Market Summary (continued)
After an upside but somewhat disappointing Thursday, at least in terms of NASDAQ and the other indices still bumping the bottom of the October/December trading range, Friday was nothing but net. Renewed trade hope, Fed softening afterglow, and lingering positive bank earnings offset expiration, company layoffs, and weak consumer sentiment.
Stocks started higher and really never looked back. All indices cut well into the trading range, moving through the near resistance, putting distance on the resistance. That is key in turning resistance into support on a subsequent test -- and indices and stocks almost always test.
VOLUME: NYSE +10%, NASDAQ +15%. NYSE volume moved over average for the first time in a while, just squeezing past. NASDAQ trade was up but still below average. Not exactly explosive volume on expiration.
ADVANCE/DECLINE: NYSE 2.9:1, NASDAQ 2.3:1.
Trade: China is offering purchases of $1T in US goods as a trade deal enhancer. China is at a point it has to deal. 1T yuan in liquidity injected into its financial markets last week in a desperate effort to get its economy going again. Rates for shipping commodities into China plunging, indicating China is not importing nearly the same quantities. Tariffs crushing its economy.
Now the key is what Trump does. This is very reminiscent of the Reagan/Gorbachev nuclear negotiations. Gorbachev knew his economy was imploding as the USSR could not keep up with the economic engine Reagan restarted and used to fund the US military. So, Gorbachev offered everything the US had said it wanted to that point. At that juncture, Reagan's belief was confirmed -- the US was winning the economically and thus militarily. He turned down Gorbachev's offer. Why give up the benefits of a winning hand? We all know the outcome.
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Stocks ran higher for the week, some early week, some late. By Friday the indices were clearing the last near resistance. We are buying and we are taking gain, but given the break over resistance, we were letting most positions run higher. CRON, CRM, WDAY, VRSN, AMZN -- letting positions move higher. But, there are instances where you need to bank gain.
NFLX (Netflix, Inc.)
Earnings Thursday after the close. A very nice run higher on the week, gapping upside Tuesday, moving through the 200 day SMA. Held steady, and with earnings Thursday after the close we sold half the February $305 strike options purchased for $25.98 on 1/7 at $54.00. That banked a solid 107% gain right before earnings that took NFLX down to the 200 day MA.
NFLX was a momentum play. We saw it break higher over the 50 day MA on Friday 1/4, put on a play, and moved in the following week as it continued the move. Now we are watching how it tests the 200 day SMA and whether it gives us a new entry for another leg higher.
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| 2) STOCK SPLIT REPORT |
Here's a leader play and our current analysis.
STATUS: If you can go about your business with bad news, you are likely going to be okay. MU has trended lower for some time. As with most chips it put in a lower low in late December, but as it did, MACD put in a higher low. It rallied up to the 50 day MA the second week of January, then earnings bounced it lower. But it didn't fall far. MU tested, and Friday jumped back up to the 50 day MA on good volume. MU has formed something of an inverted head and shoulders, and if it can make the break higher from here then we like the play and we want to move in. A rally to the target lands a 95%sh gain on the options.
Volume: 44.872M Avg Volume: 35.896M
BUY POINT: $36.02 Volume=40M Target=$42.45 Stop=$33.92
POSITION: MU APR 18 2019 35.00 C - (62 delta) &/or Stock
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SLB (Schlumberger--$44.73; +3.36; optionable): Oil services
STATUS: Trend reversal. Putting our money, again, where our mouth is as some oil services stocks post solid breaks higher. SLB reported earnings Friday morning and gapped over the 50 day EMA from a 1.5 week lateral consolidation. SLB trended lower forever it seems, the angle of decline really quickening from October. Bounced early January, moved up to below the 50 day, formed that lateral move, then gapped over the 50 day MA's Friday. Solid. We want to play a continued move higher to the late October/early November lateral consolidation. That produces a nice solid move on the options well over 100%, 15%ish on the stock.
Volume: 26.639M Avg Volume: 17.189M
BUY POINT: $44.91 Volume=18M Target=$51.55 Stop=$42.71
POSITION: SLB MAR 15 2019 45.00 C - (61 delta) &/or Stock
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--by the MarketFN STG Team
WMT (Walmart Inc.)
Our Success Trading Group members will be looking to enter new positions next week. We have many stocks on our radar including Walmart Inc. (Ticker: WMT) and Intel Corp. (Ticker: INTC).
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VNOM - Viper Energy Partners LP. is currently trading at $30.59. The March $30.00 Calls (VNOM20190316C00030000) are trading at $1.80. That provides a return of about 5% if VNOM is above $30.00 on expiration Friday in March.
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| The foregoing is commentary for informational purposes only. All statements and expressions are the opinions of Online Investment Services, LP., or Split Ventures, Ltd. This information is not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on the related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolios of writers for this issue may, in some instances, include securities mentioned herein and on the related web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors. No one associated herewith receives compensation in any manner from any of the companies that are discussed in this newsletter or on the related websites.|
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