Option Investor

Daily Newsletter, Wednesday, 10/19/2016

Table of Contents

  1. Market Wrap
  2. New Plays
  3. In Play Updates and Reviews

Market Wrap

And The Beige Book Says

by Thomas Hughes

Click here to email Thomas Hughes


The Fed's Beige Book says that economic expansion is modest to moderately paced . . .but failed to move the market significantly. Even with these new revelations Fed uncertainty remains and is a major hurdle for the equity markets. Today's action was to the upside but without much enthusiasm and left the indices within their recent trading ranges, tomorrow's meeting of the ECB and their policy decision helping to hold them in check. The bank is not expected to enact further easing but you never know what Draghi might say to spin sentiment and move the markets.

Trading in Asia was flat in the overnight session, GDP from China dominating the news. The headline figure matched expectations, 6.7% year over year and 1.8% quarter to quarter, while other data was mixed. Retail sales were strong at 10.7% but Industrial Production missed forecasts for 6.4%. European indices ended the day in positive territory after spending most of the morning hours in the red. China's news did not inspire buying, it was the US open that helped lift stocks to their closing levels.

Market Statistics

Futures trading indicated a flat open all morning. Economic data released at 8AM sent a ripple through the market but nothing major, permits and starts data sending mixed signals about the housing market. The open was relatively orderly, the broad market opened with small gains and then spent the next hour sidewinding just above break even level. By 11AM sideways action had stopped in favor of a small rally, supported by rising oil prices, that took the indices up to an early high (about +0.25% for the SPX). This level held for the next two hours until a new intraday high was set just after 1PM (about +0.33% for the SPX). The final high of the day was hit shortly after 2PM and the release of the Beige Book. After that the indices meandered to the side until the close of the day.

Economic Calendar

The Economy

Not much economic data today and what we did get was mixed. Housing starts, permits and completions data shows an uptick in forward looking building permits but some serious red flags have popped up in other areas. Permits rose by 6.3% from last month and are up 8.5% year over year. Housing starts fell -9% month to month and is now down -11.9% from last year. Completions fell -8.4% month to month and are now down -5.8% from last year. The mitigating factor, if it can be considered one, is that all of this data comes with incredibly large margins for error, in excess of +/-15% in some cases. The declines are due mostly to multi-family construction, single family starts are up 8.1% this month while permits rose 1.6%.

The Fed's Biege Book was released at 2PM and little impact on the market. The report shows that economic activity continues to expand at a modest to moderate pace in most districts. Labor market conditions are tight; modest wage and employment growth was noted for the period, staffing firms report an increase in demand. Manufacturing was mixed, exports hurt by the stronger dollar. Most regions saw an increase in retail spending with positive forward outlook for continued growth. Demand for consumer loans increased, credit quality remains good. Overall, the report is good but shows no major change in economic conditions, just more of the same slow spotty growth.

The Dollar Index

The Dollar Index held steady today. The Beige Book did not have the oompf needed to move the needle, traders eyeing tomorrow's ECB announcement holding pat. Today's candle is small and has some lower shadow but is a spinning to nonetheless. Today's action and that of the last week or a consolidation following the rally we saw during the first half of this month. The index has begun to look quite interesting, the bulls appear to be waving a flag, and bullish in the near term. If this pattern confirms with an upside break out there is potential for movement of $2.50 or more, the height of the flagpole, which would put it just below the December 2015 high of $100.51. Tomorrow's ECB meeting is the most likely catalyst. Dovishness from them, or at least a notable lack of hawkishness, could tank the euro and send the dollar moving higher.

The Oil Index

Oil prices surged to a 1 year high today. WTI gained more than 2.65% to close above $51.50 for the first time since July on a surprise draw of US inventory. The EIA says that crude inventories fell by 5.2 million barrels in the last week versus an expectations for a build. The news is however balanced by last weeks rise in US rig counts and high levels of global production but is bullish in the near term. Next resistance is just above $52.

