Too Tough to Chase

 | Sep 16, 2011 | 11:19 AM EDT  | Comments
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Today is a cleanup day for me. No, I don't mean this as in, "Man, I'm really cleaning up at the cards table" -- rather, I'm closing out positions ahead of the weekend. After four straight up days for the market and a push higher this morning, expectations on the Michigan Sentiment number were high, with whispers going up to 60 -- so an even-better-than-expected number logically brought about some profit-taking. I thought the move was tough to chase yesterday, but today feels even more difficult. I'd pick and choose spots very carefully here, both on the long and the short side. Trading today should actually be pretty boring for most. It will probably be best to key your focus on just a few stocks, or on a major index. 

As for myself, I'm playing around with Netflix (NFLX), Apple (AAPL) and Research in Motion (RIMM). Apple is gunning for $400 -- but, with the market getting weaker, it may be tough to keep off the $395 area. My instinct remains leaning toward $400 here. But, with this stock lately, any play should generally be abandoned with at least an hour to go in the session.

Netflix, meanwhile, has been a disaster the last few days. I lucked out owning some put spreads into the company's warning on subscriber targets, and now I'm playing for the stock to land between $160 and $165 Friday, but I have to say it's tough to determine where support will come in on this one. The $160 area makes sense today simply due to options pinning -- but, going into next week, this one may make for a great strangle or straddle play.

Finally, RIM is getting a little bounce off of some delay rumors surrounding Apple's iPhone 5; however, I don't know if even that would help out the stock's situation. If I were going to play this one from the long side, then I'd only use collars or call spreads. I do expect buyout rumors to pop up again over the next two weeks, but I would use those to close positions, especially swing trades. The put combinations worked well into earnings, though I chose to sell Sept. 16 $24-$25 call spreads to lock down the gains on this one.

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