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Cree Inc. (CREE)

May 21, 2015

Cree Inc. has always been a favorite for years.

Ever since President Bush inked an 822-page energy measure in December 2007, I’ve been a fan of the stock, jumping in and out on the LED growth story.

That measure included a future ban on 100-watt incandescent bulbs by 2012. It paved the way for bulbs that use 25% to 30% less energy, lopping an estimated $18 billion off annual U.S. electric bills, and cutting consumer electricity usage by 60%.

The move to LED lighting has been astonishing. In fact, the LED market is expected to reach $5.2 billion this year alone.

But that’s not what’s drawing me to the chart eight years after finding the stock. Not at all… The technical pattern is what has me excited.

Take a look.

CREE just found solid support going back to late 2014. MACD and RSI beginning to bottom out and reverse. And Money Flow is showing a positive shift to the upside, telling me money is beginning to flow back into the name.

CREE is a longer-term opportunity. With this trade, I’d consider a long-dated call or even a LEAPS trade. For our purposes, consider buying to open the CREE December 2015 32.50 call up to $3.

 

 

iShares NASDAQ Biotechnology Index (IBB)

May 19, 2015

Seven years ago, I issued my most profitable trade of the last 16 years.

I recommended that readers consider taking a position in the iShares NASDAQ Biotechnology Index (IBB) at just $80 a share.

Today, the ETF is challenging all-time highs of $360 a share.

That’s a gain of 350% without doing a thing but pay attention.

 

I knew that 10,000 boomers would retire by the day for the next 20 years. I also knew they would control $1 trillion of disposable income, demand greater health care, and spend on products that would keep them going another few years. And that’s exactly what happened.

Baby boomers created one of the most profitable 20-year trends that changed just about everything. “You’d have to be an idiot to turn your back on this humongous growth market,” said Jody Holtzman, head of the AARP’s Thought Leadership unit.

  • GNC Holdings said that baby boomers are one of its biggest buyers of its products for high blood pressure, digestion, eye and brain health, and muscle and bone density.
  • The market for skin care and anti-aging products is expected to balloon from around $80 billion today to more than $114 billion by 2015, according to Global Industry.
  • Companies and clinics are promoting hormone replacement drugs as a way to slow the aging process, too. Some cost as much as $15,000 a year. In 2011, consumers spent $1.6 billion on prescription testosterone therapies, almost triple the amount spent in 2006.

Is the run over?

Has the momentum run its course?

According to the fools, biotech is in a bubble. But it’s not. Biotech is not in a bubble… not with a sustainable 20-year trend, booming biotech advancements, and affordable care for millions that had no care to start with.

I can’t help but thank the biotech bears, though.

Every time they argue for downside, the IBB re-challenges its 50-day (and 200-day) moving averages before setting new highs. When – and if – the IBB fails at triple top resistance, which it could easily do, the bears will jump, call for a bubble, and set the IBB up for another respectable run to higher highs.

Wait for a pullback before buying the IBB and/or call options.

Wynn Resorts (WYNN)

May 18, 2015

Wynn Resorts (WYNN) is the second biggest loser on the S&P 500 after Barclays downgraded the stock from ‘overweight’ to ‘equal weight.’

Worse, T. Rowe Price – the stock’s biggest shareholder – cut its stake.

And that’s after disappointing results and a cut to the company’s dividend.

Perhaps, though, the worst has been priced in, as options gamblers bet on near-term upside opportunity. We also have to consider the stock is at a 52-week low, finding double bottom support just under $107 a share with oversold reads on RSI, MACD and Money Flow.

While I’d use the technical reads to accumulate calls for a near-term move, I also suggest buying puts on any move higher. It doesn’t look like the downtrend has wrapped up.

At the moment, consider buying to open the WYNN July 2015 105 call up to $7. All we’re looking to do is capitalize on a dead cat bounce before opening a put.

 

 

3D Systems (DDD)

May 17, 2015

3-D printing stocks have fallen out of favor.

3D Systems (DDD) just fell to a 52-week low of $20.82, as an example.

But if history repeats itself – technically – the stock could see a respectable bounce off recent lows. Four of the last six times RSI dipped to its 30-line -- coupled with an MFI move to its 20-line, shares of DDD have bounced.

The stock is now at similar lows again now. Even Williams % Range is stuck at -100. This – in my opinion – cannot last much longer.

The bears are crowding the short side of the trade. It’s only a matter of time before we see a move higher in such an oversold stock.

Considering companies are printing everything from toys and shoes to jewelry, guitars... and even guns, there’s a lot to get excited about.

  • A Belgian team of engineers produced a 3-D printed car called the Aerion that could go from 0 to 62 mph in 3.2 seconds with a top speed of 88 mph.
  • In January 2012, a French model maker created the very first life sized robot that can be 3D printed.
  • A Chinese company can print 10 one-story buildings in a single day.
  • Fashion designers are experimenting with 3D printing when it comes to fashion with hats and dress, shoes and jewelry.
  • Car manufacturers are using 3D printing for concept cars.
  • Folks are even 3D printing food.
  • Jay Leno recently used a 3-D printer for a rare part he needed for a vintage motorcycle.
  • Engineer Michael Guslick claimed that he printed and fired the world’s first homemade
  • In September 2014, the Space X Dragon Ship carried the first operating 3D printer to the International Space Station so astronauts can print tools for missions, according to CBS News. 

While the adoption of 3D printing is accelerating, related stocks are still stuck in a sustainable downtrend. But we can’t ignore the high likelihood of a near-term bounce, given massively oversold technical reads.

Without risking too much, I’d consider two ways to trade this.

One, buy just the underlying stock up to $22 a share with a firm -25% stop loss.

And, or two buy to open a long-dated DDD January 2016 22 call up to $2.80.

Avon (AVP): The Great Cyber Hoax

May 15, 2015

And boom goes the dynamite…

Avon (AVP) shareholders got the gift of a lifetime on news that London-based PTG Capital bid $18.75 a share – three times yesterday’s closing price.

The stock soared as high as $8.02 on the news.

Shareholders were thrilled to say the least.

Only problem is the news is a hoax.  Yep, new shareholders are now bag holders it would seem.  Not only did Avon not receive a buyout offer, no one can confirm the existence of PTG Capital so far.

If this is the case and an electronic filing made its way through the SEC site, this could very well be another issue of cyber security issues that needs immediate attention.

With the stock likely to pull back, short the stock at current prices, or buy to open the June 2015 7 put.

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