Hey, everyone. I’ve collected 8 days of full data using my indicator. I’ve worked out where 20 stocks that I follow stand using my indicator & I can give out initial trade suggestions on at least 2 stocks. First, the stock symbols CIE, which stands for Cobalt International and FCX, which stands for Freeport Mcmoran are both showing signs that they should be shorted by either outright shorting the respective stock or by buying puts.
First let me tell you about each of these stocks. CIE is essentially a penny stock and the cheapest of the stocks I follow. The last price for CIE is $1.04 and its options are measured in 50 cent imcrements. Through my paper trading account I choose to input an order to buy 9 options for no more that .90 cents. These options do not expire before October giving my trades plenty of time to work out. In order to purchase them at the price I am requesting the stock must rise first to a point where I can get in at a price that minimizes my risk. The reason CIE looks so weak on my indicator is simply that the indicator is dropping below the position of a recent heavy volume indicator, which is simply and asterisk below the plot line. Earlier the indicator went above the centerline and then right below the centerline indicating weakness. By the way CIE & FCX are both in the basic materials group. When I look at a long-term chart of the group I find that it has no more than a C ranking and it appears that the group has stalled and may be on a downwards trajectory. This seems to validate my position in shorting each of these stocks by selling put options.
On my paper trading account I decided to buy 9 Put options at $1.10 a piece expiring in October. This is because FCX cut through the centerline of my indicator like Butter. Although it did not do so on especially high volume the fact is that my indicator has been pointing downwards almost since the beginning. This is clearly a weak stock. There is clearly one problem here. The stock is clearly resting on its 20 period moving average, but given the status of other indicators that indicates this stock is weak, I feel confident in predicting a downside to come. Again I am setting my entry so that it minimizes my risk.
Except for the above two stock most stocks are moderating their downward trends or are trying to reverse trend, but are doing so on extremely weak volume. This may indicate that the market is weaker than it seems.
I’ll be back with another blog post tommorrow which will deal more with my overall trading plans.
EC Morris
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