Monday, June 2, 2014

Monday's Prospects: Round 2

Only three of the 18 symbols that survived my first round of analysis failed confirmation in early trading today: EE, IP and CGI from the small-cap list. All had given bull signals.

(See "Monday's Prospects" for details of the first round.)

Two more had charts that were insufficiently bullish and first glance to meet my standards: CSRE and AGEN.

Two of the three symbols that had given bear signals had insufficient open interest on its options to support a trade: CIG and LINC. The one that has sufficient open interest and remained in play is GES.

That left 11 symbols to screen, so I turned to Zacks Investment Research for help.

Four symbols, all with bull signals, had correspondingly bullish ratings from Zacks. The rest, including the one remaining bear play, GES, were rated neutral.

The final four are WFT, ERF and DVY from the mid-/large-cap list and BKNIY from the over-the-counter list.

BKNIY has very low average volume, in the low four figures, and also had declining volume on the day it broke above its 20-day price channel. I tossed it on the reject pile.

The others have volume of six or seven digits and broke above the price channel on rising volume.

DVY is an exchange-traded fund from BlackRock focused on dividends. It might go as an income play, yielding 3% a year, under my longer-term rules, but it's not really suitable for my shorter-term strategies, so I set it aside.

Both remaining symbols are oil and gas exploration companies, priced similarly in relation to earnings projects. WFT's average volume tops 6 million shares a day, and ERF runs at less than a tenth of that liquidity.

ERF goes ex-dividend on Tuesday, June 3, for a quarterly payout yielding 4.34% annualized at current prices. WFT pays no dividend.

ERF's chart is unequivocably bullish. WFT's has some ambiguity -- I won't be able to call it bullish until tops $28.11, which is 29% away.

I shall write an analysis of WFT as a potential bull play under my shorter-term rules and post it after the closing bell. The higher volume, which allow for leveraged and hedged plays using options, was the deciding factor.

The posting was delayed due to a sudden scheduling conflict that came up.

I have bought some shares of ERF today, and and later may buy DVY, under my longer-term rules in order to capture the dividend. I won't necessarily to a full write-up today, however.

-- Tim Bovee, Portland, Oregon, June 2, 2014


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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