AAPL wedge update 4/28/2015 Final Update

Added a stop at the previous target of 133.60. AAPL opened at 134.46 and went straight down and hit my stop. Position sold for $4.26. I had bought the condor for $4.25 (see http://jmstweets.blogspot.com/2015/04/aapl-wedge-irresistable.html). So, after all that I broke even. Oh well, beats losing. On to the next trade.

AAPL wedge update 4/27/2015 Earnings Report

During the day before the close, I was ready to sell the condor if AAPL hit my target of 133.60. It came close but no cigar.

After an earnings report (ER) beat (actual quarterly results better than expected by analysts), AAPL went up to about 135 when I captured this screen shot.

Near the close I looked at the cost of an At-The-Money (ATM) Straddle (that was a 132 Call plus a 132 Put), which cost about $7. This is considered the market's estimate of how far AAPL might move in response to the ER. So a beat might cause a move up to 132+7=139.

So I changed my sell order from the original target of 133.60 to 139 to take advantage of a positive move tomorrow. But I will be monitoring it very closely. If it starts to drop quickly at the open after gapping up, I will sell it right away. If it meanders around a flat line I'll move up a stop just under that level. If it starts rising, I'll watch the 10 minute chart and sell at either the new 139 target, or a 10 minute candle closing below the 8 EMA (Exponential Moving Average).

Now that I have a game plan I don't have to wonder what to do or second guess myself in the heat of battle tomorrow.

See previous 2 posts on this subject.

AAPL wedge irresistible update 4/23/2015

Setting a break out level of 127.60 and moving the wedge width measurement at the mouth (seen in previous post) to the break out point, then calculating an 80% of that distance gives us a target of 133.72. Notice the previous swing high is 133.60, which is very close, reinforcing this level as a target.

Looks like we're getting a Bollinger Band (BB)/Keltner Channel (KC) squeeze breakout. Expectation is about another 7 candles in the same direction, but we still need to close today with the BB outside the KC. I'm posting this about 11:00am so we still have 5 more hours to the close. To identify these indicators on the chart, see my previous post
http://jmstweets.blogspot.com/2015/04/my-standard-chart-indicators.html

Earnings Report (ER) is scheduled for 4/27/2015 after the market close (AMC). If I had only a long position I would exit before the ER. But since we have a non-directional condor we can hold through the ER if we want. However, if we're close to the target before the ER I'll probably exit because I don't want to drop to a level between the condor wings and go flat until expiration, which would result in a loss.

Nothing so bullish as a failed short setup

I heard this quote today from Steve Rhodes on TFNN "Nothing so bullish as a failed short setup".

www.tfnn.com/SteveRhodes.php

I took a look back at the QIHU chart (above), and boy does that quote apply here. Next time a great bearish setup fails, rather than just exiting the trade, I'm going long.

My standard chart indicators

Guess I should have already defined the indicators on my chart. I'll do it now.

Thick white line: 200 Simple Moving Average
Thin white line: 200 Exponential Moving Average
Thick red line: 50 Simple Moving Average
Thin red line: 50 Exponential Moving Average

Thick green line: 20 Simple Moving Average
Thin green line: 20 Exponential Moving Average
Orange line: 8 Exponential Moving Average
Pink line: 3 Exponential Moving Average
Light blue lines: Bollinger Bands
Dark blue lines: Keltner Channel
Straight white line segments: Trend Lines or Support/Resistance Lines
On the bottom is Volume and Stochastics(12,3,3)

AAPL wedge irresistible

AAPL is in a wedge since the beginning of March. Got May 130/140 Call, 120/110 Put Condor for $4.25. AAPL Earnings Report is 4/27/15. Would have gotten a 30 Delta Strangle but IV is a little high relative to past 12 mo. The literature says these wedges (aka triangles) break out around 65-75% the way to the apex. We look to be right about there.

I thought the FOMC minutes release at 2:00pm ET today might have moved the stock, but it was a non-event. AAPL might continue to tighten up into the apex around 125 until its Earnings Report, if it doesn't break out before hand.

Having spreads instead of a long Strangle should help with Theta decay as well as the previously mentioned somewhat elevated IV.

Had to exit the QIHU short trade

Previous candle closed over the 8ema and over the downward trend line but under the 50sma, so I gave it another day. Today it had a strong day and was closing over the 50sma, so I had to exit the short position. If it comes back down into the wedge I'll re-short it.

I've heard a quote from a famous successful trader saying that the secret to his success is that he is willing to take many small losses in pursuit of bigger wins. This QIHU trade is an example of being willing and disciplined enough to exit a trade at a loss if it doesn't develop as expected. And before it turns into a big loss. This was a great short setup and I don't think I did anything wrong. This is just one of the trades that didn't work out.

Every methodology I've ever learned came with the caveat that no strategy has 100% success rate. The trick to trading is finding a system that makes more than it loses, then follow the system.

QIHU short position update

QIHU is testing resistance. Looks threatening but waiting to see if price is rejected from here or breaks out and closes above it.