1/29/2018 – $LEN

Stock Overview: $LEN gapped down on weak housing related news.

Market Overview: Market was red all morning down over .50% across the S&P / Dow. The housing sector in general $XHB was also down on bad news.

Technicals: Stock gapped down below VWAP breaking below the 3 day low of $44.00 hitting a morning low of 43.26. With the FED meeting coming up I figured this was a decent fade opportunity on a retest of $44.00 (prior support future resistance)

Trade: The trade was buying puts as $LEN bumped back into $44.00 risking high of day 44.35.Stop was set a little above the opening high print. My put option entry executed when the stock was at $44.02

Summary: Entered weekly puts with stock at 44.02. The trade initially went in my favor, dipping to 43.78 so I suspected the $44 level would be a decent intra day resistance level. Thought there was a good chance of a dip back to retest the LOD – $43.40 target.  Instead the stock reclaimed VWAP grinding all morning, eventually hitting HOD and stopping me out for a loss.

  1. Daily Candle w/ Lower low Lower high – Yes
  2. Weekly Candle w/ Lower low Lower high – NO
  3. Below 200 Day MA – Yes
  4. Red market – overall market & sector weakness – Yes

The weekly candle failed to make a lower low 43.26 vs 43.20 making an inside week. Better setup would have been a range break to the downside. Also, noticed that my short target $44 was actually back above VWAP which I don’t like.

After touching $44 the stock dumped back to 43.78 quickly, but was still kind of in no mans land being about half way to my 43.40 target. The other problem was that 43.78 was VWAP and reversed sharply higher. The trade should have probably been cut right there for a commission burner.

Also noticed that the opening 10 min candle volume 176K vs 4.45M daily ave there actually wasn’t very much conviction in the opening move lower. More volume would have been better on the open for the $44 level to be respected more.

 

Result: – .45 contract  (LOSS)

 

Trade Plan
Stop:$44.40
Entry: $44.02
Target: $43.40

Actual Exit: $43.45

Risking .38 to make .62$

 

1 Year Trend: Neutral
200 day: Above
100 Day: Below
50 Day: Below
Weekly Candle Low: 43.20
Weekly Candle High: 46.43
Average Daily Volume: 4.45M
Opening 10 Min Volume: 176K
52 Week High: 65.45
52 Week Low: 37.29
Short Interest: 4.37%

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