[Speed Retirement] Weekly Open Position Update
Weekly Open Position Update
I would like to welcome all our new members to the Speed Retirement System!
And I would encourage you to get on our weekly webinar, if your schedule permits.
This week, the webinar will be on our normal Wednesday evening timeslot at 9:00 EST.
If you cannot attend, you can always listen to the recording in the members area.
We are in the earnings season. I encourage you to watch the video in the member’s area entitled, “Event Trading.”
It will outline a strategy as to how you can trade the announcements.
Last year, I started teaching a strategy as to how to trade the announcement itself.
These can be be very profitable, but it is often very difficult for me to actually put out alerts on them because at times they do require complete focus on an intraday basis. You need to be trading intraday to close out the positions.
This is what happened to me on YUM, which I mentioned on last week’s webinar, I was going to trade.
I will review how to trade the position this week.
The big winner last week was CMG.
The vertical backspread strategy produced an overnight return of 869%. I will review this deal as well.
But, consistent with my philosophy, I would rather share the tactic than not.
There are some major companies reporting this week, especially the granddaddy of the markets, AAPL, which reports tomorrow.
Companies reporting this week are …
7/24 – Tuesday before the open:
BIIB
PII
WHR
UA
7/24 – Tuesday after the close:
AAPL
NFLX
PNRA
BWLD
7/25 – Wednesday before the open
CAT – Maynot be a volatile mover but results can affect the whole market
LO
7/25 – Wednesday after the close
CLF
CVD
EQIX
ORLY
CAKE
TSCO
VAR
WDC
V
7/26 – Thursday before the open
CRR
CME
STRA
7/26-Thursday after the close:
CSTR
DECK
FB – Watch ZNGA on Wednesday to see if it pops. FB may follow.
VSI
7/27 – Friday before the open
Nothing of interest
7/30-Monday before the open
SOHU
7/30-Monday after the close
FISV
HLF
STX
VRTX
I need to point out that you need to do your own analysis and research, if you intend to take a position based on an earnings report. As you know, the trade is based on unexpected volatility.
You need to double check the release dates, due to the fact that changes can be made.
Now onto the markets.
Last week, the S & P 500 formed a spinning top candle.
This was after hitting the upside objective I had been calling for of 1,375.
The daily chart for the S & P 500 had a spinning top form on Thursday.
Typically, the markets will continue in the direction of the breakout of the spinning top.
Usually, how the stock or market opens the day after the spinning top, will give you an indication as to the direction of the breakout.
Friday, the market opened right at Thursday’s close, so that was not very helpful.
However, the fact that the S & P 500 hit it’s objective of 1,375 was a clue that it was due for a pullback.
The next downside support line of 1,343 should be an area where the market should rest.
And that is right where we are trading as I write this.
The weekly numbers look like this …
For the week, the S & P 500 ended the week up 5.88 or .43%, to close at 1,362.66.
The DOW ended the week up 45.48 points or .36%.
The NASD Composite closed up 16.83 for a gain of .58% gain.
The VIX ended up closing down at 16.27, for a loss of 2.81%.
Renewed fears in Europe are surfacing again to help drive the sell off today.
It really is amazing how quickly the mainstream media can sping and turn on a dime.
Two weeks ago all was safe, now the crises is here again.
How significant is the impact of Europe?
I have no clue.
But, I can’t imagine it will not ultimately impact US multi-national companies.
McDonald’s reported today and is down 2.78% because it missed earnings.
In reading their press release, McDonald’s said that their same stores sales in Europe actually grew 3.8% over last year.
Perhaps when CAT reports this Wednesday, we can get a better feel for the impact from Europe, as they do generate a substantial portion of their earnings from overseas.
For now, the charts are all still in an uptrending formation.
The short term 60 minute is in an uptrend as well.
And as I mentioned before, the S & P 500 is retesting the support line of 1,343.
The next support line is the 1,312 level.
I feel that the S & P 500 could drop down to 1,312 and the uptrend would still be intact.
If it fell to 1,281, then I would be inclined to think that we are in for a major correction.
The market has been trading in an up sloping channel for essentially the whole summer. If you put up a daily chart of the S & P 500, you will what I mean.
A breakout of the channel would lead to an expansion of volatility.
The VIX spiked up this morning to a high of 20.49.
This was just under the resistance line of 21.88.
From there is went down to a low of 18.82.
18.75 is a key line on the VIX. If it breaks back under that level and closes under it, the markets should head back up.
I still feel the VIX will ultimately bottom at around 14 and possibly as low as 12.50.
The resistance lines on the VIX are 23.44, 21.88, 20.31 and 18.75.
Support is at 17.19, 15.64 and 14.
Here are our open positions:
WDC:
We are now sitting with an adjusted basis on WDC of $24.53, after our option activity.
We are up about 23% on WDC. They report Wednesday after the close.
WDC regained the 200 ema on the weekly chart.
TIE:
TIE reports the 31st.
This is another stock that is oversold. The key price support line on TIE is $10.94, which it keeps fighting to hold.
It seems to be consolidating right at the key support line.
RDN:
It does appear to have bottomed and is now working it’s way up.
RDN also reports on the 31st.
AXL:
We are down about 34% at the moment.
Like RDN, this is another position I would add to, assuming the market cooperates with us.
It is now trading at under a 5 PE.
AXL reports this Friday.
HOGS:
HOGs reports on August 7th. Perhaps they announce some clarity on the buyout offer at that time.
DNR:
We are down about 30% on the stock and up 10% from the sale of call options.
On the next pullback, I would look to add to this position.
They report on August 2nd.
NVDA:
We are down about 17% from our entry.
If NVDA can hold the $12.50 level, it should start to make it’s way back up.
NVDA reports on August 9th.
MMR:
MMR is trading right where we bought it. But, we have collected about 15% of our purchase price in option premiums.
If we get a bit of a spike up, I would look to sell this week’s $14 call.
MS:
We paid $20.85 for MS and collected a small amount of call premium.
MS is oversold and if it can hold the $12.50 price line, it should start to work it’s way back up.
MRVL
Another stock sitting with a large cash position that amounts to almost $4 per share or 1/3rd it’s market price.
The key support line is $10.16.
MRVL is way oversold.
MRVL reports on August 16th.
X:
We collected 1.2% on the option and right now we are down 2.29% on the stock.
X is right around a key support line, and if it can make a bit of a push up from here, I would recommend we sell another weekly call.
X reports July 31st.
