T2108 Update – March 28, 2012 (Buyers Defend Latest Breakout)
Dr. Duru | Mar 28, 2012 09:09AM ET
: 54%
VIX Status: 15.5%
General (Short-term) Trading Call: Hold with a bullish bias
Reference Charts (click for view of last 6 months from Stockcharts.com):
Commentary
Sellers did not come close to reversing Apple’s Big Mystery Buyer In Q1 2012 ,” a Seeking Alpha author seems to have crunched the numbers to prove call buyers are primarily responsible for pushing Apple upward ever higher.
Bears will assume that it is a matter of time before the strong leaders succumb and take T2108 to oversold levels. The bulls will be encouraged by the prospects of the laggards turning around and sending the market ever higher. The tiebreaker rests with the data…which, again, tells us clearly that we should give the bullish case the benefit of the doubt given the historic overbought run we experienced to start the year. Amazon (AMZN) is one example of a laggard that is finally waking up to provide reinforcements.
AMZN finally tries to play catch-up
I bought March 205/210 calls on this pullback assuming that the 200DMA will now serve as firm support. The short 210 calls allow me to enter the 205 calls at a cheaper price; I do not expect AMZN to get over 210 by Friday. By the way, Tuesday’s follow-through on the breakout featured some heavy call buying in AMZN; glad I waited! Again, from OptionMonster:
“Amazon.com(AMZN) is also drawing fast-money trades as buyers snap up its weekly 205 calls, 210 calls and 215 calls. Weekly volume in the e-commerce giant is approaching 48,000 contracts — more than 27 times the average amount. AMZN rose 3.07 percent to $209.10.”
Charts below are the latest snapshots of T2108 (and the S&P 500) Refresh browser if the charts are the same as the last T2108 update.
Black line: T2108 (measured on the right); Green line: S&P 500 (for comparative purposes)
Be careful out there!
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Full disclosure: long SDS; long SSO calls; long VXX calls and puts; long CAT shares and puts; long TEX puts; long AMZN call spread
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