Bought +1 BC 100 OCT 09 12.5 PUT @1.95, mark 10.81

Here’s one last try in shorting Brunswick Corp. BC gapped open about 50 cents this morning on an analyst upgrade. It subsequently tested $11.00 with about 5 times first 30-minute volume. It has since been in a trading range.

Why is this significant? Observing Figure 1, we can see that $10.85 is the 62% Fibonacci level of the entire drop from Sept 19, 2008. Practically exactly a year ago. Secondly, this huge volume at open is good as it typically signal retail/pubic euphoria. Combining the two, huge volume retail push + test a long term resistance = shorting opportunity!

In the near term, BC is also testing a resitance as shown in Figure 2. Finally the stars may be aligned for a short in BC. I have tried many times and failed miserably in the past several weeks. But after analysing my trades and re-evaluating my method, this setup offers a very good chance. So let’s see how it goes.

Entry: $10.81

Stop: $11.00 by end of next week.

Target: $9.00, the next Fibonacci level.

Reward / Risk = $155 / $45 = 3.4. (These values are obtained by estimating the premium of this option at expiry using the Bjerksund-Stensland approximation.)

Brunswick Corp

Brunswick Corp (30-minute)

US Dollar vs. Canadian broke above resistance after FOMC and before G20

In one fell-swoop, USD/CAD gained about 200 pips in mere minutes today (Figure 1) after the FOMC meeting. With the G20 meeting going on this weekend, there’s going to be some expected volatility. However, a bright spot in this is that USD/CAD has broken above a trendline as shown in Figure 2. This is a very bullish sign in the intermediate term as I have conjectured that we’re still in a long term uptrend for USD/CAD.

While the resistance has moved from the initial point of 1.113 down to 1.086 because of the descending trendline, I will not be moving my point of ease-in for the other 50% position. We simply have too much resistance in the near-term between 1.09 and 1.11 to be adding at this point. I am happy holding a 50% position. I will only add the other 50% when the up trend is clear in both short and long terms.

Which isn’t the case for the short term as we’re obviously in a trading range between 1.0700 and 1.1100 for now as shown in Figure 1. Thus, to minimize my risk, I’m split up my stop into two and moved them up. 50% of current position below the support at 1.0872 and the rest at 1.0800.

For next week, I will consider adding 25% if we can stay above this long term trendline at 1.0860 (round up to 1.0900).

In summary, here’s an update of my plan.

Entry: 1.06754, 50% position from last week.

Stop 1: 1.0872, to book half the profit on this quick run up.

Stop 2: 1.0800, in case it turns ugly this weekend.

Target: 1.15, unchanged from Figure 2.

Update Sept 25: USD/CAD retraced to 1.0868 overnight and then continued it’s ascend to 1.0976 as of this writing. My stop 1 was triggered at 1.0872 (+197 pips). I still have half the units left. I have moved my last stop up to 1.0821 for the weekend. Hopefully it will hold and then I can look to add more next week after the G20 meeting.

USD/CAD 60-minute

USD/CAD daily

USD/CAD failing to break above a short term downtrend

Here’s a quick update on my paper trade in forex for USD/CAD. USD/CAD touched 1.0845 yesterday and dived back down. It is trading at just below 1.0690 now. I moved my stop higher to 1.0648 yesterday as USD/CAD broke above the short term trendline (Figure 1). There’s not many pips separating the price and my stop, so there’s a good chance that my stop will get gunned down.

As can be seen from Figure 1, the resistance is at 1.0770 and support is at a recent low of 1.0585. The current trend is also pointing downward.

USD/CAD 60-minute

Week of Sept 20, 2009: In-play stocks watchlist

Out of this week’s 10 candidates, I’ve only been able to identify 4 that are presenting playable setups.

Christopher & Banks Corp. go long above $8.10. Stop at $7.70. Target $9.00.

Week of Sept 13, 2009: In-play stocks breakout results

Last week, I identified 5 stocks with earnings release scheduled for the week and with obvious setups for a breakout. They are AIR, APOG, CKR, DBRN, and MLHR. Of which, AIR, APOG, and CKR have inched up steadily. DBRN’s up trend was very choppy. And MLHR was way too much into a move already for me to enter. So of the 5, 3 would have been profitable, 1 stopped out, and 1 passed.

Apogee Enterprises Inc. (APOG) in particular is worth a note because it literally went vertical. However, I probably would have exited when it touched the $15 resistance.

I believe the key to this week’s good results is that the overall market is very bullish, at least in terms of the public’s sentiment. S&P 500 made a marginally new high above 1070 without any retracement yet.

Thus, the moral of the story here seems to be just go along with the market trend regardless of any rationality.

AAR Corp. (AIR)

Apogee Enterprises Inc. (APOG)

CKE Restaurants Inc. (CKR)

Dress Barn Inc. (DBRN)

Herman Miller Inc (MLHR)