Monday, December 17, 2007

MicroStrategy, MSTR

MicroStrategy (MSTR) was drawn from a new short scan I am developing. Friday saw a combination break of support, with a nicked loss of 50-day and 200-day MAs. The latter may be enough to generate a swell of buying back to the 20-day MA - an alternative entry point. A loose stop is marked at $105.11, but a tighter one could be placed around $102.62 (just above the 20-day MA).

Downside targets are the 2 breakout gaps and August support at $61.00. Technicals have aligned in support of weakness with a fresh 'sell' in on-balance-volume - marking a shift to distribution, combined with a bearish crossover in trend strength (-DI > +DI).

Deep in the money puts for April 2008 can be bought with little time value; Optionetics shows the ask for a $150 strike Put at $55.20, with good value for $120 strike puts for the same expiration at $27.50, and the $125 strike at $31.70.