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Chart of the Day: Banking MasterCard Gains, too…

Oct 28, 2015

On September 10, we recommended a buy on the MasterCard (MA) stock -- which traded at $90.30 at the time – and the MA January 92 calls – which traded around $5 at the time…

As of today, the MA stock trades at $100.09. Sell.

The MA January 92 calls last traded at $10. Sell to close.

 

Chart of the Day: Banking Gains on Teva…

Oct 28, 2015

Well… that was easy.

On October 12, after falling from $72.50 to less than $60, we labeled TEVA an oversold bargain, as momentum began to shift.

With catalysts in place, we recommended a buy on the TEVA stock, as it traded around $59.30 and the TEVA January 60 call as it traded around $2.30.

Today, after gaining $2.70 on the day, we’re looking at a 5% gain on the stock, and about a 93% gain on the call options, excluding commissions.

Book both… Congratulations on the gains.

 

FDA Warning Creates Opportunity in AbbVie

Oct 27, 2015

Shares of AbbVie (ABBV) plummeted the other day after the FDA warned that the company’s hepatitis C treatments – Viekira Pak and Technivie – could cause serious injury to the liver mostly in patients with underlying advanced liver disease.

In the warning, the FDA noted 26 cases of liver issues had been reported since the drugs were approved. 

Some of the cases led to liver transplants and death. 

As a result, the government agency demanded stronger warnings of labels, which lead to the stock decline. 

However, many analysts consider the decline to be an overreaction, considering that only three to five percent of the hepatitis population suffers from advanced forms of liver disease. That tells us the long-term impact of the FDA news on the stock could be modest. 

Also, when it comes to ABBV, we have to consider that the drugs were never meant for – or approved – for patients with underlying advanced liver disease.

Plus, these 26 cases of liver injury were possibly” related to the two drugs. Possibly resulted in a 15% decline.

There are two ways to trade the stock.

One, consider buying just the stock up to $54. Near-term, I’d like to see a bearish gap refill at $56 before a move higher. And or two, consider buying to open the ABBV January 2016 52.50 calls at market.

 

Ferrari IPO (RACE) – The Best Way to Trade it…

Oct 26, 2015

I’m still shocked investors chased Ferrari (RACE).

As noted October 13, “It’ll be the little guys [you and me] holding the bag at the end of the day with a company that’s not really looking to dramatically increase sales, limiting future growth… The overpriced, over-subscribed stock will eventually give way to a sizeable drop, leaving many to ask why they bought in the first place.”

Here’s a company that’s not looking to dramatically increase sales, greatly limiting future growth… and “smart” investors chased it only to watch it fall well off the highs.

Now, as the shine wears off, as the news fades, the stock will crater. Your best bet is to wait for it to crash and buy shares on the cheap when and if sales pick up.

 

Valeant Pharmaceuticals (VRX): Citron Research Cripples…

Oct 21, 2015

Valeant was halted several times today, as the stock lost 38%.

Once Citron Research alleged it was the “Pharmaceutical Enron,” shares plunged.   By the close, shares were down 28% to $105.98 on allegations its using “phantom pharmacies” to boost sales.

While the Valeant CEO called the report erroneous, it did little to stop the bleeding. However, hedge fund manager Bill Ackman believes the sell off is overdone, buying two million shares on the news.

While we’d like to recommend a buy on massively oversold conditions, it’s best to wait for the news to die out first. If we buy too early as investors run scared, we stand to lose money. As soon as the news fades, we’ll issue a quick buy.

 

 

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