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Chart of Day: How to Trade the Zika Virus

Jan 31, 2016

When we see health concern outbreaks, we begin to see stock outbreaks…

Just as we did with SARS and Ebola, the Zika virus could make us some good money, as fear intensifies. Once the fear fades, though, we exit the initial trades and buy puts options as the news fade kills the stock run.

We see it happen all the time.

With Zika, the World Health Organization is now greatly concerned, holding an emergency meeting to curb a virus linked to birth defects. Apparently, it’s spreading explosively through the Americas.

The best way to profit from this story is by buying a basket of related stocks. In doing so, we recommend spreading capital evenly among each.

It’s why we’re looking at stocks such as:

Intrexon (XON), which is a buy up to $31.

Intrexon bought Oxitec over the summer, which had numerous programs for unmet medical diseases, including Zika.

Lakeland Industries Inc. (LAKE), which is a buy up to $15.

Inovio Biomedical (INO), which is a buy up to $8.50.

And Cerus Corporation (CERS), which is a buy up to $7.

These could be very exciting trades. Invest safely and equally amongst each.

 

Chart of Day: Facebook (FB) Goes Boom

Jan 28, 2016

Well, that was easy.

On January 22, we noted:

Already up $3.40 on the day, the bounce in shares of Facebook (FB) has only just begun. The stock is still greatly oversold after a 1,800-point drop in the markets. RSI is reversing off its 30-line. MACD is insanely oversold with a read of -2.46. And MFI has just begun to move off its 20-line to the upside.

I’d like to see Facebook retest $100 a share from current levels. One of the best ways to trade a potential mover higher is by buying to open the FB April 2016 100 call up to $5.60.

It moved just as we had hoped… on explosive earnings.

The stock is now up more than $11 on the day, sending our call to $9.55. If you traded this, then congratulations… Sell to close to secure up to 84% gains.

 

Chart of Day: Disney Could Pay off Big… Again.

Jan 27, 2016

On January 6, we recommended selling to close DIS put for gains of up to 279%.

Today we’re being presented with another opportunity to make money… but on the long side. After the release of the Star Wars movie, share of Disney (DIS) expectedly pulled back. Calling the top of Disney was child’s play…

But it’s now become a bit oversold at double bottom support just under $95 as share. All of the momentum indicators are deep in the red, as you can see here. Money Flow hasn’t fallen this much since April 2011. MACD is testing late 2015 lows. RSI dipped under its 20-line, just as it did in late 2015, as well.

That tells us the stock is insanely oversold at this point, long overdue for at least a near-term bounce higher.

Consider buying to open the DIS April 2016 95 call up to $5.20… Let’s see if we can’t make another 279%.  Take a small position.  Don't risk the house.  After the Fed made a mess of the markets, it's a bit crazed out there.

 

 

Chart of Day: The Truth about the Fed…

Jan 26, 2016

As long as the Fed doesn’t say anything dumb tomorrow, the market rally could continue.

In fact, if you’re still holding those DIA puts we recommended a few weeks ago, sell to close for gains…. And buy a small position in the DIA April 162 call up to $5.50.

Like I said, that rally could continue. But we have to hope the Fed doesn’t do anything as dumb as it did in December.

That’s when the Fed raised rates for no real reason, thinking the economy was strong, thinking it could handle higher borrowing costs…

Instead, it thought wrong, crippling the global economy, sending the Dow down 9%.

We were far too early for an interest rate hike.

If the Fed were correct about U.S. growth, retail and manufacturing would be stronger. Inflation would be near the 2% target.  Unemployment would be strong. In the real world, we’re nowhere near 5%...  In a world of fairy tales and rose-colored glasses, perhaps... 

If unemployment were healthy, consumers would be spending like mad. They’re not. Even Wal-Mart is struggling, closing stores…

While I don’t expect for the Fed to say it screwed up tomorrow, we all know what they did. They screwed up… big because they failed to pay attention to economic truths.

If they back off on raising rates another four times this year… If they acknowledge that they’ll pay better attention to the global economy… If they’re smart with tomorrow’s policy statement, we could rally a bit longer.

 

Chart of Day: Oil up $2.40… But…

Jan 25, 2016

On January 18, we highlighted an unusual move in Exxon Mobil (XOM), recommending that you buy to open oil put trades in Chevron (CVX) and Exxon (XOM).

By January 21, 2016, each of those trades turned higher.

While we’re recommending that you hold each of the initial recommendations, we’re now presented with another opportunity, as oil moves higher on the day.

Apparently OPEC is calling for non-OPEC countries to tackle oversupply to help prices rise.

They’re getting desperate.

In my opinion, no one is cutting supply. And we still must remember that Iran is preparing to resume exports now that sanctions were lifted…

One of the best ways to trade a potential resumption of oil downside is by buying to open the Exxon Mobil (XOM) March 2016 75 put up to $4.

 

 

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