The Oil Index managed to make some gains today as well, moving up about 1.5% to once again test resistance at the top of a 7+ month trading range. The indicators remain mixed and consistent with range bound trading but if oil prices remain at today's levels a break above resistance is very likely. If broken upside targets at 1,200 and 1,250. The risk of course is lingering oversupply and overproduction, when that reality comes back into focus oil prices will come back under pressure.

The Gold Index

Gold prices rose again today, gaining about 1% intraday, to close with a gain near 0.5%. Despite today's rebound gold prices remain near recent lows and in a consolidation pattern driven by wavering FOMC expectations. Today's move was supported by a slightly softer dollar and likely to be affected by tomorrow's ECB decision. A dovish sounding ECB is euro negative, would make the stronger dollar and send gold back to seek support. My support target is $1,250 should prices reverse today's gains.

The gold miners got a lift from rising gold prices. The miners ETF GDX rising nearly 3% to hit an almost 3 week high. Despite the gains there are some red flags popping up that could indicate this move higher is merely a rebound within the 2.5 month down trend. Primarily, today's move was capped by resistance at the short term moving average, this resistance level consistent with the gap which formed at the first of the month, near the $25 level. A break above this level would be bullish, but would also face additional resistance at the $27.50 level. Failure to move above resistance would be bearish, confirming the gap, and could lead to a continuation of the near term trend.

In The News, Story Stocks and Earnings

The Big Banks have just about all reported and the reports are good. The group has managed to beat Wall Street's low expectations and deliver earnings and revenue growth on the quarter to quarter and year over year comparison. Today BB&T and Morgan Stanley reported before the bell. Both banks were able to grow earnings by double digits, +22% for BB&T and +62% for MS, and helped to send the entire sector moving higher in today's action. The Banking Index gained 1.7% on the news and looks poised to test resistance at $73.50. The indicators are not looking strong so a break above this level is questionable, however, if one comes, upside potential is limited by resistance at the $75 level coincident with a past congestion band/bearish reversal.

A look at Morgan Stanley and BB&T charts show similarly challenged stocks. Both rose in today' session to challenge resistance, both look weak in their attempts. The MS chart shows a stock calmly trading in a long term range and at the top of that range without sign of break out. The indicators show no signs of strength and are consistent with range bound trading. A break above resistance, near $33, could go up as high as $35 but long term resistance dating back to the December '15 reversal will be met and has potential for strength.

Medical products maker Abbot Labs reported before the bell as well. The company reported a GAAP unrealized net loss of -$0.24 due to investment exposure to Mylan and its woes but other metrics are more positive. Global sales are up 2.9% in the quarter on strong sales of devices and Established Pharmaceuticals led gains resulting in non-GAAP earnings of $0.59, slightly above expectations. Forward guidance has been maintained and narrowed to a range bracketing the consensus estimate. Shares of the stock were volatile in today's action, first opening lower and then later surging higher only to fall back and set new lows by the end of the day. Shares closed at a 3 month low but above potential support at the $40 level.

Reports after the bell; Mattel reported a top and bottom line beat. Stock moved higher by 1%. American Express also delivered top and bottom line beats, EPS by more than 20%, and sent the stock higher by nearly 4%. Ebay reported a beat on revenue with EPS beating by a penny, however, traders weren't impressed with what they saw in the report and sent the stock tanking -8% in after hours trading.

The Indices

The market continue to churn. Today's action nothing more than another day spent spinning its wheels while we wait on whatever the next 3 weeks will bring us. Today's move was led by the Dow Jones Transportation Average which posted a gain near 0.70%. The transports created a smallish white candle, moving up from the support of the short term moving average and just below resistance at the top of the 8 month trading range. The index looks like it will retest the top of the range, near 8,150, although it does not look like it will be broken at this time. The indicators remain weak and consistent with range bound trading. If resistance is broken, next resistance is just above at 8,250.

