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Chart of Day: 350% in Weeks

Apr 04, 2017

When I first started talking about buying Tesla (TSLA) on a pullback to oversold levels, no one wanted to listen. My buddy would laugh at my idea and tell me the stock was heading lower, near-term. So he bought put options.

Meanwhile, the stock just hit double bottom support and held it. Why would I go short an oversold stock? I kept my mouth shut, though and let him learn the hard way. He’s since lost his money on the wrong side of the trade.

As for our recommendations, we mentioned the April 250 call as it traded at $12. We also mentioned selling the April 250 put around $15 on February 28, 2017. When I told my buddy where they last traded, he got a bit sick.

The stock last traded at $304.10.

The April 250 calls now trades at $54 from $12. The April 250 put now trades at 20 cents, meaning we’re likely to collect the $15 ($1,500 per contract) premium.

If you still hold, exit both trades.

As for how to trade this now, it’s time to go short. It’s now overbought. Buy to open the TSLA June 2017 305 put at market and, or the June 2017 310 put at market.

 

Chart of Day: Canadian Solar Beginning to Bounce

Apr 02, 2017

Just days after telling you how severely oversold CSIQ had become at $11.62, the stock has begun to pop. Not only did we recommend buying the stock, but also the CSIQ May 12 calls, which traded at 80 cents (now $1.05).

All as the stock begins to break free from oversold RSI MACD, and Money Flow pointed out on March 29, 2017. We’d like to see a bearish gap refill around $13.40 when all is said and done. If you haven’t taken a position yet, consider doing so.

The stock now trades at $12.27 after bottoming around $11.

What's funny is that "pros" still advise avoiding the stock even at these prices.  Oh well, they'll just miss out as usual.

 

Chart of Day: Sears Going Concern

Mar 30, 2017

Shares of Sears (SHLD) exploded higher in recent days on news that Fairholme Capital Management bought 287,000 shares. Even CEO Eddie Lampert bought another 526,000 shares. And again, the naïve herd followed them back in.

What no one seems to understand is that it doesn’t matter how much money you throw at Sears, it’s still a dead company walking. Such big bets come as operational results are still beyond terrible. Revenue fell from $36.2 billion to $22.1 billion in three years. Losses have rocketed from $1.4 billion to $2.2 billion.

The company has $300 million in cash, as compared to $3.6 billion in debt.

Its just part of the reason Sears recently told investors it was a “going concern.”

Despite all of this news of renewed interest, SHLD won’t make it. Once this latest native love-fest ends for the stock, it’ll come right back down on reality. Consider buying to open the June 2017 11 put up to $2.80.

Chart of Day: Did Canadian Solar just hit bottom?

Mar 29, 2017

Solar stocks have had a rough couple of years on an unfortunate combination of lower gas prices, concerns about phasing out government subsidies, and far too much debt. However, some solar technical patterns may be pointing to a potential move higher. Look at Canadian Solar (CSIQ) for example.

After failing at triple top resistance points dating back to 2014, the stock fell out of the sky, finding strong support just under $11 a share. But in recent weeks, look at how oversold it's become on RSI, MACD and Money Flow.  Plus, if we look back two years, you can see that whenever it's become this oversold on those momentum metrics, it bounces not long after.

Buy Canadian Solar (CSIQ) stock at $11.60, and or the CSIQ May 2017 12 calls, which last traded at 80 cents.

 

 

Chart of Day: SNAP Continues to Rally

Mar 27, 2017

We've been talking SNAP a lot lately.  In fact, this is the third time in a row we've covered it.  But can we not?

Weeks ago, we advised avoiding the SNAP IPO.

It was a disaster.  The company was losing money.  It wasn't likely to be profitable any time soon, or for the foreseeable future.  And it definitely wasn't worth $29 a share, where it ran to.

Then, after all of the sellers jumped ship, we recommended buying it.  In fact, not too long ago, we recommended buying it after the upgrades starting coming in.  The stock is now up to $23.83 and still likely to run from our $20.26 entry price. It's now nearing $24 just days later.  And should all go according to plan, it could run anotehr 20%, say the underwriters.

According to Fortune:

"We are bullish about Snap’s ability to monetize its highly engaged daily active user (DAU) base," a Morgan Stanley analyst wrote in a Monday note. " First, we believe Snap’s millennial audience and differentiated online video ad inventory are in demand by advertisers."

Morgan Stanley, Goldman Sachs, RBC Capital Markets, Credit Suisse, Jefferies, William Blair & Co., and Cowen, JMP Securities were among those who have given Snap a buy, or similar rating.

All were underwriters for the Snapchat IPO. On average, the 10 that did give the stock a target price said the company's stock would hit $27.20 over the next 12 months—a 19.6% upside from the stock's Friday close. Not counting the underwriters, the stock's average target price would have been $19.83—or 12.8% below Snap's Friday close.

At this pace, we could do very well with our long position.  Hold.

 

 

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