|
Monday, 03 October 2011 08:47 |
|
Will anyone ever follow sell in May and go away? It works every year, I write about it every year and yet investors get slammed with a down summer. The seasonally strong period is upon us and after just analyzing my universe of names, I am perplexed as to the next major direction. Friday was a damaging day to almost every chart I analyzed breaking support in every sector including large cap tech which has been a trooper in relative performance. Many charts are in a negative MACD pattern but the RSI is closer to oversold than overbought which takes that indicator out of play. The natural resource names have been destroyed which is making me think about October 2008 and leads me to the title of this blog. Lehman had just collapsed and the world looked bleak at best. A friend alerted me to the natural resource names, X, AKS, MON, MOS, CLF, AGU, POT to name a few and we noticed that the put premius were through the roof. My fund had been having a great year so I decided to take some risk and sell the puts for many of these names for the November strike period and about 20% out of the money on average and a premium that was another 20% of the price I would have to pay to buy the stock. This seemed like a great reward to risk play and it worked great as I was not put stock on a single name. Selling naked puts is a risky trade but it was well thought out and I had cash that I was happy to put to work if these names sold down to my levels. I have yet to look at premiums today, but given the chart patterns, the time of year and the overall sentiment out there it might make some sense.
|
|
|
Thursday, 29 September 2011 13:06 |
|
As I write this at 1:15 pm on Thursday 9/29/11 I am watching a few my favorite names just getting pummeled, BIDU, AMZN, LULU, NFLX and AAPL. Of course the bearish engulfing candle on AAPL predicted all of these moves but for me the scary thing is to look at the weekly charts of many of these names, notably BIDU and NFLX which are through significant weekly support and not so close to the next level. AAPL is trying to hang in there but any more selling pressure on this name could drag this name down through $385 support and easily into $364 which is next. NFLX is trading like it could go to zero and NVDA has its sight set on $12.00. Meanwhile in an odd twist of fate, banks are having a good day as well as material stocks. This is a frightening proposition for the broad markets as you do not want the new leadership sector to be made up of names that are technically weak. There is an old adage on Wall Street that says "they bring up the crap last" meaning that the poorest performers take the lead when things are about to get worse. Between the AAPL negative pattern, other tech names breaking down hard and leadership names turning over, the current support on the S&P at 1117 is going to be crucial.
|
|
Tuesday, 27 September 2011 18:05 |
|
On the bright side it is a very easy topic for me to blog about tonight, on the bad side AAPL may be ready to sell off and bring the broad markets with it. AAPL formed a Bearish Engulfing pattern today, which is a technical indicator, formed at the top of up trends and signals a potential for reversal.  The pattern occurs when in an up trend a stock opens above the previous days high and closes below the previous days low, therefore engulfing the entire range of the previous days trading.  This has been a very accurate pattern in relation to AAPL and has consistently led to lower prices. From April 2010 to today there has been a total of eight Bearish Engulfing Patterns on AAPL:  - April 30, 2010 from $270.50, low was May 6, 2010 (flash crash) at $199.25. If you want to negate the flash crash, then the following day the stock traded to $225: RESULT –16.66% (using $225 low)
- May 13, 2010 from $265, low was $231 on May 21, 2010: RESULTÂ -12.5%
- June 21, 2010 from $279 on July 19, 2010 low if $239.60: RESULT –14.33%
- September 27, 2010 from $294.73 to a bottoming point at $277.77 on October 4, 2010: RESULT –5.76%
- November 9, 2010 from $321.30 to a bottom of $297.76 on November 17, 2010: RESULT –7.47%
- December 7, 2010 from $324 a higher high negated the signal on December 29, 2010 at $326.45, the only pattern that did not work: RESULT +.006%
- March 7, 2011 from $361.67, bottoming on March 16, 2011 at $326.26: RESULT –9.70%
- September 27, 2011 from $409.25…
 The Bearish Engulfing Pattern has resulted in an average loss of 11.07% in AAPL and doing so with an average of 9 trading days, quick and painful. Most “market gurus” tell you to not try to pick tops and bottoms but if I have a trade that has worked 6 out of the last 7 times and resulted in an average savings of 11% while risking mere basis points, well these are odds that Jimmy The Greek would be proud of.
|
|
|
|
|
<< Start < Prev 1 2 3 4 5 6 7 8 9 10 Next > End >>
|
|
Page 3 of 71 |
