As I'm sure you've figured out, Mike an I like to trade a few options strategies in addition to long stock.   I find that  keeping a few options strategies in your play-book helps to keep you engaged in times like these, when it's hard to find stocks that meet all your rules to go long.   I actually prefer certain option stagnates to trading long stock.  

​Today Chaikin Analytics  gave us an "Overbought Sell" signal in $TSLA.  

Tesla has rallied off a bottom, although it's rallied with negative money flow, poor relative strength, and a Very Bearish Power gauge rating.   The stock is also overbought after a pretty big move.  

When you look at a long-term ( wk/3yr) chart, there seems to be a pretty decent line in the sand right around the $190 level.    When we looked at the option chain,  standard March options are trading with around 56% IV, which is pretty juicy considering earnings are behind it.   

There is only on thing that waved a red flag, entering a bearish trade..... 

Insiders have been accumulating the stock.  As we all know, insiders sell for a number of reasons.... but generally only  put their own money to work in the stock for one reason! 

That said, I still decided that the preponderance of the evidence was TSLA  looks lover extended  after a decent rally, in the face of cheaper oil and a generally volatile market.  

​ So, I entered a Bear Call Spread.  That's where we sell one call and then sell another call further out of the money to define our risk.  i sold the MAR  195/197.50  call spread and collected .75 per contract.    I will look to close this trade for about .35 as soon as I can.   

Of course, after I filled this order TSLA rallied right up to the $187 level I identified as long term support/resistance on decent volume.... luckily I have 22 more days for the trade to work out for me.   I'll keep you posted on this trade. 

Happy Trading! 

​AA

I entered my second long trade of 2016 on a Chaikin Money Flow Buy Signal.   AT&T ($T) flashed the Money Flow Buy today, and I took the trade. Money Flow signals are one of our favorites.   Here's why.  

 T is a "very bullish" stock, it has been in an uptrend for several months, staying above a rising 200 day Chaikin moving average, the relative strength  agrees with the Power Gauge and the stock is currently oversold.  Additionally, money flow has been strong and persistent and in the current environment the 5.2% yield  could help  hold the stock up if the current market rally stalls.  

It looks like $T has a couple dollars of upside, before it's first area of resistance around 38.50 - 39.00, depending on how you draw your line.  

I'll take the 2.00 dollar ride ( 5%) while enjoying a little dividend protection in a volatile market.    I filled this trade earlier today @ $36.70 I'll set my stop 20% below, to make sure and give it room to work.  If the stock continues to gain, I'll adjust my stop accordingly.    I'll keep you updated on the trade!  

Happy Trading! 

​AA

Sometimes you have to wait for the trade to come to you.  Nearly eight weeks into the year, I entered my first long trade of 2016.   As we all know the word this year has been volatility.  Money has been rotating into  defensives - bonds, metals and utilities.   We saw the rotation  beginning late last year. ​

Today, Chaikin Analytics gave a Money Flow buy signal on NiSource INC (NI).  We tend to like Money Flow signals, we have had success bullishly and bearishly  with Money Flow signals.
NI has maintained a strong trend, and belongs to the strongest sector in the market, Utilities.  NI also offers a modest yield of 2.9%.   NI has a Very Bullish PG (Power Gauge)  and the Experts like it.  Earnings are behind the company as well. ​

NI has been in an uptrend  and above the Chaikin 200 day MA since late summer 2015, has had persistent positive money flow and relative strength agrees with the PG.  Additionally, after the recent 3 day rally in the greater market, this utility is Oversold.   ​

I will keep you posted on the outcome of this trade.   As always I welcome comments and questions below!

Happy Trading! ​

 As underlying market fundamentals continue to show weakness, we trade where and when we can.   

Today Chaikin Analytics gave a "Reversal Sell" Signal on Monsanto.   Reversal Sells are powerful signals, that I have had a decent amount of success trading them.  

As Monsanto has earnings behind it,the stock  is in a downtrend,  and has very recently become overbought, it is an attractive short candidate.  However there has been a small amount of positive money flow as well as teetering relative strength... currently positive.     While not a "slam dunk" short set up, there is enough to peek my interest.    

With 38 days until expiration I looked at trading the 95/97.5 bear call spread.   The spread has a  66% chance of expiring worthless at expiration.   The spread pays .75 cents per contract,  which leaves 1.75 in risk per contract.  or, 42% return on 34% risk.    

While  not the best set up I've ever seen,   but combined with the marco market fundamentals and sentiment...It's good enough for me.   I will look to close this trade at 50% max profit, or about .38 cents,  OR  will also watch for this trade to against me.  If the spread trades 1.50 or higher I will look to exit the trade for a loss, lick my wounds and move on.  

I'll will update you on my exit 

Happy trading

AA

As the markets continue to be far more bearish than bullish, I have yet to find a long stock trade that meets my criteria.   Finding a Very Bullish Stock that has maintained an uptrend is beginning to feel a lot like searching for a unicorn riding a rainbow.  

Since long stock opportunities have been pretty scarce, I've traded a few Bear Call spreads to keep myself engaged.   A quick refresher, a Bear Call spread is a risk defined option trade where you collect a credit on a bearish bet.  I typically sell the .30 delta and define my risk buy buying an option further out of the money, typically 2 strikes away.   At .30 delta, your  sold option has a 70% chance expiring worthless, but  roughly a 60% chance of being "touched" at some point before expiration.  So, you can't get too nervous if your short strike gets breached at some point.   I typically hold these spreads until 1 of 2 things occurs.  

1.) I reach 50% of max profit
2.) The short option expires in 5-7 days. 

Earlier This Week I took a Bear Call trade on $CAT.    The Chaikin platform signaled an "Overbought Sell" last Tuesday. 

The Trade went against me almost immediately, and has since broke above the the LT Chaikin trend and the trend indicator has turned strong.  This is not a trade  I would enter now, but I'm already in it, so I'll follow my rules and ride it out.   The stock is very overbought, has negative relative strength  and while money flow has turned positive,  not by much. 

My max gain on this trade is the .87 cents received max loss is the difference between the strikes minus the credit. , I need $CAT to get back under $62.50 and stay there either until march expiration OR until I can buy this spread back for around .44 cents.   The most I can lose on this trade is 163.00 per contract. 
I'll keep you posted on the outcome. 

I continue to look for long stock opportunities,  but as they say, you only have what the market gives you.  

Please leave any comments below, I'd love to hear from you!

Happy Trading. 

​AA