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S&P 500

Jun 23, 2015

After heavy overhead resistance, fears of rate hikes and Greece sent the S&P 500 screaming lower, the index caught triple bottom support at 2075. While immediate-term fears of Greek default have subsided, we’re not out of the woods just yet.

We must still contend with rate hike fears and economic weakness as the S&P 500 challenges an historic top around 2128. Failure here, as we’ve noted in the past, could send the market back below its 50-day moving average.

As usual, though, it’s a wait-and-see.

While we don’t believe we’ll see a 2015 rate hike, we must be safe with the Greek issue. We’ve lost count the number of times Greece has sent the markets spiraling lower. The issue may seem resolved, but it’s not.

We’d like to be optimistic but we have to be realistic when it comes to Greece. Europe may release $8 billion in bailout loans to Greece, which will prevent default. The markets loved the news, sending major indices significantly higher.

The news may solve the immediate-term problems, but it cause problems in the future. One, according to CNN, there is not enough emphasis on cutting spending or making the economy more flexible, which has led to previous problems.

Two, Greece won’t grow fast enough or generate enough of a surplus to service its considerable debt any time soon. Greece has the second largest debt in the world based on the size of its economy, notes CNN. Three, Greece may need another 14 billion euros just to carry it through the end of the year.

 

Zumiez, Inc. (ZUMZ): 118% Gains in 7 Days

Jun 23, 2015

Shortly after ZUMZ was crushed on a poor report, we recommended a buy on the August 25 calls. The stock was down too much, too soon.

The move lower was unsustainable. Our technical pivot points told us that.

Four trading days later, we were out of half of the position with up to 58% gains. We were sure to recommend just exiting half.

Today, as the stock runs above $28.50, we’re recommending that you exit the second half of the trade for up to 119% gains in just days. What’s interesting is that just days after we spotted the opportunity and jumped on it B. Riley & Company upgraded it after a $4 move.

You’ve got to love Wall Street. Always late…

Meanwhile, the same technical pivot points we’ve used for 16 years told us to buy days earlier.

Here’s the before:

Here’s the after:

 

Ambarella, Inc. (AMBA) Update

Jun 22, 2015

On June 5, 2015, we highlighted AMBA as a short opportunity. We even recommended buying the August 2015 100 put.

Shortly after, the stock ran from sub-100 to more than $123 a share.

It looked like we made a ball call… but decided to hold a bit longer. We knew the valuation was absurd. We knew it was only a matter of time before reality came crashing in.

Today, that happened.

Reality sent the stock down $21.54 on the day after Citron Research exposed it.

Our August 100 put now trades at $11. If you bought, sell to close to secure the gain.

 

Zumiez, Inc.: An Update (ZUMZ)

Jun 20, 2015

On June 16, 2015, we noted:

After positing poor guidance, anticipating a 3% to 5% drop in sales, ZUMZ was pummeled, falling $6 a share. That’s a severe overreaction… at least to me. The stock is now a steal at less than sales, trading well into oversold territory, as Money Flow, MACD, and RSI begin to reverse.

Williams % Range is just beginning to gain traction, too.

I’m willing to bet we see an eventual bearish gap refill at $30 with patience here. Historically, all bearish gaps have been refilled on this stock if we examine a five-year chart. Consider buying to open the ZUMZ stock up to $25, as well as the ZUMZ August 2015 25 calls.

At the time, stock traded at just $24.25. On Friday, it hit an intra-day high of $26.36.

The August 25 calls also traded around $1.30. It last traded at $2.05 just three days later. Not a bad return while others painfully ignored a great trade.

Consider selling to close just half of the calls and stock here to secure the quick gain.

If we look at a two-year chart with MACD, RSI and MFI, we can see the stock has just begun to recover off the lows. I’d like to see a near-term gap refill around $30 a share, best case. Over the next week, I believe we could see at least $28.

 

 

Gilead Sciences (GILD)

Jun 19, 2015

Gilead Sciences (GILD) has been hot in 2015.

But it may soon face serious headwinds, as investors catch news that China has turned down a patent application for the company’s hepatitis C drug, Sovaldi.

The news could easily stall any progress on making money in such a key market.

Worse, the company’s dominant position in the hepatitis drug market could take a hit if other countries follow suit. Hefty prices, rendering the drug unaffordable for may parts of the world, could easily derail recent upside in the stock.

“Gilead has drawn fire for the cost of its top-selling drug Sovaldi, priced at $1,000 per pill in the United States or $84,000 for a typical 12-week course and its patents have been challenged in the U.S., India and Europe,” notes Reuters.

It’s another wait-and-see situation worth paying attention to.

Over-extensions on RSI and MACD lead me to believe the stock could put in a respectable pullback near-term. Consider taking a small position in the GILD August 2015 120 put up to $5.20 with a -25% mental stop.

 

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