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Chart of Day: Century Aluminum (CENX) Still Running

Jan 19, 2017

On December 20, 2016, we noted that CENX was a good buy, considering we could see a jump in aluminum prices. And that’s exactly what happened. Since that note, the stock jumped from a low of $8.55 to $13.03. If you like the gain, exit half here to secure the win. Hold the other half. This run is far from over.

Chart of Day: The Buck Stops with Trump... How to Trade

Jan 18, 2017

The buck stops with Trump apparently. 

After a 13% jump from mid-2016 lows, the U.S. dollar just broke support.  And, at this pace could retest a December low of near 100 before long, as Trump calls the currency "too strong," blaming China, which is reportedly holding down its currency.

“Our companies can’t compete with them now because our currency is too strong,” he noted. “And it’s killing us.”

Private equity firm, Carlylye Group has noted the strength of the U.S. dollar is a great risk to the overall economy, as well.

That’s because dollar strength has the potential to hurt U.S. companies that sell products abroad by making their goods more expensive, as noted by The Wall Street Journal.

While one of the biggest gainers on weakness has been gold, bearish bets on the dollar should work out well, too, such as the   Power Shares DB US Dollar Index Bearish (UDN) fund, a buy at market prices.

Chart of Day: Shoe Carnival likely to Rebound

Jan 17, 2017

After a bad drop from $29 to $23.50, Shoe Carnival (NASDAQ:SCVL) has become technically oversold, and likely to turn higher based on over-extensions on MACD, RSI and Money Flow indicators. The company – an American retailer of footwear – recently saw its stock pull back on recent results and outlook. However, it has recently announced a $50 million share repurchase program and declared a quarterly cash dividend of seven cents a share to be paid January 23, 2017 to shareholders of record as of January 9, 2017. In addition, the company expects for fiscal net sales to fall in a range of $1 billion to $1.003 billion and expects slight improvements in same store sales.  Buy just the stock at market prices.



Chart of Day: Aluminum Still Running, as Hoped

Jan 16, 2017

On December 20, we noted that since 2016 began, the Dow Jones U.S. Aluminum Index -- which tracks the future prices of aluminum – had jumped about 70% and that the run was far from over.

After years of oversupply issues and supply-demand imbalances, those issues has just about stabilized, in our opinion.  And because of that, we also noted, we could see an even bigger increase in aluminum prices, as Donald Trump’s infrastructure plans help ramp up demand for the metal. 

One of the stocks recommended in that Chart of Day was Century Aluminum (CENX) – which at the time priced at just $8.65. It’s now up to $11.52 and running. If you’re happy with the gain, consider exiting half here and allow the other half to run.

At the same time, the Dow Jones Aluminum Index ran from a low of $95.20 to $105.45. And the run is far from over especially as hedge funds take interest.

In December 2016, hedge funds boosted their total net long positions in more than a dozen commodities by close to 9.7%. That’s a sizable jump from the year prior when many funds were net short.

They’re now bullish on oil, soybeans, copper, aluminum and cotton, for instance.

“After five straight years of losses, raw materials rebounded as supply gluts receded for metals and energy. There’s a growing chorus of voices that says the rally isn’t over,” noted Bloomberg. “Citigroup Inc., the bank that was ahead of the game back in 2012 when analysts declared the end of the super cycle of rising demand and price, now predicts that most commodities will perform strongly in 2017 as global economic growth picks up.”

“Goldman Sachs Group Inc. in November recommended an overweight position for the asset class for the first time in more than four years.”

Chart of Day: How to Trade the Retail Madness Now

Jan 14, 2017

Nordstrom got the steel tip of a boot this holiday season.

It’s just been an absolute disaster after a JP Morgan downgrade that sent the stock diving. Management didn’t help, describing its traffic trends in full stores as being the worst since 1972. In fact, as we noted the other week:

“Analysts believe the company is out of “silver bullets” to boost sales growth any longer. Plus, it’s brick and mortar traffic levels haven’t been this bad since 1972, as the retail model shits online.  We see no reason to get excited about the stock. Again, if it breaks support at $50.48, it’ll fall even more. A good way to trade JWN is by buying to open the April 2017 47.50 put.”

We would exit half of that put on January 5, as the underlying stock fell to $44.62.

As of this writing, the put is now up to $5.65, where we recommend selling to close.

There’s a simple reason for the exit. The stock has become aggressively oversold, catching and holding $44.20 with oversold RSI, MACD and Williams %Range. We could see at least a quick bounce here should support hold.

But it’s not the only retailer likely to bounce. Kohl’s (KSS) could, too.

Historically, when KSS RSI, MACD and Williams’ %Range get this low, we typically see a rebound shortly after. The stock looks to have also caught good support at current prices of $40.79. As long as that holds, the stock could refill that bearish gap near $50.50, near-term. Consider buying to open the KSS February 40 call up to $2.65.




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