The Market Mon

Research in Motion (RIMM) broke out today.  This move is significant in a couple of ways.

First, the lower horizontal line represents the top of the candle after that huge gap down back in September of 2009.  Since then the lower horizontal line as been resistance

The stock tried to breakout above this line back on 12/18/2009, but only got has high as about 71.60.  More recently, 72 became resistance and the stock as been trying to breach the 72 level since about mid February, but with no success.  After bouncing off some support at the 67.5 level, we had some higher lows, then today the stock popped decisively above the lower horizontal line - for the first time in 6 months!

A look at the earning estimates show a steady upward trajectory, and if the earnings work out that way, we could very well see a new all time high later this year.

Earnings are coming up March 31st, and that could be the event that causes the gap to be filled.  We'll see.

HMSY is the chart of the week.  Its coming up on the right-hand side of a nice little cup formation.  Volume has been decent lately with some mild accumulation in progress. Not much happening on the news front.

AAPL - Stock is resting right at the top of the lower band and is definitely threatening to break below the lower range band.  The stock is up only 2 of the past 14 sessions, and volume has been increasing to the downside here.  

Between Microsoft, Google and Apple, its a clash of the technology titans, particularly in the hand-held device space. I'm starting to think that Apple is holding themselves back by not supporting Verizon's network in the US, since its so much better than AT&T's.  They need to adopt the multi-carrier approach that RIMM has done and do it fast. 

By the way - have you seen AT&T commercials indicating how great their coverage is?  Its their lame attempt to combat Verizon's "There's a map for that" commercials.  Come on AT&T, we know the difference between 2G and 3G and those ads are an insult.  But what else can they do?  Wireless networks are extremely expensive to build and Verizon has a huge lead in the US.

AUY - Gold took a hit.  Still up on this position, but not by much.

C - Financials continue to lauguish, and even industry leaders GS and JPM are taking a break.  On the bright side, BAC announced it was paying off TARP which gave the sector a boost and gave BAC a 5x volume surge.  BAC actually crossed the daily range band to the upside Friday, take a look at the chart to your left.

CML - This is a new position this week stock made a good pop with earnings news back on 11/18 and since has been marking time, moving sideways.

DIA - This ETF seems to have found a lid at about 105.  It could be just marking time here which is okay since its had a pretty good run.

EEM - is up 5% since its recent low back on 11/27/2009.

HMSY - already covered above.

KO - Stock is looking sharp and is up 8 out of the last 10 sessions.

MYRX - The company is in phase 2 trials for a drug called MPC-4326 which is is being developed by Myriad Pharmaceuticals, Inc. for the oral treatment of HIV-1 infection.  The stock didn't do much on the news.

NEOG - Neogen purchased the food safety business of a San Diego, CA based company called Gen-Probe.  Stock is good good, slow and steady.

SPY is looking good, similar chart to DIA

USO- Went negative on the daily range bands last week, but still positive on the weekly.  Looking at the chart to the left, however, the last 2 sell signals have been losers, so i'm staying put on the long side.

XLB - Select sector materials.  Took a big hit on Friday with the sell-off in Gold.

YUM - Took a big on Friday with a story that their same store sales are declining in both the US and mainland China.  But they still expect to grow EPS at 10% next year due to 1,400+ new units in YUM China and Yum Restaurants International (YRI).  Clearly not a positive development, but we're sticking with it for now.

CD Review

Taxable

LEHMAN BROS FSB WILMINGTON DEL C/D FDIC INS TO LIMITS 5.30% 05/17/2010

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40%  06/21/2010

FARMERS & MERCHANTS BK TOMAH WIS C/D FDIC INS TO LIMITS 5.25% 07/12/2010

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.60% 07/21/2010

Retirement

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40% 06/21/2010

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.60% 07/21/2010

RG PREMIER BK HATO REY C/D FDIC INS TO LIMITS 5.45% 07/30/2010

That's it, have a great week and keep your power dry.

Mr Market took a few twists and turns this week but in the end made an important price rollover to the downside.

Monday's Yom Kippur holiday was most positive day of the week with SPY bouncing off the top of the upper range band (light blue bar).  Tuesday made a marginal higher high but closed lower.  Wednesday, Thursday and Friday all closed lower.  Friday's close is perched precariously right on the lower range band.  The IBD Monday edition indicates "Market Uptrend Under Pressure."

My best trade of the week was against the long position in SPY I picked up back on 9/10 at around 104.70.  On Monday's rally, I sold the October 107 call and bought the October 105 put in each account for even money (executed at 1.68 per side).  By the end of the week, I was up at 2.80 on this trade offsetting the 2.30 open loss i'm showing on the original SPY trade.  I have 2 full weeks to go on this trade, and I have a number of ways to close this trade at a profit and still hold onto my SPY.

Next up was a long position in RIMM I entered on Wednesday 9/30 at 68.44.   My thinking was that the sellers were tired and my stop on this trade was below the recent low at 66.40 for about a 2-point risk.  I closed this trade Friday just above 66 and took about a 2.30 loss.  The stock closed the week at $65.40.  This trade was based more on hope than on any price action these types of trades must be eliminated to ensure my long-term success.

The last trade of the week was closing a position i've held in QCOM.  If you've been following my positions update you will recall that QCOM has been showing serious signs of distribution for the past few weeks.  This week's price action sealed the verdict when QCOM broken support at 45 and quickly worked down to 42.  I sold my shares at about $41.95 and took about a 4.0 profit against my entry at 39.70 entered back on 4/1/2009.

Check out the way the lower range band crossover back on 45.02 pre-saged the coming sell-off.

As for ths coming week, some of my remaining longs are looking a bit stretched and I may get shaken out of them going forward.  More tomorrow in the positions update.

On the development front, i'm moving toward migrating my E*Trade accounts over to Interactive Brokers where I can trade for $1 instead of the $10 i'm paying now.  More to come on that front.

Enjoy your weekend and sleep tight.

It was a nasty week the equity market.  Nasty because i've been getting pulled in on the long side by bullish chart action.  In fact on Wednesday I was feeling really good and my open positions were up nicely.  Based on those unrealized profits, I had made back about 1/3 of what I lost for the year, and my account was finally on an upward trajectory.  Unfortunately, that was the top and the market turned south and wiped out about half of my gains.

Let's go to the trade-by-trade.

On Monday, last weeks breakout buy of SXCI at 45.50 was working out well, so I added another 100 shares in each account at about 47.50.  By the end of the week, the stock pulled back to 46.35.  So i'm close to even on this position, down perhaps a half a point.  Stock came to rest right at the upper range band.

Also on Monday, I saw my profits in AAPL start to disappear.  After paying in the low 179's last week and being up almost 6 points in a matter of days, AAPL started to sell off.  So I closed the 100 shares I bought in each account in the low 182's and took about 3 profit points per 100 shares.

A mere 2 days later, AAPL was once again on the move so I picked up 1/2 lot (50 shares) paying about 187.80.  I knew at the time that I was badly top-ticking this trade, that's why I bought only a half position.  As expected, AAPL pulled back and I picked up another 50 in each account on Thursday at 184.87.  So my average cost now is about 186.30.  Stock closed the week at 182.37, so i've give back profits on my earlier trade and then some.  Objective for next week is to get out at a small profit.

One bright spot of the week was RIMM.  I picked up 100 shares in each account last week at about 83.50.  Knowing I was holding a loaded gun going into earnings, I sold those shares at about 84.30 on Thursday.  Well it turns out I dodged a bullet here since the stock closed the week at about $69 on some bad earnings news.  I have to hand to IBD, they correctly pointed out that RIMM was due to report its 6th consecutive quarter of declining EPS growth.  I wrote that in last week's positions review, and that was enough awareness for me to sidestep this oncoming diesel train.

Next up was Chinese on-line game maker Perfect World - PWRD.  After last week's entry at 44.35, I was feeling good and the stock was rallying big.  So I picked up another 100 shares in each account at 47.60 on Wednesday.  But later in the day Wednesday, I was feeling good as the stock got as high as 50.50 and was up nicely on both positions.  But by Friday, things had turned around and my $700 profit turned into a $400 loss as the stock closed the week at about $44.  But i've been shaken out of this stock before and i'm going to try and stick with it.  If it gets much below $40, i'm going to have to take my lumps.

I read later in the IBD that Shanda Interactive spun off their On-line gaming division in a separate IPO.  Priced at $12.50 the offering was poorly received and the offering close the day at 10.75.  PWRD clearly sold off in sympathy with that move.

The trade of the week was ABVT.  You may recall I was in and out of this IBD 100 name earlier this year on some good price action.  Well after the 2/1 split at $90 the stock cooled off and built a base at about $45.   Well the stock broke out mid-week and I picked up 100 shares in each accout at a limit of $48 on a nicely timed pullback.  This buy worked out well and the stock was as high as 50.40 on Thursday.  Like my other buys this week, the market pulled back and took away some profits.  But the stock closed the week at $48.59, so i'm still feeling good about this position.

At this point, my confidence in ability to make money in the market is low.  So low i'm considering pulling cash out my E*Trade accounts and paying down my mortgage!

Enjoy your Sunday Football - Jets vs Tennesse Titans at 1PM EST.  Lets go J - E - T -S Jets, Jets, Jets!

AAPL as well as the entire market looks pretty extended here. I'm going to try and stick with it on the long side.

C - Stock has stopped resting on the upper daily range band and is now perched on the lower range band ready to break through it to the downside.  4.26 is the lower range band but i'm in this one for the long term.

EEM - Stock is right below where I bought it and looks like I top-ticked this one and I'm going into the red. 

KO - Has been a real winner since entry early last week.  I'm going to try and stick with it.

