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Chart of Day: Oversold H&R Block (HRB) likely to Bounce

Dec 16, 2015

After dipping on earnings, H&R Block (HRB) has become massively oversold technically with MACD and RSI. Even MFI is beginning to reverse well off recent lows. With tax season creeping up on us, the stock could easily tick higher as it has over the last few years… We’re willing to bet the stock bounces well off these recent lows, potentially refilling its bearish gap from about $37 a share.

The best way to trade a potential reversal here is by buying to open the HRB April 2016 33 calls up to $2.60 and / or the April 2016 34 calls up to $2.

 

Chart of Day: JC Penney (JCP)

Dec 14, 2015

Months after Sterne Agee foolishly upgraded JC Penney (JCP) from a neutral rating to a buy rating with a $13 price target shares of the stock ran as high as $10.09.

Then, reality struck… and the stock began its descent to $6.93. Nowadays, as consumers remain uneasy in a volatile economy, shares are referred to as an oversold overreaction… as the CEO remains upbeat about the holiday season.

Others believe the company could achieve profitability by 2017…

I don’t believe JCP will last that long. In fact, with decreasing capital, high debt, and discouraged investors, the only thing I’m confident in is further JCP downside. We can trade this by buying to open the JCP February 2016 7 put up to 90 cents and / or the JCP May 2016 7 put up to $1.45.

 

Chart of the Day: Oil, Exxon and Chevron take a Diveā€¦

Dec 11, 2015

As I noted the other day:

The supply-demand imbalance will not even out next year. it can't... OPEC is still pumping 32 million barrels a day, two million above agreed upon... Iran will add 600k barrels a day by June 2016... Demand is not picking up... Rig counts, as T. Boone Pickens argues for mean nothing because -- of the 540 rigs running -- they're all still tapping wealthy oil wells... We also have about 100 million barrels of oil sitting off the coast of the US... 20 million sit off the coast of the Gulf of Mexico... Cushing is oversupplied... And China has run out of storage... but if you want to trust what oil guys are predicting for 2016, be my guest... In my opinion, just as we've seen with Pickens, hedge funds, USO investors, XOM and DO insiders... oil longs are wrong...

Better yet – for oil bears -- the International Energy Agency (IEA) just warned that global oversupply could worsen in the New Year.

As a result, oil slipped to a $35 handle on the day, destroying Exxon (XOM) and Chevron (CVX) shares in the process.

On December 4, we recommended buying the XOM January 75 put [entry price of $1.40] and the XOM February 75 put [entry price of $2.60]. The January 75 put now trades at $2.87. Sell to close half. The February 75 puts now trades at $4. Sell to close half.

On December 7, we recommended buying the CVX February 85 put [entry price of $4.10] and the February 80 put [entry price of $2.45]. The February 85 put last traded at $5.10. Sell to close half. The February 80 put last traded at $3.10. Sell to close half…

Yep, it’s that easy to make money on Wall Street…

And all we have to do is pay attention – the key to making money.

 

Chart of the Day: JC Penney (JCP) Turnaround Flop

Dec 10, 2015

I’m also fascinated by investor fascination with JC Penney…

On September 28, investors bid the stock to $9.30 off $7.50 lows on a Sterne Agee upgrade from a netural rating to a buy rating.... with a $13 target to boot. Apparently, after spending time with the new CEO – Marvin Ellison – the analysts came away more confident in the company’s turnaround plan.

You know, in a time when consumers aren’t very confident… and aren’t shopping as they once used to. But hey, as long as the new CEO gave the analysts a warm and fuzzy feeling, that’s all that matters. Right?

After hitting an October high of $10 a share as foolish investors rushed in, it topped out and plummeted to $7.48 where it’s now challenging double bottom support.

I have disliked this stock for quite some time. I’ve used every run to short with little disappointment… There’s little progress here on a real turnaround. Capital is decreasing. High debt is troubling. And potential investors are a bit discouraged.

 

 

Chart of the Day: The Truth about Oil...

Dec 08, 2015

I was just called a fool, a troll for laughing at a fellow oil traders belief we'll see $70 oil by the middle of next year...

After responding to the criticism, with the following note, I have yet to hear back.  But I can tell you -- for a fact -- that oil bulls have and are still wrong about upside.

T. Boone Pickes, hedge funds, billionaires, USO investors, insiders in XOM, DO and OXY, etc. etc. have all been wrong all year.  Even Andy Hall and David Yergin have been wrong...

Here's why avoiding oil -- as I've reported for months -- is the smart move.

The supply-demand imbalance will not even out next year. it can't... OPEC is still pumping 32 million barrels a day, two million above agreed upon... Iran will add 600k barrels a day by June 2016... Demand is not picking up... Rig counts, as T. Boone Pickens argues for mean nothing because -- of the 540 rigs running -- they're all still tapping wealthy oil wells... We also have about 100 million barrels of oil sitting off the coast of the US... 20 million sit off the coast of the Gulf of Mexico... Cushing is oversupplied... And China has run out of storage... but if you want to trust what oil guys are predicting for 2016, be my guest... In my opinion, just as we've seen with Pickens, hedge funds, USO investors, XOM and DO insiders... oil longs are wrong...

But hey, if you want to waste money, be my guest...

Word for word, that was my response... and I have yet to hear back.  This is Wall Street -- my friends.  Guessing on upside doesn't make you money.  Due diligence and patience with facts do...  

The second you're wrong, you've just cost people millions... That's why I'm extra cautious with all trades.

Be well, my friends.  And have a happy, healthy... and very profitable holiday season...

 

 

 

 

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