Click chart to enlargeAcme Packet is a company that provides border control solutions. It was started in 1866 by Wassily Wassilyevich Kandinsky. They currently own and operate over 14,000 lookouts along the US-Mexico border and an additional 12 along the US-Canadian border.
Actually, none of this is true, but it really doesn't matter. All we see is a stock that is above an uptrending moving average, holding its own despite a weak broader market, trading within a trend channel, at all-time highs. Both its quarterly and annual earnings show steady growth.
On a pullback to the bottom of the channel (below 29), which could happen tomorrow morning, it may make for a good short term trade on the long side.
We don't have the same confidence in APKT for the intermediate term as we have with the LED sector, but for a quick trade it makes little difference.
11 comments:
Would you say RBCN is pulling another ascending triangle right now?
It is. Another way to look at it is the way Darvas saw it... boxes. RBCN was trading in the 24/29 box, and then jumped into the 29/34 box where it is now. We're hoping it next jumps into the 34/40 box, but anything could happen with earnings just around the corner. We'd rather not hold thru earnings because we're not into playing Roulette, so hopefully it makes its move before them. From today's action, it looks as if the broader market is indeed tired of correcting and is ready to run up for a while. A close above the 200dma would be nice.
It is. Another way to look at it is the way Darvas saw it... boxes. RBCN was trading in the 24/29 box, and then jumped into the 29/34 box where it is now. We're hoping it next jumps into the 34/40 box, but anything could happen with earnings just around the corner. We'd rather not hold thru earnings because we're not into playing Roulette, so hopefully it makes its move before them. From today's action, it looks as if the broader market is indeed tired of correcting and is ready to run up for a while. A close above the 200dma would be nice.
It is. Another way to look at it is the way Darvas saw it... boxes. RBCN was trading in the 24/29 box, and then jumped into the 29/34 box where it is now. We're hoping it next jumps into the 34/40 box, but anything could happen with earnings just around the corner. We'd rather not hold thru earnings because we're not into playing Roulette, so hopefully it makes its move before them. From today's action, it looks as if the broader market is indeed tired of correcting and is ready to run up for a while. A close above the 200dma would be nice.
Oops, computer spasm created a triple post. Damn Bill Gates:)
You might be right about the correction being over. I got buy signals on GDX and GLD today. If the DOW closes above 10400 this week, it will generate a strong buy signal on the weekly chart. I am initiating a pair of trades on Ford: Aug 11 puts @ 23 cents, and 13 calls @ 17 cents. Note that the calls are significantly cheaper than the puts, which indicates strong bearish sentiment since Ford is trading right at $12 now. I am buying 150 calls for every 100 puts.
Would you hold VECO thru earnings?
Seeer,
Unfortunately, it's not a good idea in today's "casino" market to hold any stock thru earnings. It's usually a good idea to sell off some of the position before earnings, especially if there's a decent run up before them. One bad earnings report can kill your yearly performance if you're heavily invested in a small number of stocks. Even though a good report can make you rich overnight, you're better off over the long run to reap the slow and steady rewards and avoid the potential be-heading of a stock for missing expectations. A bad earnings miss is often the beginning of the end for a stock, which puts you in a position to never recoup the money. Even worse, you ride the stock lower and lower waiting for it to turn around. It's better to just never be in that desperate situation in the first place, at least not with a lot of shares anyway.
Thank you. I thought the same thing.
I will sell my pos.
Buying puts is another option for dealing with earnings risk. Say you own 1000 shares of CREE. That's currently a ~$70,000 position. If you are looking make this a long term capital gain, you obviously dont want to dump it just to buy it back a week later. So you buy 10 put options to cover those 1000 shares. $60 august puts are about a buck. So 10 puts costs $1000. If earnings go well and the stock goes up, you lose typically one quarter to half of your $1000 put position. If CREE goes down big, those puts go up, giving you back some or all of the losses. If done right, it only costs about 1% a year to insure a stock for one year against earnings losses, assuming no change in price from before to after earnings are announced. For CREE, earnings is august 10th. $1000 in puts bought on the 10th will sell for $850-900 on the 11th, if CREE stays at the same price. Repeat that 4 times for 4 quarters, and it comes to a base cost of about $500 a year, less than 1%. Puts can also be used to protect a channel trade when you see it is clearly at the top of the channel. Using puts allows you to save a core position for long term capital gains while still being able to trade the trend channel and play against sentiment.
You don't have to sell until the day of earnings. That gives you every chance to get the best price until then. Also, you may want to keep some shares just so you don't feel completely left out if it does very well. We just wouldn't keep enough shares to reverse the entire profit, that's all. The number of shares you keep depends on what the stock does prior to earnings. If it rallies strongly ahead of earnings, then sell almost the entire position. If it drops ahead of earnings, then maybe keep about half the shares. The thinking is that if it drops before earnings, some of the risk has already been absorbed. If it rallies before earnings, there is more risk going into them.
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