May 21. Symmetrical Triangle On BBRY Chart Forecasts Higher Prices Ahead.

Being in a long-term downtrend, BlackBerry (BBRY) seems to have found a bottom in September 2012. Whether it is the final or interim bottom remains to be seen. It has no doubt though that the rebound occurred in an impulsive manner. After reaching a 52-week high of 18.32 in January 2013, BBRY is trading sideways almost 4 months, forming a Symmetrical Triangle. The unfolding pattern implies several possible variants of the future price action. Here are two most likely scenarios.
1. The Elliott Wave theory postulates that triangles always occur in a position prior to the final actionary wave in the pattern of one larger degree, i.e. as wave four in an impulse, wave B in an A-B-C, or the final wave X in a combination. Assuming that a Symmetrical Triangle is identified right, the most likely scenario is that a Zigzag is unfolding. A Zigzag is an A-B-C correction, where waves A and B are impulses. In BBRY case the run from 6.22 to 18.32 is wave A and wave B (Symmetrical Triangle) is close to completion. Waves A and B in a Zigzag very often are equal in length, therefore, in this case we can expect wave C to reach 25.
2. It possible that wave 3 in the impulse concluded at 18.32 and wave 4 is unfolding as a Symmetrical Triangle. In this case we can expect wave 5 to reach 22 (height of triangle added to a breakout level).
A break below 13 will invalidate both scenarios and put in place a more complex correction. Actually, I have analyzed two more different scenarios (one up and one down) based on the NeoWave method before writing this post, but they are more complex and less likely. So, let’s keep it simple for the time being.
And, finally, here are two bullish price targets calculated from the September 2012 low on the long and medium horizon P&F charts.

May 19. Blog's Trading Account Performance.

The account performance is calculated after commissions and fees.
All trades and the rationale behind them are posted on the blog the same day the trades are executed.
I entered just one short-term trade through the May options cycle because of my pretty busy schedule. The trade in 3D Systems (DDD) was unfolding not as had been planned from the beginning and I exited it 2 days later at the first opportunity. An early assignment of my short leg (sold calls) in the call credit spread helped to get a better profit than expected.

May 18. SPX On Way To 1680.

May 13. SPX, Weekly Update.

As you already know, I pay close attention to the underlying strength in different market sectors evaluating the short and medium term market perspectives. For this purpose I follow the Bullish Percent Index (BPI) – one of indicators from the market breadth indicator family.
I was pretty cautious over the last two months when the SPX was traded in the 50 points range between 1525 and 1575 and the BPI of four market sectors switched to sell mode. I was expecting a deeper correction thinking that the SPX would follow the spring and autumn pattern of 2012 when the similar changes in the market breadth led to the 155 and 130 point correction, respectively. This time, however, the market digested the previous run through a sideways consolidation. Two weeks ago the BPI of the Energy sector switched to buy mode again. Knowing that the Energy sector is extremely volatile (in December 2011 the Energy BPI switched from buy to sell and back to buy mode during the SPX 65 point correction) I waited for additional signals. When a week ago the Industrials and then the Technology sector switched to buy as well, it was a confirmation that we would, likely, see higher prices in the near term.

On May 06 I posted the SPX chart with the next projected bullish price target at 1645, the 1638 resistance and the 1575 support levels. Currently, the SPX is testing the bullish resistance line from below and on a buy signal from 1582 (lime box) on the medium horizon P&F chart. The internal bullish support line is still at 1575, but the level to watch is at 1589 (pink box). If the SPX falls to this level in one column of Os then a High Pole pattern is, likely, in making signaling about the medium horizon trend reversal.

May 10. Trading Journal: Exited Position In DDD.

One of my goals, as a blog writer and trader, is to describe a rationale behind every trade in blog’s trading account to keep me disciplined and accountable. So, this is what happened with my open credit call spread in DDD.
I entered the credit call spread in DDD following the announcement of a secondary offering counting on a limited upside potential till the expiration date and an opportunity to keep the sold time premium. The stock, however, was traded between 43 and 44 for two days. Having my position underwater I tried to repair it and roll it up. My intention was to move the spread to higher strikes (44 – 46). In that case I would remain flexible in managing the position and keep a tiny portion of profit if DDD stays below 44 at the expiration day. My limit order, however, didn't get filled and I still had the open call spread at 42 -44 strikes at the close yesterday.
At today’s open the picture was changed drastically. DDD announced the pricing of an underwritten public offering ($40) and the stock opened below 41. Simultaneously, I got a call from my broker that my sold 42 strike calls were assigned and he is in a process of replacing them with a short position in DDD stocks. Apparently, somebody exercised his deep in-the-money calls yesterday and I, suddenly, found myself with 2000 sold short DDD stocks into my account today.
The price of DDD, meanwhile, was moving up fast and in order to keep the status quo until all adjustments in the account are made I bought 20 new contracts of 42 strike May calls. When the short position in DDD stocks appeared on my trading platform, I covered it immediately at the market and left with two long positions in May calls at 42 and 44 strikes. These positions had nothing to do with my initial trading plan, so, I sold them a few minutes later too.
Despite a profit it was a messy trade anyway.

Wild intraday swings over the past three days had a little influence on the short-term uptrend, which remains intact. The internal bullish support line (blue) provided support on the downside in May. The nearest support levels reside at 41 and 40. With the 43.5 bullish price target being reached the next one is at 49 provided by the horizontal count from the March bottom.

Assigned DDD May13 42 Call 20 contracts
Short DDD 2000 shares at $42.00
Covered DDD 2000 shares at $41.77
Bought to open DDD May13 42 Call 20 contracts at $1.05
Sold to close DDD May13 42 Call 20 contracts at $1.35
Sold to close DDD May13 44 Call 20 contracts at $0.55

May 08. Trading Journal: Entered Position In DDD.

3D Systems (DDD) opened today with a gap down on the 30 min chart after announcing a secondary offering. Thinking that the 41-42.5 opening gap will provide resistance and the short-term uptrend from the middle of March will be stalled for a while I entered a credit call spread.

On the short horizon 0.5x3 60 min P&F chart the price fell down from a pattern which looked like a Symmetrical Triangle (green lines) activating the potential bearish count of 36. DDD remains in the short term uptrend and I was going to pay more attention to support levels at 40, 37.5 and 36.5 rather than expect that the price goes all way straight to 36. However, a massive buying in the last 30 min of trading pushed the price to the recent highs and negated a sell signal (pink). I will repair my position tomorrow.

Bought to open DDD May13 44 Call 20 contracts at $0.36
Sold to open DDD May13 42 Call 20 contracts at $0.81

May 06. SPX, Uptrend Is Continuing.