The runner up in todays' action is the Dow Jones Industrial Average with a gain near 0.23%. The blue chips also created a smallish white bodied candle although on this chart it is capped by the short term moving average near the middle of the September/October trading range. The indicators remain consistent with range bound trading, trending near the middle of their respective ranges, although bias at this time is to the upside. A move up to test resistance is possible, target is near 18,450.

The S&P 500 is third in today's line up with a gain near 0.20%. The broad market remains range bound without indication of breaking the range. Today's candle is small and white bodied with a small amount of upper shadow. The upper shadow reveals some resistance to today's move higher, found at the short term moving average. The indicators remain weak and consistent with range bound trading but like with the blue chips there is some upside bias present. A move up to test the top of the range may be forthcoming, target is near 2,180. A break above resistance would be bullish and could take the index higher over the next few months.

The NASDAQ Composite made the smallest gains today, only about 0.05%. Today's candle is very small, a doji, and occurs almost exactly at the short term moving average. By itself the candle is indicative of a lack of direction, coupled with the moving average is a real sign of indecision. The indicators are mixed but generally bearish so I am not expecting too much in the way of upside at this time. A move lower may find support near the recent low, near 5,165.

The market continues to churn. The Beige Book was a potential catalyst but it did not ignite the market. Tomorrow's ECB meeting could do it but I'm not holding my breath. Earnings are coming in better than expected and they might break the market into a new rally but even that is overshadowed by two things; the FOMC meeting and the elections, both scheduled for the first week or so of next month, about 3 weeks away. The Fed is likely not going to change rates at the next meeting, they might give strong indication that December is on, so that isn't really a likely catalyst either, not with how this election cycle is playing out.

Mr. Zandi keeps saying in his weekly Business Sentimenet Survey summary that the election is not affecting sentiment but I beg to differ, it looks to me like the market is winding up on a lot of negative sentiment and focused on who the next president will be. I remain cautious in the near term, expecting to see the indices trade within recent ranges, bullish for the long, looking for the signal that long term rally is back on.

Until then, remember the trend!

Thomas Hughes

New Plays


by Jim Brown

Click here to email Jim Brown
Editor's Note

We exited this position on a dip on the 13th. Time to reload on the rebound. We had a bad fill when we opened the last position on Finisar. The stock gapped up at the open and that high fill forced a tighter stop and we were knocked out on the dip back to support. I think the stock is getting ready to retest resistance highs.


FNSR - Finisar - Company Profile

Finisar Corporation provides optical subsystems and components for data communication and telecommunication applications in the United States, Malaysia, China, and internationally. Its optical subsystems primarily consist of transmitters, receivers, transceivers, transponders, and active optical cables that provide the fundamental optical-electrical or optoelectronic interface for interconnecting the electronic equipment used in communication networks. The company also offers wavelength selective switches, which are used to switch network traffic from one optical fiber to multiple other fibers without converting to an electronic signal. In addition, it provides optical components comprising packaged lasers, receivers, and photodetectors for data communication and telecommunication applications; and passive optical components for telecommunication applications. Company description from FinViz.com.

Finisar shares rallied throughout the third quarter. In early September shares spiked after earnings and then leveled off but retaining a positive bias. They reported earnings of 38 cents that beat estimates for 30 cents. Revenue of $341.3 million also beat estimates for $334 million. The company guided for the current quarter for earnings of 44-50 cents on sales of $355-#375 million. Analysts were only expecting 32 cents and $344 million. The CEO blamed the soaring earnings on booming sales of certain transceivers and switches. China is in the middle of their upgrade to a 100 Gb infrastructure and the U.S. carriers like Verizon are just getting started.

Earnings December 8th.

We entered a FNSR position on October 4th just as shares gapped open to $31. That turned out to be the peak for a three month rally. After a week of declines the shares could be ready to move higher.

