Can We Milk BIDU For a Little More, or Better to Cut and Run?
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Can We Milk BIDU For a Little More, or Better to Cut and Run?

John F. Carter - February 23, 2016

Hi everybody, this is John, and welcome to the free video. We're going to focus on two quick things here tonight. Look at the QQQs. So, notice here, we got the daily chart over here, and over here we got the 195 minute. We've essentially made that round trip back to the 89, okay, and you can see here that we push through the 34, which opens up the door to the 55. I think at this point we can climb our way up to that 55 period moving average.

Just keep in mind, moving averages are like fences, right? And keep in mind that although on a daily chart this looks like this unbelievable rally, on a weekly chart all we've done is rally back to the ATMA. And this may be all we get. Okay? This is a normal move in a down trend on a weekly chart. I know that's kind of crazy. So, on a daily chart, this potentially opens up for a little bit more, but I do think that this rally is starting to look tired.

So how do we play it? Right now, the only longs I am interested in, in the short term--one is BIDU. I like this one just simply because--and we'll see, maybe it's going to peter out from here--but I like this because it has earnings Thursday after the close, so we have the potential for expanding price action and expanding implied volatility into that.

I am just looking to see if we get to like $172 bucks. I'm actually not looking for much, and I'm not planning to hold any options through earnings there. The only trade ... let's see. On this, I'd be happy. We've got an order to sell these options here at $8.60 if we can get there, and I got a butterfly that I'm planning to hold through earnings.

The other one here I like is CMG. CMG also is just kinda doing its own thing, and you've got a squeeze. It really hasn't cared what the rest of the market is doing. From a weekly perspective, we've got kind of this rounded bottom here. CMG tends to move like this, if you've ever traded it before. I mean, it just has these big swings where it'll just kind of march up $100, pull back $60, march up $200 ... It's just the way it moves. So it's a thinner, lighter volume stock, and the idea with this one is we try to make it theta positive, but it's hard. So we've just got this directional trade on it. The 535 calls, got a little cushion in there, sold some put spreads on it, you know, trying to make it a little bit better in terms of theta and premium decay.

From there, the only wild card that I'm seeing is oil. We're starting to see in the oil itself as well as the major oil stocks, daily squeeze here. We got the early warning indicator, we got a head and shoulders reversal. I think the surprise move here is going to be oil going higher. So we're looking at CVX, oil futures, and a few other things there.

All right, so that's what we got there. And then last but not least, in terms of this market in and of itself ... Well, I'll talk more about this in the premium video, but I do think that we're going to rally a little bit. I think Tuesday's gonna be choppy, possibly a little bit down. The trend did get to .38 today, which means we kind of shot all of our bullets today. But I think on Wednesday, we actually could start rolling over here pretty good.

All right, so we'll talk a little bit more about that in the premium video, the different positions I want to set up for that, but it should not be a dull week. You guys have a great night. We'll see you at the next update.