Monday Dec 3 Evening

 

It was that kind of day in the market.  Certainly the symbol of the day for our beloved leaders.

Monday Afternoon

MLNX Daily Chart (11:15AM)

MLNX - The spreads on options are ridiculous ... but ... I tossed out a 1.90 offer for Dec75 calls and it was gobbled up immediately.  I think this morning's low will hold as the 200 day is just below there and the red support line has held so far.  This company has highly desirable products and is a takeover candidate.  At least that's my opinion.  With a PEG ratio of 0.44 I think others have a similar view. 

Monday Morning - Here comes the sun ...

Gator's Chart of the Day: FSLR

I've been trading FSLR since 11/21 when the stock price showed some life while the 200 day sma slipped below the 20 day.  It was a good trade that I took profits on when the stock cooled after breaking above 25.50 and reaching 27.75.  I sold the last piece on Friday as the price moved back inside the Bollinger bands.  While the bands did not meet Fitz' 6% rule for a volatility squeeze they were tighter than they had been since the big move up in August.  With the re-election of President Obama I am looking for this profitable solar energy company to be favored.

The chart is now in the bullish configuration of price above the 20 day which is above the 50 day which is above the 200 day sma.  I learned to trade this volatility setup in phases.  Phase 1 is the break out from the squeeze (complete) and Phase 2 is the pullback to test the breakout (in progress now.)  It is difficult to see but the last 2 red candles showed decreasing volume and that's a good thing.  Phase 3 is the move higher if the test is successful.  That's where I want to re-enter the trade.  Assuming the stock bounces I'll look to buy 1/3 of my target position and if the stock price climbs with good volume I'll quickly fill the rest and put my stop just below the bounce level established in Phase 2.  I think the price could move back up to 50.