Market Summary (continued)
Just a week ending TGIF break higher or did Friday mean something more? Fridays can always deliver head fakes. There is the old adage buy on Monday, sell on Friday, and with stocks posting some good moves Friday on some positive news stories, it could be the results were juiced a bit.
Disney announced its Netflix-aimed streaming service, CVX is set to buy APC (and perhaps set off a war with Oxy as the latter previously offered over $70/share and a cash sweetener to APC -- and as an owner of APC stock, I would like to see the OXY deal), and Chinese export data improved. A veritable cornucopia of positives that helped fuel futures all pre-market and indeed into the close -- after a midmorning hiccup tested the higher open.
SP500 19.09, 0.66%
NASDAQ 46.80, 0.46%
DJ30 269.25, 1.03%
NASDAQ 100 0.44%
VOLUME: NYSE +15%, NASDAQ +1%. NYSE trade posted a nice bounce, but still turned in a below average session. But for some massive volume on CVX, APC, DIS, NFLX it would have scored another significantly below average session a la NASDAQ. Thus, despite the upside, not a general groundswell of buying
ADVANCE/DECLINE: NYSE 1.8:1, NASDAQ 1.3:1. Breadth shows what DJ30's gain did not, i.e. outside a few excited areas thanks to M&A, Disney, and a continued interest in so-called old economy stocks (e.g. industrials, machinery), the lethargy mostly remained.
So, the question again: Friday happy hour or the start of a meaningful move?
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AVGO (Broadcom, Inc.)
Friday AVGO hit our initial target on a position taken 3/26. AVGO gapped higher earlier that month in a breakaway move. It tested after about a week and we picked it up as it renewed the move off the 10 day EMA with some June $300 strike call options for $14.60. AVGO rallied then tested the 10 day EMA, then starting Wednesday last week rallied again. Indeed, we bought some more AVGO Wednesday as it broke higher off that 10 day EMA just as we did in late March. Friday AVGO hit that first target and we stuck to the plan, selling half the options for $22.30, banking over 50%.
MCHP (Microchip Technology, Inc.)
We watched MCHP form a triangle off the early February gap and rally higher. In late March it looked as if MCHP was breaking down as it fell hard and broke the 200 day SMA as it fell out of the triangle. It immediately recovered, however and held the 200 day SMA. That piqued our interest: when sellers try to sell it but cannot keep it down, that is a sign of strength. It is also called a shakeout, that quick drop below support and quick rebound once the weaker hands are folded. On 4/1 MCHP gapped upside off that shakeout and we moved in with some June $87.50 call options for $4.90. On 4/10 MCHP was close to the initial target and looked a bit heavy; we sold half the position for $7.90, banking 60%ish. Friday MCHP gapped upside 1.48%, but that is okay: we still have half the position and also a nice gain.
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Here's a leader play and our current analysis.
STATUS: Breaking upside from a short 6 week cup with handle base that itself acted as a handle to a larger base formed off the June 2018 peak. Double bottom spanning October to early January, a break higher, and now the lateral handle. Friday volume moved up to average as BABA gapped higher, moving just out of the handle. Ready to enter as BABA continues upside. Target is the late June gap that really got the selling underway. A move back up to that level -- very doable -- gains 65%ish on the call options.
Volume: 12.599M Avg Volume: 12.578M
BUY POINT: $189.05 Volume=15M Target=$201.77 Stop=$184.87
POSITION: BABA JUN 21 2019 190.00C - (51 delta)
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SYMC (Symantec--$23.96; +0.06; optionable): Security software
STATUS: Flag. Nifty setup as SYMC gapped upside last Monday, clearing the November, February, and March highs in its recovery base. The stock gapped ugly in May 2018, but that was just part of a base that started in September 2017. Three really ugly gaps lower and in late October 2018 SYMC finally started putting in the bottom. Took a lot of work, but in late January SYMC gapped upside, getting it clearly off the bottom of the base. The past 2.5 months the stock formed a little inverted head and shoulders, breaking out with that Monday upside gap. Like the nice, easy test. The play is to step in as SYMC makes a strong break higher from this consolidation. The target is near the gap fill from the May 2018 gap. That move gains a solid 15% stock and 115%ish on the call options.
Volume: 3.912M Avg Volume: 4.155M
BUY POINT: $24.14 Volume=5M Target=$27.96 Stop=$23.87
POSITION: SYMC JUL 19 2019 24.00C - (53 delta) &/or Stock
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INTC (Intel Corporation)
Our Success Trading Group members scored another winning trade this week when we closed out a position in The Walt Disney Company (Ticker: DIS). We currently like Intel Corporation (Ticker: INTC) 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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PZZA - Papa John's International Inc. is currently trading at $50.19. The May $50.00 Calls (PZZA20190518C00050000) are trading at $1.35. That provides a return of about 5% if PZZA is above $50.00 on expiration Friday in May.
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