Forest laboratories Inc.

Forest Labs (FRX) broke out of the consolidation nicely last week. I have a buy call for this ticker at this time with a stop below 33$, below which you go short on this name in case the breakout was false.

CMG has been trading in a descending channel for the last 2 months with the RSI forming a positive divergence with the price. RSI has been forming a higher low while the price was forming a lower low. I am looking for a channel breakout, not yet. There was a false breakout on thursday, so I would be looking for a close higher on the channel. Don't buy before the breakout, use a 7% stop.

Priceline weekly options

You must be aware that the market rallied 20 points ($DJI) into the close yesterday. I was watching Priceline Inc. (PCLN) and the weekly options. I had no positions though. Priceline rallied from ~ 639$ to 644$ in 20 mins before close. I was watching the 640$ calls that expired yesterday. In 20 mins, the call options gained >700% from ~ 0.45 to close at 4.30$. Was the last minute surge on this big kahuna done to push the weekly options? I don't have material evidence to prove it. But, the volatility in the big names (GOOG, AAPL, CMG, PCLN etc) has increased a lot since the weekly options have been introduced. The OTM weekly options, expiring on friday, move 300 - 700 % in the space of 4 days beginning Tuesday afternoon or so. This is only for educational purposes only, I usually do not endorse options officially. This gives you an idea of another instrument in the stock market.


Below is the 1 minute chart covering the last 2 hours of the 640$ call options that expired yesterday at 4 PM ET.

Market update

My stance on the markets:

US markets (DJI/ SPX/ COMPX) - Bullish - 5% stop
Commodities (/CL, /GC, /SI) - Bullish but I would be a seller of /CL which is the weakest of all in the group here.

Basis of the above stance is short term using daily charts.

Eur/ USD

Eur/ USD posted a price-RSI divergence on the daily chart. I view this development as bullish for the currency in the Intermediate term. Further, there is a strong support below the 1.2286 till 1.18. Resistances to clear are 1.2494 and 1.2622. 

If Eur/ USD can post a rally for few days, that should calm the markets down and we could see an short term bottom on the equity markets as well. Take into consideration that Eur/USD has an inverse correlation with the equity markets usually.