MYRX - Has been rocking lately and is now a breakout buy crossing the old high of 7.5.  They had some positive pre-clinical data on their HIV drug.

NEOG - As expected stock dropped back below 30 giving us an opportunity for re-entry.

PWRD - New entry from last week at 30.  Stock goes to sleep for days at a time then wakes up to become a winner again.  Just need to stick with it through the sleep period and not get shaken out like I did last time.

QCOM - Went negative on the daily range bands for the first time since last December! Also, red bars have been swamping green bars on both the daily and weekly charts.   I love this company long term and may either buy puts or sell a call.

RIMM - Is also looking pretty toppy here and its utterly failed to get over resistance at $85.  Earnings due out this Thursday though.  IBD reminds us that RIMM is expected to report the 6th quarter of slowing EPS growth.  I'm going to try and slip out of this with a small profit. 

SPY - The market is well extended to the upside, which begs the question - what's the proper stop loss on this position?  How about 105.10 so I can get out at scratch plus commissions?

SXCI - Rocking to the upside, close below the low of the entry bar at 43.70. 

USO - Forming a wedge pattern and it moves sideways.  Not expecting anything sudden here, could be a good opportunity to sell calls at 38, cost at 36.50.

XLB - Commodities play, don't panic out, it a long term hold.  How about sell call on half and buy protective put?

YUM - Weekly still pointing up, daily ralling back.  No signficant news this past week.

CD Listing - Now sorted by expiration

Taxable

WASHINGTON MUT BK FA STOCKTON CA CD FDIC INSURED TO LIMITS 5.05% 11/02/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40%  06/21/2010

FARMERS & MERCHANTS BK TOMAH WIS C/D FDIC INS TO LIMITS 5.25% 07/12/2010

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.60% 07/21/2010

Retirement

AMCORE BK N A ROCKFORK ILL  5.0% 11/16/2009

DISCOVER BK GREENWOOD DEL C/D FDIC INS TO LIMITS 5.05% 11/16/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40% 06/21/2010

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.60% 07/21/2010

RG PREMIER BK HATO REY C/D FDIC INS TO LIMITS 5.45% 07/30/2010

Going to start looking at Interative Brokers.  I thought I read that you get stock trades for $1 and if you don't make $10 in trades a month, they charge you $10.  That 90% less than i'm paying now!

It was a rocking week in the stock market.  You know I like to buy breakouts, and it was breakouts galore this week.  I felt like I was finally back in my element after being on the wrong side of the market for most of the year!

First up was KO.  Seeing it clear the recent high at 51, I saw an upside breakout and picked up 1 lot in each account at about 52.  Note how up volume has been swamping down volume in recent days - not even counting Friday's monster volume which was probably options related.

Next up was XLB - Select Materials ETF.  This was an add-to after last weeks entry at 30.80, I added another lot in each account at $31.46.  This is a commodities play and it cooled a bit on Friday.

The runaway winner on the week was AAPL. I picked up 100 shares in each account early Wednesday after Cramer's scoop about the accounting change - and a new target of $244.  I paid just over 179 in each account and picked up almost 6 points in each account since then.

On a related note, I picked up 100 RIMM in each account at about 83.5 on a sympathy trade with AAPL.  RIMM didn't move much from there and is coming up against recent resistance at 85.  Earning are coming up this Thursday, so I have to watch this one carefully.

Next up was EEM - Emerging Markets ETF fund.  This was recommended by Elaine Garzarelli on NBR 2 Friday's ago.  I paid $39.05 for this and its more or less unchanged since then.

Next up was PWRD - Perfect World.  This is a Chinese on-line game maker.  The stock ran up to a minor new high at $45 then pulled back.  I bought 100 shares in each account at about $44.30 and i'm down slightly on this position.  I'm sticking with it because the stock has excellent fundamentals.

Last up with my old friend SXCI.  After taking a healthy profit in the low 40's, the stock worked its way higher and looked like was forming a double top at $44.  In Friday's action the stock blew through the old high at $44 and was trading at about 45.5 by the time I saw it.  So I plunged back in and bought 100 shares in each account at $45.5. After a short pullback, the stock rocketed higher and closed the week at a new all-time high of $47.  Also, volume was a record high of 3.6MM shares showing serious institutional support. 

That's all for now, more in the Positions Update.  Enjoy your Saturday.

C - Citi again seems to have found support right at the upper range band.  Even though we had 3/5 down days this past week, up volume still appears to outpacing down volume based on the daily chart.  Next earnings due out Oct 15th.

CMGIA/CMGIT - This is the CMG_+1.56% Sept 100/105 call spread entered for a debit of 1.5.  This position will likely go out worthless.

MYRX - Is showing some signs of life.  News on Thursday indicated they are going to be presenting their work an oral treatment of human immunodeficiency virus 1 (HIV-1) infection.   They are in the pre-clinical phase here and this company seems to be setup as a research and development shop with the commercialization going on elsewhere.  Stock had a nice pop on Friday on the biggest volume since July.

NEOG - As expected, we got little follow-through from last weeks upside breakout.  Stock is once again under 30 and marking time.  Earnings due next Monday Sept 21 before the open.

QCOM - Stock had 4 straight up-days this past week shaking off recent distribution. I'm sticking with it even though the daily range bands went negative last week.

SPY - Now long one lot in each account from about 104.70.  I entered on a breakout to a new high, and i'm probably going to end up regretting this entry.  But when the shorts repeatedly fail, what's left to do but go long?

XLB - Also long one lot of select SPDR Basic Materials ETF.  Stock recently took out resistance at $30 and looks to be moving higher on the weakening dollar and increasing demand from China.  I saw Elaine Garzarelli on Nightly Business Report last Friday who made this call.

USO - Oil had a wild week, first gapping up to almost $72 on the OPEC meeting, then giving it back on Friday.  Really more of a play on the weakening dollar.

UPS - Long term hold since I worked there back in the late 1980's and early 1990's.

YUM - Posted 3 of 5 loosing days this week on increasing volume.  Definitely some signs of distribution going on but I love the prospects for this casual dining chain.  KFC, Taco Bell, Pizza Hut and Long John Silvers.  Plus, its the fastest growing retail chain on the planet and there's a lot of hungry people in China.

I need to start looking at corporate bonds in addition to just CD's.

CD Listing - Now sorted by expiration

Taxable

WASHINGTON MUT BK FA STOCKTON CA CD FDIC INSURED TO LIMITS 5.05% 11/02/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40%  06/21/2010

FARMERS & MERCHANTS BK TOMAH WIS C/D FDIC INS TO LIMITS 5.25% 07/12/2010

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.60% 07/21/2010

Retirement

AMCORE BK N A ROCKFORK ILL  5.0% 11/16/2009

DISCOVER BK GREENWOOD DEL C/D FDIC INS TO LIMITS 5.05% 11/16/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40% 06/21/2010

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.60% 07/21/2010

RG PREMIER BK HATO REY C/D FDIC INS TO LIMITS 5.45% 07/30/2010

Leading once again with Options Express account where I added a call spread in CMG this past week.

CMGIA/CMGIT - This is the September 100/105 call spread entered for a debit of 1.5.  This position has a max profit of $350 and a max loss of $150.  Stock had a small pullback but seems to have found support in the 92 area.  IBD still likes it and its one of the few stocks in the IBD 100 with a black square around it indicating its still in a buying area.

CQNHM/CQNHN - CERN August 65-70 call spread I put on 3 weeks back for a debit of $180 with max profit of $320.  The position is looking more likely to go out at a loss.

RFYHN/RFYHT - This is the RIMM August 70-75 call spread that I put on for a debit of $218 with a max profit of $282.  Gave back some profits on this position, but (as i've found) I don't make the maximum profit until expiration, so I have to squeeze all I can out of this position to offset my loosing option trades.  If its starts to threaten the 75 strike, i'll think twice about that and take what profits are there. 

Back to E-Trade.

ABVT - Pickup up half a position this past week and its showing a small profit.  Company has a 2x1 split with record date of August 20th.  Also earnings are due out Monday.  Yikes - didn't realzie that when I bought it - need to be more careful.

C - Stock had its biggest volume day ever in its history on Thursday when over 2 billion shares  changed hands.  That's almost 20% of the 11.2 Billion share float.  That suggest some serious accumulation going on.  Sticking with it.

MFE - Stock  is taking a breather here, and threatening my small profit.  I'm going to put a mental stop at $42.50 to protect my small profit.  Options premiums seem pretty low here for example the Sept 45 call is only paying $1 so it hardly seems worth writing that position going in the fall.

MYRX - Not much going on here in this MYGN spin-off.  Volume has been drying up in the absence of any kind of news.

NEOG - Stock had a nice bounce-back after shaking me out at $27 which was the bottom of the move.  No news this week.

QCOM - is cooling off along with the rest of the Nasdaq.  Stock has been down  9 of the last 12 days since the high-volume selloff back on 7/23.  Cost basis under 40 so i'm up nicely.  August 46 collar selling for even money, but 46 is the bottom of the channel so i'm looking for support here.

SXCI - Already covered in my weekly update.  I'm up over 100% on this position since entry back on 1/2/2009.

USO - Stock is now above the declining 200-day MA and above the rising 50-day MA.  Also, daily and weekly range bands went postive last week.  Sticking with it despite a seasonal bias for a decline this time of year through Feb 2010.  USO deserves its own post.

YUM - is right at the top of the channel at 36.5 after I picked up another lot in my reitrement account at the bottom of the channel at 34.  August 36 collar can be entered for a credit of 55 cents but i'm likely to just let it ride.

XZQHF/XZQTF - This is the SXCI August 30 collar put on for even money.  I'm down horribly on this position, so i'll let them just have the 100 shares of SXCI and this position will go away.  In exchange my large unrealized gain on half my SXCI will go away and become a small realized gain.

