Market Summary (continued)
Friday looked to be a surefire continuation of the upside move that began Tuesday, even with AAPL's iPhone unit miss. That would have been a follow through session as it would have occurred on the fourth session following a reversal -- if volume and the price gains held. It didn't and thus Friday was no follow through. It was disappointing in that it gave up a nice gain, but it was not a failure either. After three days of fairly solid upside the market could not hold an early move and lost some ground. Not the end of the line in and of itself. It can pause, even fade a session or two, refresh itself, and then provide the follow through. Or not. If the bounce was going to fail, this certainly was a point to do just that as the rebound thus far matched the first relief bounce that failed.
As for AAPL, of course, there will never be another such miss on units -- no, not because AAPL will never miss, it just won't give sales numbers anymore. For the past three quarters iPhone sales have varied 1% -- stagnation? -- so AAPL figured why release them any longer. Looking at the trend, it would appear $1000 AAPL phones have hit the saturation point. It seems that there is only so much appetite for hugely expensive phones that break just as easily as $200 phones. All the same, AAPL sold $62.9B of iPhones, gear, and services in Q3. Those are not garbage numbers.
AAPL was down 6.6%, but stocks overall gapped upside when futures opened. The jobs report hit and was nicely better than expected. Stocks backed off from morning highs but held upside into the open. Except for NASDAQ at -34. Stocks opened higher then tailed off, trending lower below the 15 minute moving average into early afternoon. Positives turned to negatives. The old high to low. An afternoon bounce pushed RUTX and SP400 slightly positive and took the large cap indices off their lows, but it was no great recovery.
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DATA (Tableau Software, Inc.)
We were anticipating a bounce in the market as discussed in the reports, and that included the leaders that fell on hard times. DATA was one, but it also held the 200 day SMA with a double bottom into the end of the month. We put the play on the report 10/29. 10/30 it broke higher. We moved in with some December $100.00 strike calls (stock at $100.96) at $8.90. The play was a trade pure and simple, taking a bounce up to the 50 day SMA where there was also some price point resistance.
Data obliged. It rallied Tuesday, Wednesday Thursday, hitting our initial target Thursday. We banked half the position Thursday, selling the calls for $12.10 and a 35% gain. We let part work as the market and DATA closed out at the session high. Friday DATA gapped higher with the market, but both started to sputter. We quickly sold the remaining calls for $13.20, banking 48% on those. We will see if DATA forms a handle to the double bottom, and if so -- and if the market looks good as well -- we will draft another play on a break higher from the handle. As for the trade, it worked as planned.
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Here's a leader play and our current analysis.
STATUS: Double bottom w/handle. Have to look at some utilities if this bounce fails and is a rollover. AEP broke out from a 10+ month base on 10/24. The breakout did not hold and it came back to test the 50 day MA last week. If the market bounce stalls out the utilities likely catch a renewed bid. If so and AEP posts a nice break upside, we want to move in for a run toward the November/December consolidation range. That move lands a 55+% gain on the call options.
Volume: 3.054M Avg Volume: 2.88M
BUY POINT: $73.55 Volume=4M Target=$77.45 Stop=$72.26
POSITION: AEP JAN 18 2019 72.50 C - (49 delta)
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KR (Kroger--$30.17; +0.84; optionable): Grocery stores
STATUS: Double bottom w/handle. It doesn't get more basic: the stores that sell the food you put on the table. KR gapped upside mid-June, quickly fell into a 5 week base, then moved higher into early September. It gapped lower in September: what earnings gave in June it took in September. Off that gap lower KR has since formed a double bottom with handle. A solid gap and rally Tuesday took KR up to the 'hump' in the double bottom, and it slid laterally into Thursday. Friday volume kicked back in and KR moved higher. We want to enter as KR continues this move. A rally to the target lands a very solid 100+% gain on the options.
Volume: 11.642M Avg Volume: 10.312M
BUY POINT: $30.29 Volume=14M Target=$34.79 Stop=$28.79
POSITION: KR JAN 18 2019 30.00 C - (58 delta) &/or Stock
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VZ (Verizon Communications, Inc.)
Our Success Trading Group members closed two winning trades this week when we traded in and out of Verizon Communications Inc. (Ticker: VZ) in just two days and closed another position in Coca-Cola Company (Ticker: KO). 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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GES - Guess?, Inc. is currently trading at $22.31. The December $22.00 Calls (GES20181222C00022000) are trading at $1.95. That provides a return of about 8% if GES is above $22.00 on expiration Friday in December.
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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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