T trade ideas
AT&T - Ready to fall after a atcrazy rallySorry for the typo in the title.
AT&T has been forming divergences for quite some time and I believe it is ready to fall. Double class A bearish divergence on the MACD lines, double divergence on the MACD histogram, Class A bearish divergence on the 13 day FI and class B bearish divergence on the 2 day FI. All happening at a very important resistance area, after a crazy rally. Stop is at 37$ and targets at 34 and 33.50.
Weekly here : Not saying that much, but doesnt forbbid shorting either.
AT&T - Double bottom with divergence and engulfingThere is a saying that appears in a lot of books "Plan your trade and trade your plan". I never did this. I always keep a trade that is on profit until it looks like the trend changed, I never plan my exits. This is the first trade where I'm gonna make a plan and trade it, no matter what happens.
The US market opens in 10 minutes, and I'm gonna watch for the open. A strong gap down cancels the trade. With my risk management rules and my portofolio size, I can buy 100 shares of AT&T. The stop loss will be under the current low. I'm going to close half of the position at take profit 1, and move the stop loss on break even (including the commision costs) on the remaining 50 shares. If we close over the last swing high, that is 33.50$, I will move my stop loss at the last swing low on the hourly chart. If we reach 35$, I'm going to close the entire position.
Technically, we have a class B bullish divergence (the third one) both on the MACD lines and the histogram. Bullish engulfing with strong volume. Also, the support line at 32$ is a very strong weekly support.
AT&T HEAD AND SHOULDERS POSSIBLE ?I am already short at 35.35 and waiting for neckline test. It's intresting that 34.95 was previously tested so it's a nice confluence with possible target based on H&S :)
Monthly view - levels that i see Testing the blue line for possible support but too many times is a concern.
for a overall safe bet, over $39.05 could offer a excellent entry for long term hold
Follow up on the $T Trade. Downward Channel is looking mature. Here is the original $T chart showing the failed breakout.
Looking for a channel breakout to the upside within the next 2 weeks. Conservative Target is 36.05.
www.stocksetups.com
AT&T 5 month downtrend signals a tradeRemember the famous old market indicator that Robert Farrell invented back in his days at Merrill Lynch? It was the GM indicator. It simply said that whatever GM was doing was an indicator for the US economy and market. GM was a leading indicator for many years until GM became a bloated, non-competitive force in the global automobile market.
Now comes AT&T. The stock has a remarkable correlation to the US stock market. It moves up and down very tightly to the movement in the overall market. If the market is going up without AT&T, watch out. If the market is going down and AT&T is holding up, then assume the market will recover.
What we are seeing here is AT&T in a firm downtrend over the past 5 months. This is a sign that something is wrong. At least what we can do is to sell short the market and BUY AT&T and lock in this very wide spread. Then we will look for the market to fall down to catch up to where AT&T has fallen to. IF, on the other hand, AT&T lifts to catch back up to the market, then we can profit. In either situation we profit.
The way to lose is for the market to go on higher and for AT&T to stay down. I view the risk as acceptable.
Buy AT&T 33.90 last and sell short SPY 168.93 last. Risk 5% on the entire position. Target 5%-10% return in 30-60 days. If the market falls by 5% and AT&T holds steady, that is a 5% return. If AT&T rises by 5% and SPY (the market) holds steady, then that is a 5% return. If the market falls by 3% and AT&T rises by 3%, then that is a 6% return.
I'd suggest that each position be the same dollar amount.
The net-net. I shall put this as a "LONG" for AT&T, but it is a "NEUTRAL" POSITION. I could have also put it as a "SHORT" on the market. Either way, I hope we all can make some money on this setup.
Best regards,
Tim 2:05PM EST Friday September 27, 2013
