Market Summary (continued)
The session started lower and trended lower in a very orderly decline into the afternoon session. There was a lot of 'what the heck happened?' commentary given the Wednesday surge and the utter failure to produce any upside Thursday or Friday. Plenty of concern and worry the market was going to give up the entire break higher -- it did so on NASDAQ, filling the Wednesday gap and more at the session low.
A spurt of upside started 2 hours out from the close, bouncing the indices nicely off the session lows. Stocks lost some steam in the last 15 minutes or else the recovery would have looked pretty decent versus 1%+ losses.
SP500 -25.82, -0.92%
NASDAQ -123.98, -1.65%
DJ30 -201.92, -0.77%
NASDAQ 100 -1.67%
VOLUME: NYSE +13%, NASDAQ -2%. NYSE trade moved up to average; some more selling but not heavy. NASDAQ trade faded as it sold off. Not a massive selloff.
ADVANCE/DECLINE: NYSE -3:1, NASDAQ -2.1:1. Fairly hefty downside breadth.
When all was done for the session the general notion is the rebound was rejected and the selloff continues. Perhaps, but the index patterns, particularly large cap NYSE -- even NASDAQ 100 -- despite falling, held together. The action was more a test of the Wednesday follow through.
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WMT (Walmart, Inc.)
After gapping upside on earnings in mid-August, WMT entered into a 2+ month lateral trading range. Tried to break higher mid-October, failed but held the 50 day MA. It continued to consolidate and we put it on the report after it tried higher late October but failed. The next session WMT made the move and we entered with some December $97.50 calls for $4.40. WMT was pretty much bulletproof after that, the only hiccup on Halloween as it sold after breaking higher the day before. It held the 10 day EMA then rallied straight on into Friday. After seven sessions upside straight, we opted to take part of the gain. Sold half the options for $8.80, banking a 100% gain less commissions.
MCD (McDonald's Corporation)
Old standbys are working best in this market. We entered MCD on 10/29 as it broke higher off a 10 day EMA test. MCD broke higher 10/23, gapping upside and rallying. A 3-day test followed and we put it on the report. When MCD jumped again we entered with some January $175.00 strike call options for $6.95. MCD tested immediately yet again, but it held the 10 day EMA and bounced two Fridays back. It was straight up into the past Friday, gapping to a doji. Six straight upside sessions on low volume the last two of the week. We decided with the gap to the doji it was time to take some gain. We sold half the options for $12.40, banking just over 75%.
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Here's a leader play and our current analysis.
STATUS: Friday CMG broke higher for a weeklong consolidation after clearing the 50 day SMA the prior week. CMG touched new highs in August before selling off into late October. It just undercut the late July lows then immediately reversed to start this latest move. CMG has set up something of an inverted head and shoulders as part of a cup base. With that break higher Friday we are ready to enter as CMG continues the move higher. A move to the target lands a 60%ish gain on the options.
Volume: 891.882K Avg Volume: 769.094K
BUY POINT: $491.04 Volume=900K Target=$521.89 Stop=$481.21
POSITION: CMG JAN 18 2019 490.00 C - (54 delta)
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AGN (Allergan--$165.52; -3.78; optionable): Drugs
STATUS: Bear flag. AGN rallied into August and continued into October in a very flat move over the 50 day MA's. Broke lower in early October, recovered, but then broke again, falling through the 200 day SMA in late October with a strong move. Over the past week it has recovered to the 200 day MA. Thursday it paused, Friday it started back down on rising average trade. Looking to move in as AGN continues lower. A move to the target near the prior lows lands a 55%ish gain.
Volume: 2.04M Avg Volume: 2.159M
BUY POINT: $164.88 Volume=2.3M Target=$155.56 Stop=$167.39
POSITION: AGN DEC 21 2018 165.00 P - (-46 delta)
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JNJ (Johnson & Johnson)
Our Success Trading Group members scored another winning trade this week when we closed out a position in Johnson & Johnson (Ticker: JNJ). We are watching several stocks 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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PZZA - Papa John's International, Inc. is currently trading at $55.21. The December $55.00 Calls (PZZA20181222C00055000) are trading at $3.00. That provides a return of about 6% if PZZA is above $55.00 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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