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Chart of Day: Oil to Rally or Die at Doha

Apr 15, 2016

It’s one of the most anticipated meetings of the year.

OPEC and non-OPEC countries will meet in Doha this weekend, in an attempt to iron out a production freeze at January levels.

But most of it depends on Iran, which has already called the arrangement a joke. Instead, Iran has plans to increase output to four million from 3.2 million barrels a day.

Should that happen, should Iran not play ball, the Saudis could walk, too, ending any potential deal and sending oil back to multi-year lows. It’s all a wait and see. Russia seems bullish, though, with plans to offer Iran an exemption or a graduated production ceiling offer.

All we can do is wait on the sidelines and hope these guys can work it out.

If not, well… we could see $26.05 lows on oil again. Exxon Mobil (XOM) and Chevron (CVX) would slip again, too. In fact, let’s take the bet that Doha fails, given Iran’s inability to help any one but themselves. Consider taking a very small bet on the XOM June 2016 85 put up to $3.05.

 

 

Chart of Day: Exiting Ocular Therapeutix (OCUL)

Apr 11, 2016

It was fun while it lasted…

Just weeks into the OCUL stock and September 10 call option trades, we recommended exiting half of each position for gains of 44% and 161%, respectively.

Today, we’re recommending that you close out the second halves for gains, as well. The stock is becoming a bit toppy, technically. If we look at RSI, MACD and Money Flow, we can see that each momentum indicator has over-extended…

Given that information, OCUL is likely to pivot and turn lower, near-term… So, after closing out the long side positions, consider going short OCUL by buying to open the OCUL June 2016 10 put up to $1.35. Only take a small position here… There’s still a good about of momentum here but we don’t expect it to last much longer.

 

 

Chart of Day: The Dive may have just begun

Apr 07, 2016

As we've long noted, we must be cautious of chasing the market higher at such elevated, overbought levels. The Dow for instance is challenging – and failing – at a point of heavy resistance where it has fallen more than a dozen times before.

Remember, there’s very little to get excited about in the markets, in the economy, or anywhere in the world at the moment. We need to pull back here in the markets… And as the bulls will quickly learn, they’re crowding the wrong side of the trade.

In fact, most of the major U.S. indices are back in the red as we speak. Even volatility via the VIX is soaring to three-month highs… Contracting profit growth, hefty valuations, uncertainty over interest rate policies as well as the upcoming elections are taking their toll.  Stay on the short side of the market here. The sell-off may be brutal.

 

Chart of Day: Ocular Therapeutix (OCUL) Returns 44% and 161%

Apr 07, 2016

On March 21, 2016, we noted:

On July 24, the company faces an FDA decision of Dextenza for the treatment of ocular pain after surgery. After looking into recent Phase III data, we’re encouraged by what we’re seeing well ahead of July 2016. In October 2015, the company announced topline efficacy results from Phase III studies.

As we begin to near July, we expect for shares of OCUL to move higher on the anticipatory news effect that we often see with such FDA decisions.  There are two potential ways to trade this. Consider a position in the underlying OCUL stock up to $11. And, or consider a position in the OCUL September 2016 10 call up to $3. It last traded at $2.60, according to eTrade.

We would pick up the underlying OCUL stock at $9.05 and the calls at $2.45.

Today, the option trades at $6.40 for a gain of 161% in just days. The stock trades at $13.05 for 44%. Consider closing half of each position to secure quick gains.

Congratulations on the win.

 

 

Chart of Day: Biotech Rallying

Apr 06, 2016

As we noted on April 2, 2016:

Biotech had a rough start to the New Year, lagging many other sectors.

But in our argument for buying the XBI and BIB, we noted it wouldn’t be long until biotech stocks came running back.

The catalysts for upside are still in place.

Eighty million baby boomers, newly insured Americans, new innovation, new drugs, new treatment options, and M&A activity that sparked a firestorm of news last year will continue to fuel a multi-year rally in biotech.

In fact, we could see a revival of M&A after last year’s $605 billion worth of deals, especially with such low sector valuations. Among the top large biotech companies sits $180 billion in cash – a historic high. Merck, Novartis, Eli Lilly, Johnson & Johnson, Amgen, Gilead, Biogen and Sanofi have all already indicated strong M&A interest in their last presentations.

It’s a very exciting time to buy biotech… If you haven’t bought the XBI or BIB yet, do so now.

Just two days later, on news Pfizer and Allergan were forced to walk from a $160 billion mega-merger on tough new inversion rules, we’ve learned the two companies could now turn their attention to smaller companies for growth and innovation.

As we speak, the IBB is up another $16 on the day. The XBI is up $3.81. And the BIB is up another $5.19… If you bought these, congratulations on current gains. Hold all.

 

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