Daily Archives: April 11, 2013

Dear Prudence

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Last week sure was a lot more fun than this week. It seems that every day is guaranteed to bring a new lifetime record in the S&P 500 and the Dow 30. What stung particularly badly today was I was short a number of retailers (such as LTD and ROST), and that caused some damage I’d rather have avoided. Things are stretched, but nowhere is it written that they can’t get more stretched. (more…)

A Couple of Good Options Plays

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Now that I’m trading options again, I’m focusing on simple directional plays: buying puts on stocks that (a) have a clear technical pattern that suggests a move lower; (b) a price high enough such that the dollar move makes the potential percentage change meaningful.

In other words, I’m not interested in buying puts on a $15 stock; I’m focused on multi-hundred dollar issues. Here are a couple of stocks on which I own June puts. The big moves are probably coming after earnings are announced: April 22 for Netflix, and May 20 for AutoZone.

0411-NFLX

0411-AZO

Above Us Only Sky

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It’s been obvious for a while that the SPX 2007 intraday high at 1576 wasn’t likely to hold long, but I was expecting a bigger retracement before it broke. That was not to be and SPX broke and closed over resistance there with confidence yesterday. I’ve been looking at the daily bollinger bands pinching together on SPX for a couple of weeks now and noting that these tend to resolve into big moves. That big move should now be up so I’m expecting to see SPX over 1600 in the near future. SPX doesn’t tend to wander far from the upper bollinger band however, and that tends only to rise at five or six points per day in a strong move up. That closed at 1578 yesterday and the likely closing range would be at 1582-4 today, so with the close yesterday at 1587 I’m expecting to see some consolidation today:

130411 SPX Daily BBs MAs

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