I'm short on PSA. It looks to be losing ground nicely. In AVB still even though yesterday made me nervous, which I got over. The emotion thing doesn't ever seem to get easy.

Looks like a clean break on FOSL to the topside also. Anyone looking at that one?

Give me an S...

Give me a P...

Give me an S...

Give me another S...

What does that spell???

thanks Jeff, hope I'm not too late.

Man, bottom_feeder... not sure if that's your child, but the pic is freakin' me out man! :)

Chip,

I too got burnt on tight mechanical stops. Now, as a rule of thumb, I don’t keep stops on OTM options because a real volatile day could bump me, and has. If I’m ATM or ITM, I usually set my stop at 50% of the option value for catastrophic failure. Sometimes I tighten the stops on my profitable trades as I get close to earnings.

If I’m away from my computer for a day, I will tighten my ATM or ITM options stops if they are near earnings or a significant event and I plan to exit the trade before. I don’t want a big down day to waste any profits if there are very few days before the event to make up the downturn. I have used trailing stops in place of the tightened stops.

If I’m away from my computer for more than a day, I will place a trailing stop at the ATR plus a half or two depending on whether the position is in a ST retracement or not..

I hope this helps a little.

Brett, you take addict to a new level, maybe junkie. I love it and you are giving me and a lot of others an incredible drive to succeed!

I'm with you on the picture Brandon!

Brandon

ROFLMAO, no thats not my child. ;)

MikeH

I didn't think it was... good thing. lol. It's still creaping me out a bit though. hahaha

What happens to VIP calls when it pays the dividend?

Anyone

David S

Anyone else care to join me on an EQIX bearish play? i think it's a LONG way down.

Also, there's your bear flag on CME for all those who wussed out in the $530's.

Is that a head and shoulders on NYX if right it calls for 14 points

June puts 75 maybe?

what do you think?

David S

Short Squeeze on IIG ??

Brett, what do you make of this sell off coming into earnings? Even the IV seems to be letting me down a little.

I'm committed to holding over earnings on this one with the right position size, just trying to figure out what's going to happen on Monday.

Gary

David S- Your options will be adjusted to reflect the dividend, not to worry.

Basstrader- No cup and handle here yet, but look at CSCO or SHLD on 5 year charts to get a feel for what they should look like.

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Just remember folks,

IIG was our idea of a potential short squeeze on the last earnings announcement since we had some insight that earnings would be explosive, yet the stock tanked. Just because there is a lot of short interest, doesn't mean there are enough bulls to squeeze them out. Please be careful as I am doubtful that anyone has any insight as to what the earnings will look like this quarter. Hell, Mark Cuban is short this stock at $5 along with other players. It's going to take a serious act to squeeze any of them out.

Gary, I'm confused too, but it's still holding the triangle apex. Remember (I will never forget) CMG looked weak heading into earnings too.

I'm sad to see that late buying come into CME. Guess it will be monday or tuesday before the bottom falls out.

CNS...TOTY. Hear that Jeff?

Brett,

Be sure to say hi to Warren this weekend and if you want to go to Borsheim's to spend some of your profits, you'll have to go today!

Watch out for all of those stock holders running around the Old Market!

I used to live in Omaha.

Thanks for everything this week!

Brett,
All those acronyms had me confused... "CNS...TOTY"

I told Catherine we had to call 911 because Brett said he "Can Not Sneeze... " and we all know what happens when you hold in sneezes.... we "Take Off To the Yunivers"

I've heard of explosive earnings before, but this could be worthy of a Youtube report.

Jeff,
I have been reading Market Wizards. I am also reading Retire Young Retire Rich by Robert Kiyosaki. Have you read Rich Dad Poor Dad? That is how we came to be stock investors is by going to a Rich Dad seminar.

Randall and Michelle

Randall and Michelle,

Yeah, I've read the Rich Dad books also. They are great reads and a life changer for many. Really helps people to look at their finances in a different light than most are taught.

Now on to reading Retire Young Retire Rich. lol. I've also read the one with him and Donald Trump - Why we want you to be rich... I think that's the title. It's a decent read also.

Brandon,
Thanks. I will have to try that one next. I still have three more Market Wizard books to read first, then I'll go out to Amazon for that one.
Besides trading, my husband and I are thinking about some rental properties too. Tired of the rat race.

Randall and Michelle

Brandon,
Thanks. I will have to try that one next. I still have three more Market Wizard books to read first, then I'll go out to Amazon for that one.
Besides trading, my husband and I are thinking about some rental properties too. Tired of the rat race.

Randall and Michelle

Brandon,
Thanks. I will have to try that one next. I still have three more Market Wizard books to read first, then I'll go out to Amazon for that one.
Besides trading, my husband and I are thinking about some rental properties too. Tired of the rat race.

