Friday, November 7, 2014

Friday's Finalists: RSX, DFS

The exchange-traded fund Market Vector Russia (RSX) and the Illinois payments company Discover Financial Services (DFS) were the two symbols that made it past my first round of analysis as reported in "Friday's Prospects".

Aside from those two, there were six bull signals brought forward for analysis today, and in addition two holdovers from Wednesday's markets whose analyses were delayed a day under my rule for special handling of earnings announcements.

Five of the bull signals -- SKX, OC, RL, CYT and RPM -- had charts that were insufficiently bullish to support a trade, and the sixth, ABG, had options with overly wide spreads, too wide for my taste.

Of the holdovers, both bull signals, AXLL failed confirmation, and CLNY had had wide options spreads.

That left RSX with a bear signal and DFS with a bull signal, both with workable options and true breakout charts. RSX, however, has a strong bearish rating from Zacks Investment Research, the service I use as a guide to the fundamentals and Street opinion. DSF has a neutral rating.

Also, RSX options are more liquid, and most compelling, it has a high implied volatility that has just hooked down, making it a good candidate for a short options spread, sold for a credit and expiring in the front month. DSF has relatively low volatility, requiring a long spread for a debit that won't have a clear outcome until several months further out.

That Zacks rating and the options are compelling. I choose Russia, and shall post an analysis prior to the closing bell.

-- Tim Bovee, Portland, Oregon, Nov. 7, 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. My very short term volatility trading rules 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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