Short-term tops have basically occurred at $5 increments (50 in Mar, 55 in Apr, and 60 in May) which leads me to conclude that it is a decent probability we are near another short-term top again with the stock moving to $64 and that maybe we top out around $65-66 before it goes sideways or pulls back again to that 50 DMA.
We shall see, but yesterday's price action of gapping up and closing down big is a pretty good sign of a short-term top. How to play it next time? I think selling calls against a stock position or even longer-dated options is the smart play when you get these overbought/overextended conditions, and I sold a bunch of July 75 calls on the gap up before it reversed and the day before, and I mentioned this in a previous post.
As I said, I thought and still think comments to the effect that this stock was going to run to 75-80 in the next month on Haynesville or some big material information coming in the next few weeks was hype and not substance.
I think we are going to test 59-60 in the next 1-2 weeks which is Aubrey's last purchase level or maybe even pull all the way back to the 50 DMA again. Haven't decided yet, but I might buy some July puts today to hedge against a decline (I've got 45 LEAP contracts) with the idea of selling them around 59-60.
IMO, the biggest enemy a trader faces are his own emotions of fear and greed. Next time CHK makes a big run in a very short time frame, fight the greed telling you it is racing to the moon overnight.