ADP going to $43 by mid-March

One trade that I am currently and would to discuss is ADP. I got in to the trade on December 3rd of 07. I bought 20 contracts of the Jan10 $40 leap for $9.50 each and the stock went up and on Dec 10th I sold it for the 5% profit I was looking for. Well, unfortunately I only sold 1/2 the position and then the market turned down. Looking at figure 1, You can see the stock traded sideways for a while then dropped like a rock. It dropped so, did I sell options against my position? No, I missed it. Missing moves like that is part I the reason I started trading using action/Reaction Lines and Andrews Pitchfork.



There are 2 other things I want to point out from the chart. First, I wanted to point out areas in red. Look at the action area. Next, look at the reaction area. They almost mirror each other. Also, the reaction area hit the lower prong of the pitchfork and bounced off of it. You can see that the MACD went up and did not go negative. Since the lower prong is a support level, it confirms that the stock is headed for the target. The second thing I wanted to point out is my prediction and it s $43 on or before March 10th.

Also, I had a position sell today for a profit, STJ. So, I have some cash that free up. I will be looking for a new position to trade. I will be waiting for a down day(DOW and Qs) to trade per the rules of Compound Stock Earnings. As soon as I find a trade, I will post it and we will go through it from start to finish.

Longer term predictions for the DOW's and the Qs'

Fig 1.

Not too long along ago I gave a my short term prediction for the DOW. Now, I thought I would take a look at the DOW to see if I could tell if where the DOW was going in the next 6 months. So, looking at a weekly chart and applying the tools I use, I have come to the conclusion the DOW has hit a bottom, the bias is up and is now trading in a sideways channel You can see this in Fig. 1
Looking at the action/reaction lines the DOW ends Feb. begins March at the 13,400 level. Then it should retrace that upward move. How far down the retracement goes, I can't tell yet. But, then it will reverse and climb to the previous levels of Oct. ,14,200 by the end July of this year.

The scary thing about this prediction I was watching TV and some of the talking heads were making the same prediction. They must have been reading my blog.

Fig 2.

Now for the QQQQ. It looks like the same story as the DOW. We have hit bottom and the Qs will climb to the $50 level by April and then will test the highs of Oct 07 of $55 by Sept.

Well, I hope I am right and my bank account hopes I'm right and the mortgage company hopes I'm right and the credit card companies hope I'm right but, we will see.