Google, Inc (GOOG) is set to release its earnings announcement after the close of the market today. We’re pretty excited to hear this earnings report, and we’ve got a hunch that it might be a lead-in to other tech giants releasing later this week. Right now GOOG is sitting on it’s 50-day simple moving average, right around $700.

That’s a pretty good base for bulls… there’s certainly a lot of room to run upwards, but there’s also at least $20-$30 on the downside that could be filled in without breaking any important technical barriers. 

The move predicted by implied volatility is around $35, which puts the upper end of the earnings range comfortably within GOOG’s recent range, and the lower end of the earnings range above a previous support line. It’s a toss-up, and we’re ready to see where the ball lands in a few hours.   

Tech leader IBM responded to the beginning of the year like stocks across all sectors - with a gap up, followed by a little pull-back. We’re looking hard at the technical indicators to see if this is an aberration, driven by increased market volume and new-year’s glee, or if it’s a sustainable increase in price that we expect to continue. 

IBM has been in a range between a long-term support line and its 200-day simple moving average since a big drop after its last earnings announcement. There’s been a lot of channeling happening since then, which doesn’t provide an enormous opportunity for any directional trading. We’re going to continue to stay away until one of two things happens - either the channel is broken in either direction, or there’s a significant bump in implied volatility, that would allow us to sell credit spreads or an iron condor with real premium. 

Whole Foods Markets (WFM) has been on our watchlist for more than half a year now, and it’s consistently been an interesting stock. The chart above shows a break below a long-term support line, and the 200-day simple moving average, both of which are bearish signs. 

Now we’re looking to $88 as a short-term support level, which is in danger of being broken with this morning’s pull-back. We’ve been predicting a market-wide drop in prices since early in December, so we’re not surprised to see this. Implied volatility in WFM is over 30% for the first time since its last earnings release, so we’re keeping a close eye to see if a trade presents itself. 

We  wrote about Amazon (AMZN) during “20 on 20” a week ago, and recommended a 255/260 bear call spread. Looks like we nailed it, and anybody who took that advice should be very happy right now. AMZN continues to be a range-bound security, and we like range-bound securities. Now we’re going to wait and see if the lower level in this channel is touched… something around $215. 

There’s definitely no trade here, at least not yet, but we think there will be soon. There may be some small support at $240 (the 50-day simple moving average) and if it gets that far, there may also be support at $230, from the 200-day simple moving average. 

If AMZN gets to $230 you can bet we’ll post a bullish note here, as that’s close to the bottom of this slowly descending channel, and we’ll be happy to take another position in what has been a pretty reliable security for the past six months at least.

We’re kicking off the December edition of 20 on 20 with a look back at AAPL. Last month we predicted range-bound trading between $520 and $595, and we pretty much nailed it. The high since a month ago was $594 and change, and the stock tipped below $520 only once, late last week. Anybody who placed an iron condor on that analysis is very, very happy right now.

Looking forward, we see $500 as a continued support line. It’s been nearly touched twice, and both times resulted in a quick $20 bounce. That’s a good sign for bulls desperately clinging to the stock, waiting for a return to the 600’s. While that may not be in the cards, it’s a possibility. We see the 200-day simple moving average as a resistance point, as well as this descending trendline that forms the top of a triangle. Look at the chart to see what we’re talking about.

In general, we’re neutral to slightly bullish on AAPL, but we wouldn’t be surprised to see a little stumble coming out of the gates in 2013. If you’re looking at entering trades now during the holiday calm, we’d advise you to keep your volume lower than usual for now.

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AAPL has been giving traders fits lately, at least those who have taken any real bullish stances in the past few months. We’re looking hard at this chart, particularly today’s move, and deciding what to do next. 

The lowest point from the previous bottom was $505.75, and we’re within a kitten’s whisker right now, less than 1% away at $510. Given what AAPL moves in a day it isn’t hard to see this being broken early next week, or even later in this trading session. 

Right now we’re waiting to see if the bottom holds, and if so, we’ll be looking at new trades in AAPL next week. If you’re not already an Options Strategy Alert member, you can sign up here to make sure you don’t miss anything!

Nice pull back to uptrend support in USO today. A level worth considering bullish strategy entry.