CD Listing

Taxable

FEDERAL TR BK FSB SANFORD FLA  5.40% 08/11/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40%  06/21/2010

LEHMAN BROS FSB WILMINGTON DEL 5.10% 09/08/2009

WASHINGTON MUT BK FA STOCKTON CA CD FDIC INSURED TO LIMITS 5.05% 11/02/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.60% 07/21/2010

Retirement

AMCORE BK N A ROCKFORK ILL  5.0% 11/16/2009

1ST COMM BK NORTH LAS VEGAS  5.15%  08/28/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40% 06/21/2010

RG PREMIER BK HATO REY C/D FDIC INS TO LIMITS 5.45% 07/30/2010

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.60% 07/21/2010

Leading again this week with the Options Express account.  OX is growing on me since they cut my comissions and I haven't funded the Think or Swim account yet.

CQNHM/CQNHN - This is the CERN August 65-70 call spread I put on 2 weeks back for a debit of $180 with max profit of $320.  Checking the chart on the left, up volume continues to outpace down volume, so i'm sticking with it.

RFYHN/RFYHT - This is the RIMM August 70-75 call spread that I put on for a debit of $218 with a max profit of $282.  All we need is a close above $75 on August expiry and I make the maximum profit on this position

Now back to E*Trade....

C - Citi shows some signs of life this week as they completed their preferred to common conversion.  Also some big index buying came in on Friday according to CNBC.  Sticking with it.

DIA - Long 1 lot in my retirement account.  The broad indices are clearly under-represented in my account.

MFE - Already covered in my weekly update.  Watching for signs of distribution and possible add-to on a pullback.  Stock dropped out of the IBD 100 this week which is a warning sign.

MYRX - Up slightly this week.  This is a zero-cost basis leftover from the MYGN debacle.

NEOG - Added another lot this week when the stock broke above 30 after weeks of consolidation.  Stock fell back, so it may have been a false breakout.

QCOM - Some low-volume distribution going on according to the chart on the left. With options at every strike, I can now sell the 46 collar (and below) for a credit. Options activity was dominated by the 44 puts which traded over 4000 contracts on Friday.  There's an option trade here somewhere, more to come.

SXCI - Stock recovered from a pullback to 28 to close around 29.50. No news this week, earnings before market hours this coming Thursday.

USO - broke the 28-bar range bands to the upside on Friday so i'm sticking with my long.

YUM - Addition of lot in my retirement account 2 weeks back at 44 was a good move as the stock closed Friday at 35.46.   Stock is petering out here, so it may be time to see some calls or perhaps a call spread.

My CD "WASHINGTON MUT BK HENDERSON NEV C/D FDIC INS TO LIMITS DUE 07/31/2009 5.150" came due on Saturday, so i'm looking to reload next week on something that pays 5%.

CD Listing

Taxable

FEDERAL TR BK FSB SANFORD FLA  5.40% 08/11/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40%  06/21/2010

LEHMAN BROS FSB WILMINGTON DEL 5.10% 09/08/2009

WASHINGTON MUT BK FA STOCKTON CA CD FDIC INSURED TO LIMITS 5.05% 11/02/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.60% 07/21/2010

Retirement

AMCORE BK N A ROCKFORK ILL  5.0% 11/16/2009

1ST COMM BK NORTH LAS VEGAS  5.15%  08/28/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40% 06/21/2010

RG PREMIER BK HATO REY C/D FDIC INS TO LIMITS 5.45% 07/30/2010

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.60% 07/21/2010

I'm doing my Options Express account positions first this week since i'm firing on all cylinders in that account.

CQNHM/CQNHN - This is the CERN August 65-70 call spread I put on last week for a debit of $180 with max profit of $320.  CERN had a good move this week and up volume has been swamping down volume as shown in the chart on the left.  Earnings due out this Wednesday 11/29 after the close.

RFYHN/RFYHT - This is the RIMM August 70-75 call spread that I put on for a debit of $218 with a max profit of $282.  This position has been working out well, but as I found out last week, I don't get to make the max profit (even though the stock is above 75) until much closer to expiration due to the extra premium present in 75 short call.

Now back to E*Trade....

C - This stock is a looser, but for some reason, I feel compelled to hold onto it.

DIA - Long 1 lot in my retirement account.  The broad indices are clearly under-represented in my account.

MFE - This is a recent winner picked up from my weekly scan of the IBD 100.   I'm up about 2 points on this since entry and earnings are due out during market hours this Thursday.   I may put on the 45 collar (long 45-put, short 45 call) if I can do so for a credit heading into earnings.

MYRX - Stock had a pretty-decent week up 7%.  This is a zero-cost basis leftover from the MYGN debacle.

NEOG - Earnings came out this past week, revenues rose 14% versus the same quarter last year.  Gross margins almost 50%.  CEO says.. "We continue to see a world of opportunity ahead for us, and we will continue to execute the growth strategies necessary to seize the opportunities." Sticking with it.

QCOM - This stock got a double-whammy of bad news this week.  First earnings came out  below expectations and second, South Korea hit QCOM with a 200 million plus fine for anti-competitive practices.   With all that, the stock only sold off 2% from its recovery high.   But you can't keep a good stock down, and QCOM is a long-term winner.

SXCI - Stock made a new recovery high this week.  IBD says "10% extended past 26.99 buy pt from pullback to 10-wk."  No news this week, earnings due 8/7/2009.

USO - broke the 200-day moving average to the upside this past week as shown on the left.  Seasonal tendencies are for it to peak in the next week or so, so i'm staying long and looking for a topping pattern to hedge my long.

YUM - Picked up another lot in my retirement account this week as YUM appears to be bumping along the bottom of a channel.

CD Listing

Taxable

FEDERAL TR BK FSB SANFORD FLA  5.40% 08/11/2009

FIRST MERCHANTS BK N A MUNCIE IND  5.30% 7/20/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40%  06/21/2010

LEHMAN BROS FSB WILMINGTON DEL 5.10% 09/08/2009

WASHINGTON MUT BK FA STOCKTON CA CD FDIC INSURED TO LIMITS 5.05% 11/02/2009

WASHINGTON MT BK HENDERSON NEV 5.15% 07/31/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.60% 07/21/2010

Retirement

AMCORE BK N A ROCKFORK ILL  5.0% 11/16/2009

1ST COMM BK NORTH LAS VEGAS  5.15%  08/28/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40% 06/21/2010

RG PREMIER BK HATO REY C/D FDIC INS TO LIMITS 5.45% 07/30/2010

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.60% 07/21/2010

Overall 79% cash and equivalents and 21% stocks. The broader market pushed higher this week defying the bears and my high cash position.

So for now i'm seriously under-performing the SP-500 on the year.  But all is not lost since I still have the majority of my capital and my sanity.  In trading and in life, when things are working for you, you keep doing those things. When things are not working, you do less of those things. 

In trading terms, that means when you are loosing money, the answer is to get small and trade smaller amounts until you regain your technique.  Once the technique has been re-validated, you can scale up and add size to get back to where you need to be.  For me that means keep the large part of the portfolio in high-yielding CD's and use the remaining poistion to take smarter, smaller and more concentrated positions using options and small equity positions.

Along those lines,  on Tuesday I took all they were offering of "GMAC Automotive Bk Midvale Utah C/D FDIC INS to Limits 5.60% 07/21/2010".   I'm now fully-loaded in CD's and have still have about 25% free cash in each account available for investing and trading.  As you can see from my CD listing on my positions update, all my CD's yield over 5%.  So don't settle for CD's paying less than 5%.  Just keep the size to under 250K and you will be 100% FDIC insured.

My only other trades for the week were as follows.  On Thursday  I bailed out of all of my HMSY seeing some weakness in the chart.  Note on the chart on the left how volume has been trailing off and was highter on Thursday's down day than it was in the prior 2 weeks.  I'm anticipating a top building here and expect I can get in at a lower price going forward.  Earnings are due out before the open this coming Friday and i'm expecting this to run up ahead of earnings and sell off like everything else has done lately.  Also, I had a profit in all legs of this position and wanted to take it.  I've seen plenty of winners become loosers this year and didnt want to let it happen yet again.

The other trade was adding 1 lot of YUM at 34 in my retirement account.  YUM has been bouncing along the bottom of the channel and despite the high volume in the sell-off after earnings, I like the company and its prospects going forward.

More to come in the positions update.

USO/UBOGL - USO found a bottom at about 32 this past week and started to work its way higher.   UBOGL (July 28 call) went out worthless which netted $120 per account.  Seasonal trend is for oil to head lower as of end of July and make a low in Feb 2010.   For now will be content to stay long as an inflation hedge and sell calls on a rally to collect premium.

QAQGO/QAQSL - These are the Apollo 65 put 75 call combo that I bought as part of an Iron Condor in APOL which went out worthless on Friday.  I already netted $420 by closing out the short legs of this trade.  I lost $250 on these 2 legs, so I netted $170 total.  Could have made $300 had I let this trade run to completion.

YUM - Earnings came out and did not dissapoint.  Did nothing on the options side.  Noticed however that at one point on Tuesday, I could have sold the July 36 call and bought the July 36 put for zero cost.  Had I put on this trade, I could have netted $240 per contract and still kept my stock.  Something to keep in mind for future earnings releases when stock rallies into the earnings announcement.

SXCI - IBD says "Up 6% from 26.99 buy point from pullback to 10-week line."  Earnings due out August 7 and IBD indicates "Analyst expect 4% drop in EPS after strong accelerating trend."  Need to be vigilant for a potential top coming up into earnings.  Volume on up days has been crushing volume on down days lately, so we are good for the time being.   Added some this past week at 28.20.

