MEDI could be setting up for a big move
MEDI has been
very good to us in the past, and once again it looks like it is
setting up for a major move. First, let’s take a look at the one-year chart of
(
MEDI |
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PowerRating).
Obviously, the stock is in a very nice long-term
uptrend, and has recently seen an accelerating uptrend over the last month or
so. Now comes the test. As you can see, MEDI is now testing its old highs in the
$37.00-$38.00 range. Unfortunately, this was a pretty well-established top for
the stock last fall, so moving higher from here will take some work.
One possible way to play MEDI here is through the
use of a strangle or straddle spread designed to profit when MEDI moves big in
either direction. You see, when a stock comes quickly toward an old resistance
level like this, it is likely to either breakout quickly to the upside or bounce
quickly lower. Predicting which way it will move is difficult, but because the
odds favor a fast, large move in one direction or the other, a straddle/strangle
spread could be extremely profitable.
We’ll be watching this stock very closely in our
options trading systems, especially looking for implied volatility dips that can
get us into spread positions cheaply.
Andy Swan
Andy Swan created and
co-founded DaytradeTeam five years ago on a principle of empowering
individual stock and options traders with the techniques and analysis methods
typically reserved for elite professionals. His expertise in technical analysis
and commitment to educating members earned DaytradeTeam a top-ranking among
advisory services for several years.