Wednesday, December 24, 2014

Wednesday's Finalists

Many were called, many were chosen, none made it past the finish finish line.

Tuesday's rush to the upside in the markets produced a flurry of headlines and a small mountain of trading signals. Wednesday's opening half hour saw calm sanity return to the markets -- or a simulacrum of sanity, at least -- that will no doubt produced few headline. Sanity, you understnd, doesn't bring eyeballs and clicks to financial websites.

See "Wednesday's Prospects" for a description of my early rounds of analysis.

Of the 18 symbols that made it past those early rounds, seven failed in their momentum, either failing confirmation by moving back within their 20-day price channels or running contrary to the direction of the trading signal. One turned out to be a contrarian fund with leverage, a type of equity I don't trade.

That left 10.
  • KSS and CRM had charts that were insufficiently trending to support their trading signals.
  • WSM, SNN, CAR, GNC, CCK and OFC had bid/ask spreads on their front-month at-the-money calls that were too narrow to meet my preferences.
  • EMC and XLY had relatively low implied volatility, making it impossible to construct my preferre sort of trade.
I plan no trades based on Tuesday's signals.

Turning next to the three companies on my innovators list, I find that all three failed the implied volatility test. I'm using a short-term strategy that require higher volatility.

I also considered them as trades under my longer-term rules, but none are close to a breakout above the 12-month moving average at the end of the month. All are in a bullish posture and so don't yet present an opportunity for entry.

No trade there, either, so this wraps up my trading for the holiday.

Merry Christmas to all who celebrate it. Enjoy!

-- Tim Bovee, Portland, Oregon, Dec. 24, 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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