HEAT TRADE: OPENED 7.7.2010 @ $5.50

I saw a great trading opportunity on a stock that I have been following for a long period of time. HEAT has entered a buying zone for me based upon the chart seen here. (click on the chart to see it and read the text associated with it.) I bought 2000 shares at $5.50 and am expecting a higher move. That will also depend upon the overall market too. If the S&P 500 goes down, this will most like follow suit.



Here is now a daily chart. Notice how the weekly chart above and the daily chart to the right here have the stochastic indicator in the oversold (below the 20 line) area. When both are in the same area, that should mean there is a potential for this to move back upwards soon.



UPDATE: 7.20.2010 On a daily chart, HEAT has been behaving as it should be which means upward. This upward movement was stoked by the weekly chart and the daily chart both being in the oversold territory on stochastics.

However, when you look at the weekly chart, you can see that trading volume is slowing down while price trickles higher. What a trader wants to see is volume picking up with volume climbing higher.

Plan on staying in on this trade and as of today, it is still 13% in profit.


UPDATE: 8/5/2010
So far HEAT has garnered a 20% gain for me and I see a short-term top in place so I am going to sell an August $5 covered call at $1.65.


8/17/2010
Here is the chart and why I saw the short-term top on the stock. As noted above, I sold an in-the-money August $5.00 call for $1.65. Today, I bought the contract back to close the position for $0.90. That is equivalent to $0.75 per share. This will knock my cost basis down to $4.75.