Wave Trading with Gio

The Profit: CAGC, China Can Rebound

Gio — Wed, 17 Mar 2010 21:08:39 +0000

Look at all that profit taking! It came right at a descending wedge triangle. What I like about it is that it sold off right near it’s high. Don’t buy on the dip, buy on the rebound. That means grab some cheap shares above the line.

Buy range: 25.90 - 26.xx

Then set the stop-loss just below the line.

The Profit: GMCR Put-Strangle triggered

Gio — Wed, 17 Mar 2010 21:04:09 +0000

Green Mountain Coffee Roasters Inc. (GMCR: 96.80 -0.83%) is a coffee beast. It’s staring 100 in the eye, and you could wait until 100 or 110 if you believe it still has gas. But even so, if it does get that high I think the PUTs will not be affected too much since their hedge value is growing stronger. Whatever, we want it to move big either way.

You can buy the first PUT here. Remember to go at least 4-6 months out. We will buy the Call when GMCR suffers high volume profit-taking. I presume that will happen around the low 80s.

Patience.

The Profit: HITK finds temporary floor

Gio — Wed, 17 Mar 2010 20:57:12 +0000

Staying sector focused here.

One flag up found in the pharma sector (generics). HITK finds a temporary floor. Expecting next wave of buying in the next few days. Massive selling in the past 2 days. This is a higher risk play, but looks great for an intraday long or short term swing long.

(HITK: 23.61 -1.62%)

7. Bridgepoint Education (BPI) Makes the Bullish Honor Roll

Gio — Tue, 16 Mar 2010 21:04:29 +0000

Ah, yes, those dexterous education stocks. I’ve had an affinity towards their bullish tendency for quite some time. And I will be repetitious in my reasoning and theory- there is something about education that promises better times. It is as if knowledge is the light at the end of the tunnel. And during our darkened economic state, the light gets ever brighter. There lies its appeal. The unemployed and underwhelming workers are like moths, attracted by the warmth and the light of higher education as it promises change, better times. Perhaps outside the tunnel of economic turmoil the air is fresh and clean. The more desperate the mind, the more creative the imagination of what’s outside- outside is where we can finally afford our mortgages, pay down our debts, spend a little, eat out again, buy gifts for our loved ones without remorse, converse with a stranger about that game winning three-pointer last night and not about how today might be your last day at work. And so back to school they go. They always taught us in grade school that college opened up doors to different places. By the looks of these education-stocks, I would presume a lot of people are knocking on doors.

BPI + 6.83% today. 1Bil market cap and growing.

(BPI: 23.82 +1.84%)

Apollo Group, Inc. (APOL: 64.63 +0.97%) …underachieving. Needs some muscle.

Career Education Corp. (CECO: 32.46 +1.52%) …needs follow through on rally. But still impressed.

ITT Educational Services, Inc. (ESI: 116.31 +1.32%) … confirmed breakout. But currently testing huge resistance @ 114.50

Trade: AFAM

Gio — Fri, 12 Mar 2010 20:37:40 +0000

New longs: AFAM 36.12

Last time this stock traded above 36 was on 2/22. Looking for some volume to accumulate. I still believe the demand for home healthcare is very high. Industry is strong, hope I’m not wrong.

K, going surfing or fishing, or whatever. I just need to get out of the office!

Net-flix off the Bears

Gio — Wed, 10 Mar 2010 16:53:14 +0000

Wow what a stock. I can’t help but noticed how overbought this company is, but then again, it’s been ripping apart the shorts for over a year now. This stock is a good example of how overbought indicators do not always work. Would I buy here? H-no. This one is easy to play:

1) long now

2) OTM-PUTS 3-6 months out

Then you can get fancy buy playing what I call the timed-bearish-put-strangle. That means given a principle investment =x, buy .75x of puts now, and .25x of calls on the next major pullback. I love this play, and it rarely occurs. It’s like losing money to make more money. I’ll create the strategy and post some feedback over on The PPT.

Meanwhile, my other retail pick, JCG, had a great conference call, but it looks like it is pulling back here. Let’s watch this for a while. Keep a sharp eye on those retailers. They have been oddly bullish during an economic downturn.

The Dress Barn, Inc. (DBRN: 26.39 -0.26%)

Ross Stores, Inc. (ROST: 52.15 -3.35%)

(DEST: 25.44 -0.24%)

(GPE: 0.00 N/A)