Market Summary (continued)
I cannot say Friday was a reversal session in terms of the market, certainly not for SP500 and DJ30, but I can say it was not good action, particularly for NASDAQ and growth.
Think about it. AMZN exploded EPS expectations and GDP grew at 4.1%. It would appear the market had what it needed, i.e. arguably the major stock more than doubling EPS expectations and GDP surging the most since 2014. Yet, after a higher open, all indices closed lower, with NASDAQ -1.46% as AMZN gave up 63 points open to close, giving up a breakout to a new high.
Again, it was not a definitive reversal, but a gift to the market was refused.
SP500 -18.62, -0.66%
NASDAQ -114.77, -1.46%
DJ30 76.01, -0.30%
SP400 -22.22, -1.11%
SOX -6.18, -0.45%
VOLUME: NYSE -7.4%, NASDAQ -4%. NYSE trade well below average as there was no selling just a lack of bids. NASDAQ trade was lower but still well above average as it sold, a sign that NASDAQ stocks are being unloaded.
ADVANCE/DECLINE: NYSE -2.1:1, NASDAQ -3.4:1. Definitely escalating negative breadth on the downside.
Not a definitive reversal, but there are issues. Macro and more micro.
Read "The Daily" Entire Weekend Summary
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Watch Technical Summary Video
With earnings coming fast, we were banking gains on positions before and after results.
AMZN (Amazon.com, Inc.)
Banked gain both ahead and after results. Thursday before the close we banked more of our August options for a 60+% gain. Friday on the gap we banked the rest with a 70+% gain. When your options cost $47.00, that is a nice chunk of change.
VRSN (VeriSign, Inc.)
We banked gain ahead of earnings, selling September $140.00 strike options for $12.60 after purchasing at $7.80. Nice 60+% gain. Sold some of the stock for $151 after purchasing at $139.98, banking almost 8%. Not bad for a less than 3 week trade.
JNJ (Johnson & Johnson)
Friday JNJ rallied to the 200 day SMA and triggered our target. We picked up some September $125 strike calls on 7/23 for $3.85 and sold them Friday for $7.60, a solid 97%.
FB (Facebook, Inc.)
Ahead of earnings we banked gain on positions taken at $198.22 and $186.57. The latter position was August $185.00 strike calls bought 5/23 at $10.75 and we sold them for $33.50, a nice 210% gain. The other position was picked up at $198.22 on 7/5. We sold the September $200 call options for $19.75 after buying them at $9.85, banking 100%.
DIA (SPDR Dow Jones Industrial Average ETF )
We played a bounce to the prior high on this one, buying in on 7/10 with some September $248.00 calls for $6.05. We sold half Wednesday for $8.4, banking 38+%. We will see if DJ30 can keep moving higher.
V (Visa Inc.)
Ahead of earnings we had picked up some positions on 6/4. August $130 strike calls at $6.65. V rallied toward earnings and we sold them for $12.80, banking 90+%.
GOOG (Alphabet Inc.)
We picked up some GOOG August $1135.00 call options on 6/11, playing for a move off a 10 day EMA test. The stock rallied to the initial target (the prior highs) on 6/20 and we sold half for $72.30, banking 50+%. We held on and then it dropped to the 50 day EMA. It rebounded and we were in for a run at earnings. It did that and on Monday we sold another half for $82, banking 74% (bought at $47.00). We are letting the last part work post earnings to see if it holds the gap and rallies more.
We also sold a position taken when the price was $1065 back on 5/9. Some August $1065 strike calls purchased for $55.75 and sold for $142.00. A nice 150+% gain.
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Here's a leader play and our current analysis.
STATUS: Triangle. NUE rallied from November 2017 to January where it peaked (along with many stocks). It then formed the current 7 month triangle using the 200 day SMA as the support for the lower trendline. NUE enjoyed a good July, rallying off the 200 day SMA to the upper trendline Tuesday. The rest of the week NUE tested the move. NUE is getting toward the point in the triangle and it is going to show a break one way or the other. We are watching for a higher low near the 10 day EMA and a breakout from there. Right kind of stock the way the market appears to be rotating. The play is to wait until NUE finishes this test and puts in that higher low, them makes the breakout move. On these patterns you want to enter as it makes the breakout as they can be explosive.
Volume: 1.673M Avg Volume: 2.3M
BUY POINT: $68.64 Volume=3.4M Target=$77.24 Stop=$65.77
POSITION: NUE OCT 19 2018 67.50 C - (53 delta) &/or Stock
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AVGO (Broadcom--$221.05; -2.13; optionable): Semiconductors
STATUS: Bear flag. AVGO broke lower fromm a 2 month head and shoulders pattern that formed at the end of a 8 month trading range. Just could not find the buyers to break it higher. AVGO rallied back up to the 200 day SMA the first two weeks of July but failed there, gapping massively lower, clearing the bottom of the range in a downside breakaway gap. The past three weeks AVGO has recovered back to the lows from the trading range, about half of the gap. A key level because this was range support and it was obliterated. After moving up to that resistance (coincident with the 20 day EMA), AVGO three a pair of doji to end the week, closing well off the intraday highs. We are watching for a failure at this resistance and are looking to play a move downside with an initial target at the July low. That move lands a 75%ish gain on the put options.
Volume: 7.884M Avg Volume: 6.127M
BUY POINT: $220.04 Volume=8.5M Target=$201.01 Stop=$226.71
POSITION: AVGO SEP 21 2018 220.00 P - (-44 delta)
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--by the MarketFN STG Team
HON (Honeywell International Inc.)
Our Success Trading Group members closed FOUR winning trades this week including a trade on Honeywell International Inc. (Ticker: HON). We have several stocks on our radar and are looking forward to trading next week.
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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ECA - EnCana Corp. is currently trading at $13.11. The September $13.00 Calls (ECA20180922C00013000) are trading at $0.85. That provides a return of about 6% if ECA is above $13.00 on expiration Friday in September.
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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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