Traders Corner   40 comments

The S&P 500 levels to watch today:

UPSIDE: 2001 (August 25th’s high and the all-time high), and 2006 (top of the Bollinger Bands).
LAST CLOSE: 1997.
DOWNSIDE: 1993-1994 (2 data points), 1991 (July’s high), 1988 (August 20th’s high), 1986 (August 21st’s low), 1984 (August 22nd’s low), 1982 (August 19th’s high), 1977 (August 20th’s low), 1971-1972 (2 data points), 1968 (June’s high), 1964 (August 15th’s high), 1962 (50 day moving average), 1958 (August 18th’s low), 1955 (August 14th’s high), 1953 (20 day moving average), 1947-1948 (2 data points), 1944 (August 11th’s high), 1941 (August 15th’s low), 1927-1939 (July’s low and 9 data points), 1925 (100 day moving average), 1924 (May’s high), 1921 (August 4th’s low), 1916 (August 1st’s low), 1909-1913 (3 data points), 1904 (August 7th’s low), and 1899 (bottom of the Bollinger Bands).

S&P 500 Daily Momentum: Bullish
S&P 500 Daily Overbought/oversold: Neutral (leaning overbought)
S&P 500 Weekly Momentum: Bearish (weakening)
S&P 500 Weekly Overbought/oversold: Neutral (leaning overbought)
S&P 500 Futures: Slightly positive
Overall: Yesterday, the S&P 500’s P&F chart showed an ascending triple top breakout, which is considered bullish long-term. However, the P&F’s price target remains at 2040, which is only a little over a 2% increase from yesterday’s close. My takeaway from this signal is limited upside, keeping in mind P&F targets aren’t always accurate. On the other hand, momentum certainly belongs to the bulls in the short term. Taking long positions in day/week/month trades is probably safe here, but only if sentiment doesn’t shift. There is still enough money sloshing around in the markets to keep equities running here. One more bullish signal: The Bollinger Bands are starting to expand, just as the market is moving upwards.

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40 responses to “Traders Corner

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  1. Looks like I may get to keep my TSL shares!

  2. OWEE. Down 6%? Their quarter was not that bad? met on earnings but missed on revenue. Looks a little oversold to me but probably not the right time to buy more. TSL is of course taking down my other solar YGE and CSIQ this morning. I’ve been looking for an opportunity to buy more YGE and this might be it.

    • Now down 8%. I will hold through option expiration in September. Then I will re evaluate whether to sell or sell more calls. It may be a decent stock for me to sell calls.

      • Nice to have covered calls. I could buy them back, sell the stock at its current price and still make a profit. I’ll hold for now.

    • bought more yge at 3.55

      • YGE is definitely mad money. BS looks terrible but they’ve been getting some very big orders and if they can hang in there, there should be outsized gains. Looking to sell some calls to reduce risk.

  3. Bought back my CSIQ 35 calls for .80. Originally sold for 1.10. Gain is 37.5% and I intend to resell calls in the next day or so when the TSL effect ebbs.

  4. Hey guys, post if any of y’all buy covered calls on gtat this week. Jeff I know you have a few, if I recall Sept 20. Calls. If I get called out I have 1 position left that I’m keeping in my IRA. I’d like to use cc to reduce my cost base.

  5. GTAT is up sharply today. Not sure why. Cramer mentioned it this morning, but basically did not say anything new. Sometimes I think about selling a covered call again on some shares, but most likely will just let it ride to keep the dream of my Hawaiian beachfront home alive.

  6. Quick question – I can now buy and sell options with my fidelity account. I tried it out last week with two smallish purchases. One thing that surprised me was the commissions. I was charged $55! So I think if I buy and then sell that is $110. Is that a typical rate or is fidelity ripping me off?

    • Marshall depends on the size of your trades but that does seem high I’d give them a quick call. I think Ed uses IB and I’ve heard they are cheaper.

    • I pay $1.25 per contract with Scottrade.

    • Marshall, Tradeking is .6 per contract and Scottrade is 1.25. I use both of those. Plus I pay the trade fee

    • Thanks guys. So the cost is per contract. Let me see if I understand. So if we use TLM oct 11s as an example, they are trading for 75 cents. If If I buy 10 calls, that is ten contracts, with each contract being 100 shares? So ten calls would cost me 75 cents x 10 x 100 = $750. Right? Then, if I pay $1.25 per contract, that is $12.50 of fees to open, and another $12.50 to close? Am I right? So a total of $25 for my $750 trade. That seems really expensive. If I am trading stocks, I pay maybe $8 to open and $8 to close, but that would be the cost whether it was 100 shares or 1,000 shares.

