Market Summary (continued)
Earnings misses from AMAT and NVDA did their damage, but they came up short in terms of tanking stocks. Indeed, most of the indices managed a low to high move off an opening gap lower with the NYSE indices actually closing positive.
SP500 6.07, 0.22%
NASDAQ -11.16, -0.15%
DJ30 123.95, 0.49%
NASDAQ 100 -0.34%
VOLUME: NYSE +18%, NASDAQ -2%. Expiration, so the higher volume on NYSE did not mean much. Interestingly, NASDAQ trade remained lower and just below average.
ADVANCE/DECLINE: NYSE +1.1:1, NASDAQ flat.
After a decent look on DJ30 and SOX Thursday as the indices actually held a lead, they struggled on Friday. Yes there were reasons for the struggle (earnings, Fed angst, trade ups and downs) but the point is the same: the market struggles when it is out in front.
Not a selloff, not a rollover, but the slow action continues to show a market that has a very hard time gaining traction when it tries to move higher.
Of course, it was Friday, an expiration at that, and the market rarely (rarely) makes bottoms on Friday. Thus, while there are some very interesting patterns setting up and some bumping at entries, they are still in Missouri, still have to 'show me' the moves. Friday was interesting in that respect, but this coming week is more to the point of serious moves.
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Definitely taking what the market is giving.
NVDA (NVIDIA Corp.)
With the negatives surrounding growth stocks we were playing NVDA into earnings. Not a lot of thought here other than it sported a negative pattern and was not being treated well. We put the play on the report 11/12 and the next session NVDA bounced but then started selling off that bounce after hitting resistance. We picked up some December $200 strike put options, paying $15.90. NVDA gapped upside the next session but gave it all back -- a good indication the stock was still being sold when it moved higher. Then Friday the gap lower after the earnings issues Thursday after the close. NVDA gapped lower, we figured it would not get better, so we sold the puts for $38.10, banking 139%.
AEP (American Electric Power Company, Inc.)
Yikes, a utility. Hey, when they are what is working you play them. We picked this one up 11/6 as it bounced off a 50 day EMA test. We bought some January $72.50 strike calls (stock at $74.50) for $3.17. It was pretty much a no brainer from there: let it crawl up the 10 day EMA. AEP did just that, then Friday gapped upside and hit our target. We sold calls for $5.90, banking a nice 85+% gain.
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Here's a leader play and our current analysis.
STATUS: DATA broke out from a short 7+ week double bottom with handle on 11/7, gapping through the top of the pattern. In the continuing market stumble, DATA dropped right back to the 50 day SMA it gapped over on earnings, tapping that level Monday and bouncing to show a doji on the close. Broke higher again Thursday, tested Friday. Still in excellent position to move higher, and we certainly want to move in if DATA makes a new upside break. Software and chips look good again and DATA is a very good software stock.
Volume: 816.474K Avg Volume: 1.08M
BUY POINT: $117.79 Volume=950K Target=$130.94 Stop=$113.46
POSITION: DATA Jan 18 2019 120.00 c - (45 delta) &/or Stock
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REV (Revlon--$28.11; +0.19; optionable): Makeup, personal products
STATUS: REV broke higher on earnings, gapping through the 50 day MA and past the late October high. REV spent last week testing that move in a tight lateral range, waiting for the 10 day EMA to catch up. It has done so as REV sits on top of the late October peak. This is part of a break higher in a long double bottom base that started with the early 2017 peak. We want to the pullback to finish and then we look to play REV as it breaks higher.
Volume: 286.068K Avg Volume: 291.477K
BUY POINT: $28.42 Volume=400K Target=$32.79 Stop=$26.98
POSITION: REV FEB 15 2018 30.00 C - (62 delta) &/or Stock
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CSX (CSX Corporation)
Our Success Trading Group will be watching closely for entry points next week on some of our favorite stocks such as CSX Corporation (Ticker: CSX) and Stanley Black & Decker, Inc. (Ticker: SWK).
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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FAST - Fastenal, Co. is currently trading at $57.55. The January $57.50 Calls (FAST20190119C00057500) are trading at $2.75. That provides a return of about 5% if FAST is above $57.50 on expiration Friday in January.
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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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