Market Summary (continued)
SP500, DJ30 and NASDAQ 100 all managed to hold the 200 day SMA Friday on a less than energetic session, one that saw a positive to negative, high to low intraday move. Again. There were bombs lower in software, chips. NASDAQ 100 maintained the 200 day SMA thanks to a handful of large cap stocks that managed to hold near the flat line. Oh, and PYPL; it jumped 9+% on 34M shares, over 3x average volume. Outside of those it was less than pretty, at least on NASDAQ.
NYSE large caps kept SP500 and DJ30 flat as well, but some groups enjoyed continued success such as food, entertainment (DIS), drugs. Consumer goods jumped on PG's earnings, not the greatest group for a strong market rally. Utilities rose as well. Another group that does not shout out 'big market rally ahead.'
SP500 -1.00, -0.04%
NASDAQ -36.11, -0.48%
DJ30 64.89, 0.26%
NASDAQ 100 -0.12%
VOLUME: NYSE +13%, NASDAQ -1%. NASDAQ trade matched the Thursday downside volume, indicating still a dump of NASDAQ stocks. NYSE trade jumped as it held the 200 day SMA, potentially a good indication.
ADVANCE/DECLINE: NYSE -1.1:1, NASDAQ -2.3:1.
The internals show more dumping of NASDAQ stocks though NASDAQ 100 held the 200 day SMA. More stocks were lower, obviously, as the breadth shows.
The market ended the week with the big indices at the 200 day SMA sans NASDAQ as it fell below the 200 day SMA on another day of strong volume. It is possible the remaining three can hold that support and launch a new rally.
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A mix of downside and upside as well as different sectors of stocks as the market shifts. Taking advantage of the opportunities wherever they are.
MNST (Monster Beverage Corporation)
MNST put in a big rounded top after a nice May to July rally. It tried in August for a higher rally high and made it, but as it did, MACD put in a markedly lower high: momentum waning. It stepped lower, breaking the 200 day SMA, testing it, fading. In early October we saw MNST testing the 200 day SMA from below and wanted to be ready to make some money if it failed to get back through. On October 4, MNST broke lower and we picked up some November $55.00 strike put options for $2.00. MNST moved laterally the next four sessions, but when it hit the 10 day EMA it dropped hard two weeks back. Monday MNST continued lower with a gap, hitting the target. It managed to hold, showing a doji in creation. After a nice rip lower we did not want it to rebound on us. Thus, we sold the options for $4.00, banking a solid 100% return.
NFLX (Netflix, Inc.)
After the NFLX flop to the 200 day SMA two weeks back we wanted to pick up some positions for a bounce rally into earnings. On 10-12 NFLX gapped back over the 200 day SMA after a one-day close below that level. We used that move to pick up some December $340 strike call options for $28.55. NFLX touched the 200 day SMA one more time intraday Monday, then rallied nicely Tuesday. We let it work into earnings, and there was a solid beat. NFLX gapped upside the next morning, and we did not wait too long to bank the gain. We sold the options for $45.80, banking a solid 60%.
WBA (Walgreens Boots Alliance, Inc.)
We spied WBA in a nice cup with handle base formed from January to early September. Not super exciting, but drugs were setting up well and WBA certainly sported a good pattern. It broke higher 9-12 and we moved into position with some October $70.00 strike call options for $2.45. This was a pretty easy play albeit with one hiccup. WBA rallied nicely through the end of September. It then tested for almost 2 weeks, working laterally in a tight range. Then it announced earnings and gapped lower two Wednesdayâ€™s back. It immediately recovered, however, and we let WBA continue working. It jumped right up off that 50 day MA test, clearing the lateral consolidation Monday. WBA continued rallying into Wednesday, hitting our target. Thursday it moved higher yet again, but immediately struggled; time to lock in the gain. We sold the options for $7.40, banking a solid 202% gain.
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Here's a leader play and our current analysis.
STATUS: AXP broke out from a 8+ month base in mid-August, rallying to mid-September. It peaked and tested normally to the 50 day MA and started bouncing back up into early October. Just in time -- for the selling. It again sold to the 50 day EMA, looked decent, but then flopped lower near the 200 day SMA in 2 sessions. It immediately bounced, however, held its ground, and on Friday bolted back upside through the 50 day MA. Good earnings did not hurt at all. We want to play AXP as it continues the recovery move: when they try to sell a stock but it does not take and it rebounds right back, that shows the buyers are stronger. Thus, as AXP continues the move we move in. A rally to the initial target lands a 70+%ish gain on the call options.
Volume: 5.694M Avg Volume: 3.253M
BUY POINT: $107.48 Volume=4.3M Target=$114.45 Stop=$105.14
POSITION: AXP JAN 18 2019 105.00 C - (60 delta)
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CTL (Centurytel--$21.99; +0.94; optionable): Telecom
STATUS: CTL broke sharply higher in early August, gapping and rallying out of a 14 month base. Solid breakout and rally to 24 followed by a 2 week flag test. CTL sold to a low early last week then started to recover, breaking sharply higher Friday on a very good shot of volume. Nice upside break and if CTL continues through the entry point we want to move in for a rally to some logical resistance near the June 2017 peak.
Volume: 11.794M Avg Volume: 10.039M
BUY POINT: $22.11 Volume=12M Target=$26.44 Stop=$20.61
POSITION: CTL JAN 18 2019 22.00 C - (54 delta) &/or Stock
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KO (The Coca-Cola Company)
Our Success Trading Group will be watching closely for entry points next week. We currently like The Coca-Cola Company (Ticker: KO) at its current price for new positions.
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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 $37.23. The November $37.00 Calls (VNOM20181117C00037000) are trading at $1.50. That provides a return of about 4% if VNOM is above $37.00 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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