Market Summary (continued)
The theme for the week remained through Friday, that is the NYSE large caps moving higher as money moved their way, the NASDAQ, small caps and midcaps consolidating the past three weeks the August move to a new high. SOX remains in its triangle, showing promise of a breakout to come, but still not making the move.
Indeed, DJ30 finally purchased a new high, moving past the January peak, the last to join the indices (excluding the specialty SOX) at new highs since the early year peak. That of course raises the question that now the last dog has caught the car, what do they do next? Rotate back to the techs? Certainly they are set up after 3 weeks of testing, the small caps are pretty much in the same position.
In recent history this same rotation two-step has played out with moves higher. The 'industrial side' rallies then money shifts back to the more tech-ish/growth side and the roles are swapped, the rallies in both sides maintained. Virtuous rotation as opposed to vicious rotation.
Thus the indices all stay in their uptrends, testing then rallying in a sinusoid wave.
Ah but there are issues or potential threats.
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CLF (Cleveland-Cliffs Inc.)
Put CLF on the report in August when it tested the 50 day MA and money was moving into more industrial stocks.Â It took awhile, but on 9/6 CLF finally made a break higher off that support.Â We picked up some stock for $10.55 and some October $11.00 Strike calls for $0.57.Â CLF rallied well, tested the 10 day EMA for one session, then ran straight up past the July high to near our initial target Wednesday.Â We waited to see if it would continue higher, but moved laterally into Friday. Decided to bank half the gain as this was a good run to this point. Sold some stock for $12.19, banking 15+%.Â Sold calls for $1.45, banking 150+%.
CRON (Cronos Group Inc.)
Put CRON on the report Monday as it started to come off a decent test of a solid move.Â Tuesday CRON started upside and we bought some stock for $11.53 and some January 2019 $12.00 call options for $2.50.Â The next session was the wild TLRY day and CRON gapped and surged as well, moving to over 15 on the high.Â We managed to catch a good chunk of that gain, selling stock for $14.25 and a 23+% gain, selling some of the calls for $4.50 and an 80% gain.
JNJ (Johnson & Johnson)
Picked up JNJ on 8/16 as it broke higher off a nice two week flag pattern and moved up through the 200 day.Â Used October $130 strike call options to give us better leverage, picking them up for $4.55.Â Nice initial move to $137, but JNJ then tested for two weeks.Â Held the 20 day EMA and then posted a solid 3 week run to the target by the end of last week.Â Sold half the options for $12.10, banking 165%.
TLRY (Tilray, Inc.)
Started this position on 9/11 as TLRY rallied off a short test of the prior rally.Â Picked up stock for $92.43 and some December $95.00 strike call options for $12.40.Â Nice initial move to 9/13.Â Somewhat gappy, and it gapped back down to the 10 day EMA the next session only to gap right back up.Â Okay, you need the bicarbonate next to your computer to trade this one, but that worked.Â The next day a gap and run of 35 points.Â As it closed at the high we left it to work.Â Then came wild Wednesday.Â TLRY gapped upside and surged near 100%.Â Started to fall back, had to be a blow off top.Â We sold the stock at $209.61 for a 125+% gain.Â We sold the call options for $114.10, banking 820%.Â Insane but sometimes that works.
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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: The past 7 weeks BAC formed a double bottom pattern over the 200 day SMA. This was after a good run from the early July low. If you dial back the chart a bit, you can see the current short double bottom is acting as the handle to a larger double bottom with handle pattern started in early March. BAC broke higher Wednesday, then started to test into Friday. Waiting for BAC to make the test, perhaps form a handle, but when it breaks upside, we want to lay a move to the March high as the initial target. That lands a solid 80%ish gain on the call options.
Volume: 85.978M Avg Volume: 49.391M
BUY POINT: $31.33 Volume=72M Target=$33.05 Stop=$3.08
POSITION: BAC NOV 16 2018 31.00 C - (53 delta)
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CRZO (Carrizo Oil & Gas--$25.62; +0.40; optionable): Oil and gas
STATUS: After a rally from March to July, CRZO peaked and formed a new base. It fell to the 200 day SMA in August, then formed a 7 week double bottom, tapping the 200 day SMA twice, the last in early September. Nice move upside last week, moving through the 50 day SMA Friday. Want to move in as CRZO continues higher through the buy point. Initial target is near the July high; like not having to hit a new high to make good money.
Volume: 2.56M Avg Volume: 2.463M
BUY POINT: $25.81 Volume=4M Target=$30.97 Stop=$24.11
POSITION: CRZO JAN 18 2019 25.00 C - (57 delta) &/or Stock
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--by the MarketFN STG Team
C (Citigroup, Inc.)
Our Success Trading Group will be watching closely for entry points next week. We currently like Citigroup, Inc. (Ticker: C) 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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CTB - Cooper Tire & Rubber Co. is currently trading at $30.05. The November $30.00 Calls (CTB20181117C00030000) are trading at $1.75. That provides a return of about 6% if CTB is above $30.00 on expiration Friday in November.
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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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