The declines were sector related. The optical networking stocks were all slammed after some guidance warnings in the space. Finisar was riding the crest of a Goldman Sachs upgrade to buy on the 11th. That caused the peak in the stock just as the sector news appeared.

I am putting an entry trigger on this position to make sure the stock can get over recent resistance before we buy it.

With a FNSR trade at $30.15

Buy FNSR shares, currently $29.65, initial stop loss $28.75

No options recommended.


No New Bearish Plays

In Play Updates and Reviews

Minimal Gain

by Jim Brown

Click here to email Jim Brown

Editors Note:

The decline in the biotech sector and the low volume ahead of the debate led the indexes to only a minimal gain for the day. The Russell 2000 actually did ok despite closing right on resistance at 1,222. The biotech sector was down another 1% and that normally drags the Russell lower. Despite that drag the index managed a 5 point gain. The Dow added +40, S&P +5 and Nasdaq +3. The Nasdaq 100 closed with a -3 point loss.

Today traders were just passing time ahead of the debate and the ECB announcement on Thursday. After those events the markets should pick a direction.

Current Portfolio

Stop Loss Updates

Check the graphic below for any new stop losses in bright yellow. We need to always be prepared for an unexpected decline.

Profit Targets

Check the graphic below for any profit stops in green. We need to always be prepared for a profit exit at resistance.

Current Position Changes

No Changes

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BULLISH Play Updates

ALRM - Alarm.com - Company Profile


No specific news. The company announced a change in their earnings date to Nov 14th after the close.

Original Trade Description: October 1st.

Alarm.com Holdings, Inc. provides cloud-based software platform solutions for the connected homes in the United States and internationally. It offers multi-tenant software-as-a-service platform that allows home and business owners to intelligently secure and manage their properties, as well as remotely interact with an array of connected devices through a single intuitive interface. The company provides interactive security solutions, which offer intelligent security and awareness services through a dedicated, cellular, and two-way connection to the home or business; and intelligent automation solutions that connects, integrates, and controls the devices in the home or business, such as security systems, garage doors, lights, door locks, thermostats, electrical appliances, environmental sensors, and other connected devices. It also offers video monitoring solutions, which provide live streaming, smart clip capture, high definition continuous recording, and instant video alerts through its mobile app or on the Web; and energy management solutions that offer enhanced energy monitoring and management services. It has approximately 2.6 million residential and business subscribers. Company description from FinViz.com.

For Q2, the company reported earnings of 15 cents compared to estimates for 11 cents. Revenue rose 24% to $64.4 million and beat estimates for $58.6 million. Software as a Service (SaaS) revenue rose 23% to $42 million. The company guided for the ful lyear for earnings of 49-51 cents and revenue of $242.3-$245.8 million. Analysts were expecting 48 cents on $241.7 million.

Earnings Nov 8th.

Despite the strong beat and strong guidance shares crashed from the historic high close of $33 before the earnings were released. Shares were up +135% since the February low at $14 and traders took profits. The only ratings change was from Raymond James from outperform to market perform based on value because of the strong gains. At the same time Imperial Capital raised their price target from $24.50 to $30. Since shares closed the day before at $30 that was an implied neutral rating.

Shares collapsed back to $28 and here there for three weeks then fell sharply on September 6th on no news to bottom at $25. That bottom was quickly bought and Friday's gain lifted the shares back over resistance at $28.50.

There is no bad press for Alarm.com. Earnings and revenue are growing, subscribers are growing and shares are back over resistance. If the market is going to rally in late October this should be a tech stock that outperforms.

Position 10/3/16 with a ALRM trade at $29.05

Long ALRM shares @ $29.05, see portfolio graphic for stop loss.

No options recommended because of price.

CC - Chemours - Company Profile


No specific news. Another nice gain and nearing a new high.

Original Trade Description: October 17th.

