Hot Pick Of The Day

[New-born baby]

Its all good!

Spike,
Its all good! If there isn't enough humility to accept correction, then the proud one cannot learn! I want to learn! Surely your comments are worth a lot more than silence!

About your post, didn't you mean to say you could profit SELLING puts as the stock rises, and lose a chunk of change if it pulls back and you have to buy the security?

[New-born baby]

Forever Descending

Spike and Newborn,

It looks like I read a chart right for a change. If only we could develop chart reading skills like Spike, then we all would be millionaires. Thanks for the clarification, Spike.

See chart below (from earlier in this thread).

Let's measure this triangle. And here's the words of Bulkowski:

To calculate the minimum price objective, calculate the "height" of the formation at its widest part - the "base" of the triangle. The height is equally determined by projecting a vertical line from the first point of contact with the trendline on the left of the chart to the next point of contact with the opposite trendline. In other words, measure from the highest high point on one trendline to the lowest low point on the opposite trendline. Both these points will be located on the far left of the formation. Next, locate the "apex" of the triangle (the point where the trendlines converge). Take the result of the measurement of the height of the triangle and add it to the price marked by the apex of the triangle if an upside breakout occurs and subtract it from the apex price if the triangle experiences a downside breakout.


Spike, are you calling for a $55 target?

[skiracer]

NBB,
Wasn't the question in regard to whether or not the chart was projecting a descending triangle and nothing to do with a targetted price. Bulkowski also states that 45% of descending triangle chart patterns fail and never end up fulfilling the breakout to the downside. He continues to state that the failure rate drops to 4% if one waits for the downside breakout to happen which I interpret as meaning for it to reach the apex or the converging point of the horizontal bottom line and the descending top trendline. But as we all know nothing about any of this is absolutely definite. The 45% failure rate in my estimation makes forecasting any prediction of a specific target price to the downside a gamble.
He goes on to say that the average decline is around 19% but that the most likely decline would be in the 10/20% range. Premature breakouts, to the downside or before reaching the apex, occur 22% of the time.

[spikefader]

Spike,
Its all good! If there isn't enough humility to accept correction, then the proud one cannot learn! I want to learn! Surely your comments are worth a lot more than silence!

About your post, didn't you mean to say you could profit SELLING puts as the stock rises, and lose a chunk of change if it pulls back and you have to buy the security?

OK, cool. Great attitude dude.

And no, I actually MEANT TO SAY that you can, in the right circumstances, profit from BUYING puts and still win when the stock prices RISES. I.e. averaging into a position using sneaky limit orders during moments of strength when demand for puts is less and supply is more. The reason is the emotional influence of supply demand during big fluctuations in stock price. Because of emotional panic buying/selling one can profit from that even though it's against logic! I mean ya think price has to drop to make money with puts right?! Well, here is a close example to what I mean....

Don't know if you recall, but I posted my GOOG puts trade back in late 2004 that demonstrates this phenomena to a degree.

I'd bought $120 strike GOOG puts at $0.95 when stock price was $175 and then added more at $0.70 when stock price had risen to $180. So the average put position was $0.825. The average of the stock price was $177. The chart down the bottom of this post shows the price action during that time. You can see it was very volatile, had a gap up strength and then 8 days after the gap up, she sold hard and fast from 200 to 170 in the space of 3 days. When it hit the 177 price (remember, that's the average on my way into the puts) the puts had doubled to $1.65. A full 100% profit in the space of 11 days, where the stock price had simply returned to the average it was for my put purchases. Now that my friend is what I'm talking about. It defies logic at first glance, which is why you questioned what I meant. But when you think about it, it makes perfect sense. Fear during those hard selling days opened up some real bearish sentiment and fear of a possible island reversal on the daily. There were some serious bidders wanting those puts. Not only did people want to own those options but the sellers wanted out. That bidding up and hitting the ask did the thing that will happen until the end of stock market time; resistance broke and price ran up - squeezed. I benefited from that squeeze; in the face of whatever the real value of the stock was. Now that gentlemen is true market action. Fear and greed combining to cause serious price fluctuations. So careful with options NB; they can bite hard

Here are the posts for the trade:
first position: http://www.mrmarketishuge.com/showpo...postcount=1234
added here:

http://www.mrmarketishuge.com/showpost.php?p=8372&postcount=1236

and the resulting double value of the puts while price was dropping like a knife posted here: http://www.mrmarketishuge.com/showpo...postcount=1352




So moral to the story: Options are NUTS. And you can profit from them big time despite the average price at exit being the same as average price at entry. It's all about supply/demand of those options and how bad people want out, and how much they are bid up and asked down. So this is something to be considered, especially with stocks like BMHC that are low volume (relatively) and experience high stock volatility.

