Exponential growth

Cache Landing · Jan 20, 2006

Quote from Algorithm:

MO is looking good right now at around the 75 strike just hovering there due to expiration today. Engle court case is still pending and could be announced any Thursday any week now. If favorable (90% probability that it will be) stock should POP nicely to the upper 70's to low 80's in my opinion.

But right now MO is at support levels at mid 70's. MO options have been very, very good to me.

Just my .02 since you asked.

MO doesn't look bad at all, but I need a couple more bearish plays. Looking for the same setup only high probability of going down. Thanks

Algorithm · Jan 20, 2006

Bearish plays ought to be pretty easy after today. Monday should be very interesting to say the least.

Next support levels look to be quite a ways down on the DOW.

Could be a real Geronimo call, LOOK OUT BELOW!

Neoxx · Jan 20, 2006

Quote from Cache Landing:

MO doesn't look bad at all, but I need a couple more bearish plays. Looking for the same setup only high probability of going down. Thanks

This is how I read MO:

Double top, long red candle closing on support, resistance at ~77, only halfway into natural cycle.

Could someone explain what I'm missing...

Neoxx · Jan 20, 2006

How would these be for bearish plays?

UNH
PLCM
GRA
HCC

And for the stout of heart,

ABX
GOLD

Or do they have rookie setup written all over them?

Cache Landing · Jan 20, 2006

Quote from Neoxx:

This is how I read MO:

Double top, long red candle closing on support, resistance at ~77, only halfway into natural cycle.

Could someone explain what I'm missing...

You aren't missing anything. It really all depends on how one views the $75 level. There definitely is resistance at 77, which as you know would probably prohibit me from one of my usual credit spreads. The real question is, which one is stronger. I don't trust the candle today. What appears to be a strong company was dragged down by widespread selling. But still, it held at the all important 75. If it fails to break through to the downside then it will probably be a good short term bullish play. (Until the 77 point)

Cache Landing · Jan 20, 2006

Quote from Algorithm:

Bearish plays ought to be pretty easy after today. Monday should be very interesting to say the least.

Next support levels look to be quite a ways down on the DOW.

Could be a real Geronimo call, LOOK OUT BELOW!

I never get into bearish plays on a day like today. There might have been good reason for some selling, but today was definitely an overreaction. IMHO.

Neoxx · Jan 20, 2006

Quote from Cache Landing:

You aren't missing anything. It really all depends on how one views the $75 level. There definitely is resistance at 77, which as you know would probably prohibit me from one of my usual credit spreads. The real question is, which one is stronger. I don't trust the candle today. What appears to be a strong company was dragged down by widespread selling. But still, it held at the all important 75. If it fails to break through to the downside then it will probably be a good short term bullish play. (Until the 77 point)

Need to widen my horizons.

Snap out of tunnel vision.

Start looking at the broad indices.

Cache Landing · Jan 20, 2006

Quote from Neoxx:

How would these be for bearish plays?

UNH
PLCM
GRA
HCC

And for the stout of heart,

ABX
GOLD

Or do they have rookie setup written all over them?

UNH---This one looks good. I might actually play this next week if it bounces back up toward the 50-MA to get me a better spread.

PLCM---Wish it was a bit closer to 18.

GRA & HCC---Not really enough volume for me.

As for gold. Gold and silver have been hitting resistance lately but I have a really hard time betting against precious metals right now. When I see a market rolling over, there is usually a migration toward precious metals (specifically gold) as a "safer" investment.

Algorithm · Jan 20, 2006

Quote from Neoxx:

This is how I read MO:

Double top, long red candle closing on support, resistance at ~77, only halfway into natural cycle.

Could someone explain what I'm missing...

Agreed that MO has significant resistance at stated level, but it will quickly be taken out after the Engle court ruling is revealed, which should be on MO's side. That ruling is a week by week play and could come any given week, at the SCOFL's leisure. MO will spike significantly after it happens due to the fact that Altria will be closer to its plan of company break up after Engle case is decided.

So yes, there is stout resistance around 77, but it could be shattered next thursday, or any given thursday any given week. So, in my opinion, to be longterm bearish on MO is suicide due to the stated factors. With that being said, I have been very successful in collars and just plain covered calls over the past 3 months or so. With that being said, I am still net long the underlying.

The chart is really only telling half the story right now and is a bit deceiving.

Cache Landing · Jan 20, 2006

Quote from Algorithm:

Agreed that MO has significant resistance at stated level, but it will quickly be taken out after the Engle court ruling is revealed, which should be on MO's side. That ruling is a week by week play and could come any given week, at the SCOFL's leisure. MO will spike significantly after it happens due to the fact that Altria will be closer to its plan of company break up after Engle case is decided.

So yes, there is stout resistance around 77, but it could be shattered next thursday, or any given thursday any given week. So, in my opinion, to be longterm bearish on MO is suicide due to the stated factors. With that being said, I have been very successful in collars and just plain covered calls over the past 3 months or so. With that being said, I am still net long the underlying.

The chart is really only telling half the story right now and is a bit deceiving.

If you're right, look for me to come in with a bull put spread right after it takes out that resistance.

77 should then become very strong support.