RFYHN/RFYHT - RIMM August 75-70 call spread entered for a debit of $2.18.   If RIMM has a close above 75 this week, the position should reach max profitability.  Unclear on whether this will occur whenever RIMM closes above 75 or only on expiration.  Will learn from this position.

QCOM - Earnings due out this Wednesday after the close and stock has rallied nicely at a new high since the 2008 top.  At this point, the 46 or 47 collar can be entered for a credit.  Unlikely to do anything this week since i'll be away on vacation.

NEOG - Stock seems to have found some resistance at 30 here.   Earning due before the open on Tuesday.  No options are available here and i'm unlikely to do anything going into earnings.

MYRX - Zero-cost mustard seed left over from Myriad Genetics debacle.

MFE - Stock is at a new 10-year high and looking like a winner.  For the second week running, IBD has a black-square around this chart indicating its still in a good buying position.  Long 1 lot in each account and sticking with it.  Earnings due out on July 30 during market hours.

One distribution day in MFE on Thursday on higher volume.

HMSY - Up nicely on this position.  Earnings due out on July 31 before market open.

C - Earnings came out this week.  Citi is still a sick pup and managed to show a profit only because of a large one-time gain by the Smith Barney / Morgan Stanley joint venture.  It had a good rally off the lows and considering it was $2.60 last week, it had a decent rally off the low.

CQNHM/CQNHN - This is the Cerner August 65-70 call spread.   I paid $160 for this and it doesn't look too promising.

CD Listing

Taxable

FEDERAL TR BK FSB SANFORD FLA  5.40% 08/11/2009

FIRST MERCHANTS BK N A MUNCIE IND  5.30% 7/20/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40%  06/21/2010

LEHMAN BROS FSB WILMINGTON DEL 5.10% 09/08/2009

WASHINGTON MUT BK FA STOCKTON CA CD FDIC INSURED TO LIMITS 5.05% 11/02/2009

WASHINGTON MT BK HENDERSON NEV 5.15% 07/31/2009

Retirement

AMCORE BK N A ROCKFORK ILL  5.0% 11/16/2009

1ST COMM BK NORTH LAS VEGAS  5.15%  08/28/2009

GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40% 06/21/2010

RG PREMIER BK HATO REY C/D FDIC INS TO LIMITS 5.45% 07/30/2010

Have a great week.

Overall 77% Cash and CDs and 23% stocks.  Stocks position up slightly due to addition of more SXCI.  Also added some call spreads in RIMM and CERN.

Some of my favorite stocks had good up moves this week including QCOM, SXCI, HMSY, NEOG and MFE.  More in the positions summary, for now the week in review.

I kept my promise to go CD shopping and on Tuesday bought a large chunk of "RG PREMIER BK P R HATO REY C/D FDIC INS TO LIMITS 5.45% 07/30/2009" for my retirement account.  On Wednesday, I bought a sizable chunk of "WASHINGTON MUT BK FA STOCKTON CA CD FDIC INSURED TO LIMITS 5.05% 11/02/2009" for my taxable account.   

On Wednesday, I also picked up another lot of SXCI in both my retirement and taxable accounts.  The stock recently broke above the resistance area at 27.  Checking the chart of up the left, volume up on days has been swamping volume on the down days, and the stock wants to revisit its old high at 31.95.  Also, on Friday SXCI announced a 3 year deal to provide PBM services for the state of Ohio.  More on SXCI when we get to the positions summary.

Thursday came along and took all they were offering of "GMAC AUTOMOTIVE BK MIDVALE UTAH C/D FDIC INS TO LIMITS 5.40% 06/21/2010" by purchasing equal lots in each account.

My old friend RIMM broke the range bands to the upside on Wednesday.  Having been burned by the stock so many times this year, I bought the 70-75 call spread for a debit of 2.18.  Max gain is $280 on a close above 75, max loss is $218 plus commissions.

I made a simlar trade in CERN.  After entering CERN 2 weeks back and getting stopped out on the IBD 7% down rule last week, CERN came roaring back.  I picked up the 65-70 call spread for $1.60.  On a close above $70 max gain is $338, with max is the $160 debit paid to enter the trade.

I did the 2 call spreads in my (newly re-funded) Options Express account.  Recall from 2 weeks ago took my APOL condor trade to E*Trade because OX wanted almost $60 for a 4-leg option trade!   Well I called the guys at Options Express and told them I was going to take my business over to Think or Swim.  I didn't hear anything back from them until a few days later when they told me they would reduce my commissions to $1.95 a contract or $10 per leg, whichever was greater.   After the 2 trades, I realized they charged me $12.95 for a 2-leg trade which is better than they promisied and equal to E*Trade!   Bottom line - if your broker's commissions aren't good enough - call them up they will drop them for you!

In the meantime I went ahead and opened a Think or Swim account.  Their platform is amazing and a bit intimidating.  In fact, after navigating around it for a while, I appreciated the Options Express web-based platform.  I seem to be able to find my way around there more easily. 

Think or Swim is still pretty cool.  They have this "My-Trade" feature where you can see what their other users are doing and/or recommending.  Its a constant stream of new Option Trading ideas.  You can put the trades on using their "Paper Money" application to see how they work out.  Options are an amazing investment vehicle and I think i'm somewhere between beginner and intermediate. I used the Paper Money feature to put on 2 trades:

Short 100 shares both FAS and FAS.  Idea being they are chronic loosers and both underperform due to the costs inherent in portfolio construction.  When one is +2.85%, the other is -3.0%.  Should be interesting to see how this works out.

Second was a Calendar Spread in AAPL.  Bought 1 October 140 call and sold the August 140 call.  I don't fully understand the implications of calendars, so this trade should be a good education experience.

Enjoy your weekend.

RIMM broke the daily range bands to the upside early today.  Looking at the chart of the left, you can see that range bands have crushed buy and hold in the past 2 years.

Having been burned by this stock several times already this year - this time I bought the August 70-75 call spread for a debit of $2.18.  Max gain is $282, max loss is $218 not counting commissions.

Overall 30% stocks, 70% cash and equivalents.  Stocks position down 3% from last week due to shakeout in RIMM.  With the broader market rolling over, it was time to take some positions off the table and protect some recent gains.

With broader market weakness taking hold, I was no longer comfortable being long this 3X small cap bull fund.  Also, I got the prospectus for this and the related family of Direxion 3X funds and all over the prospectus the stressed the fact that these funds track the daily performance of the fund, but deviate over time.  In my case, I bought on 5/20 and sold on 6/15 for a small loss.  Had I bought IWR (iShares Russell ETF), I would have made 2.6% instead over the same time period.

RIMM broke the daily range bands to the downside at $77.89 on Wednesday 6/17. Note how the range bands went positive back on 3/17 at about $41.  So the range bands caught an incredible move here and gave a great exit signal as well!

Seeing the weakness, I sold my 100 shares in each account for a small profit on Monday 6/15.  I held my June 80 calls to the bitter end, however and lost $6.90 in each account on this position.  On the OptionsXpress side, I closed out the short side of my 85-90 call for a $205 profit.  I let the 85 call expire worthless and took at $282 loss on this position total.  That was $82 more than my planned maximum loss of $200, but I thought it was worth removing the $300 cap on profits in case the stock rallied after earnings.  That turned out to be a bust as the stock sell-off telegraphed the disappointing earnings announcement.

RIMM and TNA were my only disappointments on the week and it was all positive otherwise. 

Back to my new friend MYRG.  After rallying as high as $23.19 during the week it sold off back down to $21.  So it occurred to me that this is a good trading stock and that I could get in around $21 and out at about $22.  So I sold the 200 shares purchased for $21.05 at $21.75 for a $140 profit in each account.  Then I waited for a pullback and re-entered the same 200 shares at $21 in one account and $20.90 in the other.

On the technical side, the stock is forming a nice cup-with-handle pattern.  The handle hasn't quite formed yet, but if it does, we could easily see a break up the $24.50 area.  The plan for next week is to sell the additional 200 I bought in each account on a pop above $22 and let the other 200 ride.  At this point, i'm long 400 shares in each account and up nicely on the first 200.

Next up is my new best friend HMSY.  I entered this stock recently below $35 and it's had a nice move up from there.  HMSY broke out decisively on Tuesday 6/16 with a move above the recent range.  I posted on the blog and picked up 100 shares in each account at 39.25.  On closer examination, I actually screwed up and bought 200 shares in my taxable account. Figuring my sub-concious new better. I picked up another 100 in my retirement account at 39.  After moving sideways for 2 days, it broke decisively higher on Friday on nice volume.  No fundamental news that I could find so this looks like just plain old accumulation. 

That's it for now.  I'm just going to keep playing my game - buying breakouts, cutting loosers and letting my profits run.  See you in the positions update.

AIG - Holding up fairly well since the daily range bands went negative back on 5/22/2009.  Sticking with it since its basically a call option with no expiration.   Overall i'm up in the taxable account and down slightly in the retirement account.

C - Not much is happening in this position since C got kicked out of the DJ-30.  Down about 40 cents per share on this.

FAS - Holding up fairly well - down slightly on this position in each account.

MYGN had an excellent week.  After the earnings sell-off, I was down almost $2000 in each account on this position, now up slightly.  Additional entries at $34.50 and $35.75 got me up to 500 shares in each account.  TSV has been leading price to the upside as TSV has made a new recovery high ahead of price.  Note the spin-off of Myriad Pharmaceuticals is expected by the end of June with 1 share of the spin-off for every 4 shares of MYGN.  So to keep things even, I should take profit on 100 shares of MYGN.

HMSY - Up nicely on this recent entry with cost just below $35.    Will add-to on a dip below $35, no news this past week.