Good luck dude.

[spikefader]

KBH:
Spike, are you calling for a $55 target?

I interpret that descending triangle target to be $55, yes. That's assuming it IS a valid descending triangle and the pattern doesn't fail. So yes, that's the target of that pattern, but no, I'm not necessarily calling for that target based on that pattern alone. BUT: I AM bearish on KBH with channel work, channel short from the top and turn down from 69.12. So my bias is bearish until 77.92 gets taken out. With that pattern, if it breaks down below 69.12 I'd be calling for 55.00

[New-born baby]

Kbh

I interpret that descending triangle target to be $55, yes. That's assuming it IS a valid descending triangle and the pattern doesn't fail. So yes, that's the target of that pattern, but no, I'm not necessarily calling for that target based on that pattern alone. BUT: I AM bearish on KBH with channel work, channel short from the top and turn down from 69.12. So my bias is bearish until 77.92 gets taken out. With that pattern, if it breaks down below 69.12 I'd be calling for 55.00

Would you agree that KBH may very well bounce up to $77.92 based on the double bottom pattern formed the last three weeks or so?

[spikefader]

Would you agree that KBH may very well bounce up to $77.92 based on the double bottom pattern formed the last three weeks or so?

Sure. KBH may very well do that, and do the exact opposite of what I see in it (and yep, I do see price clearly is bouncing off price support areas too) and that's OK, because if I end up trading it I'll make sure that long or short I'll have a good r/r and it will be worth trading. Right now, I see bearish bias and looking short side is the edge as I see it. But where would an entry short be? Well I don't see one today, but if it pops to 77.00 to the channel short area, and gives a nice SHS or double top to enter, then the risk is 1.2% to target new lows. OR if it falls under the price support, breaks the triangle, returns to that resistance, gives a good SHS or double top intraday, then bang, there's your entry. Risk a stop above the descending line and make the r/r good. Stop out or get your target and move on.

All we can each do is set our plan, make the r/r on the trade acceptable, and make sure the setup is statistically good enough that in the end you make money. Anything else is unacceptable and we strive on, searching for a 'system' that we like. And we're all different. What I do is silly in the minds of some; searching for the perfect entry and risking very often sub 2% on a trade. It's only silly until I nail a huge % profit monster that I almost had in VPHM (currently +113% from my entry if I'd held it and it was good to me lol).

[Runner]

NB, how about ARRS?

[Runner]

A few others SNDK SIRF NFLX KG FLSH MU CX CHKP

If any look worth investigating let me know. I’m trying to narrow down my list from 110 to 20-30.

[tokyojoeskid]

sndk

Bought jan 06 calls for 2.55 about two weeks ago, currently up 64%, gotta love options!

[Runner]

A few others SNDK SIRF NFLX KG FLSH MU CX CHKP

If any look worth investigating let me know. I’m trying to narrow down my list from 110 to 20-30.

Hey NB, time is running out did any of these few picks pass the test???
I understand if you have been doing a lot of homework for the huge competition though.

[New-born baby]

Busy Day at Church

Hey NB, time is running out did any of these few picks pass the test???
I understand if you have been doing a lot of homework for the huge competition though.

Runner,
Busy day at church. I'll look right now (9:15 pm CST). Hang on.

[Runner]

Thanx NB, May the FORCE BE WITH YOU!!!

[New-born baby]

Sndk

Weekly chart notes:
SNDK--all-time high, lots of up volume power this past week, STO shows her running. The question: where to buy? The 10 day has been support all the way up the steep bull line.

SIRF:incredible rocket! Where to enter?

NFLX:may offer best return for the money. Making right side of cup right now.
Moves up on one day, moves sideways for a day or two, and then up again.I like that. I could buy this one on Monday.

KG:love the daily. I definately would buy this one on Monday: STO screams 'buy me.' Nice support at current price levels. Money flow into stock despite downturn. I like it.

FLSH:looks like she's good for another $5. Friday's pop on huge volume says that their is a lot of interest in this one.

MU:excellent buy I'd think. Powerfully gap up.

CX:fresh off of a double bottom, and that on an uptrend. I'd buy this one Monday for sure.

CHKP:double top breakout on daily; inverted s~h~s breakout on the weekly. How could you go wrong????

Summary: all the stocks look good. The best?? Well, CX is probably the one that I think has the most gas left in the tank, but it is really hard to say. CHKP is going to be a winner, too. and KG. In fact, all of them look great!
Thank you for posting.

[Runner]

http://www.mrmarketishuge.com/showpost.php?p=27959&postcount=906

KG is looking pretty good.

Awesome job NB. Thank you for your time!!