Good evening traders. We are still waiting to be triggered on DPS and WFC. I suggest readers be patient here and wait for a pullback prior to entering long positions. Today's bounce back was probably not just the result of the Euro Zone bailout package, but rather a combination of the latter and shorts covering positions. Volatility will continue and the indices still face a lot of overhead resistance.
The volatility over the past couple of weeks continues to make trades very difficult to manage. In this environment I believe it is necessary to have hedged positions on the long and short side of the market. This enables traders to enter (or take profits) on positions when there are wild swings in price. But this also requires intraday management so if you can't manage trades intraday I suggest keeping position size extremely small, or simply staying away. Good luck!
NOTE: I am trying a slightly different format for our daily play updates that I think you will like. I am simply listing important information such as our targets, key support/resistance levels, and time frames at the top of the play update. My hope is that this information will help you better manage the trade by quickly being able to identify important facts about the trade as opposed to sifting through the text of the play update. If you have any suggestions or comments please email me.
BULLISH Play Updates
IMAX Corporation - IMAX - close 18.90 change -0.15 stop 16.75
Target(s): 19.25, 20.95
Key Support Areas: 17.75, 16.95, 50-day SMA
Key Resistance Areas: 18.74 (intraday), 19.20, 19.90, 21.30
Current Gain/Loss: -1.57%
Time Frame: 1 to 2 weeks
New Positions: Aggressive traders only
IMAX bounced back today after Friday's sell-off in the stock, closing +4.90% higher. The stock traded as high as $19.39 early this morning and then the sellers showed up sending the stock down over $1 lower to close at $18.21. IMAX made a double top with the intraday highs of today and last Thursday which probably sparked the selling. Double tops and bottoms can produce powerful moves in stocks and in IMAX's case the stock closed -6% lower than the double top high and +2.2% off of its lows. The stock traded in an 8% range today. I urge readers to be careful here with the volatility and protect capital. I listed a lower first target above which can be used to manage exiting the position, along with several support areas above our stop. $17.75 could be used as a tighter stop to protect capital.
Current Position: Long JUNE $20.00 CALL, entry at $1.10
Entry on May 5th at $1.10
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 1.9 million
Listed on May 4, 2010
BEARISH Play Updates
Sina Corporation - SINA - close 33.00 change -1.50 stop 36.80 *NEW*
Target(s): 32.50, 30.50
Key Support Areas: 32.50, 30.50
Key Resistance Areas: 35.30, 36.00, 37.60
Current Gain/Loss: +1.32%
Time Frame: 1 to 2 weeks
New Positions: No
SINA continues to look vulnerable and is below broken support near $35.00. The stock is below all of its major daily and weekly SMA's. The 50-day SMA crossed below the 200-day SMA which is a bearish signal that confirms our outlook for this stock. I expect the overhead resistance and SMA's to hold. I would like to move our stop down to $36.80 to protect capital if SINA somehow manages to continue higher from here.
Current Position: Short SINA stock at $34.95
Suggested Position: JUNE $35.00 PUT
Entry on May 4,2010 at $34.95
Earnings Date June 9, 2010 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on May 1, 2010