Charts of Note

[deucy28]

Quote from deucy28:

Here is the HOT HST 9 days ago (Aug 1), found on p. 40.

(...and actually the spread narrowed from then 8 1/2% (not 8% as I earlier indicated) to 4% nine days later (Aug 10) ! )


<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=3596429>

Please look at my posts on page 39 with longer dated charts. This is one heck of a safe trade.

When looking at the Aug 10 position (just a few posts ago) you can see it has VERY MUCH MORE additional, convergence potential.

I'm shopping this inquiry around, especially to the T.A. types and those leaning toward T.A. I have never used it in my swing pairs trades. But I am open minded. This question however is very much a tiny niche in T.A. : What value does long term charts have ?

Without using any software or metrics and just eye balling........... does a 10 year chart for a long term pairs trader willing to stay in the trade for many weeks to a few months have any usefulness at all. In other words, momentarily, disregard more significant short term modalities in the decision making of putting on a trade here.

The operative phrase here: "any use at all" for the prospect of shorting HOT and going long HST.

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=3598771>

 

[darkhorse]

Quick housekeeping note, please try to be aware of chart widths on this thread.

A width greater than, say, 800 pixels or so tends to break the style formatting and makes the thread harder to read.

There are plenty of free tools available to resize an image if the original render is too big... or can just attach it...

Thanks!

 

[Mike_McDermott]

Staples plummeting 15% this morning after missing earnings, revenue, & guiding lower (basically they whiffed on everything)

The stock has been a losing proposition for investors since 2007 when it peaked, but has provided plenty of tradeable swings along the way.

At $11.50, SPLS now becomes a tempting buy for value investors. Staples is a cash cow, generating reliable (if not dull) profits, and paying a steady dividend. After the 15% drop, the yield is now very close to 4%

A possible way to play would be selling the Sept 11 puts at $0.25 - capturing the premium if it holds up, and buying at an effective price of $10.75 if it continues to drop.

High-multiple cult stocks still represent great short candidates, but SPLS is much more likely to attract stabilizing value investors after today's drop.

 

[cdcaveman]

Drop some names... high flying cult stocks in your opinion

 

[hughb]

Quote from Mike_McDermott:

Staples plummeting 15% this morning after missing earnings, revenue, & guiding lower (basically they whiffed on everything)

The stock has been a losing proposition for investors since 2007 when it peaked, but has provided plenty of tradeable swings along the way.

At $11.50, SPLS now becomes a tempting buy for value investors. Staples is a cash cow, generating reliable (if not dull) profits, and paying a steady dividend. After the 15% drop, the yield is now very close to 4%

A possible way to play would be selling the Sept 11 puts at $0.25 - capturing the premium if it holds up, and buying at an effective price of $10.75 if it continues to drop.

High-multiple cult stocks still represent great short candidates, but SPLS is much more likely to attract stabilizing value investors after today's drop.

This thing has been quietly tucked away in the back of my watch list since May of 2011 when it gapped down hard. I'm not usually a value investor, but Staples looks compelling now. When a stock is at historical lows like Staples is now, it's usually because something has gone wrong with the company. So I have to ask myself, what's wrong with Staples? Since I'm not a fundamental analyst, I'm not able to parse what they said in their conference call, but I didn't see anything about cutting the dividend. (if anybody saw otherwise, please correct me). I did notice, however, that when I checked the yield last week it was listed at 3.40%, and today it is listed at 3.30%. My friend who passed away last month was a value investor, and he loved those round numbers, and he would probably say he's buying it if it gets to 10.

 

[hughb]

One other comment of SPLS, back on 12/02/2011 I made a note that Joe Rosenberg, chief investment strategist at Loews, said in a Barron's interview that he liked the stock.

 

[deucy28]

Quote from deucy28:

Perfect PAIRS TRADE for spread, reversion to the mean.
See this 1 - Year and the next posts for 6 months and 3 months.
The shorter term months look great, too.

The above quote was from Aug 1, 2012.


I closed half my position of HOT Short and HST Long:

At this point, every chart term (chart lengths) but one said 40% to 50% of the potential NOW has been realized. The 6 month chart suggested a higher probability that much more had been realized.

 

[cdcaveman]

From that chart it seems that corolation indicates crashes and decoupling indicates a normal market

 

[deucy28]

Quote from deucy28:

The above quote was from Aug 1, 2012.


I closed half my position of HOT Short and HST Long:

At this point, every chart term (chart lengths) but one said 40% to 50% of the potential NOW has been realized. The 6 month chart suggested a higher probability that much more had been realized.

The gross gain before commission on the half position I closed for the 14 days held was 2.3% (56% annualized).

In other terms, it would be equivalent to a $ 45 stock gaining $ 1.03 for a two week hold with a high probability at the opening of the trade it would realize a decent gain.

Note: I trade off potential gain for safety. I closed half the trade in spite of my charts suggesting to me it realized only half of its potential. It is important to understand this when looking at my gain against other traders' risk tolerance. This has been my style since 2008: extraordinay few losses and leaving much on the table. Safety is my personal, highest priority. Intuitively, bigger gains will more than offset more frequent losses, but I prefer not to go there. Maybe my handle should be tightFistedGranny rather than deucy. I think it fair to pair trading to note the gains I make are modest relative to a high probability they would be enhanced by most traders.

 

[deucy28]

Quote from cdcaveman:

Drop some names... high flying cult stocks in your opinion

I don't have any other charts to show now, caveman, because I am doing hardly any trades. I am not even searching for ones now.

Even though this is not what you are looking for, WRI short and KIM long has been a nice rolling spread for some weeks. It DID fit the description of your question a few weeks ago. My apologies to this thread I don't have the time to show the example of WRI KIM of a few weeks ago. Not quite the same powerhouse as HOT HST, but it went off like a rocket for me in a few short days. (I got out prematurely, taking only 1/3 the trade would have gotten me in a few more days after closing.) Maybe I can recreate the charts at that time for you to see what I was looking at then. When I have the time, it would be a nice post for this thread.

btw....WRI KIM was unusual because it took off for me quickly after opening the trade. Normally with my style, newly opened positions go against me for some days because I play contrarian to the momentum. But this gives me opportunity to add another layer sometimes. I HAVE NEVER BOOKE A LOSS ON ADDITIONAL LAYERS. I relish the opportunity, therefore I never use a stop loss.