Wednesday's Prospects: Round 2

Each of the six symbols survived the first round of analysis (see "Wednesday's Prospects") has a flaw that knocks it out of competition in the second round, or at least threatens to do so.

The one bull signal, APELY, is too illiquid for my preference.

EGP failed confirmation by moving back within the 20-day price channel, and BGG and MTRN have insufficient open interest for a bear play.

That left ADBE vs. STAA. The latter has a 20% bid/ask spread on puts. That's wider than I like.

The higher volume ADBE has a far narrower 4% spread, which is a level I can work with.

However, ADBE has a bullish rating from Zacks, a company whose analyses focus on earnings expectations and the fundamentals that I use as a short-cut to evaluating those area. I generally prefer that the rating and the direction of the trade be aligned.

Ratings, of course, can be out of date, and sometimes flat wrong. The question is whether the ADBE chart is bearish enough to overcome the bullish presumption behind the rating.

I'll search for that answer and look at other properties of ADBE in an analysis as I decide whether or not to take the trade. I'll post it prior to the closing bell.

References

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.

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