Hi David,
Welcome to the forum! I think I can answer your question
with a fairly easy answer. We advocate the primarily use
two major technical indicators. That is, Bollinger Bands
(BBs) and the Relative Strength Indicator (RSI). You can
pick a chart web site on the internet that allows three to
five years worth of plotting along with the BBs. Look at it
and where you see a wide distance between the upper and
lower BBs, you are seeing the documented higher volatility
points which was reflected in the higher premies for the
PUTs or CALLs. Notice, I mentioned the two kinds of
options because those high volatility periods could be
durning an up or down price cycle. The rest of the time the
stock price is within the norms.
It is possible by looking at the stock to see how long in
lenght of time the stock takes to move up or down or
sideways. Again, it is only an estimate! But, it is better
than guessing for sure.
As far as cycles? Sure, just about everything moves in
some kind of time cycle. From oil prices vs. airlines,
trucking, transportation industry to interest rates vs.
technology stocks, banks, brokerages, etc.
You can plot all those industry groups and see the cycles
they are in as well. Look at the toy stocks right now. You
can buy LEAPs on TOY for $7 and write spreads for +$2.00.
That's some nice ROI for a few months and capital
appreciation if you are called out on top of that. TOY just
completed the second leg to a double-bottom pattern and
with a relatively low RSI and OBV starting to increase, you
are looking at more upside potential from here. A divergence
between the upper and lower BBs confirms that along with
the Stocastics going positive.
TOY
NYSE: (TOY : $18 3/8) $5,218 million Market Cap at November
26, 1999 Ranks 133rd in the Fortune 500 on Revenue & 241st
on Profit. Employs 70,000. Trades at a 23% Discount PE
Multiple of 11.7 X, vs. the 15.1 X average multiple at
which the Toys SubIndustry is priced.
siliconinvestor.com
Note! Overhead price resistance should kick in around $20.
A no brainer for a quick profit! :-) |
