Friday, December 26, 2014

Friday's Finalists

Today begins the wort trading week of the year. Stock prices might be lackadaisical, or they might turn aggressively bullish or bearish.

In any case, the trading decisions are being made by unmonitored robots and interns. The robots are working with their usual inscrutability -- who knows what Terminator thoughts of world domination are coursing through their CPUs. The interns -- well, think long liquid lunches and, as New Year's approaches and spirits rise, intense frisbee fights with pizza plates in the brokerage bull pens.

Who would want to trade into such an environment? Not I, certainly, and so my default position until the first trading day of 2015 will be to open no new positions. I shall, however, continue my usual analysis, just to keep in tune with the markets, no matter how distorted they might be.

There are no potential earnings plays on the calendar to consider until Jan. 4.

All four of the survivors of my early rounds of analysis,  CDTY, CDNS, SAP from Wednesday's markets and CMG from my list of innovators, have relatively low implied volatility. This precludes trading them using my preferred tactic of late: Selling option spreads short in order to buy them back later at a cheaper price.

I'm using this strategy a lot because, unlike six months ago, volatility is high. If volatility in general drops, then Ill move to another strategy.

There may be other issues with the four symbols, but with the discovery of the one, they're off the table and there is no need to analyze further.

(See "Friday's Prospects" for a discussion of trading signals from Wednesday's markets.)

-- Tim Bovee, Portland, Oregon, Dec. 26, 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 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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