The Shooting Star

Hi Shoppers,

 

I have a quick candlestick lesson for you today.

 

The Shooting Star is a Japanese candle formation found at the top of an uptrend.

 

It looks like this:


The Shooting Star has a long upper shadow — or wick — with a small real body at the lower end of the formation (or lower prices of the trading session).

 

The real body can be red or green.

 

The long upper shadow shows that the bulls took charge after the opening and during the session but the bears came in and overtook them by closing near the lows of the day.

 

Read on to see I plan to play a shooting star I’m gazing at …

 

A Big Star

 

Look at this perfect specimen of a shooting star in iShares 20 Plus Year Treasury Bond ETF.

 

 

Yesterday’s shooting star candle formation in TLT could be signaling a pullback from the run-up that began on Oct. 22, taking it from $142.23 up to $151.77.

 

I think TLT can trade back to $147.85.

 

Looking at the options, I like buying the near term Nov. 19 expiration puts:

 

 

      • If TLT opens and trades lower today, I will be a buyer of the Nov. 19 151-strike puts and I will pay up to $1.70.
      • I am buying these outright because there really isn’t any meat on the further out-of-the-money puts.
      • I will take my loss if these trade down to the $1.20 area and begin profit taking at the $2.75 area.

Trade Review

 

      • I ended up buying the Coca Cola (Ticker: KO) Nov. 19 56.50-strike puts paying $.58. I still think KO is heading lower to $54.70.
      • I am still in my Alcoa (Ticker: AA) Nov. 19 48/53 call spread. It traded lower yesterday; I will have a close eye on this today.
      • I am still long the Nov. 19 30/50 call spread in Greenidge Generation (Ticker: GREE) and I think it is going to trade up to $40.

Thanks for Reading … See You Next Tuesday!

Licia Leslie

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