TradeKing Midday Market Call Recap - $SPX & $CBI
Quick Takes Pro Market Technician Michael Kahn Analyzes the S&P 500:
SPX was trading at 2,073.44 at the time of analysis, up 20.79 on the day. Michael indicated that we’re still seeing a lot of overhead resistance that SPX will have to fight through on the long-term, but there does appear to be short-term movement. He points to a bull-flag breakout pattern following a pullback with a one-day rally appearing above the flag pattern. Volume, however, is still relatively low which leaves Michael skeptical on the overall market.
Michael Kahn’s Chart of the Day: Chicago Bridge & Iron Company (CBI):
Chicago Bridge & Iron Company was trading around the $35.85 level during the time of analysis, below its 50-day moving average of $37.20. Following a peak in early 2014, CBI has been trending downward and has been bearish for the last two years. The bear-market trendline has been nearly on top of the 200-day moving average all year, with the 50-day moving average appearing right in the middle of the rising channel that appeared in early February. Michael believes that pattern alone could be a bearish-flag pattern in the big picture. The February rally failed not only at the long-term trendline and the 200-day moving average but also at the top of the rising channel pattern. CBI continued to try to break down today but the strong market appears to be keeping it propped up for the time being. CBI is still riddled with bearish signals and Michael suspects this stock will continue to decline in value with a further breakdown being imminent.
TradeKing “Options Guy” Brian Overby Analyzes Chicago Bridge & Iron Company’s Volatility & Dividends:
Chicago Bridge & Iron Co.’s 30-day Implied Volatility (IV) is middle of the range for a stock of this price while also being near a 6-month low. Brian doesn’t expect volatility crunch to be a problem.
Chicago Bridge & Iron Company pays quarterly dividends yielding about 0.78% annually and its next earnings announcement is anticipated to be on 07/28/16.
Brian Overby Shares CBI Paper-Trading Strategies:
Brian’s first paper trade was a Short Call Spread a that is neutral to bearish on the marketplace. His second paper trade was an at-the-money near-term Long Put Spread that has a higher risk-reward but he considers the more speculative of the two paper trades.
Brian’s First Paper Trade - Short Call Spread
- Buy 1 Jul 15th 2016 CBI 40.00 Call
- Sell 1 Jul 15th 2016 CBI 37.50 Call
- 52 days to expiration
- Net Bid 0.60, Mid 0.70, Ask 0.80 for the strategy
- Net credit is 0.70 if we get it at the mid-price, though note this is not always possible
- Maximum potential loss: 1.80
- Maximum potential gain: 0.70
- Total commission to enter this trade at TradeKing is $6.25
Brian’s Second Paper Trade - Long Put Spread
- Buy 1 Jun 10th 2016 CBI 37 Put
- Sell 1 Jun 10th 2016 CBI 35 Put
- 17 days to expiration
- Net Bid 0.80, Mid 1.00, Ask 0.1.15 for the strategy
- Net debit is 1.00 if we get it at the mid-price, though note this is not always possible
- Maximum potential loss: 1.00
- Maximum potential gain: 1.00
- Total commission to enter this trade at TradeKing is $6.25
Important notes: Option prices are given as a per-contract amount. Multiply loss and gain figures by 100 shares and by the number of contracts traded to determine the amount of the full potential loss or full potential gain. No additional calculations are needed to determine commission costs.
TradeKing Options Tools used:
Options involve risks and are not suitable for all investors. Prior to buying or selling options, an investor must receive a copy of Characteristics and Risks of Standardized Options, sent to you in previous communication. Additional copies may be obtained by calling TRADEKING at 877-495-KING or by visiting www.TradeKing.com/ODD.
Multiple leg options strategies involve additional risks, and may result in complex tax treatments. Please consult a tax advisor.
At the time of publication and in the preceding month, TradeKing and/or Michael Kahn did not have ownership greater than 1% in any stocks mentioned; did not have any other actual, material conflict of interest known at the time of publication; have not received compensation from a public offering nor from investment banking services related to any companies mentioned within the past 12 months, nor expect to receive any in the next 3 months; nor engaged in market making in the securities mentioned.
System response and access times may vary due to market conditions, system performance, and other factors.
Any strategies discussed and examples using actual securities and price data are strictly for illustrative and educational purposes only and are not to be construed as an endorsement, recommendation, or solicitation to buy or sell securities. Past performance is not a guarantee of future results. Consider the following when making an investment decision: your financial situation, your risk profile and transaction costs.
Market timing is a complex investment strategy which involves risk and may incur additional commission costs.
While implied volatility represents the consensus of the marketplace as to the future level of stock price volatility, there is no guarantee that this forecast will be correct.
TradeKing charges $4.95 for online equity and option trades, add 65 cents per option contract. TradeKing charges an additional $0.35 per contract on certain index products where the exchange charges fees. See our FAQ for details. TradeKing adds $0.01 per share on the entire order for stocks priced less than $2.00. See our Commissions + Fees page for commissions on broker-assisted trades, low-priced stocks, option spreads, and other securities.
The projections or other information generated by TradeKing's tools regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. The calculations do not take into consideration all costs, such as commissions and margin interest which may impact the results shown. It is the user's sole responsibility to select the criteria to enter in the TradeKing's tools, or to choose among the predefined screens, and to evaluate the merits and risks associated with the use of the tools before making any investment decisions. TradeKing is not responsible for any losses that occur from such investment decisions.
TradeKing Webcasts and All-Star Blog are provided for educational and informational purposes only. All investments involve risk, losses may exceed the principal invested, and the past performance of a security, industry, sector, market, or financial product does not guarantee future results or returns. TradeKing provides self-directed investors with discount brokerage services, and does not make recommendations or offer investment, financial, legal or tax advice. You alone are responsible for evaluating the merits and risks associated with the use of TradeKing's systems, services or products.
TradeKing selects and defines as All-Stars certain independent market commentators who are recognized industry personalities and experienced traders and who provide timely market commentary via the TradeKing All-Star Blog and/or TradeKing Webcasts. Each All-Star commentator's bio, related qualifications and disclosure as to their relationship with TradeKing can be found on the All-Star Roster. The selection of All-Star commentators is solely based on the quality and style of the content provided. TradeKing does not measure, endorse, or monitor the performance or correctness of any statement or recommendation made by independent All-Stars commentators. Supporting documentation for any claims made by TradeKing All-Stars will be supplied upon request by the author of the post, who is solely responsible for the views expressed. Contact TradeKing All-Stars by sending an email message to TKallstars@tradeking.com.