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What To Focus On - Part Two

My blog of November 27th was entitled "What to Focus On". Please read it. This week we are feeling a bit of a hangover. Last's weeks triple witching event is over. Stocks that were forced to contract in price to sqeeze out spectatate positions on them are now free to resume there old trading patterns. This Monday morning at 10:20 a.m. the Djia is up 301 points. There are also losers. So now what? Mark on your calendar exactly three months down the road how the markets traded on the first morning after one of these triple witching events and use this same logic to catch the upside on the next "hangeover" day like this. How do you pick the winners? Find a few stocks that have enjoyed a recent upswing and play them to pop on the first trading session after one of these events. This blog is just an observation.

The Three Amigos On A Friday

Boeing, Caterpillar and Deere. All three are heavy hitter stocks that have a wide following. Let's watch and see how they traded during the second half of the day, Friday January 5th. First, it should be mentioned that payroll numbers in the U.S. came out prior to the opening bell and they were largely unchanged from the previous month. That was deemed to be a positive for the markets. Look at these readouts, the first being just a few minutes into the trading session.
Now look at a 12:12 p.m. reading.
Now look at how these three stocks were doing at 12:12 p.m. Notice a weak market and notice these three stocks going strong. Would this be a good time to jump into Puts and catch a Friday afernoon slide or to purchase Calls and catch a further upward surge?
All were strong. Might they sell off going forward? Now a mid afteroon look..
Now look at how the market closed the day.
Now the closing reading on these three amigos.
Now here are the one day charts on all three of these stocks.
What's the common theme to all three of these one day charts? It's how they all surged on the opening. Following this, their trading patterns on the remainer of the day were largely irrevelant. Think about this prior to the release of next month's payroll release numbers and position yourself accordingly. Seasoned option traders know this. *** One final observation. Two Deere series of Calls. Both are lightly traded and these are extreme positions.
Scary stuff.

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