LOOKING AT A NEW MONEY MGMT SYSTEM, BUYING PUTS TOO

The overall market continues to decline and I will ride the stocks that continue to make lower highs and sell those rallies (or buy puts).

OXPS - on a weekly chart, the slow stochastics (14,3) are in overbought territory and the ADX is below 25 meaning that the stock is not trending. On a daily chart (seen on this blog), it has had a small uptrend for the past few months, but the stochastics are also heading lower while the ADX is at 15. Note that the ADX did not rise above 25 during this recent uptrend and if a stock trends up strongly, so should the ADX. Since both stochastics on a weekly and on a daily chart coincide, I suspect that the stock is going to head lower for a little while, but this is debatable.

CRZO - Here is one that I see on a daily chart that is probably going to drop a little while. The weekly chart shows a strong uptrend during the past few months, but the ADX is showing negative divergence - i.e. the stock has moved higher, but the ADX is now trending downward. On the daily chart, the ADX is less than 25 denoting a non-trending stock and the slow stochastics have just broken down below the overbought area. Perfect opportunity per stochastic recommendations.

Another one I like on the short side is VIVO. It has had a long uptrend also on a weekly chart but in mid-April, the uptrend was broken with high trading volume. Since that time, the stock has risen, but trading volume never surpassed the high selling volume. Focusing back down onto a daily chart shows the stock hitting the 200 day moving average and it is resistance. I see this as another perfect time to short the stock or buy puts.

Good luck trading.

JD