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Strategies & Market Trends : Stochastics
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To: Cathedra who wrote (869)10/19/1998 9:49:00 PM
From: Wayners  Read Replies (2) of 927
 
I think I did reasonably well on the CMGI advice. If you had followed it exactly, you would have written the $55 Oct--which would have expired too--just with less anxiety. CMGI is consolidating in a longer term descending triangle and short term its in an uptrend channel since 8 Oct. 5 day stochastics are about to give a sell signal and the bollinger bands are at their narrowest point. Your key resistance on the upside is at just past $50 on the downtrendline portion of the descending triangle. Important support is at about $35 on the downside. The trend on stochastics is starting to turn up a bit. I think CMGI is going to go up to just past $50 in the very short term and test the downtrendline. I'd sell the Nov or Dec $50 calls at that time. After that CMGI is likely to reverse and retest the $35 level--letting your calls drop in value dramatically so that you can either let them expire or you can buy them back for a lot less. I think MSPG is going to go much higher--at least $35 and possibly $42. NSOL is going to run out of buying pressue quick with spikes like it had today. I'm not sure I understand the XCIT play. I've been daytrading XCIT over the past week. If you are looking for a bounce off of $30, why buy at $31 1/8? If you are trying to position trade XCIT from the longside--I strongly advise against it. You're fighting the trend. Its very likely to hit $27 again or lower. A very quick bounce off of $30 to $33 or $35 wouldn't surprise me, however that's for daytraders.
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