Major market ETF SPY is sitting almost exactly in the middle of a long-term upward-trending channel. On top of that, it’s just recently bounced off it’s 200-day simple moving average, and is now running up against the bottom of its 50-day simple moving average. We’re setting up for a potentially smaller near-term range while inside a longer-term range, which creates some interesting trading opportunities. 

More to come soon - we may be looking into double diagonals early next week. Until then, enjoy the weekend!

COST has been a great stock in 2012, finally reaching the coveted “par” (that’s street slang for 100).

Short term this stock looks attractive as a buy on pull backs to 94 support area. But zoom out to the 4 year chart (above) and you get a look at how truly beautiful this stock has been for long term investors.  That’s an uptrend worth paying attention to if you ask us!

We like selling USO Jan13 29 Puts @ 0.50 credit here.  After all, owning USO from 28.50 cost basis even looks attractive on the 5 year chart…and that’s a rarity.  Throw in an 81.47% theoretical probability of expiring at break even or better and this is one tasty trade.

S&P 500 Index Futures (/ES) are the back bone of the market.  Therefore it is always a good idea to keep a close eye on them.  Here’s our current break down.

1. A recent Triple Top @ 1460 (gray ovals) with a height of 40 points indicated a downside move to 1380 (red rectangle) after support @ 1420 broke. 
2. The Triple Top measured move came to fruition, taking /ES to 200 day Simple Moving Average, aka SMA, support (green line) coupled with one year uptrend support (purple line).
3. Continued sell side pressure caused a break of both SMA and uptrend support, resulting in a swift three day sell off to 1340 before /ES caught a bid.
4. /ES quickly bounced back above 200 day SMA, similar to early June (orange oval).

Our conclusion after noting these technical items is “cautiously bullish” on /ES. The reason we are cautious is because unlike the first break of SMA support (orange oval), this break was coupled with an uptrend support break. That should not be discounted, regardless of the fact there were only three consecutive closes below the uptrend support line. 

We are in wait & see mode, and prefer range bound strategies like wide Jan13 Short Strangles for the time being.

Let us know if you have anything to add!

The 200 day Simple Moving Average has proven quite relevant per this one year UUP chart.

Early 2012 it acted as support (green ovals).

Early September it broke through (yellow oval) and experienced a swift drop as a result.

Now after a Triple Bottom in the 21.60 area, UUP is testing 200 day SMA support turned resistance.

So far resistance is winning the battle, making the next move up to the 200 day SMA a good bearish entry opportunity from a pot odds perspective.

Finally, 20 on 20 covers everybody’s favorite stock: AAPL. Today’s been a weird day - when we looked this morning we were ready to talk about the 200-day simple moving average as a source of resistance, and it’s been proved more quickly than we anticipated. It seems like $595 is a legitimate resistance point in the short term (or so today’s sellers would have us believe) and we’ve already identified $520 as a support level (see chart above). 

So what does this mean? Well, it may mean that the best trade here is an iron condor, using $520 and $595 as the short strikes. It’s always possible that AAPL could move 100 points in either direction at a moment’s notice, but we’ve got to trade something, and this action is too strong to ignore. We’re definitely interested in finding a trade, and the IC is as good a place to begin analysis as any. 

Beyond that, we could use today’s drop to enter some more bullish trades, if we really feel confident that this drop is temporary. There are more than a few people out there doing exactly this - loading up at lower prices and getting ready to exit after a nice spike. It already happened once, as that’s probably what the selling at $595 was today - people exiting profitable trades (or getting out of old positions at breakeven).

As our subscribers will tell you, AAPL is a frequent target of our attention… you might even call it the “apple of our eye”. If you sign up for our Options Strategy Alerts, you’ll get all the trades (and, unfortunately, all of the puns). Enjoy! 

Not to be hard on AAPL, but this morning we’re seeing another down day in everybody’s new favorite bearish play. We’ll continue to see $525 the next relevant support level until it’s broken. Right now options implied volatility is pretty smooth across the next few months, meaning that this move doesn’t seem like a short-term thing that will drastically change soon. If anything, it seems like traders are planning for AAPL to stay down in this $540-$560 range for a little while longer. 

We’re still looking for ways to take advantage of increased volatility while protecting ourselves from a bigger downward move. Right now it’s still looking a little unpredictable and we’re staying away from new trades, but you may see us post a new credit spread for our members soon. Additionally, if we see a move coming it might be a chance for a quick directional calendar or butterfly trade. 

Members, stay tuned! And if you’re not a member, you can become one here!