I might be doing some wishful charting on ATI. I’ve gone all of the way out to the monthly charts to find a moving average that supports holding onto it. The 10 month average for ATI is around 97. ATI is trading at 107.40 as I write this. I sold my June 110 naked put that expires on Friday for $420 which brings my cost if assigned down to around 106. That would give me a little over $100 profit if it flat lined for three days. That’s not how ATI behaves though. That’s what brought me to the charts. I like ATI fundamentally, but since NUE warned earlier this week ATI has taken it on the chin and is down more than $10 from its April high. If bonds don’t play nicely this week ATI could continue its decline. The question I have to ponder is how far down will it go before it comes back to life.
I think the downside is limited. The trailing P/E is 16.55 and the forward P/E is 12.39 with a PEG of only 0.93. They’ve shown earnings growth that is incredible and the forecasts are still strong. If the chart agreed with the fundamentals, I’d sit back and relax, but ATI has just broken through a trend line that I liked. Actually it broke through it a few days ago when I wasn’t paying attention and another one today. Last week ATI dropped below the 10, 20 and 50 day moving averages.
The data I’m reading on the fundamentals says hold or even buy more. The chart says sell and run. The option premiums are rich which is why I’m going to ride ATI out a little longer. If it doesn’t rebound over the next few days, I’ll write a covered call and have a deeper cushion should it continue to fall.
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