The Chemours Company helps create a colorful, capable and cleaner world through the power of chemistry. Chemours is a global leader in titanium technologies, fluoroproducts and chemical solutions, providing its customers with solutions in a wide range of industries with market-defining products, application expertise and chemistry-based innovations. Chemours ingredients are found in plastics and coatings, refrigeration and air conditioning, mining and oil refining operations and general industrial manufacturing. Our flagship products include prominent brands such as Teflonâ„¢, Ti-Pureâ„¢, Krytoxâ„¢, Vitonâ„¢, Opteonâ„¢ and Nafionâ„¢. Chemours has approximately 8,000 employees across 35 manufacturing sites serving more than 5,000 customers in North America, Latin America, Asia-Pacific and Europe.

Chemours was spun off from DuPont in 2015. The company spent hundreds of millions of dollars developing hydrofluoroolefin (HFO)-based alternatives and blends with low global warming potential. These replace the hydrofluorocarbons (HFCs) that were used in air conditioners for decades and reportedly responsible for global warming.

The UN's Montreal Protocol calls for HFCs to be phased out and replaced. Chemours has created a replacement and expects more than 24 million vehicles to be on the road in 2016 using their HFO-1234yt (Opteon) product in their air conditioners. By the end of 2017 that number will rise to more than 50 million. They believe by 2025 the HFO-based solutions will have replaced 325 million tons of Co2 equivalents. The Opteon product line has been widely accepted and nearly every refrigeration manufacturer is moving in that direction.

For Q2 they reported adjusted earnings of 27 cents that easily beat estimates for 17 cents. Management delivered more than $100 million in cost reductions in the first six months of 2016.

Earnings Nov 3rd.

CC has been moving up steadily since August as analysts began coverage and the company beat on earnings on August 8th. Over the last 30 days consensus estimates for Q3 have risen from 26 cents to 30 cents. Full year estimates have risen from 77 cents to 84 cents. Rising estimates suggest the stock will continue higher.

After a $7 rally since the earnings, the stock pulled back last week and found support at $14.75. Shares were up today on the UN news since it means even more manufacturers will be forced to switch to the HFO products.

Position 10/18/16 with a CC trade at $15.45

Long CC shares @ $15.45, see portfolio graphic for stop loss.

No options recommended.

CLVS - Clovis Oncology - Company Profile


No specific news. Moving sideways ahead of the debate.

Original Trade Description: October 12th.

Clovis Oncology, Inc., a biopharmaceutical company, focuses on acquiring, developing, and commercializing anti-cancer agents in the United States, Europe, and internationally. It is developing three product candidates, which include Rociletinib, an oral epidermal growth factor receptor and mutant-selective covalent inhibitor that is under review with the U.S. and E.U. regulatory authorities for the treatment of non-small cell lung cancer; Rucaparib, an oral inhibitor of poly polymerase, which is in advanced clinical development for the treatment of ovarian cancer; and Lucitanib, an oral inhibitor of the tyrosine kinase that is in Phase II development for the treatment of breast cancers. Company description from FinViz.com.

Clovis has been rising on the prospects for the drug Rucaparib. They reported in September the FDA was not planning on holding an advisory committee meeting to discuss the new NDA application. The FDA has accepted the company's NDA for accelerated approval and granted it a priority review. The FDA response is expected to be positive and is expected by Feb 23rd.

However, on October 7th the company released data on a Rucaparib trial that appeared to show it was less effective than a competing drug already on the market from AstraZeneca. Shares were crushed for a $10 drop at the open. Analysts were quick to come to their defense saying there are many trials and making a decision by just one trial with a very narrow patient subset was comparing apple to oranges. Shares immediately rebounded.

Clovis has several anti cancer drugs in final stages and the outlook is very positive. Just seeing that CLVS shares have not declined with the sector over the last couple of days is a very strong indication that portfolio managers are buying and holding.

Earnings Nov 3rd.

Position 10//13/16:

Long CLVS shares @ $31.97, see portfolio graphic for stop loss.

