Intuitive Surgical (ISRG) takeover target

Unusual option activity going on in ISRG in the past few days.  Someone is buying January 2011s, about $200k worth today.

ISRG broke out of my 105 buy point on high volume, thanks to hedge fundies talking about JNJ wanting to acquire ISRG and maybe a little short covering.  A lot of shorts entered in when ISRG dipped below 100, and I think a series of stop-covers got filled above 100.

Nice volume.  Buy this on the dips, stops set just above today’s open at 103.95.

Swing traders, watch the 119 spot, should struggle there a little.

ISRG was one of my favorite stocks back in 2006.  In fact, I named my first blog after them- “Intuitive Traders.”  Great product, great company.  Shall we operate?

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Tough tape right now.  Almost all of my indicators are not working.  With all this divergence in the iETFs versus the market we’re getting low probability plays.  Actually, I haven’t seen a tape like this in a long time.  Right now, the market either has no idea where it wants to go, or it just doesn’t want to go anywhere.  Maybe it’s unemployed too?

If you missed the morning action, here’s a snapshot that shows little range and little playing field for day-traders.  So far, the tape favors the bears, as there is divergence in FAZ, SKF, FAS… working inverse to the inverse.  My guess is that FAZ and SKF are heavily shorted and are imbalanced against this low volume tape, therefore no significant rally then they start covering (keeping iETF stronger than its supposed to be).

Here’s a snapshot of FAS, FAZ, DJI, SPX at 12:45 ET

I’ll be waiting for the imbalance in the market to adjust.

Stocks that are currently day tradable are:  DRYS, RTI, AVP.  I am staying away from DRYS unless we get rally in the close (day-trader short covering).

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First off, if you haven’t already done so, check out WoodShedder’s post “Isa’s Hats”

Notes…

–  3 red days in a row for SPX and DJI.  NDX broke the cycle.

–  IBD has “rally under pressure” alert (2/2 issue), after releasing a silly “follow-through day” last Wednesday.  Despite the intense bearish news permeating in the bank sector, I think the market can retest the FTD range.

–  VIX looks weak, however it is a tough read.  Volume was very light 2/2/09 versus Friday.  I think Friday was a distribution day.

– Earnings Lightning Round:   Company’s reporting 2/3/09 that matter

• Avon (AVP) – yuck.  2 points from 52-low, retail is bad longterm, but tricky here.
• CME Group (CME) – oh boy, the big one is reporting.  Keep an eye on ICE, NDAQ, AMTD
• Corinthian College (COCO) – marshmellows anyone?  Watch the school stocks in this order:  DV, LOPE, ESI, CECO
• Electronic Arts (ERTS) – sitting right at 52-low.  Expecting a big move here.
• Genomic Health (GHDX) – hot stock in a hot sector.  They best be guiding higher, or else.
• Integral Systems (ISYS) – will play if it rallies.
• TravelZoo (TZOO) – this stupid 57M marketcap stock can squeeze fast.
• RTI Metals (RTI) – a relatively cheap stock.  Will play if rallies.

And day trading plays at StockTwitts…

And my “Jack-your-chart” chart of the day goes to zMoose12 for his great analysis on the “devil’s child”… SRS.

aLoHa,

-gio-

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I used the following indicators to short FAZ at the close.  Priority was given to technical breakout, then momentum, then VIX.  For now, I think that is the proper order for indicators.

Here’s the snapshot of today’s H&S pattern intraday on the DJI/SPX I mentioned to take note of over on StockTwits.  Notice the golden 7940 spot.  I’ll be using this, plus that tail on the close to trade the rest of the week:

Here’s how I spotted the reversal at the close… a rare 1-2-3 punch with VIX reversal (hardest to spot), technical breakout, and momentum shift green ( = selling has stopped).  Shorted FAZ with a few twittererrrerererrrrs.  However, I capped my gains at 3%… I was too afraid of the 7940 checkpoint.

Here out, I will use the 15-minute tail on the SPX/Dow to see where we go.  I don’t mind shorting FAZ again if market can hold that 7940 with VIX flat.  I think in the next few days the VIX will be tough to use, therefore I’m slowly switching back to technical and momentum indicators.

One last note… today we had divergence with the DJI/SPX versus the NDX.  I’m not sure if the bears know how to deal with this.  Last Wednesday IBD gave us a “Follow-through-day”… Ha!  A series of bad economic news shut that FTD down fast.  Let’s see if we can get back to that level.

aLoHa,

-gio-

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…yee ha!   http://ibankcoin.com/gioblog/?p=2799

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Thinking out loud on StockTwits…

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