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Chart of Day: Activision (ATVI) Explodes from Oversold Conditions

May 06, 2018

On April 16, 2018, we noted:

While ATVI recently pulled back, it’s become aggressively oversold on news that Epic Games’ Fortnite and Bluehole’s Player Unknown Battlegrounds took away player and monetization from Activision’s Overwatch and Call of Duty games. We believe that a great deal of negativity from this news is fully priced into the stock and has created an incredible buy opportunity for smart investors. Sitting at its lower Bollinger Band with oversold reads on MACD, RSI and Williams’ %R, we believe the ATVI could recover to $70.50, near-term. There are two ways to trade the stock. One, we can buy the ATVI stock at current market prices. And, or two, we can buy to open the ATVI May 18, 2018 67.50 calls at market.

At the time, the stock traded at $66.56. The calls traded at $2.40.

On Friday, the stock exploded $3 a share on news that the company reported first-quarter net income of $500 million, or 65 cents a share, compared with $426 million, or 56 cents a share, in the year-ago period. Adjusted earnings were 38 cents a share. Net bookings rose to $1.38 billion from $1.2 billion in the year-ago period. Total GAAP net revenue rose to $1.97 billion from $1.73 billion in the year-earlier period. The company said it expects second quarter adjusted-EPS of 31 cents a share on net bookings of $1.35 billion.

The news also sent the calls to $3.04. Let’s hold a bit longer to see if we can see a near-term gap refill around $74 a share.



Chart of Day: XOM Puts up 58%. Exit Half.

May 01, 2018

On April 17, 2018, we noted:

While we're bullish long term on oil, immediate-term not so much.  Not only is the fear premium being yanked, but oil prices are failing at the upper Bollinger Band (2,20) with over-extensions on RSI, MACD and Williams' %R.  That being the case, we're looking to short major oil names that also rocketed on the fear premium, including Exxon Mobil (XOM) and Chevron (CVX).  We can buy to open the XOM June 15, 2018 77.50 put at market, and the CVX May 18, 2018 120 put both at market prices.

At the time, the XOM June 2018 77.50 put traded at $1.90. It's now up to $3, as the underlying stock plummets to its 50-day moving average. Should that MA break, the stock could fall to test $73. Let’s still secure some wins here. Sell to close half.

At the time, the CVX May 2018 120 put traded at $2.55.

While the put was halved to $1.25, let’s hold a bit longer. CVX is just beginning to fall apart after testing a high of $128. We’d like to see a pullback to at least $118 here.

Chart of Day: As we Near August 2018, Buy Weed Stocks

Apr 30, 2018

As we near the legalization of marijuana throughout Canada, buy related stocks, like:

  •  Canopy Growth (TWMJF)
  • Kush Bottles (KSHB)
  • OrganiGram Holdings (OGRMF)
  • Aphria Inc. (APHQF)
  • American Cannabis Company (AMMJ)
  • Aurora Cannabis (ACBFF)

We believe that as anticipatory momentum heats up ahead of legalization, related stocks could double, if not triple from current prices.   By 2021 analysts say Canada could have nearly four million recreational marijuana users, creating a monstrous $4.5 billion industry. The industry could balloon to $8.7 billion shortly after, as marijuana retail sales just in Canada are likely to surpass beer, wine and spirit sales combined. That’s big money.

Plus, consider, this. Canadians are among the world's largest consumers of cannabis. A study by the national agency for statistics estimates that Canadians consumed 698 tons of marijuana just in 2015.

Approval could easily set off quite a boom. Get ahead of it.



Chart of Day: Fear at Skechers (SKX) Overdone

Apr 25, 2018

After a big gap down from $42 to $29.35, Skechers (SKX) is oversold, having caught support. The only reason the stock fell was because the Street felt that earnings were poor, but they really were not. Sales were up 16.5%. Same-store sales were up 9.5%. International wholesale sales were up nearly 18%. Domestic wholesale sales were up 8.5%. Gross margins were up 230 points. EPS was up 25.2%. Those are great numbers.

Granted, revenue guidance is between $1.12 and $1.145, representing growth of 10%, and a slowdown from this latest quarter’s 17% revenue growth. And management has already noted that while the next quarter may be weaker than normal, the third quarter is expected to be strong. The Street was also worried about margins again, too, as the company embarks on investments to fuel long-term growth. But these aren’t reasons to send a stock down from $42 to $29.35.

Look at how oversold it is on its Bollinger Bands (2,20), MACD, RSI and Williams' %R, too.  That's not sustainable.

Seeing this as nothing more than a ridiculous overreaction, we’re recommending a buy.

There are two ways to trade SKX.

One, we can buy the stock at market prices. And, or two, we can buy to open the SKX June 15, 2018 29 calls.


Chart of Day: Trump Effect Pays off with Amazon

Apr 23, 2018

On March 28, 2018, we noted:

Amazon is always an interesting trade, especially after President Trump bashes the stock.  Each time he does, however, the stock races back stronger than ever.  In June 2017, Trump noted that Amazon was getting away with not paying taxes.  Shortly after, the stock fell from $990 to $951.  It would recover to $1,083 not long after.  In August 2017, Trump tweeted that the company was doing great damage to tax paying retailers.  The stock would lose $6 billion in minutes after that.  However, it would also go on to recover that and add even more value.  Today, Trump noted that he wanted to go after the company because it’s hurting retailers and is costing the U.S. many jobs.  That stripped $60 from Amazon’s stock.  However, as we’ve seen many times in the past, Amazon prices in the concern and moves aggressively higher.

At the time, it traded at $1,429.33.

Today, with Trump fear fully priced in, shares of AMZN are up to $1,528.80. That’s nearly a $100 gain just by buying excessive fear. Easy.

Let’s say you also chose to buy the AMZN May 18, 2018 1430 call, too.

At the time, that call traded at $90. It’s now up to $135.

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