Market Summary (continued)
After good breakouts Thursday with NASDAQ and NASDAQ moving to new highs and SP500 clearing important resistance, stocks were pensive Friday. NFLX was downgraded on valuation more than once just ahead of its Monday earnings because . . . it could actually miss expectations. Wow, a stock could actually miss earnings expectations? Duh. Yet, they act as if it is an impossibility.
Of course it is not. Just ask the banks announcing on Friday. C missed the top line, WFC missed the top and bottom line. Looks as if they are going to have to get over getting free money from the Fed and then buying bonds for a guaranteed return. WFC might actually have to start making loans again and not just come on CNBC and falsely claim the banks are open for business to lend to small businesses. That was the biggest farce ever. You would go to WFC and you would be directed to a SBA loan; no way WFC was touching that -- it had risk attached to it. Now, with the Fed not so generous with the free money, banks have to make money the old fashioned way, e.g. loans, jacking up fees, etc.
Anyway, NFLX was hit hard, falling from the new closing high hit early week. NFLX' action helped stymie NASDAQ's upside move, but didn't kill it.
Instead, a week of heavy earnings for NASDAQ is ahead, and it very much looked as if the downgrades and bank earnings misses had bids pulling back Friday after some good moves higher earlier week.
Not across the board of course. AMZN continued its new move while FB and GOOG added more upside. Overall, however, Friday saw the action cool as the indices turned in mixed sessions.
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The moves to new highs by NASDAQ and the general upside shown managed to push several plays to targets and we banked some nice gain.
AMZN (Amazon.com, Inc.)
AMZN surged Friday and one of our positions hit the initial target. We sold half our options purchased 6/13 at $82.20 for $132.15, banking over 60%.
V (Visa, Inc.)
V broke higher as well after a bit of dormancy, hitting our target. We sold half the options purchased 6/4 for $6.65 for $10.30, banking 55%.
ISRG (Intuitive Surgical, Inc.)
ISRG finally caught some fire and surged on the week. It too hit the initial target and we banked half our 49% option gain on options purchased for $25.00 and sold for $37.20.
CRM (salesforce.com, inc.)
CRM started this last run in late June on a 20 day EMA test. We already had the position that we entered 6/5, buying some stock at $133.87 and some August $135.00 strike calls for $5.75. We sold the calls for $9.40, banking 138%.
SFIX (Stitch Fix, Inc.)
SFIX was a relatively quick play, entered 6/26. We bought stock for $28.49 and some September $27.00 strike calls for $4.7. On 7/10 SFIX hit the initial target and we sold some stock for $33.25, banking 16+%, and some of the calls for $7.80, banking 65%.
UIS (Unisys Corporation)
A software stock that finally broke higher for us. We entered 5/30 and spent a long time waiting for UIS to move. It finally came to life and surged this past week. We sold some stock for a 15+% gain, sold some of the October $12.00 calls for $3.3 (bought for $1.8), banking 83%.
ARQL (ArQule, Inc.)
Entered ARQL 6/26 on a good move, buying stock for $5.39 and some August $5.00 calls for $0.90. ARQL edged higher then exploded upside two Fridays back. Monday it surged early, hit the initial target. We sold stock for $6.64 and a 23% gain, also selling options for $1.90, banking 111%.
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1) pre-announcement (where we forecast an upcoming split prior to the company making the announcement); 2) pre-split (these plays are made in the days leading up to the actual split day); and 3) post-split plays (plays made after the actual stock split where the stock is showing continued or renewed strength).
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Here's a leader play and our current analysis.
STATUS: Inverted head and shoulders. After a nice run to January 2018, CONN carved out an inverted head and shoulders over the past 6 months. The past 5 weeks CONN formed the right shoulder, something of an inverted head and shoulders in itself. MACD broke out as CONN rallied to the January high. Friday CONN tried the move, faded a bit, but is looking solid. We want to play the breakout move as our entry.
Volume: 587.132K Avg Volume: 638.297K
BUY POINT: $37.74 Volume=900K Target=$45.00 Stop=$35.32
POSITION: CONN OCT 19 2018 37.00 C - (55 delta) &/or Stock
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DO (Diamond Offshore--$20.50; +0.53; optionable): Offshore drilling
STATUS: The past two weeks DO has formed a short pennant after a strong move higher to end June. Before that, DO built a very large inverted head and shoulders spanning August 2016 to the breakout in late June. This pattern formed after a long 4 year pullback. Over and over you have seen these patterns formed after selloffs and then yield impressive upside rallies. That is good enough for us. The play is to enter as DO makes the move out of this pennant test of the breakout. Earnings are at the end of July and perhaps DO breaks higher and gives us a nice rally ahead of that. If so, we bank at least a good part of the gain. If not, we like this enough to ride through earnings.
Volume: 1.737M Avg Volume: 1.498M
BUY POINT: $20.93 Volume=2M Target=$25.00 Stop=$19.59
POSITION: DO SEP 21 2018 20.00 C - (56 delta) &/or Stock
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--by the MarketFN STG Team
WMT (Walmart Inc.)
Our Success Trading Group will be watching closely for entry points next week on some of our favorite stocks such as Walmart Inc. (Ticker: WMT) and RPM International Inc. (Ticker: RPM).
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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VALE - Vale S.A. is currently trading at $13.14. The August $13.50 Calls (VALE20180818C00013500) are trading at $.49. That provides a return of about 4% if VALE is not called away at expiration and about 7% if VALE is above $13.50 on expiration Friday in August.
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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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