Market Summary (continued)
A tumultuous week outside of financial markets, some tumult in the financial markets, and a possible change of focus in the stock market.
Trade remained an issue with more US companies complaining about the potential for rising costs, no deal with Canada but deals with South Korea and others, and of course, China whining like a toddler about how the US just isn't playing fair. Hell, maybe China ISN'T ready to join the big leagues of world finance -- but it certainly will have to trade fairly and stop stealing the rest of the world's intellectual efforts. China likes to brag about its intellectual power, but it has stolen most of its advances. Kind of like the guy in college who would probably still make good grades if he spent as much effort studying as he did figuring out ways to cheat.
Economics of course played their role. The US remans much stronger than the rest of the world, but even the US data appears slowing in the forward looking areas. For example, Chicago PMI put in its lowest reading since April -- but at 60.4 it is HARDLY low. Trends, however, are always the real story, and while the overall trend is up, the data is slowing a bit. Of course any slowing is heralded as the end of the run -- instead of the more obvious . . . a slow down after two 4+% GDP quarters. Even in the gains in the 1980's there were slowdowns between quarters. Not major slowing, just ebb and flow in a very strong run higher. History repeats, but so do doomsayers.
The Fed was THE dominant factor for the week, specifically the chairman's comments regarding 'excess asset valuations.' Always a slap for markets because when the Fed starts talking overpriced assets it moves into areas where its lack of understanding has manifested time and time and time again, always with the same actions and same result: it overreacts, goes too tight too long, the market rolls over, the economy after it..
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While we waited for the big names such as AMZN, AAPL and NVDA to get moving again -- something they did on the week -- we banked some gain on other positions that moved while the big names worked through some near term issues. With NVDA moving the way it did Friday, it should not be too long before we take some gain on those stocks as well.
CRC (California Resources Corporation)
Energy stocks have improved and in looking for good patterns we found CRC. After an early July peak it fell into a 10 week base. After clearing the 50 day MA in a recovery and testing it, we put it on the report. On 9/18 it broke higher on volume, we moved in with some stock at $39.70 and some November $40.00 strike call options for $5.10. Moved up a bit, paused, then Monday CRC gapped and surged upside, hitting our initial target. So we sold some stock for $47.45 and a 19+% gain and some options for $10.00, banking a 95+% gain. CRC quickly tested then moved higher again into Friday, already putting more value into our remaining position.
SRPT (Sarepta Therapeutics, Inc.)
We moved into this position 9/29 with the stock at $139.68, picking up some November $135 strike calls for $16.15. After modest gains, SRPT made a good move mid-September then flattened out again for a week, then fading to the 20 day EMA. Last week SRPT jumped back upside, Wednesday gapping and running over $161. We banked some of the option gain, selling calls for $31.10, a solid 90+% gain. The remaining part of the position is still working higher for us.
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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: Formed a cup with handle January to May but could not breakout. Instead, it failed and rolled over, selling lower and lower, trending below the 20 day EMA into early September. Put in a lower low, but MACD was higher. HAL gapped higher, a bookend to a first of September gap lower. That formed an island reversal and HAL rallied up to and through the 50 day MA as of last Monday. HAL spent last week testing the move, holding over the 50 day MA's. Nice setup to break higher and rally to near the 200 day SMA. We want to play a solid upside break that holds. A move to the target lands a very nice 100+% gain on the options, 12% on the stock.
Volume: 9.514M Avg Volume: 8.106M
BUY POINT: $41.01 Volume=12M Target=$46.05 Stop=$40.34
POSITION: HAL NOV 16 2018 40.00 C - (59 delta) &/or Stock
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SPLK (Splunk, Inc.--$120.91; +2.41; optionable): Security software
STATUS: SPLK gapped out of an inverted head and shoulders in late August, gapping and rallying past the May and June peaks. Tested the move, falling back to the 50 day EMA two weeks back. Last week SPLK started higher off the 50 day, showing a solid move Friday on strong, above average volume. Nice action in a blah market. Ready to move in as SPLK continues upside. The NOV options land a 65%ish gain, JAN 45%.
Volume: 2.871M Avg Volume: 2.183M
BUY POINT: $121.21 Volume=2.3M Target=$131.94 Stop=$116.57
POSITION: SPLK NOV 16 2018 120.00 C - (55 delta) or JAN 18 2018 120.00 C - (56 delta)
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--by the MarketFN STG Team
KO (Coca-Cola Company)
Our Success Trading Group will be watching closely for entry points next week on some of our favorite stocks. We currently like Coca-Cola Company (Ticker: KO) 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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VNOM - Viper Energy Partners LP is currently trading at $42.10. The November $42.00 Calls (VNOM20181117C00042000) are trading at $1.95. That provides a return of about 5% if VNOM is above $42.00 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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