Tuesday, September 4, 2012

Tomorrow is key...

S&P Futures Hourly
The bulls stepped up at 1395 again today... and if you ignore the holiday close from yesterday, today was the 3rd close in a row under the 20day WMA (1406ish). It wasn't by much, but I still think it counts. Tomorrow should finally give us a heads up to whether a shift in control is under way. If the bulls step up and follow the recent pattern, we will see a solid close above 1406ish and the rally is most likely back on towards 1425ish. If the bears keep a lid on it and close below, I'll be looking for a move down to 1375. Either way, it will be nice to get away from the recent range.

Edit: I can't shake this image from my brain when looking at that hourly chart:


One Ringy Dingy ... Two Ringy Dingies ... T

T Daily Chart (11:40AM)
I still don't own it but I still think it's at a great buy point.  Dividend is 4.8% and it is sitting on the trend line printing a green candle on an ugly day.  Selling covered calls on this one has been a solid conservative strategy and still looks good.

Which Way Will it Go? Watch and Listen.

Gator's Chart of the Day: NUAN
Nuance Communications Inc is rumored to provide the recognition system behind Apple's Siri.  While this is high profile it is a very small part of NUAN's business.  Every product they offer is based on their speach recognition capability.  It is integrated with other applications to automate a wide variety of medical data input and voice to text services. 

The company reported earnings before market on 8/7.  The stock gapped up and then sold off for the rest of the day and closed down nearly 3%.  Since then it has completed a "W" pattern and kissed the 200 day simple moving average from beneath.  This average has proven to be stiff resistance.  If the stock can trade through and close above it $30 becomes a likely target.

The Trades
Depending on your opinion of the market and the company's products there are two trade opportunities ... something for everyone.  The 200 day sma is the key to both trades.

The Long Trade:  When the stock trades above the 200 day sma take a small position (1/4-1/3 of your desired full size) and put your stop around 23.85 (below 24.)  If the stock is still above the 200 going into the close and volume is strong then consider adding.  If not then wait for a close above the 200 day before buying anymore stock.  I would want to have a full position when the stock clears 24.75 and expect resistance around 26.50-27.  Once 27 is cleared 30 is the logical target.

The Short Trade:  If the stock fails to clear the 200 day on the next attempt short it (or buy puts) and put your buy stop just above the 200 day.  As long as the 200 continues lower hold the position.  Expect support at the 50 day but the stock could retrace down to 20 (or a little below) as it tests the double bottom.