Randall and Michelle

Many thanks to David S, John Logan and Chris (and Catherine),

David S: Unfortunately I don’t have an Internet capable handheld, although that is a great idea. Since I won’t have access towards the end of the trading session, I will have to make choices each night as so many others must do. I agree, in many cases with OTM options, I am willing to risk the whole thing, although not all of my current options are in that position. I may be able to take a little time at lunch, although I’m not sure that will help all that much, unless to adjust the orders from the night before.

John Logan: I think I’ll set some tight stops on my profitable trades and the others, I’ll keep loose or let ‘em ride. Maybe I’ll try a trailing stop or two… Otherwise, I’ll just have to hope that at least some of the trades don’t mature or tank too much while I’m out. I feel like with all of the up days we’ve had that we are due for a ‘nice correction’ and without having any countermeasures in-place could be catastrophic, so yes, I understand having something in for “catastrophic failure”…yikes!

Chris (and Catherine): You’re right, this stuff moves very quickly and one can get emotional if not careful…believe me I know! I can’t cash out of all of my positions, although if I know well enough ahead of time, that sounds like a very practical idea. So I guess I’ll be “frettin’ about my options”, sounds like a title for Jeff’s options segments on the Marketcast.

Now as far as the “Mechanical Bulls”…I can’t say much about those, but I have ridden real ones, actually rode several rodeo events, never managed to get on those tin cans, I always thought they were more dangerous than the real thing! I’ll buy the first round and we can swap bull ridin’ stories!

For those of you who don’t have the luxury or patience to watch your stocks during the sessions, maybe the suggestions by David S, John Logan and Chris (and Catherine) can help you too. They’ve given me some ideas, I’ll just have to see how well I can implement them.

Thanks to all for your suggestions!!!

DE has been in a sideways channel since Feb. It is right there @ resistance.....watch for it to either breakout or retrace back down to support ($10 channel)
Earnings is on May 16th, it could be the boost needed to bust this out.

Brett,

Above you stated:

"Anyone else care to join me on an EQIX bearish play? i think it's a LONG way down."

What do you see here? This still looks like an uptrending stock to me. Are you basing your perspective on the bear flag alone?

Historically this stock has done the same thing several times only to continue its uptrend.

Please enlighten me as to what you see, many thanks!

Chip,

You are correct, it is a long-term uptrending stock.

Intermediate-term it is a sideways-trending stock.

However, I see the stock 3 times ramming its head on $90 and the volume is very strong on the down moves. If you're playing the bear flag alone, your target is that $79 price area. A $4 price move, but not too exciting on an $83 stock. Not the greatest risk/reward either, since your exit is likely the $85 area.

I see a bigger picture at play. I think that $79 level gets tested for sure, and i also think it gets broken. I could choose to wait for confirmation of that level getting broken, or I can play the confirmed short-term flag pattern here, which I did do. The biggest key for me breaking with conservative reasoning is the volume. I see an awful lot of selling at these levels, and the stock just looks toppy to me.

This may cut against what we are taught, but I think there's a potential for a big gain here. It's a long-term bearish play, and that will give me plenty of time when the market does eventually correct itself. If the stock recovers and heads higher, i'm out with a very small loss.

Again, I don't look at support levels as brick walls. I see them as those wooden street horses that can be knocked over.

This strategy may not work for many people, but i'm comfortable with it.

Chip,

Let me take a stab at this one. I would say the three to four attempts to penetrate $90 as an ascending triangle over the past few months broke downward with increased volume forming a lower low.

That sounds good in my head. What say you Brett?

Oh, thank you for making me look like I already read your post before I posteed mine Brett.

I was keeping peace in the house with the wife out of town and missed the opportunity.

The scary thing here is I think I'm beginning to think like Brett in certain instances.

If it does penetrate the $79 level, the next support level could be $75. If you buy the June $80 put risking the entire amount, it will be worth $5 at expiration while risking $2.20ish which isn’t a bad return on your money. If it hits $75 sooner while there is still some time value, it could be nicer. If it hits $79 within two weeks the gain could be 50%.

Hmmm….

I’m thinking of beer at 10 AM while the kids are driving me nuts!

On EQIX the hammer on 5-1 shows a bunch of buying volume at that level. It has been above $80 since mid JAN. I agree with Brett...it looks toppy but the entire market has looked toppy before and then went on to new highs. Just be careful shorting this one now.

Joe

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Sorry, i had to edit that last post.

Joe,

I'll see your hammer on 5/1 and raise you a big bearish engulfing candle at resistance yesterday.

i have a really interesting investing idea for everyone. Jeff, you will really like this one as a price pattern guy.