MYRG had an interesting week.  After being up $500 in each account in just one week's time nearly all of my profit went away with Tuesday's sell-off.  But the stock came roaring back Wednesday and make another new all-time high before backing off on Thursday and Friday.  The only fly in the ointment now is volume which has been declining.  Also, volume on Friday's sell-off is the largest day of down volume in weeks.  No news this last week, so i'm considering this just profit-taking and sticking with it long term.  May take off half however if it gets back to $22.

NEOG - Another great looking chart, wish I had room for them all!  After last week's news about the deal with the Chinese government, its off and running.  Next stop $30.

QCOM - Cooling along with the rest of the Nasdaq 100 and volume on down days has been steadily increasing. Showing a nice profit here with entry just below 40.  The company increased its 3rd qurter guidance on Thursday and Friedman billings has a 12-month price target of $54.

RIMM - in a holding pattern ahead of earnings due out on Friday morning.   Long 100 shares in each account plus one June 80 call.  Up nicely on the stock, but slightly underwater on the calls.  Looking to take profit on the stock and either rollup to a high strike call or buy a protective put.  See the weekly update for more

SXCI - up nicely on this position with cost below $20.   No real news since May 20th, no options, no news to report, sticking with it.

TNA - up nicely on this broad-market play with entry at $27.82.

USO - up nicely on this position with entries at $29.20 and $32.85.  Sticking with it for now, letting profits run.

YUM found support right at the lower range band.  Like the rest of the market, volume has been declining recently.  Like I mentioned last week,  the Kentucky Grilled chicken seems to be well-received and hopefully will give a boost to this tired KFC franchise.  Up nicely on this position with cost just below $30. 

Overall 33% stocks, 67% cash and equivalents.  Stocks position is down 12% from last week due to weakness in Apple which shook me out.

This rally is looking tired.  Take a look at the TSV-price divergence on the left.  The 28-bar TSV with a 10-bar moving average shows the rally of the last 10 sessions has not been supported by TSV.  TSV is essentially price change times volume so a declining TSV can indicate lack of buying as much as outright selling.  In this case, I think its just lack of buying.  Price is the ultimate indicator however, and I would follow the price before following the TSV.

On the trading side, the rally in AAPL was loosing steam early in the week.  Recall I bought 100 shares at about 140.50 in each account on the breakout above 140.   I sold those shares in each account on Monday in the low 141's and took a small profit in each account.  That left me long 2 June 100 calls purchased last week at 43.30 in each account last week.   This position deteriorated as the week went on but seemed to hold above 140.  On Friday, AAPL opened decisively below 140 and I sold the 2 contracts at 38 and 37.80 in each account.  So I took about a $1060 hit in each account on this sale.  So to answer last week's question - was this position smart or dumb - the answer was - dumb!

That loss was a bit demoralizing, but I have good profits in some other positions.  The younger me would have taken a profit in another position to offset this loss. But i've learned over time to cut your losses and let your winners run.  Take a look at my weekly update which has mostly winners since the losers have already been eliminated.

The real challenge for next week is how to handle RIMM earnings.  I'm long 100 shares in each account from about $79.50 showing a decent profit in each account.  I'm also long 1 June 80 call in each account which is about 80 bucks underwater.   Here's what i'm considering - on a rally back to $85 dollars, sell the long stock and take a $5.5 profit.  Then take that profit and buy 1 80 put at about $3.00.  So this is essentially a long straddle where I can take all the profit above say $87, but i'm covered 1 for 1 below 80.

The chart on the left (courtesy of our friends over at OptionsXpress) show the profit/loss graph for this position.  If i'm able to sell the long stock for a $5.5 profit, then I will be profitable between $75 and $85 with the maximum possible loss at about $300 in each account if the stock settles right at $80. 

If you read my entry on RIMM from mid-week, recall I am also long 1 $85-90 call spread with a maximum $200 loss at $300 profit. 

RIMM is looking pretty breakout-ish.  I'm already long some stock and 80 calls.  Earning are out next Thursday and the stock has been working its way back towards last years breakdown price at $120 and the all-time high of $150.

This week I funded my OptionsExpress account which had been sitting idle since last years bludgeoning. So today bought 1 lot of the 85-90 call spread for $2.  On a move to $90 I make $300 or a 150% profit.  On a close below 85, I loose $200.0.   How's that for loss control?

Also - check out the shot of the live streaming chart on the left side courtesy of https://www.freestockcharts.com.  I just found out today that the Worden's are behind FreeStockCharts, although they have been pretty secretive about it up to now.   They probably didn't want to canniblize their TeleChart business.  What an awesome tool, totally free. 

AAPL / RFYFP  - Long 100 in each account as well as 2 June 100 calls.  Stock continues to move up amid the developers conference coming up next week.  Also, got a high-profile analyst upgrade last week.  

Need to be careful with my APPL calls, because I got burned back in Feb when I let a good solid profit slip away due to simple lack of exit plan.   I'm going to put in a limit order to sell one of the 2 at 50 and let the other one ride.

AIG - Moving sideways, nothing much going on technically.  Slowly selling off assets to try and pay back the government.

C - CNBC is calling Citi a "Zombie Bank".  Its starting to look like a Zombie investment as well as the daily range bands are about to go negative and the price bumps up against the top tthe declining weekly range band.

FAS - Similar pattern to AIG and C, nothing much happening.  Perhaps financials have had their run.

HMSY - I'm up on this position after a recent entry at 34.90.  IBD 100 quick recap says "Still reaching for possible buy point in cup with high handle.  Sticking with it for now.

MYGN - Seems to have found some resistance at 38 after a nice run up from the low.  Getting ready to spin off 1 share of Myriad Pharmeceuticals for each share held.  Record date 6/17 pay date 6/30.

MYRG - This stock had quite a run and i'm up nicely on this IBD-100 pick.  On June 6th Deutsche securities started coverage with a buy rating and a price target of $27.

NEOG - Stock cleared recent resistance at 24 on news from 6/2 that NEOG is parterning with the Chinese government.   The Scotland-based office of NEOG will develop food and animal safety tests that will be replicate across 30 sites in China.  This is an awesome development for this small-cap animal and food safety play.

RIMM / RFYFP - Now long 100 shares in each account plus a June 80 call.  In the money nicely on the stock and coming into the money on the calls.

SXCI - This position is working out well and is firing on all cylinders and i'm up nicely.

TNA - Up nicely on this small position.

USO - Oil rally continues, expecting a seasonal high at the end July.

YUM - Based on my own family's experience, the Kentucky Grilled Chicken is a hit.  My wife would never allow the fried variety into the house due the sky-high carb content and its corresponding impact on my daughter's diabetes.   The grilled variety is essentially carb-free and the kids love it. 

Overall 45% stocks and 55% cash and equivalents.  Mr Market continued to rally and I was pulled in on a number of breaks and add-to situations.  Overall, I feel i'm hitting my stride and I enjoy this type of market since its breakouts galore!

Starting with my last post, I bought 100 shares of MYRG in each account early Monday at about 19.55.  It quickly moved up and I picked up another 100 in each account at 20 even.  Next up was my old friend Apple computer which broke out decisively on Tuesday and I bought 100 shares in each account on at 140.50.    Also on Tuesday, RIMM started to breakout and recall from last week's post that I was long 200 shares in each account just under 80.  On Tuesday, RIMM got above 83 and I reconsidered by short 80 call.  So I bought back the short 80 call and turned around and bought 1 RIMM June 80 call (RFYFP) in each account just under 7.0.  That did it for Tuesday.

Wednesday's weakness challenged some of my confidence, so I sold 100 shares of RIMM in each account at about 80 and took a small profit on half of my long stock position.   I also sold 100 shares of MYGN in each account and took a small profit on that position as well.

On Thursday, AAPL broke out decisively and I wanted to add more stock but I was nearly out of cash due to a large CD position that I had added earlier in the year.   So I levered up and instead bought 2 AAPL June 100 calls at 43.50 in each account.  So instead of laying out $28,000 in each account for 200 shares,  i'm now long nearly the equivalent of 200 shares in each account for about $8700.  Smart or dumb?   We'll see!

On Friday, we broke out across the board and all of my recent buys worked out well.  Also, many of my existing positions had good moves which i'll review in my Positions Review post.

Cheers and enjoy.

AIG - Stock is above rising 50-day PMA, but below 200 day declining PMA.  No news this week.

C - Similar situation as AIG in terms of of the technicals. Recent resistance is at $4.5 and the stock seems to be stuck in the recent range.

FAS - Financials seem to be cooling recently as attention starts to focus on other areas of the market. FAS seems to have found support at its 50 day PMA and is slowly rising.   Bear in mind FAS was in the 25 range at the beginning of this year, so considerable upside remains.

HMSY - New position this week, HMS had a nice orderly pullback from a recent high.  Already covered in my Weekly Update entry.

MYGN - Added to this position this week, looking for higher prices ahead.

NEOG - Coverage initiated with a buy recommendation this past week at Sidoti.  Never heard of these guys.

QCOM - Stock has recovered nicely from a recent selloff where it found support right at the intersection of the 50 day PMA (red) and 200-day (cyan) PMA.

RIMM - Now long 200 shares and short 1 June 80 call.   This stock could easily sell off sharply so back to 75.  Watch the price action, it will be telling.

SXCI - This stock finally had the breakout i've been looking for an i'm up nicely.  As IBD put it this weekend: "At a two-year high after clearing short cup-with-handle base."   Sticking with it.

TNA - Bought this for some general market exposure at $27.60.  It quickly sold off but has since recovered.   This stock was at 35 at the start of this year so considerable upside remains.

USO - Almost back in the money on my orginal entry, and up nicely on my second entry at $29.20.  Expect further upside action through the end of July which is typically the seasonal high.

