An example of using daily and intraday Memory support lines for precise entry.


A few days ago I had shared an idea on $RAD - a peer stock of WBA. Some of the CUE traders took a long position in RAD and made a significant profit. RAD is up today as well. RAD had jumped up after its earnings. WBA's earning is this week. Will it also go up after earnings? No one knows for sure. Is it worth taking a risk of buying the stock now? Let's do some more analysis using real-time CUE systems.

Its industry is weak today (the market also seems to take a breather after the rally of the past few days).

The stock is undervalued. It is a defensive stock and may withstand pressure if the market pulls back. It pays a dividend yield of 4.2%.

WBA is down as of this post. However, the stock is right at Memory support on the daily as well as a 10-min chart.

Sometimes, you may make a precise entry using such Memory support lines.

The earning is nearby. Will you still consider taking a bullish position? If so, will you use stocks or short the put or use a covered-call or something else? That is if at all you are considering buying WBA.

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In the Graduates' Club web-meetings, I had detailed how I was managing my $WBA bullish position since I first shared it on 7th July and through the earnings drop. Here I summarize that trade as of today.

1) I took a long position two days before earnings. So, I was prepared to hold it through a possible decline after earnings. To safeguard somewhat, I had sold Aug 45 Strike Call (A) - making it a covered call. Volatility was high just before earnings - that helped my trade. And I planned the short strike at the daily Memory resistance.

2) After earnings, the stock dropped by about 8% from my stock purchase price on the day's closing basis. My short Call had about 70% profit, and I booked the full profit (B).

I had noticed the weekly Watermark support (drawn as green dashed line on the daily chart) and decided to short the Put Aug 37.5 strike (C). Volatility was very high as the stock dropped after earnings, and that benefitted me.

As of today, WBA went up as I expected, it is making a doji-like candle as of ~1:50 PM EST. My short Put had more than 60% profit, and I booked the full profit (D).

I am not left with the original stock position bought ten days ago. That stock position has about a 1.5% unrealized loss. My profit from short Call and Put options has already made much more than that. The overall trade is in a profit.

As WBA has gone up after the initial earnings drop for about six trading days and the earnings drop gap is almost filled and that it is making a doji-like candle, do you think it is time to short the Call again? If you consider that, you might short the strike that is at the daily Memory resistance, wouldn't you?

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