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Covered Call
Want to get some feedback from any options players in the forum.
Have you ever used the covered call to offset any down move in the stock you are holding? I have heard that using covered calls is best when you are expecting an intermediate move up. But I have not tried it myself, any tips?
Have you had any experience using the collar strategy?
A Weekly Look -- Week Ending 3/16
The dollar printed a daily cycle peak on Thursday, day 11.
Friday saw the dollar form a swing high and broke the daily cycle trend line.
Coffee Holding Co., Inc. (NASDAQ:JVA)
This is probably one of the best acting stocks in the momentum. She's extended but no one seems to care. So, I'll be watching her carefully for any possible opportunities. The stock has two immediate support levels. One is at 13 and the next is at 12.43. Only a close below the 200-day moving average with volume, will change the trend.
FormFactor, Inc. (FORM)
Breaking out of a well-defined base on decent volume. Note $5.50 was resistance, now support. The MACD is still above the technical signal line. Also, the ADX chart has given some strength to this movement. Watch for follow-through next week.
Elan Corporation, plc (NYSE:ELN)
The stock broke out to new highs on Friday on 3x the daily avg. volume. There are some reasons to start taking an active look at this stock. The breakout has occured on strong volumes, an indication of some strength in the stock. The MACD and Stochastics are also on a strong positive zone. In addition, the OBV chart is showing some strong buy in this stock. However, for the stock to move from this level would be difficult as the RSI indicator is in the 70s. So there is a strong possibility here of the stock to correct back to probably 14.02 before moving higher again. Yesterday's movement was something that I have been waiting to see from this stock. I would wait for a pullback unless there is some strong buying happening in this segment. The stock has two immediate support levels. One is at 14.28 and the next is at 14.00-14.02.
Goldman sachs accused of trading abuses
Peabody Energy (BTU) - Quick Takes Pro Chart of the Day
March 16, 2012 - Peabody Energy (BTU)
Market Indicators Point To More Gains
Another day, another dollar. Or should I say another week, another stock market rally. The S&P 500 finished the week +2.39% mainly due to large gains on Wednesday after FOMC minutes and positive news from bank stress tests. Overall the economy seems to be humming along ok and investors and feeling confident.
Market indices are back to overbought levels already although we?ve seen over the last 2-3 months that doesn?t mean much. You can see below that the Option Buyers Sentiment Gauge is well below bullish extremes as is the McClellan Oscillator. If anything, they are both looking decidedly neutral. With my trading style, I find it hard to chase markets that are this overbought, but for any bulls out there I think selling some OTM April Bull Put spreads on SPX would make sense here. There is strong support at 1300 and 1275 so something like the 1260-1270 spread might make sense, but with volatility so low, decent premiums are going to be hard to come by getting filled may be difficult.
AAPL provided plenty of highlights again this week. Traders came in and took profit at bang on $600 (well $600.01 to be exact) on Thursday. Implied volatility is up to 38% so it could be a good time to look at an Iron Condor.
Volatility is at a 52 week low below 15, it may stay there for a while, but one thing I can guarantee is that it will rear its head again at some point in 2012. We will be waiting.
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Im Buying BAC Puts!!
Just bought 40 BAC Puts about a 2200 trade im holding into stress test results.
Strike is 9.
Probably selling tomorrow early.
-Redstripe.
Dave Landry's Market in a Minute - Friday, 3/16/12
Random Thoughts
The market resumed its rally out of a Persistent Pullback pattern. This action has it at multi-year highs--decade highs for the quack!
The strong such as Banks and Retail stayed strong on Thursday. What's even more impressive is the fact that other areas such as Trucking began to accelerate higher.
Most sectors, like the market, remain in solid uptrends.
So what do we do?
Well, as you know, I've been applying my doctorate in trend following moron trading to this market for quite some time. Therefore, if you're like me and just follow the markets because you're not smart enough to predict them, you too have been long for a while.
Since the market is at new highs,there aren't many meaningful pullbacks setting up. So, use this rally as an opportunity to take partial profits and trail stops. Then, on the next pullback, look to reload. Easy huh? Well, it is--as long as the market is trending.