YUM - Sunday night is Taco Bell night at my house.  Go YUM. Go Taco Bell!   Enjoy your weekend.

Overall 33% stocks and 67% cash and equivalents.  Stocks position up 10% this week due to new long entries.  Mister Market continued to push to the upside this week and I had no choice but to follow the money.

First up is HMS Systems (HMSY) which was highlighted in last Monday's Investor's Business Daily "Stocks in the News" column.  I know this stock from years past and its a great health-care cost-containment play.  It recently broke out to a new all-time high at $38, then pulled back.  Note that the stock is above a rising 50-day (red) and 200-day(cyan) PMA. No news this past week. I bought 100 shares in each account at about $34.90.

Next up is my old friend RIMM - Research in Motion.  The stock has been on a major tear lately, and I picked up 100 shares in each account at about 79.50 on Wednesday.  Owing to the major possibility that I top-ticked this trade, I sold 1 June 80 call in each account for $4.50.  On a close above $80, this trade will rake in $500 per account in a few weeks time.

Next up is MYGN.  Stock is quietly builing a base after a recent earnings related sell-off. On Friday it pierced the flat 200-day moving average on above average volume.  In fact, volume was the highest since earnings bombshell back on 5/5.  There was no news this week, but I noticed that call volume in the June 35 and 40 calls has been steady with risking open interest.  Someone is clearly accumlating this stock in expectation of higher prices ahead. Going into Friday, I was long 400-shares, 200 from my initial entry pre-split at 41, and another 200 shares at $34.50.  I added another 100 shares at $35.90 to make it an even 500 shares.  I expect MYGN is headed back to the $40 level.

Sure enough, RIMM broke out on Friday and got as high as 80.97 before pulling back.  I picked up another 100 in each account at about $79.50 on the way down.

Overall 83% cash and equivalents, 17% stocks.  Mr market continued to power higher, mostly without me on board.  This has been a frustrating to those of us who have kept high levels of cash.  I didn't take any new positions this past week mostly due to demands from other areas of my life - okay my regular job.

Weekly range bands have now been positive for SPY for 4 weeks running.  From the moving average perspective, SPY is now above its rising 50-day MA, but still below a falling 200-day MA.  I prefer the range bands over the moving average because the have much less lag. For example, the range bands shown to the left look back only 12-bars.  From a trading perspective, its too late to enter here for the SPY since the lower range band is too far away.

On the breakout watch, RIMM finally broke above resistance at $70.  RIMM is now above both its 50 and 200-day moving average and this week got an analyst upgrade with a price target of $90.  There's no resistance here until the bottom of the gap at $80.  From a trading perspective, the June 70-80 call spread looks good with a cost of $4.35 (max loss) versus a max gain of $5.65.  A lower cost alternative is the May 70-75 call spread with a cost of $2.50 with a max gain of $2.50.

On the performance side, my 2 accounts have now slipped below the S&P for the year as of Friday.  As I mentioned above, keeping my career from blowing up has been taking a front seat to my market activities.

Overall 21% stocks, 79% cash and equivalents.  Stocks position down slightly from past week due to some long side liquidation.  Overall, I was up about 0.6% for the week versus a similar move in S&P based on Thursday’s numbers.  That aside, everything I did this week turned out badly.

Noticing a breakout in RIMM on the weekly chart, and weekly range bands,  I bought 2 lots of RIMM in the taxable account and 1 in the retirement account at about 64.80 on Monday.   RIMM of course petered out after I bought and went sideways down from there.  I sold 1 lot at 63.5 a day later for a $130 loss.

I attended Dr Alex Elder’s Webinar advice Tuesday evening where he was bearish on RIMM.  RIMM started to look toppy, so I shorted 100 RIMM at 63.75 and sold my other long at 63.38.  I also closed my other lot in the retirement account at 63.40.  At this point I’m short 1 lot of RIMM and I’m feeling good as RIMM is starting to turn down after its big run.  Next downside target is $60 and i’m already counting my future profits.

On Thursday, RIMM opened strong and started to rally and I ended up covering my RIMM short on Thursday at 65.5 for a 1.75 loss.  So on RIMM alone, I lost about 4.2 on the long side and 1.5 on the short side.  These weren’t large losses, but at one point, I was up over $100 on each of these positions and let them run to losses.

FAS started to look toppy in the middle of the week. I had a good profit from a long entry at 5.75 so I sold 2 of my 5 lots in each account at about 8.60 on Tuesday.  By Wednesday, these had dropped to the high 7.0’s, so I felt good.  At the same time, I bought 1 lot of FAZ in each account at about 10.25.  These ran up to about 11.8 on Wednesday and I was up nicely.  Well FAS rallied back and FAZ dropped and I ended up closing my 1 lot of FAS in each account on Thursday at about 9.15 for a $110 loss in each account. 

So the bottom line was I lost about $850 across the 2 accounts based on these trades before commissions. 

Finally, I sold my AAPL April 115 calls at 3.30 on Wednesday at the low of the week. I made a small profit on these, but only a fraction of what I could have closed them out for later in the week. 

In retrospect,  I was in the right positions and in the right direction, but I didn't have clear entry/exit parameters and the account suffered as a result.  Also, i'm in the mindset to take small losses, and let profits run.  Its just that I took the losses but didn't let the profits run in some cases.  In the bright side, I didn’t do much damage to my accounts and I still have some good positions open.

My regular corporate job was incredibly demanding this week along with some last minute scrambling to get tax return in also took away from market time.  I know I could have pulled some money out this option expiration, but it wasn't mean to be.

For the year. I am down about -2% versus -4% on the SP-500 based on Thursday numbers. 

I’m doing positions in reverse alphabetical order so I don’t have to lead off with that 3 letter insurance fiasco that begins with A and ends with G.

QAADC – Up nicely on these Apple April 115 calls. No real resistance until we get to the bottom of the gap at 120.

YUM – Long 2 lots on the taxable side and 1 on retirement account picked this up in the mid 28’s so I’m doing okay.

USO – Still looking constructive and I’m staying long

SXCI – Was a big winner this week and finally starting to pay off.

SSO – Already covered from above.  Position exit is problematic of this rally doesn’t hold

QCOM Already covered in weekly update.

NEOG – Chart looking constructive after some recent sloppy action

MYGN – Consolidating its recent gains. Chart starting to look toppy.  Sticking with it for now.

FAS – Had some surprising strength later in the week.  Hears to fine guys and gals over at the FASB for relaxing those accounting rules.  God Bless America.

C – Working its way out of a hole and looking constructive.

AIG – Probably will expire worthless.  Should have bought RIMM instead.

Overall 21% stocks and 79% cash and equivalents. Stocks position up 3% due to some breakout buys. It was a good week with breakouts plentiful. I favor the long side and tend to do better in a risking market which this week certainly was.

After having most of my QCOM get called away at 35, I missed most of the move to 39 On Wednesday late morning, I was impressed the way the stock came up against the top, moved down and very quickly back up both in time and price. So I picked up another 1 lot in the retirement and 2 lots in the taxable account at about 39.60. Stock gapped up and closed the week at 41.25 so that worked out.  This is a great company with solid fundamentals

The market had every reason to sell off after Tuesday's end of quarter window dressing. And sell-off it did, but it didn't last the morning. Instead, we had a decisive change in character and the path of least resistance turned up. I picked up 2 lots of SSO in each account after reading and concurring with Dr Cthuu’s related post.  Got filled on Wednesday at 20.60. That worked out well and SSO gapped up the next day and closed the week at 22.12

On Thursday, I having re-read the good Dr Cthruu’s post on AAPL back on 3/31, I realized we had a bull market in AAPL in the making. I bought 1 AAPL April 115 call in each account and paid about 2.75 in the taxable account and 2.95 in the retirement account.  By week’s end AAPL was up about 4 points and the calls closed the week at 4.30 so that worked out as well. I’m trying hard to resist the urge to take a small profit and let the winners run.

Still down about -3.5% for the year versus -7.5% in the S&P based on Thursday's numbers.

ETFC – Stock was a low as 0.88 during the day.  With my cost at $1.30, i'm loosing faith in this position and may pull the plug on a close below 0.80. 

 LLL – Stock is dangerously close to crossing the lower range band to the downside and ending the bullish move that started on 12/5/08.   Considering a collar, buy stock, sell call, buy put.  More research required.

NEOG – No news, well in the money long term

QCOM – Wait for a rally to sell March Calls.  Holding up pretty well relatively speaking but may get taken down.

SPY – This position is problematic in i'm long about 3 lots with cost in mid 80's.  With all that was going on this week, I missed the opportunity to sell the breakdown (pink bar 4 back).  Clearly headed down to retest the low with probably much lower prices ahead.  More research required.

SXCI – Holding up relatively well, pharmacy benefits plan.

USO – Finally caught a bid on Thursday, but its going to take a lot of patience to get back to my cost basis at 36.5.

YUM – Holding up pretty well, will sell March 30 calls on any type of rally. Also close to range bands breakdown.  Watch carefully.

Overall 30% stocks, 70% cash and equivalents.  Stocks position down 11% since last week since I got shaken out of a lot of my longs.  It was a good week trading, not because I made money, but because I acted decisively to preserve capital.

I noticed last weekend that RIMM crossed the range bands to the downside, so I knew I was in for more pain.   On Tuesday, RIMM quickly broke down.  So I covered my Feb  50 short calls for 0.30, having been paid 3.00, this was a 2.70 profit.   Sold the stock I bought for 47.15 for 46.38 for a loss of 70 cents.  So I made +2.0 points in each account with this position and was the only profitable leg in the whole RIMM fiasco.

Next, I covered the Feb 55 calls.  Having been paid, 2.5, I covered for 0.05 for a gain of 2.45.  But I got crushed in the stock, having paid 52.5, sold at 45.40, lost 7.1 points on that.  So I closed this leg of the trade at -4.65.   

