Market Summary (continued)
Stocks decided to move upside at quarter end with SP500 and NASDAQ gapping higher from a 4-session lateral move after dropping back into the top of the range the prior Friday. Down the prior Friday, up this one, but the two moves are not really apples to apples in terms of size and strength. Even so, the indices held support after that drop and did manage to garner some bids Friday. Whether just end of quarter shopping will be seen next week. Regardless, it was a strong quarter, the strongest first quarter since 1998 and overall quarter since 2009 -- or something like that.
Friday showed a decent move up off support. Needed it. But, alas, not definitive. Still below the highs before the prior Friday selling, still plenty to prove if bids are returning. Consider that the sellers are nowhere to be found. Stocks SHOULD be moving higher with relative ease, but bids were hard to find outside of perhaps Friday. Pretty anemic action nonetheless when you consider the sharp Friday selloff a week back. Again, still a lot to prove and surprisingly so given the lack of sellers stepping out in front of the market.
The internals were not bad, at least volume-wise; breadth was quite puny. Exchange volume spiked upside, but given it was 1) end of month, 2) end of Q1, and 3) LYFT posted 71.5M shares in its opening day, volume doesn't mean a whole lot. Good to see it up on an upside market session -- at least it was not selling volume, but there were other factors at work.
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YETI (Yeti Holdings Inc.)
A new issue in October, we picked up our first position on Yeti as it broke from its first base, a cup with handle formed from late November to mid-February. After that break higher and rally, YETI consolidated three weeks. Liked how it did not give up any gains, so we put on a new play to pick it up as it broke higher once more. YETI broke higher 3/13 and we picked up the stock for $26.25 and some May $25.00 call options for $3.30.
YETI surged upside to $30.25, tested back to the 10 day EMA, then rallied off that near support into Thursday. Strong move and rallying right to our initial target. At $32.60, that put the gain at 24% on the stock. The options traded $7.2, a 115+% gain. YETI fell right back to the 10 day EMA Friday, but after undercutting it managed a nice rebound to hold the 10 day on the close. Nice shakeout test as the buyers came right back in. Still looks good to continue.
VZ (Verizon Communications Inc.)
VZ set up a classic triangle from November to early March and we put it on the report 3/01 to be ready for the break higher. VZ needed one more test and made that to start March. Then on March 11 it made its move, surging on some solid trade, gapping and rallying. We picked up some stock for $57.53 and some May $57.50 strike call options at $1.60. After that, it was a case of letting the pattern and the breakout work.
VZ rallied off the initial move for four sessions, tested the 10 day EMA for three, then rallied up into last week. Midweek it hit the target at the November high. We pulled the trigger, selling the options for $3.55, a 120% gain. Sold the stock for $60.84, banking 5.75%. Options or stock? Hmmm.
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Here's a leader play and our current analysis.
STATUS: Cup w/handle. Another drug related play, this one getting very interesting with a four week handle to a 7 month base, the handle one of our favorite upside shorter term patterns. That pattern is the downward pointing wedge. Those have a very good reliability to breaking in the opposite direction of the point of the wedge. With ARWR fading the past four weeks to the 50 day MA last week, that means the move to watch for is the upside break. The entry is a solid break higher through the upper trendline, showing some good trade. That puts ARWR on trade to shoot for a new high. Of course, we can make some good money without it having to move to a new high, a very nice aspect of this pattern.
Volume: 1.101M Avg Volume: 1.77M
BUY POINT: $18.76 Volume=2.5M Target=$22.48 Stop=$17.51
POSITION: ARWR JUN 21 2019 18.00C - (57 delta) &/or Stock
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ODFL (Old Dominion Freight Line--$144.39; -1.10; optionable): Trucking
STATUS: Double bottom w/handle. A very well-formed 7 month base showing the classic features. The second low undercut the first, and as it did, MACD put in a higher low. The stock jumped from there and rallied to mid-February. ODFL has spent the next 6 week handle, using the 50 day MA as support. Nice lateral move the last 1.5 weeks puts ODFL in good position to make a breakout move. Looking for strong volume and holding the break higher as the entry signal. A rally to the initial target at the first level of resistance gains 75% on the calls, 9%ish on the stock. Steady but solid stock, great pattern.
Volume: 460.115K Avg Volume: 540.26K
BUY POINT: $147.34 Volume=800K Target=$159.77 Stop=$143.01
POSITION: ODFL JUL 1j9 2019 145.00c - (45 delta) &/or Stock
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VZ (Verizon Communications Inc.)
Our Success Trading Group members closed another winning trade this week on Verizon Communications Inc. (Ticker: VZ). 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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TROX - Tronox Holdings PLC is currently trading at $13.15. The May $13.00 Calls (TROX20190518C00013000) are trading at $1.25. That provides a return of about 10% if TROX is above $13.00 on expiration Friday in May.
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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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