Thursday, March 11, 2010

Long GR - Update

UPDATE:  Exited GR calls at $2.75 each for $25 loss. GR broke hourly stop of $71.50 early in the day and traded around it all day. It recovered a bit but, rules are rules. Market is at cross roads and I am trying to reduce long exposure in case the rally tuckers out...which is what it appears to be doing....lots of signs pointing to a top...Still looking into potentially using daily close as the basis for triggering hourly this would have probably kept me in GR...a strong stock...with a so-so volume day...

Date entry: 5-MAR-10

Trade: Long GR Mar 2010 $70 Calls - 10 contracts at $1.15 each,...added another 10 at out then added 5 April $70 calls for $2.80

Set-up:  5-Mar-10 set up on Hourly chart on %R and accel bands.

Confirmation on Accel band on 2-MAR-10 at 10 AM (%R had been confirmed for a while already)

Conditions: Efficiency Ratio, Stochastics, MACD, and ADX/DMI are all very bullish

Re-Entry: 2:45PM  %R retest

Exit strategy: 1st if  69.23 is violated on hourly chart.

Target for profit taking: Sell entire position at $500 profit.

Stop loss: close below $70.92 (latest %R Retest bar's low).

Time Frame: Prepared for 2 weeks  holding period.

Where found: Sizzle index


This was very difficult as GR has been in an uptrend for a few days..with no retests on the daily chart and very few retests on the hourly chart. The news is that they would be presenting at a JPM and GS aerospace conferences .

This is in essence a short term trading not necessarily a day trade but very short term. Also these are closer to being at the money rather than very deeper in the money. Also this is a March expiration with only 10 trading days left a the time of execution.

I did not follow my exit rules when they were violated on Monday 8-MAR-10. I did not cut loose because I thought volume was low, and the daily chart still showed bullish confirmations. And I was only out of the money by a few cents...This was not good. I was looking at a near 50% loss on the position.

Tuesday 9-MAR-10, stock moves higher and the market was rallying hard....bringing back all my loss I did not take any profits. Towards the end of the day the market stopped rallying and reversed...I hit my break even point and I exited the this point I was following a new stop based on a %R retest...and it was I followed the rules this time.

Wednesday 10-MAR-10 stock gaps up. Go figure. rallys most of the day then at the end it gives a false retest of 79.69 on %R...I picked up 5 April $70 calls for 2.80. GS added the stock to the conviction buy list.

Thursday 11-MAR-10 stock gives a true retest in the first hour of trading, but I did not add to the position. The market is getting tighter and opened lower today...jobless claims came in flat...volume is weak and the rally looks tired...VIX is hitting 19 today.

I am looking for a double at this point...GR continues to be strong.