My esteemed colleague and editor of OptionInvestor.com has been on fire lately with his play picking at OptionInvestor.com as Mr. Utley has tended to be a little "too negative" as some subscribers have noted. That said, Mr. Utley's negativity has put quite a bit of money in subscribers pockets and will also leave Mr. Utley with a good feeling as he heads out to get a manicure and get those claws of his trimmed back an inch or two!
PMC-Sierra Chart - $1 and $0.50 box
The pattern of lower highs and lower lows becomes readily apparent in the point/figure chart of PMCS. I'd note that the bearish price objective was exceeded in late June when the stock traded as low as $24. While stocks can achieve values greater than there bullish/bearish price objectives, it does help a trader to understand that the stock might be trading near a level of institutional support. Traders that are short/put the stock from the $30 level would be well served to at leas move their stops down to a break even level. A break below $23 could find the stock in further trouble. The number of bulls holding gains has rapidly been erased with the first sell signal coming in early May at the $38 level. The stock hasn't had a buy signal since.
QLogic Chart - $1 box
Traders that took Mr. Utley's advice and bought some puts or shorted shares of QLogic (NASDAQ:QLGC) from the 07/03 write up and those trader's from premierinvestor.net that took the trade bearish at $62.53 should be moving their stops down to $55 at a minimum. One thing I like to do is compare past and current bullish/bearish vertical counts to get a feel for the stock and what institutions might have in mind. Back in April, we must understand that the NASDAQ-100 was OVERSOLD and the BIG buy signal off the bottom in QLGC indicated a long-term bullish price objective of $92. This now can be used for a trade to understand the LONGER-TERM implications that may present itself for the stock. For whatever reason, there was enough buying in the stock to drive it from $29 to $49 without any type of reversal. Now we're looking at a $31 BEARISH price objective and this too can be used to understand current risk/reward in the trade. By comparing these two number, I get the feeling the trade is 50/50 right here, and I also notice the stock is right back in the middle of its bearish channel after breaking out of that channel to the upside. A trader that bought two or more options, might simply implement a strategy of selling one of his/her puts for a profit at current levels for a nice profit and let the remaining position ride with a stop at $55, which would find the stock starting to head back to the upside of the bearish channel. Our "fitted" retracement bracket from the bar chart has the first level of support at $46.50.
Astropower Daily Chart
Premier Investor added a short play in Astropower (NASAD:APWR) yesterday, and the stock is down $1.64 today. After a six-day run, APWR met resistance at the May downtrend, and started to stall. The stochastic began to rollover, and today the stock dropped below near-term support at $47.50 and 50-day moving average. Placing a retracement bracket over the April advance shows that a drop to $45.46 would give back 38.2% of those gains, and a drop to $41.72 would give back 50%. Those two levels should offer some support on the way down, but we could also see a decline like the one in June that fell all the way down to $38.
Yahoo 60-Minute Chart
Unfortunately our Yahoo long play isn't doing quite as well. The rash of tech warnings is decimating technology stocks, and Yahoo is no exception, down $1.20. A shorter-term retracement bracket placed on the 60-minute chart shows support at $17.91, which is also a gap that formed back on 6/25/01. Our stop at $17.25, is just below the 61.8% retracement level, and a series of 60-minute lows between 6/21 and 6/25.