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Opko Health Inc. (OPK): The Anticipatory Momentum Trade

Jul 09, 2015

After running from $8 to $19, OPKO pulled back, consolidating just under $16 since May 2015.  As we near its PDUFA date of September 5, 2015, I believe we could see a break back to $19 as momentum begins to pick back up.  One of my technical indicators – MACD – is sitting on the floor, an indication of an oversold situation overdue for correction to the upside.

OPKO’s Rolapitant is up for review, as a supportive care product for chemotherapy-induced nausea and vomiting.  If you’ve known any one that’s undergone chemo, you know this can be severe, greatly uncomfortable, and sad.  The last thing any one should have to deal with is a cancer.  I wouldn’t wish it on my worst enemy.

If approved, there’s a potential $1.25 billion opportunity.

There are two ways to trade this opportunity.  One, you can buy just the stock up to $17.  And, or consider buying to open the OPKO September 2015 17 call up to $1.45.

 

Restoration Hardware Holdings, Inc. (RH)

Jun 29, 2015

We just learned BB&T upgraded Restoration Hardware (RH) to a buy rating with a $120 price target, implying 25% upside potential.

Apparently, the analyst is encouraged by the “introduction of Restoration Hardware Modern, which management describes as a carefully curated collection that combines the clean lines and minimalist aesthetic of modernism with the comfort and quality that defines the Restoration Hardware brand.”

But let’s be real here… I can probably buy this “Modern” stuff at half the cost over at IKEA.

The excitement is over. There’s nothing to see here, in my opinion.

While there may be further strength down the line on potential revenue boost “if” there’s success, technical pivot points are pointing to a near-term sell-off. Not only is the stock challenging its upper Bollinger Band (2,20), it’s become a bit over-extended on RSI, MACD and Money Flow.

Betting on a near-term pullback to the 50-day moving average, consider buying to open the RH November 100 put up to $8.

 

iShares NASDAQ Biotechnology Index (IBB)

Jun 25, 2015

I’m attending a quick investor meeting tomorrow morning. Not knowing how long I’ll be out, I wanted to make sure I had this Chart of the Day to you a bit early.  I didn't want to miss a day.

Anyway...

I still laugh at the absurdity of a biotech bubble… 

Because a bubble doesn’t exist… 

I’ve heard all of the garbage bubble predictions. I’ve laughed at Janet Yellen’s biotech advice… And I’ve bought every dip, every wiggle, every time. 

In early May 2015, renewed fears of a biotech bubble reemerged as the sector challenged all-time highs. Terrified investors sent the IBB from near-$370 highs to $330 in days.  But as I explained, there was little chance of a bursting bubble because of the 10,000 baby boomers retiring by the day for 20 years, new healthcare options, and new treatments.

A month after the pullback, the IBB has hit a new high of $383 and could reach $420. 

At least, that’s what I’m betting on after a brief move lower.

 

 

 

 

 

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.

 

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