Market Summary (continued)
Thursday RUTX made the clean break from the 50 day EMA. SP400 started following that session, really stepping out more Friday. SP500 finally showed some pop as well, jumping from an 8-session lateral consolidation and importantly topping the May peak. Chips were up, DJ30 as well, but they did not make very significant breaks higher. More work to be done for those, but as with SP500, at least they have a road map to follow, i.e. the moves of the other indices.
Leadership was not bad either. FAANG stocks shows some serious action. FB to a new all-time closing high despite the continual reports on privacy issues. GOOG rallied nicely off the 50 day EMA test. NFLX broke higher on solid volume from a 1.5 week consolidation. AMZN is still in that same consolidation. AAPL as well. Perhaps the latter two will follow the other FAANG leads as we would like SOX and DJ30 to do as well.
FAANG was not the only game in town. Drugs/biotechs, energy, software, some key chips (e.g. AMD), TWTR, some metals, some materials (TREX) -- not garbage. Hey, someone had to be pushing the indices higher. Good to see there was some quality there; oh sure, it was not the industrial machinery or JPM (though the latter were higher), but these were solid stocks.
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ACAD (Acadia Pharmaceuticals--$17.84; +1.20; optionable): Biotech
STATUS: Always liked playing ACAD but it has not given many good upside setups in the past year. That has changed. After a nasty gap lower in late February wrecked a 4 month recovery and sent ACAD to a new low in April, the stock looks as if it has turned the corner for a new rally upside. ACAD put in a lower low in late April, but as it did MACD put in a higher low. Since then MACD has surged upside even as ACAD has moved laterally, fading to match the April low in June; momentum is definitely turning. Volume kicked in as well the past three weeks. Friday a solid break higher through the 50 day MA's with strong volume. May not rally to a new high anytime soon, but it can easily run back up to the 22 level where it consolidated before that sharp April gap lower. We want to initiate the play as ACAD continues the break higher through this resistance.
Volume: 4.6M Avg Volume: 2.986M
BUY POINT: $18.16 Volume=3M Target=$22.49 Stop=$16.73
POSITION: ACAD SEP 21 2018 18.00 C - (55 delta) &/or Stock
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Here's a leader play and our current analysis.
STATUS: Cup w/handle. After a peak in mid-March, ATVI carved out the current 3.5 month base. The past 4 weeks ATVI has build the handle, using mostly the 20 day EMA though there was a quick one-day trip to the 50 day EMA. ATVI bounced right back up ff that test and continued working on the base. Excellent positioning for a breakout to a new all-time high. The play is to wait for the breakout move to enter, riding that toward earnings. At that time it depends upon how ATVI looks, i.e. how much mileage it puts on the breakout as to whether we bank all the gain or part.
Volume: 2.876M Avg Volume: 4.97M
BUY POINT: $78.03 Volume=7M Target=$89.68 Stop=$74.34
POSITION: ATVI NOV 16 2018 77.50 C - (53 delta) &/or Stock
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DOCU (DocuSign--$54.95; +0.33; optionable): Cloud services, document signatory, etc.
STATUS: A new issue in late April, DOCU rallied nicely to mid-June, peaking near 67. From there it tested into last week, coming back to the 61% Fibonacci retracement, putting in a very quick double bottom. It may want to test more, but with a new issue moving well they can show a lot of pop off the initial flag test. Showed good volume on a solid move Thursday, paused Friday with a doji. The entry is a break higher on more good trade.
Volume: 1.178M Avg Volume: 1.89M
BUY POINT: $56.02 Volume=2.8M Target=$66.72 Stop=$52.33
POSITION: DOCU SEP 21 2018 55.00 C - (56 delta) &/or Stock
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NFG (National Fuel Gas Company)
Our Success Trading Group members will be looking to enter new positions next week. We have many stocks on our radar including National Fuel Gas Company (Ticker: NFG) and Walgreens Boots Alliance, Inc. (Ticker: WBA).
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COHU - Cohu, Inc. is currently trading at $25.14. The August $25.00 Calls (COHU20180818C00025000) are trading at $1.50. That provides a return of about 6% if COHU is above $25.00 on expiration Friday in August.
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