Equity futures are higher this morning as the market appears to be breathing a sigh of relief that the world's largest chipmaker Intel (NASDAQ:INTC) reported earnings that topped Wall Street estimates. S&P futures are higher by 11 points, NASDAQ futures are up 65 and Dow futures are up 43 points.
Don't forget to follow your trade
Yesterday's "Play of the Day" on OptionInvestor.com was VeriSign (NASDAQ:VRSN) and today is the day for traders to be looking long the stock. With INTC's earnings out of the way and equity futures higher, this is the day to be looking long VRSN. We've made a few adjustments to the chart below to help traders trade the stock today. Currently we're seeing pre-market activity at $80.25 and we'd be a go here. Day-traders can use our upward trend as a stop ($76.38) and swing-traders may want to use the 50-day MA at $75 as their stopping point.
VeriSign Chart - 60-minute interval
Many of the trends and horizontal levels on the VRSN chart are exactly as they were yesterday, but we've added an upward trend (A) to our chart that aggressive bullish traders can use as a trend to monitor and trade off of today. Traders should note how "young" this trend is and I'd say that it is basically one-hour old. Yesterday after the close, shares of VRSN were trading at $80 and if the market gets an upward tone today, trend (A) could serve as a trailing stop with a break below the 50-period MA (thin blue) at $75 as a further sign that the trade is not working in a bullish traders favor. Traders will remember that yesterday, $75 was a level we were hoping for the stock to pull back to for a possible bullish entry point. Traders will also remember that VRSN was the highlighted "Trade of the Day" for OptionInvestor.com at $83.38 on 01/16/01. By waiting one trading session, bullish traders now have more information (Intel's earnings out of the way) that they can use in their trading scenario. Current "hurdles" reside at (D) $85, then the 200-period MA at $85.30, then downward trend (C) near $96. I also want to look at the DAILY interval chart. When I do that, I see the 50-DAY MA is at $95. With these levels in mind, I can now control my trade and know where certain levels of resistance lie. I can also use these levels to begin looking at different option strike prices and chose one to my liking. If I feel that resistance might be pretty formidable at $95, I might NOT want to be buying the $95 strike unless I'm buying a couple of months out and willing to give the stock some time to "eat through" resistance.
Try to use this in the future
Traders, especially those new to the game, should try and use some of what we've talked about the past couple of days in the future. A trade will not always set itself up to be traded to your liking, or my liking and this is why traders should always have a candidate list ready to trade. Often times, traders will chase a stock or buy it when market conditions are not favorable for doing so. Two-hours later, they're stopped out for a loss and then they quit following that stock as it resulted in a "bad trade." Traders that do have a candidate list can "roll" from candidate to candidate and be selective in those stocks that "fit their trading criteria and meet their stringent trading discipline." Traders that are looking to build a candidate list should review the archive sections of "past plays" and ascertain if the stock is still a candidate for trading.