Check out PFE on a 5 year chart. See the huge inverse head and shoulders with the downward-sloping neckline? It broke out July 2006 at around $25, fortelling a $32 price target in a year and a half (12/07). After the breakout, the stock formed a triangle and broke out recently at $26.50 or so.

Here's where it gets really interesting. The head and shoulders predicts a 12/07 arrival date of our $32 price target. The triangle predicts a 10/07 arrival date of its target. What is the target on the triangle? $32!

With the stock trading at $27 now, and TWO patterns predicting a $32 price target in the next 5-7 months, that's almost a 20% return in half a year. For an investor, that's a pretty good return on a blue chip stock.

My wife owns this stock, and i have no interest in trading it. I just use this pattern to illustrate how amazing price patterns can be and how to develop target prices and time frames.

Now, i'm going to go back to playing tee ball with my son.

thanks tim for your help on the photo upload.

John L (Fellow Oregonian),
You asked about Live Interactive 3 day vs Online Interactive class. I am currently in the Active Investor Options Online Training. I have to say I think it's great; learning alot with Mike Follet & Tyler Thomas as instructors. The advantages to me are you have a very small class size so lots of personal attention to your trades and questions and 8 weeks to digest the information, vs a blitz of info in three days. Each week is a 3 hour instructional session on 1 or 2 strategies, followed by a 1 1/2 hour open office session where you bring your homework (trades) based on the strategies you learned about that week. You also have the recorded sessions to review throughout the 8 week course and for a few weeks after the class ends. This helps to further solidify my understanding of the material. So, I'd highly recommend the online interactive classes. Disadvantages: no face to face interactions and need to be available during day hours for class times for personal interaction (or you'd just be reviewing recorded sessions without personal review/feedback on learnings, although that may work too) however; you also save on travel and lodging expenses. Hope this helps in your decision making.
Loretta

Good evening option addicts. I'm a first time post. I've been reading for months now, faithfully for the past 3-4 weeks. Just want to say thanks to Jeff and all the other Option Addicts for keeping this blog going. I've researched lots of your great ideas, learned a lot and even made some $$$ on some really great plays - TEX, IIG - making $$$ that is what we're here for right. Anyway, I ran across FLR this evening looking for some trades for next week. I'm seeing an ascending triangle with a possible move to 102-103, likely in the next 4-6 weeks. Maybe if it pulls back some on Monday to get in after it's nice move on Friday. Just thought it was time to hopefully contribute. Let me know your thoughts.........
Misty

One thing to note on FLR - just noticed that earnings is on Monday.

Misty

What the Press Release Won't Say by Neil A. Martin

Summary: iMergent (AMEX: IIG - News) CEO Donald L. Danks has told select investors that FQ3 earnings will be about $0.60/share -- more than 50% higher than the $0.39-0.41 estimate of the one analyst who follows the company, and that revenue will be around $50 million vs. $26 million. Confronted about the lack of fair disclosure, Danks denied having spoken with any outsiders, despite Barron's having heard a tape recording of an alleged conversation. Analyst Michael E. Shonstrom advised a client in an Apr. 24 email that his previous FQ3 estimates were 'conservative' based on discussions with management, yet failed to disclose his change of heart in an Apr. 30 research note. In February Shonstrum and Danks appeared on CNBC deriding shorts for ganging up on the stock. Shorts were 60% of the 12.4 million share float as of March 15, and have since suffered $50 million in paper losses. Illinois is suing iMergent to stop it from selling its e-commerce software in the state, alleging it misled workshop participants about the ease of its software and availability of tech support (it runs over 1,000 seminars a year and charges about $5,000 plus monthly fees for those who sign up); the company calls the charges 'unwarranted.' Florida is pursuing an 'active investigation' of the company, investigations are underway in Oregon and Maryland, and it has already been taken to court in at least four other states. This week Utah wants to designate iMergent a "business opportunity" provider, which would force all kinds of disclosure; Danks says he will fight the designation. Investor Mark Cuban says "it's not a question of if it collapses, but when," though he's no longer short the stock. The company reports Monday.


So let me get this straight: Mark Cuban is convinced the company's going to collapse, but he decided to close out his entire short position anyway. Perhaps he needed the cash to pay off news reporters in Dallas from skewering their basketball team's embarassing 1st round exit.

I can't wait until tomorrow morning.

Brett (and John Logan),

Thanks for your explanation of how you are perceiving EQIX.

Since it's bounced several times up against ~$90. What's to say it won't do that another time or more and trade sideways for a while or potentially break up?

Have you seen patterns like this with the high down-side volume before to typically be confirmed?

How do you set your stop to get out if it goes up: very tight, somewhat loose or Goldilocks "just right"?

You may be right that the pending market correction will probably take this down with it...just don't know how long that will be.

