A lot can be learned just from a visual scan of CallWriter’s Real-Time Lists, especially once the list data has been sorted appropriately. For example, a brief survey of our Global Select (Dividends) Lists is instructive today, after I sorted the list by Sector and then did a secondary sort by Industry (hold the shift key for the second sort).

I have had my eye on the Basic Materials (BMAT) sector, because much of it has been selling off recently. However, these sell-offs come to an end at some point, and I watch for that on our lists. For example, stocks in the same industry, or even the same sector, will show very similar MADI values - our MADI shows the stock’s current price in relation to the 20- and 50-day moving averages. A week or so ago, the BMAT stocks were showing MADI values of 00:00 and -01:00, indicating that they were testing the 50-day average and also testing or were slightly below the 20-day average.

These MADI values frequently herald a coming bounce off support. And voila! They are indeed moving. Agricultural chemicals aren’t really showing much strength, but AGU, MOS and POT all seem to be testing or maybe just resolving a test of support.

Gold miner NEM is showing a very promising bounce off support. GOLD on the other hand is frighteningly overvalued - a 90+ P/E!

Of course, chemical maker FMC is rocking, and never really sold off; it is a little stronger than DOW.

Independent oil and gas companies are showing some strength. Check out OXY, for example.

Much of the oil and gas group remains troubled. While BHI may be finding support, others such as DO, ECA and RRC are very weak. However, some of these stocks are fairly oversold and have the potential to bounce back soon.

There is no better time to put on a covered call or naked put trade than when 1) a stock has sold off in its trading cycle and 2) BOTH the stock and its peer stocks are recovering as a group. You can see this right on our lists, actually, once you sort by sector and industry.

Finding a great trade in a few minutes is rewarding, but sometimes we find “almost” trades that require resolution of a support test - and once we get it, vavavoom.

This entry was posted on Monday, March 29th, 2010 at 1:08 pm and is filed under Covered Calls, Markets/Economy, Naked Puts. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.