CMI

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How to view the entire chart:


1. Try clicking on the name of the most recent article in the column on the right. This will remove the "Archives" list.
2. Try right click on the chart itself and open it on a separate window.


I am sorry that I cannot always make the chart small enough to fit neatly on the left column. I want you to be able to see the details I want to point out.


I Hope this helps,


Juan

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Today's rally made me put the YHOO trade in the back burner for a couple of days, unless there is a breakout.

I turn my attention to stocks that move strongly today. Specifically, I am interested in CMI, which has just broken out to a 52 week high. In my experience, this kind of breakout usually is followed by strong moves. So looking at the Elliott wave analysis, I think that a double zigzag up may be in the works. An alternative count may be an impulse wave 5. In either case, my approach is to use a PCCRC. This time I am looking for Delta gains, and use the rest of the position as a protection. Remember, if the stock reverses and goes down, it would have to do so with an increase in volatility which may be good for the trade. If it rallies with HIGH IV, both Vega and Delta will help me make money. If the stock rallies higher and then begins to decline, it could be possible to make money on the way down too. I would like to use this as an example of such a trade.

This is the trade I proposed. Tomorrow morning I will post a confirmation of the trade, so you know I am doing it for real.



The volatility has been pulling back, but may be on the rise again. Still, as long as the IV is below 40%, I am comfrotable using this trade as a Straddle with a slight bullish orientation.


The Elliott wave count is quite bullish. Although the RET does not show that option yet, it is not hard to imagine that this could be a 5 wave sequence and that the 5th wave is already in progress. The reversal of a fifth wave can be quite unexpected ans strong. So I keep on my PCCRC strategy. Of course you could use other vertical trades.


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Update, July 3rd, 2006

Today I had a fill on the long portion of my trade, but the short portion did not fill. This happens when you have to split the trade. As you can see I was trying to enter as a long straddle followed by a short straddle with 1/2 the number of contracts. I believe I got a good price for the long portion, but I was not able to fill the short portion after several changes in my ask price. I consider that since we were in a shortened trading day, that perhaps the volatility was low, and that I could get a better price for my shorts on July 5th. Potentially, my ask may be met in the first hour of trading when volatility is usually highest. I will keep you informed.