Here’s an excerpt from my newsletter:
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Market Update Feb 25, 2015
S&P made a new high today but then settled back down to almost put in a DOJI on the charts. Breath was positive at 330. Tomorrow morning we have CPI, Core CPI, and unemployment claims. All of these could set the tone for tomorrow.
Call Writing Updates Feb 25, 2015
TRIP– Stock is still consolidating here above the 200MA and the 50% retracement. Love these setups. Looking for it to release to the upside.
AMGN – This is repeat from yesterday because nothing has changed.
Its hanging in there, as it is testing the 50MA. I need this one to get above 160 by Friday to lock in $2.35 for the week.
Now I want to go back a few days and talk about a stock I high-lighted, but did not get in.
On Feb 7th:
LNG after getting a big move back on Jan 16, the stock has been pulling back, it’s consolidating and is still above all of its’ moving averages. The stock reports earnings on Feb 20 (always double check and please do not hold the stock through the earnings date). I would look for the stock to breakout before entering, and then you can write weekly calls on it.
On Feb 11th:
LNG finally broke out of its’ consolidation pattern. I missed this one, so I do not have a position in this one. This needs to get above $75.67 and then I would look to write the 77 calls that expire next week on 2/20.
So just because I missed it doesn’t mean you have to.
The stock did get above $75.67 but it was on a Thursday, so you would had to write the 77 calls for the following week. They would have expire worthless.
The stock reported earnings on 2/20 and I personally would not have held it over. I would have had to buy back the options and sell out the stock, probably making a few bucks, very few. Of course hind sight is 20/20 and if you held you are laughing your ass off. Look here LNG
The point I want to make is that to be a successful trader you should not follow another trader. You never know what circumstances may arise and what action they may take. And by the time you find out it’s too late. Everybody should read Pit Bull by Martin Schwartz, he tells a great story about this.
The reason I am telling you this, is that I hope you are learning something from the newsletter. My goal is point out what I see and try to explain it and why I take the trade. But it is up to you make your own decision on wether you should or should not put the trade on and when to exit.
I have tried other services and I have made this mistake a few times. Always looking for an easy way to make money. But once I started to become a student, that’s when I started to earn on a constant basis.
I will leave below the stocks I am watching for this week for your reviewing pleasure.
New Candidate For Week Of 2/23/15
AMGN is trading above three of its moving averages and is testing the 50MA. I ran a fibonacci from the highs to the recent lows and the 50% retracement would be resistance at 160.28. So, the game plan is to wait to see if it can get above the 50MA. Get long just above it and then write the weekly 160 calls. Or if the stock is too expensive for your pocket book, then you can always buy in the money weekly calls (150 calls) and then sell the weekly 160 calls. If you know how to put on spreads, then just buy the 150/160 call spread. Just remember that if the stock is above 160 by the end of the week, the spread can not be worth no more than $10 even if the stock goes to $200. So you want to buy the spread for less then $10. I think you can get in around $7.35 debit.
I have a few other candidates but for now they are on my watch list.
FB – needs to pull back and consolidate.
FDX – looks like it might want to bounce, needs to clear the 180 level.
LULU – I like this one again, but needs to pull back a little.
NSC – forming a small double top and it has the 78% retracement for resistance. The options on this one are not so great, but if you are looking for a swing trade you might want to look at it.
PSX – I have played this one before, love the stock. Needs to get above the 200MA. The option premiums are not so great, so you might have to go out 2 weeks.
TRIP – Currently sitting at its 50% retracement. I would love to see this one consolidate here and rest before it makes a move higher (if it moves higher).
If you are not following me on Twitter, I urge you to start, because I try to twit out (when I remember) what I am doing. You will then know when I have initiated a trade.
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