BigTrends

We've been talking lately about very choppy conditions, which makes for difficult trading.  Our subscribers have mostly been on the sidelines here as the chart setups are just not quite there yet.  Oh there are some that look good, RIMM below is an example...and it's probably going higher, as I mentioned it in the Wednesday webinar (miss it?  email me for the link, bob@bigtrends.com).  However, the situation in Europe can't seem to get any resolution, and now we see China is trying to rein in growth.  Wasn't it China that was driving/fueling the growth here in 2009?  What to do now?  One thing is for sure the volatility will start to kick in as the unknowns start to build.

I mentioned RIMM as a chart ready to go higher.  See my notes below.  Another close above 68 confirms this for me and the indicators.

First of all, Google spent years perfecting Android, their mobile operating system (OS) for smart phones.  In a very smart product development move, Google tested many versions of the Android OS on other phones such as the much hyped DROID by Motorola in an attempt to perfect it before they rolled out their own phone.

And it appears that strategy has worked very well.  The graphic below shows the increasing popularity of the Android OS compared to its competition.  As you can see, the survey of future smart phone buyers has shown a meteoric rise in the popularity of the Android OS, scoring even higher than RIMM's Blackberry OS.



It will be very interesting to see where this surge in popularity takes the Nexus One over the coming months.  Many people question if the luster of Google's newest creation will tarnish with time.  Apple's iPhone and RIM's Blackberry are available on multiple networks, while the Nexus One will only launch with T-Mobile initially.

I expect the other carriers to pick up the Google phone when the iPhone makes the jump to Verizon or T-Mobile in the coming months, giving it the opportunity to grow market share.  In the meantime, check with your carrier to see when your current contract expires, because if you are in the market for a new smart phone, the Nexus One appears to be the Next Big Thing.

So, RIMM ripped last week and posted some enviable numbers...and provided super guidance.  The market reacted accordingly, running the stock up 10% on expiration Friday.  Clearly some shorts were stuck in a trade and had to exit poorly.  But for me, the true buy will be over the next few days,  and I will tell you why.  Friday was a huge breakout on volume.  I generally want to see the price rise on good volume 4-7 days AFTER, so with Friday being day one we're looking at a time frame of dec 23-Dec 29.  If we break higher then there is more upside...today is too early, it's day 3, but day 4-5 is ideal.  Today, RIMM is lower on a ridiculous downgrade, but whatever.  Our sights are set on this week and next, so let's be watching this one for a an opportunity.

As for trade ideas, i'm looking at the 70 calls straight or perhaps a 65/75 call debit spread.

There looks to be a lot of November Expiration related "pinning" going on as we head into Friday's close.

The S&P 500 (SPY) is starting to move towards 110 ... a last hour spike to that level would be likely a "false" pin that would be reversed on Monday, in my view.

Many big equities are moving right towards strike price pin levels, including (AAPL) at 200, (GOOG) at 570,  (RIMM) at 60, (DIS) at 30, (AIG) at 35, (FITB) at 10, (NFLX) at 60, (AMZN) at 130, (COST) at 60, (DISH) at 20, (MON) at 80, (HPQ) at 50, (KO) at 57.5, among others.

As we've previously mentioned, this kind of "pinning" action, where a stock closes right around an option strike price on an Expiration Friday is due to a variety of factors.  Among these are technical, manipulation, psychological, but also the actual option open interest at these strikes.  The open interest causes market makers and hedgers to buy and sell the stock around those levels to keep the books balanced (delta neutral, etc).

We've seen it time and time again, and this afternoon looks like no exception.

Bullish Option Plays   Below are a couple of interesting names to consider for bullish option strategies.

Magna Int'l (MGA)   Magna broke out Friday from a brief consolidation pattern after testing moving average support.  There are not many stocks in the relative new high area, but MGA is there and is poised to challenge the Sept levels of the 50's.  This breakout can be bought.
     

We ended up rather mixed with a slight downside bias on expiration week in May.  We bought into some new ideas on expiration Friday and while they started off well they came off a bit as the volatility rose in the latter half of the session.  So it goes.  We did post a decent winner with RIMM and GOOG and managed our losses.

According to Yahoo today, Research In Motion (RIMM)'s BlackBerry had several smart phones in the top sellers in the first quarter of 2009.