To say the market is nuts is the understatement of the year.
After testing a high of 22,179, the Dow Jones slipped, and is now testing its 50-day moving average at 21,674. The hope is that this will hold.
If not, the stock could test 21,250.
To be honest, I’d rather stare directly at the eclipse today than see what may happen in the markets this week, especially with North Korea making threats again.
I kid, of course about staring at the eclipse. It’s the worst thing any of us can do.
The only way to safely look at the eclipse is with a commercial grade visual solar filter. If not, and you look directly at the sun, you could damage your eyes or in some cases lose their eyesight. In short, don’t do it. Don’t even hold a cell phone camera over your shoulder and try to look at it either, which is a sad, sad suggestion.
With the markets, let’s stay on the sidelines for another day here. We need to see exactly what’s going to happen with North Korea today with planned war games. If we break below the 50-day moving average, markets could be in for quite a wild ride.
However, I can tell you we are looking to buy shares of Nike (NKE) shortly.
The stock only fell because Foot Locker (FL) announced weaker than expected quarterly results. The idea is that since FL sells NKE shoes and FL same-store sales are weak it implies that NKE sales aren’t trending higher as they should be.
And just like that NKE gapped lower.
Unfortunately, NKE is being unfairly pared with FL at this point, even as NKE earnings have been explosive. At the end of June 2017, for example, NKE posted a beat on top and bottom line numbers. Sales were up 7% year over year with running apparel up 8%. NKE achieved top line growth among all major categories.
However, before we buy NKE on this idea, we have to wait for confirmation of trend change. All we have at the moment is a falling knife at the 200-day. If the 200-day does not hold, NKE could drop to $52. Let’s wait to see what happens next.
As soon as tomorrow, we could buy the stock and call options.
Current Open Trades
TrueCar (TRUE) stock
TrueCar October 2017 16 calls
TrueCar January 2018 16 calls
On August 15, we recommended buying TRUE, as well as the October 16 calls and January 16 calls. Shortly after recommendation, the stock began to tick higher from oversold conditions. We’d like to see a near-term test of $17.50.
Vanda Pharmaceuticals (VDNA) stock
VNDA October 2017 16 calls
We spoke about this opportunity just the other day. After a nice break higher, it did pull back slightly. But we continue to hold.
VIX October 2017 15 put
VIX October 2017 14 put
Pro Shares Short VIX Short-Term Futures ETF (SVXY
Velocity Shares Daily Inverse VIX Medium-Term ETN (ZIV)
Each remains a hold, as volatility begins to die down again. We’d like to see the VIX drop back below 10, near-term.
Zillow Group (Z) -- $44.75 entry, exited half for win
Zillow Group (Z) November 2017 45 calls- $3.60 entry, exited half for win
While the stock continues to break lower, we continue to hold. We already exited half of the stock and the November 45 calls in early August 2017.
We currently hold the second half of each position.
Advanced Micro Devices (AMD) -- $13.30 entry
Advanced Micro Devices (AMD) September 2017 13 calls – $1 entry
AMD is beginning to recover nicely. We see no reason to exit this trade. We have a target of $14, near-term.
Randgold Resources (GOLD) September 2017 95 put -- $1.60
Randgold Resources (GOLD) September 2017 92.50 put -- $2.40
DB Gold Double Short ETN (DZZ) -- $5.75
Continue holding these trades, as well. Gold has been all over the map again with tensions at home and abroad. However, the metal is aggressively overbought and ready to come down along with Randgold.
FireEye (FEYE) stock
FEYE December 2017 14 calls
FEYE December 2017 15 calls
FEYE now trades at $13.98, consolidating. We’d like to see a breakout with a potential test of $15, near-term. Hold.
Stay tuned for more.
Ian L. Cooper