Sadim,
Regarding MSFT LEAPS strategy, I agree that it is a bit challenging to pick entry/exit points as the stock hasn't shown a regular trading pattern one can rely on.
Here are the tools I use:
* Have you ever used the SAR signals? This is on the menu of Alphachart.com, version 2, and you can find the present as well as historical tracings. Simplistically, the upper red dotted lines signify recommendations re. the initiation and closing of short positions whereas the bottom red dotted lines indicated the initiation/closing of long positions. I use these mostly for timing my options after the first pass of my own "hunch".
Last time I looked, MSFT's calls could have been bought at $123-124, and the puts/shorts should be closed above $131. Needless to say, macroelements play an important role on stock prices, and I never consider any of the T/A stuff as science as I have been trained to know. Just an art--a more predictable form than sheer randomness perhaps.
(One thought: I don't think you need to find a volatile stock in order to be profitable in LEAPS calls. So far, LU LEAPS have done me wonders; I have off-and-on traded more than 40 contracts, the least profitable one returned over 100%. No loser yet, thanks to the beauty of LEAPS and high-growth image of the stock.
On DMI: I usually looked for the separation of space between DMI+ and DMI -, and of course DMI+ should be above DMI-, not the reverse. It is amazing how the signals coincided with stocks' performance, both in magnitude and in direction or directional reversal. I have spent a fair amount of time in recent monthse looking at the correlation of the above for a number of stock, and I came away with a feeling that this set of indicators are of as much predictable value as the popular MACD and BB/RSI. I would be interested in your thoughts in this area, too.
Regards,
Ibexx
Back to MSFT: I do think there may be a 10-15% correction on the high profile stocks sometime before Thanksgiving. My strategy is to sit tight and buy aggressively between late September to October. But then, one shouldn't have a "fixed" game plan for the stock market, may be I will just play it by the ear. |
