DEPOMED testing resisitance

Depomed NASDAQ:DEPO is testing resistance for the third time since October 1. This specialty pharma company  develops products for pain and other conditions, as well as diseases of the central nervous system. Depomed is making the transition from a developing pharmaceutical to profitable health care company. Revenue growth has been strong and EPS has turned positive in recent quarters. 

Technically the stock has been pushing against resistance at $7.80 during the month of October. It made one attempt to break above this around  October 22 on above average volume. Sometimes these surges foreshadow more consistent advances are to follow. The third test of the $7.80 resistance came yesterday but on much lower volume. If DEPO has a significant increase in volume it is possible that it will break out of this range and move higher. 

COSTCO is making new all time highs

COSTCO is poised to move higher. Since posting better than forecast same store sales  in October Costco has been continuing its bullish move higher. The chart has been exhibiting some classic technical patterns. Costco put in a triple top at the beginning of November. Costco made a new all time high on the third top. It also put in two very bullish parallel tails before breaking through resistance on November 6. A pennant is forming off the bullish candle and is suggesting that Costco will move higher in the near term. The options market is also predicting that Costco will move higher as there is heavy buying of the November call options.

INTC - Daily Trading Strategy

Daily Trading Strategy

Intel INTC (NASDAQ) has emerged from its lows that it set in December 2012. It broke out of  a range between about $19 and $21 midway through April and has been rising with only a few small pull backs in the last few weeks. A possible short opportunity could be presenting itself here and one potential way to exploit this is with options and going long INTC puts. This simple strategy will provide a positive return if INTC falls from its current level. A best case scenario would be a 6% - 8% retracement of the underlying to the 50 day moving average:

On a two year chart INTC has returned to a key area around $24 that provided a resistance point in 2011 and served as a support point from May to August in 2012:

The question now is if this level will serve as a support for INTC to move higher or if it will provide resistance and INTC will fall below this level. The RSI has recently given a sell signal and the average daily volume is declining. This combined with the recent quick upward acceleration of the stock price could suggest that INTC is ripe for a pull back. On May 17 INTC made a topping tail and failed to reach a new high. This presented a good entry point to enter into a long put:

If INTC drops from this area we can expect puts purchased at $.70 to yield 130% given an approximate delta of .4609 for the July $24 PUT and assuming downward move in the underlying to the 50 day moving average. This implies a move from $24 to $22 in the underlying. A move above 24.50 in the underlying would deal 24% loss to the long PUT option given the delta of .4609 and this level should serve as a stop out for the long put.

Please refer to http://www.optionseducation.org/en.html for a calculator to estimate option deltas.

The preceding is for interest only and not to be considered investment advice.