-traded fund. I'm always happy for the diversification such ETFs bring.

However, ILMN has implied volatility of 35%, and XLV is running at only 15% volatility. The possibilities for profit seem higher on ILMN and so I'm giving it priority.

However, XLV is worth a look, and I'll put it on the Watchlist with an eye toward writing an analysis when I have time, probably over the weekend.


My shorter-term trading rules can be read here. My longer-term 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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