Don't Get Caught in the Moment It Can Cripple You: Don't be a Pig

Yesterday late afternoon I started stalking Apple, ticker AAPL, for a short options combination trade. The chart above shows a string of tighter range days unable to break above 265 over the last 2 weeks, and today's move down. I was looking at 1x2 Put spread. Here I was looking to buy August 240 puts and sell both a August 230 and a 220 put for each one bought. The trade would put me net long AAPL at 210 if the stock were to close August 20 below 220. I am willing to own Apple at 210, but was betting that the combination would rise multiples if the stock started to fall and I would most likely sell it before expiry. The market for this combination was 4c bid and 6c offered just minutes before the close. I stuck to my bid and did not trade.



As I write this the stock is down $5.80 at 253.40 and the spread I was unwilling to pay 6c for yesterday is now showing a 41c/46c market. It could have been a 680% return in less than one hour of market exposure......if I was not a PIG.

Moral of the story, get caught up in the moment, fight for every penny, but remember the broad context of your trading premise. Like the lottery you've got to be in it to win it!

Top 10 Ideas For the Week of June 21, 2010

Reviewed over 500 charts and posted over 150 this weekend. It was an interesting quadruple witching week. Gold is just flying, no questions about it, and the dollar appears to need some more time to consolidate. Oil and the equity indices all seem to be in ranges and need to be watched carefully. When they break the range they will move and you need to be ready. With that backdrop here are some ideas for the week in no particular order.

1. Apple, ticker AAPL


Broke out of a symmetrical triangle and made a new high. Price target is now 300.

2. Rambus Inc, ticker RMBS


Bear flag after a big drop, bodes for another drop. Target is 15.

3. ProShares Ultra Short 20+ Treasury, ticker TBT


Descending triangle completing, watching 37.50 for a break out. A break lower would have a target of 30ish.

4. American International Group, ticker AIG


This stock has historically traded off of Resistance/Support. If it breaks 38 expect a run to 43.82 - 44.82 and beyond that then 54.20/55.90. Above 55.90 there is clear air. Support is at the 200/100SMA.

5. Intercontinental Exchange, ticker ICE


Trying to break out of ascending triangle formed by SMAs and 122.50, target on break out and hold of 130 is 160.

6. Mastercard, ticker MA


215 is a crucial level to watch and can play either way. A break and hold higher sees 227 - 230. Failure sees support at 195 below.

7. Delcath Systems, ticker DCTH


A break below 8.75, leads to 6.93 next and further support then at 6. Make sure it sticks below 8.75 to play.

8. Cliffs Natural Resources, ticker CLF


Rejected at the 100SMA with the 50SMA driving down. Looks to test 200SMA again.

9. Lululemon Athletica, ticker LULU


Strong move higher. 50 is the next resistance and through there can try 60. Support at 44 below and then 39.81.

10. Shanda Interactive Entertainment, ticker SNDA


Descending triangle with support at 38.20. Volume declining, doesn't look good. Support below is at 33.70 - 34.00 area the 30.83. Resistance at the 50/100 SMA convergence at the downtrend line near 43.15 and 200SMA above that.



Bonus Idea: Sears Holding Corporation, ticker SHLD
Daily Chart


Under 76.80 now will see resistance at 70 below.

Trade'm well this week.