Market Summary (continued)
Trade news received the most attention to end the week, and this time the trade news was not upside conducive. At least through the Friday open. Thursday Larry Kudlow uttered his 'sizeable distance to go' warning regarding US/China trade negotiations, and Friday morning we learned that Trump and Xi did NOT have a scheduled meeting -- a real market issue given the President said he would personally have to meet with Xi to work through the stickier portions. Then on top of that, reports warned that Trump would issue an order banning Chinese telecom equipment in the US. From trade optimism back to gloom in a week.
Futures were again lower for another start to a session. Wednesday was lower and stocks suffered modest losses. Thursday was a fairly sharp day lower. Friday was the third. And perhaps the charm. Stocks rebounded off midmorning and midday lows and rallied back upside to the close. That actually turned some indices positive.
Trigger? Trade yet again. After realizing the trade comments from Kudlow, Trump and who knows who else rattled the market, the White House announced that Mnuchin and Lighthizer are heading to China on February 14-15. Alone. No Kudlow, no Ross, no Navarro. That is viewed as being deal positive as those wanting deep structural changes are staying home. I doubt the administration is going to capitulate and accept just the purchase of more US goods, but indeed a few pundits were concluding that Friday.
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With the indices approaching resistance and bumping it and with the February expiration next week, it was time to bank some more gain.
RMBS (Rambus, Inc.)
We picked up RMBS on 1/24 as it broke higher in the right shoulder of an inverted head and shoulders pattern off the longer selloff. We bought stock for $8.69 and some May $8.00 strike call options for $1.33. It hesitated a bit, but late January and early February saw RMBS surge to our initial target. On 2/7 we banked half the 14+% stock and 50+% option gain.
UCTT (Ultra Clean Holdings, Inc.)
Another stock we picked up in late January (1/24), UCTT surged again for us last week, hitting our target at the 200 day SMA and showing a doji. We banked more of the 25% stock and 200+% March $10.00 strike call option gain.
GOOG (Alphabet Inc.)
On 2/24 we took the rest of our GOOG February $1070.00 strike call options, selling them for $67.30 (bought at $41.50) for a 60+% gain.
COUP (Coupa Software Incorporated)
We bought COUP 1/15 and it ran well for us into February, started to stall at $94 in February. We banked some more of the March $65.00 strike call options for $25.5 (bought at $8.25), a solid 200+% gain. Sold some stock for $90.33 (bought at $68.51), a nice 31% gain.
DOCU (DocuSign, Inc.)
On 2/5 we banked some 16+% stock gain and 40+% option gain on positions purchased 1/10.
BILI (Bilibili Inc.)
We picked this position up 1/10 at $16.31 and some February $15.00 strike calls at $2.10. It performed, but was not a big runner for us. We sold out 2/7 for $17.84 on the stock (9%) and $2.95 on the options (40%).
CRON (Cronos Group Inc.)
We bought CRON 1/3 and took some early gain 1/11. On 2/5 when CRON turned volatile after a good run, we banked some more, selling some stock for $22.16 (bought at $11.52) for a 91% gain. Sold the March options for $11.15 (bought at $1.81), banking over 500%.
VRSN (VeriSign, Inc.)
Bought 12/27. We sold the last of the February options 2/7 for $27.5 (bought at $9.80) for a 180% gain.
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| 2) STOCK SPLIT REPORT |
Here's a leader play and our current analysis.
STATUS: MCHP is testing a nice gap higher through the 200 day SMA on its earnings results, gapping higher Wednesday, testing Thursday and Friday. MCHP gapped lower from a trading range in early August. Sold hard into late October but MACD put in a higher low. Rallied through November faded to test in December, setting up an inverted head and shoulders. Broke higher mid-January and rallied to the 200 day MA, then that move last Wednesday broke it out. May want to come back and test some more and if so we will adjust the entry point. If, however, MCHP is ready to rally from here, we step in. The play is for a gap fill to the early August gap lower. On the Wednesday break higher it moved to the bottom of the late July range, and the gap fill is the next logical resistance to touch. That move lands a strong 90+% option gain, 10% on the stock.
Volume: 2.837M Avg Volume: 3.276M
BUY POINT: $87.81 Volume=3.4M Target=$96.88 Stop=$84.79
POSITION: MCHP APR 18 2019 87.50 C - (51 delta)
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GWRE (Guidewire Software--$93.24; +1.25; optionable): Software
STATUS: Call the pattern a 5+ month cup with handle or double bottom with handle; the end result is the same, i.e. a nice accumulation base. Broke higher late January on strong volume, rallying into the start of February. That took GWRE to just below the early December recovery high, the 'hump' in the double bottom. Last week GWRE moved laterally over the 200 day SMA, testing the resistance it just broke. Friday GWRE bounced rather nicely and showed a very solid uptick in volume.
Volume: 597.998K Avg Volume: 536.826K
BUY POINT: $93.87 Volume=745K Target=$103.96 Stop=$90.21
POSITION: GWRE APR 18 2019 95.00 C - (45 delta) &/or Stock
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JNJ (Johnson & Johnson)
Our Success Trading Group will be watching closely for entry points next week on some of our favorite stocks such as Johnson & Johnson (Ticker: JNJ) and The Hershey Company (Ticker: HSY).
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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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CTRE - CareTrust REIT Inc. is currently trading at $22.18. The February $22.50 Calls (CTRE20190216C00022500) are trading at $.20. That provides a return of about 4% if CTRE is not called away at expiration and about 6% if CTRE is above $22.50 on expiration Friday in February
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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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