Risk and Stability

 | Jul 07, 2014 | 12:28 PM EDT  | Comments
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Stock quotes in this article:

coh

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aapl

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spls

,

rad

Writers, commentators, pundits, traders, and pretty much anyone involved with the market will have an opinion. There are going to be different opinions and lots of very bold personalities. Trading requires a certain confidence. Unfortunately, confidence can easily devolve into arrogance. At times, it can be difficult to tell them apart. A difference of opinion can create great debates or petty arguments.

Personally, I don't mind trading barbs, although I hope it is a teaching or sharing moment. I won't hesitate to challenge someone's strategy or someone's claims. My hope in doing so is to learn something myself or open my eyes to other ideas. At the very least, I will challenge my own thinking and strategies.

For instance, I'll be the first to admit I didn't completely agree with Paul Price's strategy on Staples (SPLS) and Coach (COH). But it did get me looking at those names and watching them. Often a falling knife will, at some point, find a floor and a reversal. These are two, along with Rite Aid (RAD) which look to me that they may indeed be there.

COH is one I already hold, but I'm looking to add SPLS and/or RAD here today. The chart of SPLS looks like it has finally outlined the risk, which is a must for me. There is a nice channel for price with a double bottom in place. If SPLS closes under $10.65 then I want no part of a long position. The price here today is attempting a breakout, but not quite there. The short-term moving averages are looking at a bullish crossover, while RSI fights to hold 50. The MFI demonstrates some money is coming back into this name, so a half position here on the stock followed by more around $11.40 looks like the long side play. The risk is about $0.50 to the downside, while the upside offers a bit of gap-fill potentials.

 

Staples (SPLS)
Source: StockCharts.com

 

For those wanting a bit more in the way of stability and earnings, then Apple (AAPL) finally looks ready to hit the triple digits. Price is breaking out to new highs here with a measured move right about $100, which ties in well to trader psychology. There is nothing significant about $100 for most other than it is a round number and makes for an easy sell when it comes to rationalizing a move. I'd like to see a better MFI, but volume was way off with the holiday week. The momentum is strong, price breaking through resistance and the short-term moving averages just crossed over in a bullish fashion. Three out of four is enough for me to get involved with a July $95-98 call spread around $1.00 or even just July 19 $94.29 calls if they are out there for you in your comfort zone.

 

Apple (AAPL)
Source: StockCharts.com

 

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