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Strategies & Market Trends : Playing the QQQQ with Terry and friends. -- Ignore unavailable to you. Want to Upgrade?

To: faqsnlojiks who wrote (1657)	8/3/2005 4:35:31 AM
From: Walkingshadow	Respond to of 4814

Hi faqsnlojiks, UNA looks pretty good... UNA has been in a long-term uptrend for about 3 years: 139.142.147.19 As you can see, UNA just exploded, rising 5-fold over an 11-month period. That was pretty excessive for a stock like UNA, so a prolonged breather was appropriate, and that's what we've seen. So in the more medium-term, UNA has been range-bound between about $14 and $25 for the last 2 years after the explosive move that began the uptrend a year previously: stockcharts.com[w,a]waclyyay[df][pa25!a14][vc60][iLyb20,2.0]&pref=G More recently, UNA rallied impressively out of that trading channel a few weeks back on strong volume, evidently coinciding with (but probably not caused by !!!) the departure of their CFO. Then it proceeded to level off and gather itself. 139.142.147.19 In the process, the BBs have gotten very contracted. I like the fact that there has been little ramp going into earnings because if they report in line or beat the street, there is minimal chance of "buy the rumor, sell the news". So all in all, things look pretty good for UNA, but that could change in a hurry if there is a downside surprise on Thursday. One way to approach that is to not hold thru earnings. Another way is to hedge your position by buying front month puts that are at the money or just out of the money. Those would be relatively cheap since expiration is only a few weeks away, and could provide a lot of protection. The way to play that I think would be to buy the puts at the close on Thursday, then if there's no downside earnings surprise, liquidate the puts at the open on Friday. You'd lose some money on that trade, but that's sort of the insurance premium. If there's a downside surprise and you wake up to a monster gap down on Friday morning, those puts might really save you a world of hurt. One other thing..... a strong break out of a long-term base offers very good prospects for the medium and long-term, however the first breakout is always suspect. Not infrequently, the stock will lapse back into the trading range again, and gather itself up for another try. When that happens---especially when the relative strength is trending upward as it has been with UNA---the second breakout is very reliable. So what I am saying is don't be surprised if this first breakout fails, but don't be discouraged either. Instead, if I were trading it, what I would do is set a stop just inside the trading range, then if you get stopped out, gather up all your dry powder and lie in wait. When you see evidence of reversal, pile in with good position size, particularly if you see increasing volume, the stock is extremely oversold (stochastics less than 20, Williams below -80, and trading at or near the lower BB rail) and assuming the stock continues to get gradually stronger (judging from the relative strength and the relative strength compared to the appropriate index, such as the SPX). Under those circumstances, a breakout is high probability, and will likely be very rewarding in the medium-term and long-term. .... all IMO, of course. T