Yesturday I updated my JPM play with a chart and a little more detail on the important levels. Recall the $34 support level. It was breached but on very light volume. I consider this to just be a shake out as it returned to the $34 support level on solid volume before the end of the trading day. This morning JPM has seen a nice move off of this support level to $35. Intraday it looks to be putting in new support at $35. See the chart below.
On the next chart looking at the 10 day 1 hour chart JPM is putting in a bull flag. This could set up for a nice move higher. On the chart it looks like it could lead to a point and a half gain from $35 to $36.5 ish.
JPM closed at $35.35 today and the bull flag that I pointed out on the second chart is still in tact. If the market can keep its strength I really think that JPM can go and fill the gap to $36.50.
ReplyDeleteInteresting that you closed this position even though you're short-term bullish on the uptrend. What made you take profits and not wait to see if it crossed back up threw the gap to resistance?
ReplyDeleteI apologies, I guess I was not clear. I was just giving an update on how JPM closed on the day. I still have my positions open on JPM. Like I said in my orinal post I will not re-evaluate unless JPM breaches $33. With June expiration right around the corner I plan to hold my short puts until expiration and keep the whole premium.
ReplyDeleteThere is actually two gaps on the JPM chart. The first one being created at the opening on 5-11-09. It opened at roughly $37.50 and had closed the Friday before at roughly $39. When it went to $35.50 I bought a $37.50 June call and set a conditional GTC order to sell the option if the underlying filled the gap at $38.25. Since that time the closest it got was $37.25 and my order is still sitting open.
ReplyDeleteI have been charting JPM for about six months, there has never been a gap that wasn't filled in a few days. That's why I put the play mentioned above on in the first place. A double gap gets me a little more excited as those are usually filled very quickly. However, sometimes gaps takes months to fill. But so far, just using options to exploit a basic technical rule that "gaps get filled" has turned out well for me. I've been plying this one contract at a time just trying to see what my results are. If it's exploitable on a long-term basis I will up my contract size.