In retrospect, I think my mistake here was trying to do a covered call position in such a strongly trending stock.  Sticking with straight directional trading with would make more sense while leaving the covered call strategy with less volatile stocks like YUM and QCOM.

Washed out of CVC at 13.00, having paid 17.12, this was a -4.12 point loss.  I didn't really have a good exit plan for this trade and the results reflected that.

Sold ISYS – Plan was to exit on a close below 10.5 which I got on 2/17.  Extra slippage kicked in on the selloff and got out about 10.1.  Having paid 12.45, this was loss of -2.35.

Sold GHM – Plan was to sell on a close below 9.  More slippage kicked in and I didn’t get the sell off until about 8.40.  Having paid 11.45, this was a loss of -3.05.  Hard to believe this stock was over $100 less than a year ago.   

So all of the above results in a big -21.42 loss. At one point, I was up on all of the above positions.  But they all moved down after I sold them (most notably RIMM), so I did the right thing taking these positions off.

Option expiration was the bright side of the week, and I bagged these profits:

-       QCOM Feb 35 Call expired worthless - +1.20 gain

-       MYGN Feb 75 Call Assigned, Stock called away at $75 for  +4.70 gain

-       LLL Feb 80 Call expired worthless - +3.2 gain

-       YUM Feb 30 Call expired worthless - +2.7 gain

All that adds up to +11.8 which minimizes some of the loss from above. 

 

CVC – In the house of pain here having with stock at 13.90 having paid 17.12.  They offered to buy back some debt which gave the stock a lift on Friday.  Close to pulling the plug on this position.

ETFC – Nothing new this week, cost $1.3

GHM – Last weeks range band crossover was a false signal and we may have to say goodbye on a loss below 9, cost 11.50.

ISYS –Paid 12.45 will exit on a close below 10.50.

LLL – Bounced off the lower range band on Friday.  Once it becomes clear I won’t be called on Feb 80's, will sell March calls on the other half of position.

MYGN - Stock still looking good, will get called for a profit next Friday.

NEOG – No news, well in the money long term

QCOM – In the money on all around , may get called against short 35 calls.

RIMM – Still long 1 lot at 47 against short 50 call and 2 lots at 52 against 55 calls.  Trying to hang in there until Feb expiration, then roll short calls over to March.

SPY – Waiting for that rally to 90 to sell March calls and 100 to sell April calls.  Had an opportunity to sell those calls earlier this week, but overestimated the upside.

SXCI – Long 2 lots in each account now, cost 19. and 20.50, slightly in the money

USO – In the house of pain on this having paid 36.5 early this year.  I'm down 11 points on this position and still with it.  Clearly a case of loss avoidance.

YUM – Love those crunchy beef tacos, cost basis just under 29.

Identical positions in both taxable and 401K rollover accounts:

Overall 41% stocks, 59% cash and equivalents.  Stocks position down 5% due to RIMM fiasco.

I was a bruising week.  Monday picked up 2 more lots if RIMM in each account at about 60.  The breakout didn’t occur as expected, so I sold 2 RIMM March 60 calls against the position on Tuesday for $4 even.

Wednesday RIMM pre-announced bad earnings and the stock gapped down showing as low as 50 in the pre-open.  At this point, I am long 6 lots in each account with a 10-point loss so I’m looking at a $12,000 gap down at the open.  Fortunately, I’m short calls against 5 of those lots and only naked on 1 in each account. This is a healthy reminder that there’s always event risk, even when no earnings are due.

RIMM opened, briefly tested 50 and moved down.  The worst case scenario at this point is that the stock will get back down to 40 and the entire bullish case would be unwound. First, I sold the naked 100 picked up for 59.20 at 48.8 for a loss of 10.40.  In the retirement account, sold the other 100 cost 59 for 48.53 for a loss of 10.5

Next I covered the 2 short March 60 calls at .73 cents.  Having got paid 4, this was a 6.3 point gain for each account.   Finally sold the other 200 that I paid 59.90 for 47.90 for a 23.6 point loss.  In the retirement account, sold the other 200 paid 59.90 for 47.80 for a 23.4 point loss.

So I’m looking at losses of -27.60 in taxable account and -27.30 in the 401k rollover account on this position.  How’s that for a bad day?

This will likely wipe out my profits for Feb option expiration and put me down for the year.  So I went from up about 3% to down 2% for the year in one nasty day. 

Putting things in perspective, the S&P 500 is down 8% for the year and I’m down 2%.   Also, loss in the taxable account is slightly overstated since it doesn’t include the E*Trade bank account where the bulk of the spare cash is parked.

Plus I have some winning trades on the board for Feb option expiration due next week which should reduce the loss somewhat.  Barring any new blow-ups, we should have a better report next week.

No new positions this week other than a sizable CD purchase on the retirement side. It yields 3.3% FDIC insured and comes due on 6/30/2009.

Finally, I would like to thank Wordens for hosting this blog and including my blog in a customer e-mail.  I’ve been a customer for over 20 years and you guys rock!  Keep up the good work!

My breakout antennae are twitching overtime on RIMM.  Once it clears 60, 65 and 70 are easy targets, particularly since we are close to Feb option expiration.

I picked up another 2 lots in each account just south of 60.

CVC – Hopefully finding a bottom here.  In the hole almost 2 points having paid 17.12., but I’m sticking with it.

ETFC – Looks like they are not going to get TARP funding, but I don’t care.  At my cost of 1.3, it’s basically a call option with minimal downside.

GHM – Decent rally showing a positive crossover of the upper range band.  Having paid 11.45 it’s a wash now minus commissions.

ISYS – Earnings out, need to review, paid 12.45

LLL – Company came out and raised the dividend this week!   In the money on both stock and short calls

NEOG – No news, well in the money long term

QCOM – Up channel remains intact.  Cost about 34.5, may get called on my short 35 calls  Add to at 34 and under.

RIMM – Added some more just below 60.  Could go much, much higher watch this and add to as it moves higher.  Already long stock and short calls, stock will be called.

SPY – Waiting for that rally to 92 to sell March calls and 100 to sell April calls.

SXCI – Added to this week, already  covered

USO – Nearly sold this on Friday, but it held the low.  Way down on this having paid 36.5 but I’m sticking with it.

YUM – Love those Chicken Quesadillas, cost basis under 35.

Identical positions in both taxable and 401K rollover accounts:

I didn’t do much for new positions this week since waiting for February options expiration and  for my short calls to come in.

SXCI broke out as expected, and I added one lot in each account at 20.5 on Thursday.  No options on this stock so I’m a straight buy and holder.

On Friday, RIMM broke out to a recent high.  Tired of this stock going up without me onboard, I bought 1 lot in the taxable account at 59.20 and another in the 401K rollover account at 59 even.  Resisting the urge to sell calls this time because I think we are going to see higher levels ahead.  That said, I would welcome a pullback since i'm short both Feb 50 and Feb 55 calls against stock bought below the strike.

I got my hands on a Blackberry Bold this week, and while not as cool as the iPhone, its freaking awesome and unlike the iPhone, its welcome in corporate America.

Overall 46% stocks, 54% cash and equivalents.  Stocks position up 2% since last week due to new positions in SXCI and RIMM.    

MYGN was the big winner on the week.  Earnings came in Tuesday better than expected and the stock rallied big and was up over 10 points.  Bought the stock last Thursday at 74.3 and sold the Feb 75 call for 4, so the most I could make on this position was 4.7 points. Nothing left to do here but wait for option expiration.

Finally, we got a good rally in the S&P’s. Since holding the recent lows, the SPY is bouncing off the bottom of a channel. Price-time pattern indicates we should see 92 in the March timeframe and 100 in the April timeframe.   Synopsis:  wait for a rally then sell March 92 calls and sell 100 calls in April.  I’m already long 3 lots of SPY in each account for an average price of 85.  May add longs next week if market remains positive.

Enjoy the weekend.

CVC – Chart action is looking sloppy and I missed the chance to sell some calls.  That aside, I am a customer and while they have a lot of debt, they are a solid company so I’m sticking with it.

ETFC – Record Daily Average Revenue Trades (DARTs) of 216,000, up 18% quarter over quarter.  Plus they added 97,000 accounts and now have over 4.5 million accounts.  There’s a profitable company trying to fight its way out from under the bad mortgage debt.  Look for another baby TV commercial on Super Sunday.

GHM – Earning are out and looking good.  Stock repurchase program added.  They sell to petrochemical industry so oil related.

ISYS – Closed below lower range band.  Earning due Monday, let’s hope for a pop or we will have to say so long.

LLL – Earnings were rock solid and don’t seem to be affected much by the economic downturn.  They did guide down for 2009, but the govt seems to have a lot of money to spend on C3-ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance).  Seems capped at 80 so short call should come in.

NEOG – Had a nice pop this week.  The peanut salmonella scare this week highlighted food safety.  May add some more

QCOM – Already covered below.

RIMM – Rally is getting tired, but I’m short calls all around so I’m content to wait it out.

SPY – Waiting for a rally to sell calls

SXCI – Nice upside breakout on Friday, next stop in the lower 20’s!

USO – Hard to see oil going much lower here so I’m going to let it ride. Looking for opportunities to add to energy positions this week

YUM – Already covered, love that Taco Bell

CVC – Stock is pulling back and close to support at the lower trendline and lower range band.   If this stock pull back much more, I may have to pull the plug.

ETFC – Earnings coming up Tuesday after the close.  Soft stop below 80 cents, still love the retail assets

GHM – Range bands went negative, but seems to be holding support at 9.  Earnings are coming up this Friday before the open.

