Wednesday's Prospects

On Tuesday, April 19:

Of 480 large-cap stocks and exchange-traded funds in my analytical universe, 33 broke beyond their 20-day price channels, 27 to the upside and six to the downside.

One symbol giving a trading signal having low odds of success survived initial screening, having broken out to the upside.Low-odds symbols are candidates for non-directional trades and time spreads.

There are four prospects for trades coinciding with earnings announcements.

I shall do further analysis on Wednesday, April 20.

Earnings season began April 11. The higher pace of announcements will continue for about four weeks from that date.

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Tuesday's Outcomes

I opened a position on INTC timed to correspond with an earnings announcement and closed a position on STX for a profit.

-- Tim Bovee, Portland, Oregon, May 19, 2016

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.


Elliott wave analysis tracks patterns in price movements. StockCharts has a good explainer. The principal practioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading. 

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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.

INTC Analysis

Update 4/29/2016: INTC fell to 50% below its break-even point and I exited for a loss.

Share drifted sideways with a slight downward tilt after earnings were published but took a sharper decline to the downside this morning.

Shares declined by 2.4% over 10 days, or a -88% annual rate. The options position produced a 37.3% loss on debit for a -1,360% annual rate.

---

The semiconductor manufacturer Intel Corp. (INTC), headquartered in Santa Clara, California, publishes earnings on Tuesday after the closing bell.

[INTC in Wikipedia]

INTC

I shall use the MAY series of options, which trades for the last time 31 days hence, on May 20.

Ranges

Implied volatility stands at 31%, which is 2.3 times the VIX, a measure of volatility of the S&P 500 index. INTC’s volatility stands at the peak of its most recent range. The price used for analysis was $31.60.

Ranges implied by options and earnings

Week	SD1 68.2%	SD2 95%	Earns
Upper	34.44	37.29	32.65
Lower	28.76	25.91	30.55
Gain/loss	±$2.84	±$5.89	±$0.77

Implied volatility 1 and 2 standard deviations; central tendency earns move

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Tuesday's Agenda

I'm looking at one prospect on my desk this morning, an earnings play on INTC. It has passed initial screening, and I shall post a full analysis today.

-- Tim Bovee, Portland, Oregon, April 19, 2016

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Tuesday's Prospects

On Monday, April 18:

Of 480 large-cap stocks and exchange-traded funds in my analytical universe, five broke beyond their 20-day price channels, four to the upside and one to the downside. None survived initial screening.

There is one prospect for a trade coinciding with an earnings announcements.

I shall do further analysis on Tuesday, April 19.

Earnings season began April 11. The higher pace of announcements will continue for about four weeks from that date.

A book from my library →

Monday's Outcomes

I entered two positions, both of them earnings plays: HOG and IBM.

The short leg of my GM diagonal turned unprofitable and I exited for a loss.

-- Tim Bovee, Portland, Oregon, April 18, 2016

<

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IBM Analysis

Update 4/20/2016: IBM gapped sharply to the downside after its earnings announcement. Earnings beat the Street estimate, but revenues were lower than expected.

Shares declined by 5.1% over two days, or a -935% annual rate. The options position produced a 54.3% loss on debit for a -9,907% annual rate.

---

The information technology company International Business Machines Corp. (IBM), headquartered in Armonk, New York, publishes earnings on Monday after the closing bell.

[IBM in Wikipedia]

IBM

I shall use the MAY series of options, which trades for the last time 32 days hence, on May 20.

Ranges

Implied volatility stands at 28%, which is 2.1 times the VIX, a measure of volatility of the S&P 500 index. IBM’s volatility stands in the 68th percentile of its most recent range. The price used for analysis was $152.83.

Ranges implied by options and earnings

Week	SD1 68.2%	SD2 95%	Earns
Upper	165.52	178.22	159.52
Lower	140.14	127.44	146.15
Gain/loss	±$12.69	±$25.39	±$6.69

Implied volatility 1 and 2 standard deviations; central tendency earns move

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HOG Analysis

Update 4/27/2016: HOG moved sharply to the upside after earnings were published, putting my bear call spread on the wrong side of the market. I held on for seven trading days hoping for a pullback, which never materialized. I exited once the price moved 160% below its maximum profit point.

Shares rose by 5.2% over nine days, or a +210% annual rate. The options position produced a 37.4% loss on debit for a -1,517% annual rate

---

The motorcycle manufacturing and retail sales company Harley-Davidson Inc. (HOG), headquartered in Milwaukee, Wisconsin, publishes earnings on Monday after the closing bell.

[HOG, in Wikipedia]

HOG

I shall use the MAY series of options, which trades for the last time 32 days hence, on May 20.

Ranges

Implied volatility stands at 51%, which is 3.7 times the VIX, a measure of volatility of the S&P 500 index. HOG’s volatility stands at the peak of its most recent range. The price used for analysis was $47.06.

Ranges implied by options and earnings

Week	SD1 68.2%	SD2 95%	Earns
Upper	54.21	61.36	51.71
ower	39.91	32.76	42.41
Gain/loss	±$7.15	±$14.30	±$4.65

Implied volatility 1 and 2 standard deviations; central tendency earns move

A book from my library →

Monday's Agenda

I have prospects on my desk this morning: IBM, NFLX and HOG. All are potential earnings plays.

All three meet my requirements for options liquidity, having sufficiently high open interest on strike prices important to building a trade.