This particular trade looks too risky for me. I've taken risks before, although this one doesn't have me convinced it's headed down just yet and not worth the potential up-side risk.

I like your 'vision', which is a great thing to learn, so Thanks for sharing that and your time looking at these with 'us'!

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I am a college graduate but can't figure out why picture shows up but my name does not on the reader community option addict side...
I did go to U of Miami great school but I did spend a lot of time at the U bar (doing homework of course)
Can anybody help?

David S

OK....I am not a risk taker....and I hate to admit this...but I figure a one-contract OTM Call on IIG can't hurt. At least it might be fun to watch and I might make a few dollars. If not....I won't lose much. Don't tell my wife...

Chuck
Orlando, FL

For those of you who hold AH, looks like you are due for another gift today, wish I was one of them:

May 7 (Bloomberg) -- Shares of Armor Holdings Inc., the largest maker of Humvee military vehicles, rose in Europe after the Wall Street Journal reported BAE Systems Plc is in advanced talks to buy the U.S. company for $3.5 billion.

Ride it baby!

Jeff,

Does this mean today is the day to sell AH?

Looks like a shorts party for IIG today. Getting crushed in the premarket.

Interesting...the earnings call isn't until after the close. Looks like the guidance will have to wait.

Morning Brett,

Yes, I just pulled up IIG myself. I will be curious to see what the volume is like today.

I guess I'm going for broke though on this one. Perhaps my biggest gamble of earnings seaons, but what the heck!

Since I don't drink White Moca's, I can live on the edge a little.

What's your stance?

Gary

I'll be keeping an eye on IIG today.
Looks like MT is finally breaking out, good pe-open.

Glenn

I wouldn't say i'm going for broke on this one. i bought a smaller position and it's otm, so unless the stock totally implodes, if it doesn't work out, i can still salvage some time value. i was prepared to lose the whole thing.

i'm not totally convinced that this story is over for the day. the stock is creeping back up and if they guide up later, it could really take off. Don't forget, there's only 1 analyst covering the stock that i'm aware of. the door is open for new analysts to initiate coverage on it.

Good Morning Guys,
I was wondering where you are getting your earnings reports, at the time they are released? I've been reading about earnings on CNBC.com , but I noticed that the website doesn't always list all the reports.
Thanks
Jeff

Jeff,

I use Yahoo finance it's usually reliable for earning reports, but there ae several other websites out there.

Glenn

CRS and BBd could be good plays

David S

Time for the WMWW (White Mocha Weekly Watchlist):

Bullish:

CNS
SF
SPSS
STR

Bearish:

EQIX
CME
RYAAY
AMR

Obviously I reserve the right to add to this list.

Good morning, everyone. I'm back in Oklahoma City now after a trip to the west coast. Thanks to all of you Californians for your hospitality. I enjoyed my time in Pasadena and Los Angeles.

By the way, I really do enjoy the 6:30 - 1 market hours. That would be a great help to my schedule, but alas, here I am back to the market being open right in the middle of the day.

Finally, just wanted to say that since last Tuesday when I poured my heart out in therapy on this blog, the following four days have been the best trading days of my (very short) career. Prior to that point, I was having some of my most difficult days.

So, what's the lesson here -- if you're ever struggling, simply pour out your pain to this blogging community and you will be guaranteed instant success. Well, something like that ... thanks everyone.

Jeff: AKS just broke out of a flag pattern, but it seems that it is do far away from its trend line. I just want to see how you would rationalize on this trade. Could you make a comment

I welcome everybody's comment

David S

David,

first of all, it hasn't broken out of anything yet. Volume for the day (while strong early) isn't even average yet. So i'd wait before calling this a breakout.

Next, what trendline? Who says it's not forming a new, steeper trend? Trade bounces or trade breakouts. Sometimes they mix and sometimes they don't.

Brett: thanks for the response.

I do see a flag on this one 32.25 to 31.75.

I guess I will wait until the end of the day to see how volume materializes, I do know that a 5% move on this stock is unusual.

I also like BEAV for a continuation of its trend

Also NYX for a bear play. I will like more if it breaks 80

If you are looking for a potential bear play take a look at akam (Jeff's Pick) it is sitting right at resistance and a break above that could spell exit.If it bounces 40 is the next leg down.

Yeah, good pick on AKAM Jeff. lol!

Check out the flag on ALK
BOL is testing again makes for a good entry point. How about VDSI nice.

Brett,

I don't get it.

You guys watching SPSS today? What a move and it's already almost double its average volume.

ESRX getting ready to bust loose...and just below the century mark too.

Anyone holding IIG and hoping for an advance on earnings hsould read this: http://biz.yahoo.com/seekingalpha/070506/34599_id.html?.v=1

Everyone-

Please be careful with this IIG trade. Manage your risk appropriately.

JK