ISYS – Close to lower range band like the company so I’m sticking with it

LLL – Still holding 2 lots and short 1 Feb 80 call.  Earnings due this Thursday before the open

NEOG – Animal and food safety.  Chart action sloppy but I’m a long term holder

QCOM – Missed my chance to reload on Tuesday when the stock briefly pulled back to 44. Look to reload anywhere below 44.5.

RIMM – Next stop is the 55 strike.  I’m now short calls in all my RIMM, so I’m letting it ride

SPY – Waiting for a rally to sell calls

SXCI – All the news is out and hopefully we will hold support right here at 17 bucks.

USO – This position has had my biting my nails all week.  It held the recent low at 27.7 so I’m sticking with it.  Important to realize that oil usually bottoms right about this time of year and peaks in July-August, so seasonality is in our favor.

YUM – Love that Taco Bell

LLLBP – Short LLL Feb 80 against ½ position

RFYBL – Short RIMM Feb 50 call against whole position

RFYBJ – Short RIMM Feb 55 call against whole position

YUMBF – Short YUM Feb 30 call against 1/2 position

Price action Tuesday was abysmal and I nearly went off the deep end and sold everything.  I did sell my position in ETN just above 46.50.  Like I said last week, I didn’t have a lot of conviction in this position.  Did not honor my stop of 46.90, but close enough.  I lost about 2 points on this position, so I got off easy.   

Wednesday I sold YUM 30 calls in each account for 1.5 against stock costing about 28.8 pulling in some of what I lost on ETN.  Wednesday was a nice rebound, but didn’t quite make back what was lost on Tuesday indicating a lower highs situation

Friday rolled around and picked up some more RIMM.  I intended to put 1 lot in each account but mistakenly bought 2 lots in my taxable account.  Taking this as a sign my subconscious knew better, I went ahead and bought 2 lots in my retirement account as well.  So now I’m long 4 lots at about 52.60.

RIMM quickly pulled back to the high 51’s inducing a slight panic, but I held on and it later rallied as high as 53.80 later that day.  By end of day, it pulled back to my entry price so I went ahead and sold 4 February 55 calls at 2.5 each.  If stock closes above 55, this will yield 3.8 points per lot or 15.2 points by Feb expiration

Since my shared chart doesn’t contain the range bands, and in response to some feedback, below is code for range bands.   Follow these steps:

- Right-click on an empty area of a chart and select Create New, Indicator Block Diagram. 

 - Call it EaUpperBand and click Ok

-   Drag the input for "Numeric Plot” to an empty part of the diagram and select Create Code Block

-     Select Bar and Int to Line and click Ok

- Name the block EaUpperBandCode and click Ok

 - Paste the contents of the code below between Public Overrides and End Sub

 - Before saving the block paste the separate functions called HighestHigh() and LowestLow() into the code block after End Sub but before End Class.

- Click Ok to save the code block.

CVC – Chart still bullish since range bands issue a buy signal back on 12/5/2008

ETFC – Terrible week for the financials, but I’m still a believer in ETFC as well as a customer

ETN – Covered this above already

GHM – Range bands went negative, and I’m in the hole 2 points, but not ready to throw in the towel yet.  This was a IBD 100 stock with good fundamentals.  Earning due out Jan 30.

ISYS – Chart still positive, fundamentals good.  Defense sector is one of the few industries that has not gotten crushed by the economic meltdown. 

LLL – Another defense industry player already covered above

NEOG – Animal safety play.  Stock has been very volatile lately but it’s a long-term winner and I’m sticking with hit.

QCOM – Love this company long term.  Half my position got called away, if stock gets back to 34, I will reload and sell the 35 call.

RIMM – Already covered below

SPY – Holding onto at close to cost.  Will sell 90 calls on a rally back up

SXCI – Health Care cost reduction play, similar to HMSY.   This an IBD 100 stocks, and Analysts raised targets.  Looking for a move into the 20’s.

USO – I’m deep in the hole on this position having paid 36.50 not long ago. Range bands flashed a sell on Thursday, and I should be out of this position already.  Oil’s not going zero, but I could easily see USO going lower.

YUM – Long term favorite, love Taco Bell.  Selling the 30 calls great since the stock closed at 29.90.  Will look to sell some new calls on any type of rally.

Stay defensive and trade well.

RIMM - I picked up another lot of RIMM in each account at about 47.20.  I was short the 45 calls, and in Thursday’s selloff, it quickly got back down to 45 and I had brief hopes by 45 calls might go out worthless.  But that was short lived and the stock bounced hard off 45 and moved quickly up.  I grabbed 1 lot and quickly wrote the Feb 50 call at 3.00.   Stock closed up 2 points so selling the call was premature.

A lot of times just before option expiration the stock moves quickly between strikes and we certainly saw that here between the 45 and 50 strikes.   Volume in the 55 and 60 strikes in the Feb contracts indicate we are looking for further upside action.

ETN – Bought 1 lot in each account at about 48.5.  This trade wasn’t particularly well thought out.  Earnings are coming out on January 26^th, so there’s some event risk.  I was planning to let it rally then sell some 50 calls.  I have to keep a close eye on this and either dump out on a close below the low of the entry bar ($46.90) or put on a short call position.

LLL – When I’m short calls, and the stock runs away, and I’m going to get called, I buy more stock and sell more calls.  That’s what I did here and as LLL moved higher, and bought 1 lot (100 shares) at about 78.95 and quickly sold the Feb 90 call at 3.10 and 3.20.  If all goes well, this position should pull in 4 points profit in each account by Feb 21 expiry.

LLL has earnings coming out on Jan 29, so we have some event risk.  The chart has been all bullish since a positive turn on the range bands back on 12/8.  A negative earnings picture could cause a sharp reversal.   Beware, stop loss below 75.

So between RIMM 5.7 and LLL 4.0, that’s almost 10 points of potential profit on the board for Feb.

The plan is to look for an Obama rally this week, then sell more calls.  Looking SPY to make its way back to 90.0, then I’ll sell Feb 90 calls.

Overall 40% stocks, 60% cash.  

It’s been a bruising week for the market and hopes for a smooth and uncomplicated 2009 have quickly been dashed.

First for the bad news, I got stopped out of my CSX position on Thursday at about $29.60.  Having paid $36.45 for it last week, this was a 6.85 point loss in just a few days time.  Ouch!  I sold it because:

1)    Broke the lower range band.  See my other posting on range bands

2)    Broke support at $30

So while I took my lumps on that position, I find it’s better to take a small or moderate amount of pain now rather than a lot of pain later.

On the bright side, January option expiration was a winner!

LLL -  Bought stock for 73.5, got called away at 75 plus 1.5 points option premium equals 3.0 points profit.  Still holding half of original LLL position with a nice profit.

QCOM – Bought stock at 34.5, got called away at 35, plus 1.4 points option premium equals 1.9 points profit.  Still holding half of original QCOM position and showing a profit.

RIMM – Was my big winner, bought 2 lots at 41.75, called away at 45, plus 2 points option premium X 2 equals 7.5 points profit!

SPY – Bought stock at 89.34, call expired worthless so I kept the entire 2.5 point premium

YUM – On the retirement side of the account, I sold 2 YUM January 30 calls against 2 lots I bought at about 28.95.  The option expired so I kept the 3 points option premium.

So overall, on the taxable side of the account, I pulled in just over 8 points realized profit in my taxable account and 11 points in the retirement account which is close to my goal of 10 points realized gain per option expiration.  For one lot, that would be about $1000 per month option premium income per account.

Range Bands are my favorite trend-following indicator.  Here’s how they are calculated:

Take as input a number of bars lookback, default is 12

Calculate the midpoint over the time period by taking the lowest low, and add it to the highest high minus the lowest low divided by 2:

MidPoint = LowestLow() + ((HighestHigh() – LowestLow()) / 2)

Calculate the upper band by adding to the midpoint 1.06 times the Average True Range over the lookback period:

UpperBand = MidPoint + (ATR(12) * 1.06)

Calculate the lower band by subtracting from the midpoint 1.06 times the Average True Range over the lookback period:

UpperBand = MidPoint - (ATR(12) * 1.06)

The good thing about range bands is they never miss a big move.  The bad thing is that they can chop you around sometimes when the tradable is moving sideways or is range bound.  It’s best to use range bands as an entry point to confirm some other bullish thesis or to confirm a suspected breakout.

For an example, take a look at the attached chart of RIMM.

Note the way the range bands took you out back in September before the floor fell out on this stock.  Also, note how it got you back in on the long side in the low 40's back in late Dec 2008.

I shared this chart using the share Chart feature of Blocks, so you should be able to load range bands on your favorite charts.

If you have trouble loading the range bands from the shared chart, let me know and i'll post the blocks code here in the blog.

I look at range bands in multiple time frames from 13-minute on intra-day charts to daily and weekly charts, but mostly daily charts.

Like any other indicator, range bands are not a panacea.  Extensive back-testing with Backscanner show its not a profitable system on all charts and time frames.  But if you show me a winning chart (APPL, RIMM, GOOG), and apply the range bands, you will get profitable signals that keep you in for the big winners and get you out before the bottom falls out.

Keep in mind that range bands are trend-following indicators, and trend following is not easy.  Obviously, don't take every signal, but use your judgement and other criteria you might apply to a trade.

When entering on a breakout buy, the sell signal comes when the bar closes below the lower range band.  Sometimes that can be many points away and well beyond your tolerance for a loss.  An alternate method for stops is to exit the position if the stock closes below the low of the entry bar (or high of the entry bar for short positions).  This alternate stop method will result in more stops being hit than if you use the lower band, but losses will be much lower.  Using this method, you may run out of conviction long before you run out of money, so tread carefully and be selective in your entries.

Enjoy your weekend and trade well.