CSX failed confirmation, falling back within its 20-day price channel. MIK confirmed the signal but lacks open interest on its options. Without options, I can't construct the leveraged and hedged trades that I'm looking for at this point.
The two symbols had given bull signals. MIK's chart is bullish, supporting the signal. CSX appears to be in the early stages of a new downtrend.
Two stocks from my volatility trades list are up for earnings. T announces after the closing bell today, and GM prior to the opening bell on Thursday.
Neither meets a key requirement of my rules for such trades: High implied volatility. T's implied volatility is in the 29th percentile of its one-year range, and GM is slightly better, standing in the 61st percentile.
Note: I've had a change of heart on GM and have posted an analysis. See "GM: Volatility play".
My strong preference is for implied volatility in the 75th percentile or higher.
I won't be writing any analyses today and shall concentrate my efforts on rule revisions.
I need to hone my volatility trade rules to clarify how I should pick the direction of a trade, as mentioned in my post-trade update to "AAPL and KO: Volatility plays", posted on Oct. 20.
I also need to figure out rules to cover a less rigid way of determining when to exit positions. See my Oct. 21 essay, "Beyond Turtles and Grasshoppers: Day of the Fox".
-- Tim Bovee, Portland, Oregon, Oct. 22, 2014
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. My very short term volatility trading rules 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.License
All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Based on a work at www.timbovee.com.
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