Monday, September 22, 2014

Monday's Finalists: TIBX, VZ, AGO

Update 10/16/2014: VZ closed below its 10-day price channel on Oct. 15 and traded below the channel today, confirming the signal. I have removed the symbol from the Watchlist as a potential bull play.

Actually, today's trading produced a close below the 55-day price channel, which means VZ has given a bear signal, which is a whole other analysis if it makes it past my analytical hurdles.

None of the three symbols that made it to the final round of analysis has sufficient momentum to support a trade. Two are bear signals -- TIBX and AGO. The third, VZ, is a bull signal. (See "Monday's Prospects" for the earlier rounds of analysis.)

Three of the six that made it past the earlier analysis failed confirmation by moving back within their 20-day price channels. All were bull signals: GLOG, SABR and BERY.

Of the remaining three, I rejected AGO immediately as having a chart that is insufficiently bullish to support a trade.

The remaining two, a bull signal on VZ and a bear signal on TIBX, were more ambiguous. Both have neutral ratings from Zacks Investment Research, and both have highly liquid options that could provide good leverage and hedging.

VZ pays a high dividend, north of 4%. TIBX pays none (and of course, a dividend is irrelevant for a bear position.)

I turned to the charts to guide my decision.

Click on chart to enlarge.
TIBX 5 months daily bars (left), VZ 3 months daily bars (right)
TIBX, to the left, has fallen sharply from its peak on Sept. 4. However, as of today, it has traced out a series of higher highs and non-trending lows since that time. It will take a break below $18.88 to change the trend, 1.7% below the present price of $19.21.

I'll add TIBX to my Watchlist as a potential bear play and shall reconsider it if the price indeed breaks significantly below that level. I would expect significant resistance.

VZ, to the right, has failed to move higher that Friday's peak, as momentum falters. The resulting trend line creates what could either be a shorter-term counter-trend correction, probably lasting weeks or a couple of months, or the beginnings of a triangle. VZ is presently trading half a percent below Friday's peak of $50.38.

I'm also adding VZ to my Watchlist as a potential bull play and shall reconsider it if a break above that level reestablishes the trend.

One symbol made it through to the finals from my supplemental list of innovative companies: TCS. However, it failed confirmation and I removed it from consideration.

I plan no further analysis today based on Friday's market results.

-- Tim Bovee, Portland, Oregon, Sept. 22, 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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