Tech Train Wreck
Tuesday, January 8, 2008 at 08:30AM I am wondering if this early morning buying will keep the NASDAQ from adding to its 7 consecutive day losing streak. Said streak totaled an 8% loss. If we do see a rally here, it will likely take us to re-test prior lows, which will give you a great entry point to getting short or buying puts.
If you are already short (as I am) this rally doesn't scare me. What scares me is not buying a few dips in the uptrends here to balance my inventory. Such as...
JASO- I keep wondering about all the cautionary remarks about buying solar stocks here. Because I respect the opinion of no one, I am buying twice as much; simply to drive up the price for everyone else.
PBR- Money in the bank.
A lot of price patterns confirmed yesterday. Today will be a day for these stocks to re-test old support levels. Take DRYS for example. A good clean break of support yesterday, and the stock is right back to that same price level, but holding it as resistance. If you missed it yesterday, you might take down some puts, or sell a vertical call spread here. That stock packs some serious volatility for you option sellers.
For those of you that have put your typical OA poker face back on the shelf, and are sporting your new "deer in headlights" look...start getting defensive. Have you seen MO today? Apparently plenty of people agree with me. A few others to look at...BUD, LLY, JNJ and PG. Don't try to be a cowboy and buy up tech stocks, and buy options on high bete stocks. If you are having trouble in this tape, tone it down a notch and play some defense. You gotta admit, playing it safe looks like a decent alternative right now.
In closing I will apologize for yesterdays disappearing act. I'll be monitoring and contributing more regularly today.
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Reader Comments (29)
Sorry for the continual repost but I really want to get this answered.
This question pertains to all triangles. Where are the measuring points when one part of the triangle starts significantly further (horizontally) than the other?
For example OMG, my upward trendline starts at 44 on 11/9, my resistance line is at 60.59 starting on 12/7
When measuring this pattern would I have a target of 16 points over 2 months (extend the resistance line left to 11/9) or 10 points over 1 month (measure of hight of triangle on 12/7)?
Anyone playing MOS ahead of earnings tomorrow? It's taking a nice dive now.
My triangle on OMG takes place over the last month.
The one you are drawing takes up a huge percent of the stock price...which I normally try to discount.
As I always say, keep it real...istic.
Brett,
It is great to hear from you. I have looked at what you have done and have been inspired by your success. I may not have stayed in the game as long as I have without your example. Thanks and good luck.
I am just tinkering around now myself since November I have been on a losing streak. My real colors came out so I am regrouping, studying harder and plan to just be on the fringes until I get something that really works well, which is not my current trading plan. My one advantage (never thought that it was an advantage) is that I still have a job (2 actually) so I can make mistakes in the market and be fine. Who knows, I may just have to piddle around until the next real bull market. Like so many, I hope to be able to trade full time someday.....And if not that, it is at least how I will someday be able to retire, hopefully in another 12 years, hence the moniker...
Jim
Jeff,
Thanks!
Jeff,
How concerned are you that the Fed will swoop down to the market's rescue and stop you out of your puts?
Thanks for the insight Jeff.
Jan expiration is in 8 trading days and the FED is scheduled to meet almost two weeks later. To step in now would be a huge admission of being behind the curve and I don't think they'll do that unless there's a meltdown. But, that's just me....
in a recession it is always good to own cigarette, beer and drug companies, as jeff said above - and soft drinks.
Brett,
Glad to see you are still here. I had a tough whole year in 2007, so I'm trading small positions and being a lot more cautious.
Happy New Year, All.
Jeff, Great watch list.
Traded some POT and then saw it on your list.
Let's make some money in 2008.
Jeff, was there no Marketcast recorded yesterday? The last one playing is the one from Friday...
jym,
I would use the 12/19 distance as more conservative.
Anyone watching GENZ, I just bought some calls on the breakout.
GENZ- Hell yes! Awesome news for this company!
Jeff, Due to high IV on DRYS I am considering a synthetic (sell 70 calls and buy 70 puts). I am looking at resistance being approx 69.90 and would exit the trade at the end of the day if the stock goes above 69.90. Can you let me know if the trade and exit make sense.
Thanks.
Hi Folks,
Everyone knows that Financial companies are in big mess. However, I was looking at the ETFC share as a long term investment. DO you think buying ETFC for long term (few years)investment at this stage is a stupid idea?
Jeff,
What is your bull/bear ratio now?
Anyone going to play the nice gap on ISRG? Should be a good ride depending on earnings.
Jim
Benton, thanks. Brett thanks again for your honest open posts. I have been trading very very small but profitable (but just profitable). My account is basically still near its all time lows and I just have too many other distractions right now so need a week or two of continuing very small trading and then I will hit it full force again. Raimo, I too always appreciate your consistent message.
And Jeff as always THANKS for ALL you do. IT is on me to renew in several areas and to be honest it is you and a couple others that have me looking at spending more on this education with IT. I have several areas of disappointment but no one seems to be able to do anything about it.
Hey Jeff-
My target on DRYS puts it at about $8.
Previous High 131 - Support 69 = $62
That just about makes them BK. I'm doing this correctly? Fire away.
Thanks,
Peter
Peter V,
Look at Jeff's response to my question at the top of the page.
JYM-
Thanks for that.
So perhaps a more realistic target on DRYS is around 52 in two months or so?
GENZ - thanks, got in with April $75 for $7.60 Calls - right now the spread is widening out but, I'll take the ride.
Peter V,
You can draw a shorter term triangle on DRYS from 97 to 70, giving a target of 47. Watch the 2 year support line around there as well. Hope this helps. Kim
VA Beach Girl,
You mean 43 ;-)
I have approximately the same thing give or take 3 pts.
Goodbye Dow. Hello lower low.
Yikes!
Are we headed to $SPX 1375?
I thought we would bounce from here.
Welp, Susan answered it! :-)
CLEAN CUPS
VA Beach,
Somewhere near 60-40; favoring the shorts of course.
I sure hope the market closes before I lose money on my VIP calls! Nice call on DRYS, Jeff!