Wednesday, November 14, 2012

Wednesday evening

by Peter Lik

Another of my favorite landscape photographers.  He prints these really big and they are gorgeous.  This is likely Fuji Velvia slide film, which is also my favorite color film.

Checklist redux


A handy checklist for evaluating a potential trade with links to previous posts.

Trend
On your primary (or higher) timeframe - is the trend up, down, or sideways ?  (the technical term for a sideways trend is “junk”, lol)  It is much easier to trade with the trend than against it.


Void
Is there a relatively empty area on the chart (i.e. lacking in nearby support or resistance) for price to move into ?  Price moves easier when it has clear areas to travel through.


Entry
What is the entry signal ?  For instance, trading outside of the previous bar, or perhaps hitting an obvious support or resistance level.


Stop
Where is the natural stop-loss point ?  For instance, the prior pivot low or high.  If the stop is too wide, the trade should be avoided.


Target
How far is the stock likely to go if it moves in the trade direction ?  This would generally be the next support or resistance level.  If the ratio of target size to stop size is too small, the trade might not be worth taking.


Market internals
Things like A/D ratio, $TICK, up/down volume, $VIX.  In a very strong market, shorts have lower odds of paying off.  In a very weak market, longs have low odds.

Wednesday Morning

Gator's Chart of the Day: FXI
China is finishing up the transfer of power they do every 10 years.  It's not the public spectacle with mud slinging, name calling, truth abuse and character assassination we are treated to every 4 years.  Despite the alleged copper bubble it appears China's economy is cooking at a slow boil with GDP growth well over 7% in the 3rd quarter and inflation reported at 1.7% in October.  The US of A should be so healthy ...

Tuesday I was watching for a bounce from the horizontal support line and it appeared a little bit after 10AM and it held for the next half hour and then started climbing.  That's when I took a bite on some Dec36 calls.  Now what?

The Trade
Now that I've taken the initial position I'm watching for the stock to make a move.  If it's up I'll add but if it falls below the rising 50 day sma I'll be kickin' those calls to the curb.  My high level plan is to hold the calls (adding twice) for about a week and if the etf moves up near its October high I will have more than a triple and the delta will have moved high enough I'll want to roll out and up.  (Maybe just up.)