      • No. Has nothing to do with the price of the option. Using Scottrade as an example. If you by ten contracts you pay 10×1.25=12.50. Same when you sell. If they expire worthless you pay nothing. There is no other cost if you are just buying options. If you are selling covered calls, then you have the same commission when you see the calls. In this case 12.50. Little confused by your first question. Post again if this doesn’t clear things up.

      • Trader, thanks for the response. The first part of my question was just trying to get a rate, what percentage of my purchase price goes towards commissions. S. In your example of ten contracts with the 12.50 commission, if the calls were $1.00 that would be a 1,000 purchase cost plus another $12.50 for the commission. Does that sound correct?

      • I got it now. You are correct. In your example, you would pay $1000 for the options plus 12.50 commission for the purchase.

    • For buying and selling covered calls I pay 9.95 plus a buck per contract with Wells Fargo

      • Ouch Karl. You might want to look at IB which is very cheap with great service. Actually this goes out to everyone. I’ve had a few hiccups with IB, but overall I would rate them in the excellent range for trading stocks and options and their prices are hard to beat.

      • I just checked. Fidelity is 7.95 + 0.75 per contract. Then my ML Edge account is 6.95 + 0.75 per contract. Neither one seems that cheap, but neither one is so expensive (nor do I plan to trade options much) that it is worthwhile for me to open a third brokerage account.

      • Marshall, you may wish to ask both brokers if that is the best deal they can give you. I did with TD Ameritrade and they reduced the commission to almost nothing. Something like $1.25 per trade plus a dollar per contract. The price of the commission is not dependent on the price of the option. It’s per trade/per contract.

  7. I added a large position of UPRO at $122.60, which I will probably let ride until Thursday at the latest. With volume low, and it being the end of the month, I just don’t see anything in the technicals which worry me, and the bullish momentum is pretty strong currently.

    • I’ve been thinking about upro. Good luck Ed.

    • Seems odd that you would buy here after the S&P has been up 6 of the last 7 days. The low volume can work strongly against you as well. A large position seems to add extra risk for what will probably be a small gain for a couple of days. For your sake, I hope the market doesn’t open up down big tomorrow.

      • Trader,
        So far, this August has been typically slow, especially in news. Unless we get a big news story, I don’t expect a sentiment change.

  8. Barron’s had a nice article on Bunge (BG) this weekend and I’m checking it out. Marshall have you ever looked at this stock

  9. Started position in CA at 28.14 yesterday.

  10. Question on Dry bulk shippers. Own SB which is one of the more stable and conservative shipping companies out there. Have a small profit in it right now but wondering what the technicals are showing and if the market weakens these stocks seem to be the first to get clobbered. Should I take profit and wait for a better price to get back in?

    • bobb, looks like it might be up against some resistance here. You could sell part of your position to lock in some profit. Hold the rest and/or sell some covered calls if you want of hold longer term.

    • Bobb – dry bulk shippers are tricky as they have relatively high fixed costs, yet their revenue can be variable as they are really selling a commodity. In a way, similar to airlines. Too me, you need to consider several points: (a) where you think the Baltic dry index is going, (b) how much of future charges have they locked in (are they 100% spot rates or have they pre sold capacity) and (c) what does their balance sheet look like? For SB, you’d have to do the legwork on the first two points. I did look at their balance sheet and it is actually relatively good for this industry, they have managed to keep debt down.

  11. The DSW I bought last quarter after what i thought was overreaction to tough earnings is bouncing back today on new earnings release. Up about 9%
    Still think there is more runway to go.

  12. I just read an interesting study by NSR, one of my holdings. They do a lot of real time information and Analytics. Their most recent study commented that advertisers get by far the best bang for their buck through social media. I am not sure what to do with this, but one implication is perhaps twitter and Facebook are places to think about investing, especially in a pullback.

  13. Jeff, There was a lot of movement in the September 20 call options @ both 20 and 20.5 strike. I’m going to wait see where this run takes us for a few days. I’d also like to have been in and out of 2 covered calls before there next earnings report Nov 3rd.
    I think GTAT makes a new 52 week high soon but we saw see.
    https://secure.earningswhispers.com/stocks.asp?symbol=gtat

    Not sure I like this big negative number in on my GTAT covered call. Now that GTAT moved over my 18.50 strike the option is worth more.

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