Additionally, HOG and IBM have implied volatility that meets my standard: The 60th percentile or higher of the most recent range.

NFLX, however, falls short, with implied volatility standing in the 20th percentile of its most recent range and in the 46th percentile for the past 12 months.

I shall post analyses of HOG and IBM rtoday but shall reject NFLX without further analysis.

-- Tim Bovee, Portland, Oregon, April 18, 2016

<

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The Week Ahead: Housing

This week in top-tier economic reporting is all about real estate: Housing starts on Tuesday at 8:30 a.m. New York time and existing home sales on Wednesday at 10 a.m.

Leading indicators (in descending order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, at 4:30 p.m. Thursday.

The S&P 500 index, reported continually during market hours.

Average weekly initial claims for unemployment from the jobless claims report at 8:30 a.m. Thursday.

Building permits for new private homes from the housing starts report at 8:30 a.m. Tuesday.

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Monday's Prospects

On Friday, April 15:

Of 480 large-cap stocks and exchange-traded funds in my analytical universe, three broke beyond their 20-day price channels, two to the upside and one to the downside. None survived initial screening because of my rule that forbids chart-signal trading within six weeks of an earning announcement.

There are three prospects for trades coinciding with earnings announcements.

I shall do further analysis on Monday, April 18.

Earnings season began April 11. The higher pace of announcements will continue for about four weeks from that date.

A book from my library →

Friday's Outcomes

None of my three prospects -- HAS, PEP or RCL -- passed final screening because of low implied volatility. See the discussion in my Agenda post.

No trades today.

-- Tim Bovee, Portland, Oregon, April 15, 2016

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Friday's Agenda

Half an hour into the trading day all three of my prospects fall short of passing final screening, all for the same reason: Low implied volatility relative to their most recent range.

HAS is at the 52nd percentile of its range, PEP the 8th percentile and RCL the 49th percentile.

Both HAS and RCL are close enough to my 60th percentile minimum that each could conceivably meet that standard before the trading day is over.

In addition, HAS has open interest that is lower than I like at strike prices important to building a trade.

If HAS or RCL meet the minimum standards during trading today then I'll do a full analysis. (PEP's implied volatility is so low that there is little hope that it will come up to snuff.)

Otherwise, I shall do no analysis and enter no new positions today.

-- Tim Bovee, Portland, Oregon, April 15, 2016

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Friday's Prospects

On Thursday, April 14:

Of 470 large-cap stocks and exchange-traded funds in my analytical universe, nine broke beyond their 20-day price channels, all to the upside. None survived initial screening because of earnings announcements.

There are three prospects for trades coinciding with earnings announcements.

I shall do further analysis on Friday, April 15.

Earnings season began April 11. The higher pace of announcements will continue for about four weeks from that date.

A book from my library →

Thursday's Outcomes

I entered a position on STX after some difficulty in obtaining a fill.

I rejected C and RAI without full analysis. See the discussion in today's Agenda post.

-- Tim Bovee, Portland, Oregon, April 14, 2016

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Next week's earnings plays

I have selected for analysis 51 out of 593 symbols of companies publishing earnings next week.

As the pace of earnings season picks up, I have tightened the requirement for average volume to reduce the number of symbols to a manageable level. Volume must now be 2 million shares a day or higher.

Below are the symbols, sorted by action -- the day I shall do the final screening and analysis -- and then by symbol within the action day.

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STX Analysis

Update 4/19/2016: STX reached 51% of its potential and I exited for the profit.

Shares declined by 6.8% over five days, or a -497% annual rate. The options position produced a 103.1% yield on debit for a +7,528% annual rate.

---

The data-storage hardware maker Seagate Technology PLC (STX), with operations headquartered in Cupertino, California publishes earnings on Friday before the opening bell.

[STX in Wikipedia]

STX

I shall use the MAY series of options, which trades for the last time 36 days hence, on May 20.

Ranges

Implied volatility stands at 64%, which is 4.7 times the VIX, a measure of volatility of the S&P 500 index. STX’s volatility stands in the 85th percentile of its most recent range. The price used for analysis was $27.61.

Ranges implied by options and earnings

Week	SD1 68.2%	SD2 95%	Earns
Upper	33.16	38.71	32.53
Lower	22.06	16.51	22.69
Gain/loss	±$5.55	±$11.10	±$0

Implied volatility 1 and 2 standard deviations; central tendency earns move

A book from my library →

Thursday's Agenda

I have three prospects on my desk this morning, all of them potential earnings plays. They are C, RAI and STX.

At Wednesday's close all three had implied volatility below my minimum requirement, the 60th percentile or higher of its most recent range.

However, at the open this morning volatility on STX took an upward leap and now stands in the 87th percentile, making it tradable.

I shall post a full analysis of STX today, and reject the other two without a full analysis.

-- Tim Bovee, Portland, Oregon, April 14, 2016

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Thursday's Prospects

On Wednesday, April 13:

Of 470 large-cap stocks and exchange-traded funds in my analytical universe, 17 broke beyond their 20-day price channels, 13 to the upside and four to the downside. One survived initial screening, having broken out to the upside.

There are three prospects for trades coinciding with earnings announcements.

I shall do further analysis on Thursday, April 14.

Earnings season began April 11. The higher pace of announcements will continue for about four weeks from that date.

A book from my library →

Wednesday's Outcomes

I did no analyses and placed no trades today.

-- Tim Bovee, Portland, Oregon, April 13, 2016

A book from my library →