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Barnes & Noble, Inc. (NYSE:BKS)

Jun 25, 2015

This should be a painless, easy trade over the next few days…

When BKS becomes this over-extended on our technical pivot points (RSI, MACD and MFI), we typically see a respectable pullback.

It’s happened time and time again over the last five years…

While the company just posted a smaller than expected loss of 37 cents a share, as compared to 39-cent estimates, revenue fell 10% to $1.18 billion thanks to Amazon. That doesn't warrant such a stock valuation.

Looking for a near-term swing lower, consider buying to open the BKS August 2015 26 put up to $1.70.

 

Green Dot Corporation (GDOT): Trade the Death of News

Jun 24, 2015

Green Dot Corporation, the issuer of reloadable pre-paid debit cards, soared more than 30% this week after reaching a five-year deal with Wal-Mart… Though, now that the news is out, smart traders are looking to cash in on the death of news.

As with all stocks, once news is fully disseminated to intended audience, we begin to see the death of the news cycle, which can – and often does – lead to sharp sell-offs following fevered momentum pushes.

We can measure just how over-extended momentum has become by simply watching our RSI, MACD and MFI indicators. When these reach extreme overbought conditions following news dissemination, we can call tops about 80% to 85% of the time.

On the Wal-Mart news, GDOT rallied more than 30% in no time at all. Now that the good new has been priced in – met with technical over-extensions – we can make an argument for likely near-term downside in the name. I’d like to see an eventual bullish gap refill around $17, best-case scenario.

One way to profit from a likely move lower is by by shorting GDOT at market.

 

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.

 

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