Wednesday, July 7, 2010

Update on a trade: HS

Why only yesterday I put HS into the taxable account.

Here is my rational for getting into the trade in the first place:
Bought 5 HS Aug 21 2010 20.0 Put @ 4.7

I picked this up in my taxable account today. This was something that popped on my scan on Friday. A short retest outside the bands. This is my favorite setup. I did this only in the taxable account because in this account I had missed the CRI trade in this account due to my phsycological crapping I went for the next best thing which is shorting HS. I noticed Friday that this was not the only health care insurer that had this retest phenomenon, AET, UNH, also exhibited this behavior. So the sector is in trouble. However, my psychological issues right now are that we are long in the tooth with the downtrend and I fear these moves are nearer to their end than to the beginning. No matter, I am trading based on the setups.

Stop is 15.55. 

Today it violated the daily chart's %R retest stop of 15.55 by closing today at 15.88. Also it has closed inside the bands...One of my favorite indicators the 13 period EMA was not even close to being violated on the daily...but did in fact get violated on the 4h...So I should exit this position...that's what the indicator's are telling me.

So I will cut out of it tomorrow. However, it is interesting to note that every other indicator is still very bearish on this stock, and just today we had another retest in the Health Insurance sector in WLP.

Today was a very bullish day for stocks, bullish breadth, decent volume, IBD called it a follow through and a new rally...So being short is pretty tough to do...The wavers are saying this was a typical 2nd wave with the big 3rd wave down still to come. Kass also called a bottom.

Anyway the HS charts are below:



Bottom Line: Sold 5 contracts for $3.90 this morning (8-JUL-10) as the market in HS ran away from me. Total loss $400 plus vigs.

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