First on our list today is a long I took last week Monday on IMGN. This was a CC play and I wrote an $8 option with a December expiration. I attempted to close my position on Thursday of last week because I was already above max profit, however; the spread was way too wide and I was not able to sell back the call. In terms of the outlook next week, I am slightly worried about the pattern formed over the last 2 trading days. The 2 large “tails” formed by the candlesticks indicate the stock keeps struggling to break the 10.50 mark and sellers seem to take control of the stock after the first hour or so of trading. I will not be adding to my position, and with the option I have; I am protected all the way down to $7.66. As long as the stock stays above that price I’ll be in the green. I will not be adding to the position during the week, although I can see some support forming at $9.50, and a $10.50 break could lead to a powerful trend.
I waited for Apple to retrace about 50% from its high after it had a nice run from $95. The 50% pullback is the first pullback since the trend formed, and therefore it is the most significant. I have protected the position with a CC because it could see further downside. If it continues to decline my loss will be slightly covered by the call I wrote, and I will continue to cover with weekly call expirations. I do see further upside if it can continue its trend upwards.
Cisco has much the same story as Apple does. I’m looking for a long entry at $26.50 since this will be the first pullback from the current trend and it will be at the 50% retracement level.
Always on the watchlist is the S&P, except this week I decided to actually put it on as part of this week’s study. We have seen quite a bit of range over the past trading week and I believe that we are at a good range for a continued uptrend. The chart is similar to that of AAPL and CSCO in that it’s at a retracement level and the possibility for a swing upwards is more likely at this price. The only downside to this chart is that the market isn’t as oversold I would like.
I'm a buyer at the next support level. I just recently sold out of my GSK position at $47, and I was going to be a buyer at $45, however, it broke that support level rather easily. The next buying opportunity will be at $42 with a tight stop at $41.50
This stock trades well off support. If I see a long range green candle engulf the previous day's red candle around the $44 mark I will be a buyer. Smaller size and will keep a stocp at $43. This stock moves FAST.
In closing I want to mention the current oil situation that we as consumers are enjoying. I did not see oil prices going this low so quickly, and neither did most of the energy “experts”. It has been quite the perfect storm for this sudden drop in energy prices, and as of right now the price of oil has not established a floor. I mention all of this because, firstly, I was burned by an oil stock this year and I am still clawing my way back from that loss. Secondly, this drop in oil prices and related stocks is going to create a wonderful buying opportunity once things start to recover. I am going to stay AWAY from all energy stocks until I feel we have established a “stable” oil price, and not one that plummets on a daily basis. It will present a great bargain on energy stocks, but until then I will be nothing more than a spectator.
Happy trading, my friends
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