Market Summary (continued)
Thursday I noted that how the indices respond to the Thursday trade and end of month drop would be the tell. I also said NASDAQ, and SOX if it could as well, needed to break higher, citing MSFT, INTC, AAPL as key stocks.
Well, Friday they obliged. Futures were higher from the open of trade, holding a fairly tight range into the actual jobs report. The President tweeted a couple of hours ahead of the release that he was looking forward to the numbers, and that was interpreted as an indication they would be good. Some attributed the morning rise in futures to that tweet. Looking at the timeline, however, that is hard to conclude given futures were already up before the tweet and didn't move much at all from there. Oh well. The President should not, however, be tweeting about upcoming reports just as his predecessor should not have given out the numbers ahead of the official release. What happens next time if there is no tweet? Assume they are not so great?
The jobs report was good enough and indeed initially caused futures to drop as the 'Fear of the Fed' reemerged. A surprise beat, decent wage growth, and high-quality jobs as the Household Survey showed 904,000 full-time jobs added. Now that is REAL jobs growth, not the Affordable Care Act stunted part-time waiter and burger flipper jobs through 2016.
In any event, if there was some Fed fear, stocks moved past it rather quickly, opening higher, rallying to 1:00ET, then working laterally, holding the gains into the close.
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It took a while, but BABA is a leader and it is again showing leadership moves. We have two long term positions on BABA and another we picked up on 5/4, buying some July $190.00 strike call options for $10.15 as BABA surged upside off a short double bottom. BABA rallied up to the top of the range by 5/10 and then . . . ran out of gas. It stalled but didn't fall. Instead it held the 10 day EMA and worked laterally through Thursday. Friday BABA found buyers. It gapped out of the range and rallied to the January peak. That triggered the initial target for the play. We sold half of the July options for $18.15, banking a solid 72% gain. With this break higher we anticipate BABA showing more gains and pumping up the value more. Indeed, we are looking at picking up new positions on BABA as it continues the move.
IQ (iQIYI, Inc.)
A relatively new Chinese issue that was in a nice test of the last upside leg. Chinese stocks in general were setting up and breaking higher, and IQ, a new issue in late March, was prime for playing. We put it on the report during its four-session test of the 10 day EMA, and then on 5/22 IQ broke higher on volume. We bought some stock for $22.49 and some September $22.50 strike call options for $3.50. A good 2-day rally, a 1-2-3 test to let the 10 day EMA catch back up, then a blast higher starting Wednesday, pausing Thursday, and then adding 12.5% Friday, on volume to boot. Let it surge past the initial target but then stuck to the plan, selling half the position. Sold some stock for $28.30, banking 25+%. Sold half the options for $7.79, banking 122%. Still strong, letting the rest of the position run.
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Here's a leader play and our current analysis.
STATUS: While some China stocks are pushing new highs, BITA is not. Indeed, it is involved in a 7 month pullback from the October 2017 peak. It looks to be, however, turning the corner in the selloff as we like to say, having formed a cup with handle over the past 2.5 months. Note how as the cup formed in late April when BITA put in a lower low MACD put in a lower bottom. Indeed, MACD is rallying close to a high, way out in front of price. Volume jumped in on Wednesday as BITA bounced off the 50 day MA and held strong as BITA broke higher Friday. Like it, plenty of room to make us money without having to break the 200 day SMA. Also, it can run fast, and that gives it time to make the target with a pre-earnings rally.
Volume: 1.785M Avg Volume: 1.331M
BUY POINT: $26.21 Volume=1.6M Target=$32.00 Stop=$24.22
POSITION: BITA JUL 20 2018 25.00 C - (48 delta) &/or Stock
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NTNX (Nutanix--$56.72; +3.27; optionable): Cloud software
STATUS: NTNX is coming off a 50 day MA test on good volume just as it did in February and in May. As NTNX came back to the 50 day MA the past week volume jumped up above average as it held that level. That shows big buyers stepping in to buy at key support, indeed supporting their stock. Friday NTNX started back to the upside with some good trade. A leader testing key support, starting back upside. We are ready to move in as NTNX continues the break higher. A move to the initial target lands a 65%ish gain on the call options.
Volume: 3.188M Avg Volume: 2.714M
BUY POINT: $56.94 Volume=3M Target=$65.00 Stop=$54.28
POSITION: NTNX SEP 21 2018 57.50 C - (55 delta) &/or Stock
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--by the MarketFN STG Team
TRV (The Travelers Companies, Inc.)
Our Success Trading Group will be watching closely for entry points next week. We currently like The Travelers Companies, Inc. (Ticker: TRV) at its current price for new positions.
Our Success Trading Group closed
7 years with 0 losses on our Main Trade Table. In fact, we closed 100% winning trades for the calendar years 2016, 2015, 2013, 2012, 2011, 2010 and 2009 (we still have 1 open position from 2017 (all others were winners) and 1 trade that we opened in 2014 was closed as a losing trade). All of these trades are posted on our Main Trade Table for your review during your free membership trial period.
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SM - SM Energy Company is currently trading at $23.19. The July $22.50 Calls (SM20180721C00022500) are trading at $2.10. That provides a return of about 7% if SM is above $22.50 on expiration Friday in July.
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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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