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Chart of the Day: Buy the Biotech Boom

Dec 29, 2015

You rally can’t go wrong with biotech…

It’s nearly impossible not to make money.

Over the last year, biotech accounted for more than $400 billion worth of M&A activity… and that’s not likely to stop, as bigger industry names hunt for new innovation to keep their pipelines fresh and relevant.

Just this year Allergan (AGN) and Pfizer (PFE) announced a $160 billion merger. ,

Johnson & Johnson (JNJ) announced its open to a deal.

Amgen (AMGN) is hunting for a multi-billion dollar acquisition. And Gilead (GILD) is shopping with $10 billion.

While there may be an occasional hiccup along the way – a well-placed political tweet, arrests, and price gouging – biotech will continue to outperform, in my opinion.

The biotech sector isn’t slowing. In fact, it’s very likely to outperform the major indices yet again. We have a $400 to $450 target on the iShares NASDAQ Biotechnology Index (IBB)...

 

 

Chart of Day: Barnes & Noble (BKS) at 52-Week Low…

Dec 28, 2015

After dismal earnings, shares of Barnes & Noble (BKS) sit at a 52-week low.

While many investors are now avoiding the stock, fear has become a bit overdone, technically. Using the chart below, we can see RSI, MACD and MFI are all significantly oversold. If we look at historical dips using the same indicators, we can see bounce backs shortly after.

All we’re looking to do here is profit from a quick bounce off oversold levels here, collect our money and move on. Consider buying to open the BKS April 2016 9 call up to $1 and / or the April 2016 10 calls up to 70 cents.

Have a happy, healthy… and profitable New Year.

 

Chart of Day: FedEx and UPS at Support…

Dec 25, 2015

Happy Holidays...

Even today, we're still hard at work finding undervalued gems.  Enjoy...

After a 2013 shipping debacle left Amazon vowing to never again to use FedEx or UPS, there are rumors that Amazon could launch its own delivery service. The fear of an Amazon third party logistics service has been damaging to UPS and FDX. But we have to remember that Amazon still relies very heavily on the two shipping giants, because let’s face it. Logistics isn’t easy…

And we have to consider that the absence of Amazon may not be terribly damaging to the bottom line of UPS or FDX. Over the last 12 months, UPS generated $58 billion in revenues. FDX generated $48 billion. Amazon had shipping costs of $10.4 billon, which tells us a loss of Amazon wouldn’t be as bad as many believe.

And even if Amazon does launch a third party logistics service, it won’t happen for quite some time. Logistics is no easy task.

Technically, UPS and FDX have found solid support after their latest tumble, as well.

After finding double bottom support just above $140 with oversold reads on MFI, MACD and RSI, FDX is just beginning to bounce back. We’d like to see a move to at least $160, near-term. Consider buying to open the FDX February 2016 150 calls up to $5.60.

UPS has also found historical support just above $96 a share with oversold reads on MFI, MACD and RSI, too. We’d like to see a move to at least $102. Consider buying to open the UPS April 2016 97.50 calls up to $4.60 and / or the February 2016 97.50 calls up to $3.40.

Have a very happy holiday… and a happy, healthy, profitable New Year…

 

 

 

Chart of Day: Oil Upside Cannot Continue...

Dec 24, 2015

Oil prices may be gaining support from falling inventory and reduced drilling numbers, but many aren’t betting on a sustained rally. In fact, some are betting we’ll see $20 or less in the New Year…

We have not hit the lows in oil… especially with Iranian supply coming online.

There’s also very little demand for oil, despite the pullback.

Anything can happen, but consider this. I’d argue for $20 oil before we see $50 again.

Insiders believe differently, though, buying stock. But what they’re forgetting is that we’re over-supplied. Cushing for example is getting increasingly full. China has run out of space to store. There’s 100 million barrels of oil sitting at sea…

Unless something miraculous was to occur, oil is heading lower.

Don’t get caught up in this end of year rally. It won’t last. Short it. In fact, consider buying to open the Exxon Mobil (XOM) March 2016 77.50 put up to $3.25, as well as the February 2016 77.50 put up to $2.70. You can also buy to open the Chevron (CVX) February 2016 90 put up to $3.90.

Have a very happy holiday… and a happy, healthy and profitable New Year.

 

 

Chart of Day: IMAX Corporation (IMAX)

Dec 21, 2015

The new Star Wars: The Force Awakens was amazing…

The film earned some $517 million in global ticket sales, crushing multiple box office records in its first outing. But the hype is beginning to fade, as is the excitement that sent stocks like AMC Entertainment (AMC) and IMAX (IMAX) skyrocketing.

It’s a typical sell the news reaction.

Failing at overhead resistance, IMAX is already beginning to pull back after a 40% run off August lows. Even AMC Entertainment – up 11% on Star Wars hype since early December – is showing signs of failure, reversing lower, too.

Don’t expect much upside in these names, as the hype fades. In fact, short both stocks as they continue to pullback.

 

 

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