CVS Options Call Update

December 27, 2010 · Posted in ABC Bullish, Head and Shoulders · Comments Off on CVS Options Call Update 

The last post on Dec. 6th showing CVS ABC Pattern and its Feb. 35 Options. CVS is trading in ABC Bullish Pattern with a Long triggered at 30.70, targets: $35 (100%AB), $36-$38 (127%AB-162%AB) and stop at $29.40 (below C). On Dec. 6th Feb. 2011 $35 Call options were trading at 0.50c. On Dec. 22nd, CVS reached its 1st target of $35, and Feb. 35 Calls were traded at $1.40. The chart below shows CVS chart as of Dec. 23rd trading.

ABC Patterns in Options

December 6, 2010 · Posted in ABC Bullish, Head and Shoulder, Options · Comments Off on ABC Patterns in Options 

ABC Patterns with Options

ABC Patterns are integral part of many other patterns like Double Tops, Double Bottoms and Head and Shoulders. When I see Inv. Head and Shoulder patterns and its breakouts I plot ABC Patterns and trade using Options. Here is an example of CVS (Caremark Corp.) Daily Chart. This chart shows a clear Inverse Head and Shoulder pattern. Plotting ABC Bullish Setup, it covers from Sept. 2010 to Dec. 2010, trading above EL Level. On Friday Dec. 3rd, it traded above the Neckline to signal a breakout. The distance from the Neckline to the Head is about $6, so the projection from the Breakout level is also $6, targeting around $38. I plotted CVS Feb. $35 Calls in the subgraph. This chart also shows a potential double bottom pattern confirming the validity of Inv. Head and Shoulders in the underlying stock chart. The Feb. 2011 CVS 35 call is trading at $0.50c. Expected target is around $1.10-$1.40.

Head and Shoulder Failure Pattern

December 2, 2010 · Posted in Failed Chart Patterns, Head and Shoulder, Head and Shoulders · Comments Off on Head and Shoulder Failure Pattern 

Head and Shoulder Failure Trade

Today ES (S&P Emini Futures) gapped up about 15 points and by the end of the day closed 25 points up. About 10.15am, ES was showing some signs of initial tiredness and potential pullback. Usually on big rally days, reversal patterns are distinct and occurs over a period of time. Between 9.40am to 10.15am, ES showed a small size Head and Shoulder pattern signaling potential reversal. The neckline was marked at 1199 and the high of the head is at 1203 and high of the right-shoulder is at 1201.25. ES initially traded below the neckline from 10.15am to 10.30am. Then it reversed its trend and started trading above the neckline. When price trades above the neckline, it is a first-sign of failure. The confirmation of Failure occurs when price trades above the second shoulder high. About 11.40am, ES traded above the second shoulder high signaling a confirmation of H&S failure setup. A Long trade was entered at 1201.5. Most pattern failures make powerful moves in the opposite direction. It was evident today as price closed above the Right Shoulder (1201.25) and started to trade a powerful move to 1204.75 (first Target of HS Failure). Target is set the same height as the head to the neckline from the Second Shoulder high. Second Target is at 162% and third target is at 200% of the height above the second shoulder high. Targets are marked on the chart to show how the trade progress.