Here’s your trading strategy for CBOE Holdings (CBOE) (December 14, 2015)
A quick video here on CBOE ( NASDAQ:CBOE ). This was a little like Icarus, it was doing really, really well, then ultimately it flew a little too close to the sun. That was your first indication, really, that the stock was in trouble. You could look at these high volume spikes beforehand, but then when it falls down to the 50-day moving average it should be bouncing. Right? Okay, great! So you don’t want to be long this stock. This is institutional selling. How do we know that? Because volume is heavier than average and the stock is closing near it’s intraday lows and the red bars look really, really ugly. So this is what we had. Right? We had this on 12/8, that was last Tuesday, and then more institutional selling.
So if you’re buying here, you’re not trading along with the institutions. They were working up here; so now you’ve got this stock rebounding right up here. Does this mean that you’ve missed the opportunity to buy? I don’t think so. There’s an opportunity to sell coming up. Here’s my point: we see the zigzags here, but what’s the big thing? These big volume spikes are really, really concerning to me. They’re really concerning. So here’s what I would suggest you do: here is support, here is resistance. this channel breakdown, that was a key breakdown. You can expect this kind of move, and then you see this so often, somewhere in here, maybe the stock breaks through there and there’s selling up here. But you just don’t see stocks do this, breakdown and then move up to new highs. You just don’t see them. Typically you’re going to see them do this, they break down and they move somewhere up here and then roll over.
So what you want to be doing, frankly, is looking for a short entry. You want to wait for this stock to falter. Maybe we get another day, maybe up to the $68.00 level, the 50-day moving average. If we get a little bit of a rollover, that’s what we’re looking for and that’s your short entry on CBOE ( NASDAQ:CBOE ). I just want you to make sure, if you’re doing that, you have a buy stop. Don’t just sit there, and if the stock continues to move higher think, “Well that Fitzpatrick is a ‘bonehead’, this was not a good short,” and continue to lose money. I may be a ‘bonehead” but that doesn’t mean that you need to lose money because of that. What I’m saying is, you take responsibility for your own trade, I’m happy to give you the idea and I hope you make money on it. But I want you to take responsibility for your own trade by setting a stop. You define your risk and you’re going to do just fine.
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