No options recommended because of price.

FTNT - Fortinet - Company Profile


Another minor gain but the best news is that the rebound has not failed.

Original Trade Description: October 15th.

Fortinet, Inc. provides cyber security solutions for enterprises, service providers, and government organizations worldwide. The company offers FortiGate physical and virtual appliances products that provide various security and networking functions, including firewall, intrusion prevention, anti-malware, virtual private network, application control, Web filtering, anti-spam, and wide area network acceleration; FortiManager product family to provide a central management solution for FortiGate products comprising software updates, configuration, policy settings, and security updates; and the FortiAnalyzer product family, which provides a single point of network log data collection. It also offers FortiAP secure wireless access points; FortiWeb, a Web application firewall; FortiMail email security; FortiDB database security appliances; FortiClient, an endpoint security software; and FortiSwitch secure switch connectivity products. In addition, the company provides FortiSandbox advanced threat protection solutions; and FortiDDos and FortiDB database security appliances. Further, it offers security subscription, technical support, training, and professional services. Company description from FinViz.com.

Fortinet released preliminary earnings numbers on the 11th and the stock was crushed in the afterhours market. The company said earnings would be in the range of 15-16 cents compared to prior guidance of 17-18 cents. Revenue would be in the range of $343-$348 million compared to guidance of $372-$376 million.

This is not the end of the world but shares fell from $34 to $29. They blamed the guidance miss on lengthening deal cycles saying enterprises were becoming more strategic in their purchasing decisions and buying with less urgency than last year. They also admitted to "sales execution challenges" in North America as the result of a new sales force in that market. They just recently expanded into North America. There were also "macro" issues in Latin America and the U.K. that they did not explain.

Despite the guidance cut they are still positive about Q4 and 2017 saying the "competitive-differentiating and market-leading security fabric" was intact and they remain confident in the underlying strength of the business. They will release their actual earnings on October 27th. Normally, when a company warns in advance, they report better earnings than their guidance in the warning.

Shares are already rebounding because multiple brokers immediately reiterated their buy ratings. Wunderlich said buy with price target of $42. Doughtery said buy with a price target of $35. RBC Capital reiterated a sector perform rating with a price target of $37.

I believe there is very little risk in taking a position in FTNT at this level. The damage has already been done.

Position 10/17/16:

Long FTNT shares @ $30.92, see portfolio graphic for stop loss.

MENT - Mentor Graphics - Company Profile


Minor decline from Tuesday's new high.

Original Trade Description: October 13th.

Mentor Graphics Corporation provides electronic design automation software and hardware solutions to design, analyze, and test electro-mechanical systems, electronic hardware, and embedded systems software worldwide. It offers printed circuit boards; Mentor Graphics Scalable Verification tools; Questa platform to verify systems and integrated circuits (ICs); FastSPICE, Eldo, and ADVance MS analog/mixed signal simulation tools; and Veloce hardware emulation system. Further, the company provides software, tools, and professional engineering services; and methodology development, enterprise integration, and deployment services. It sells and licenses its products through direct sales force, distributors, and sales representatives to the communications, computer, consumer electronics, semiconductor, networking, multimedia, military and aerospace, and transportation industries. Company description from FinViz.com.

Billionaire Paul Singer, head of Elliott Management, announced on Sept 29th his firm was taking an active 8.1% stake in Mentor Graphics. In the SEC filing Elliott said there are "strategic opportunities" available at MENT and he is going to force a sale. Singer is no stranger to activist investing. Since 1994 he has launched 114 campaigns and 14 proxy fights when companies do not take his advice and get the M&A ball rolling. Elliott has $27 billion under management and Mentor only has a $3 billion market cap. If the board does not take action quickly, Elliott could launch a proxy fight to get enough people on the board that will take action. As a relatively small company, Mentor is in the crosshairs and there is very little chance for escape.

Shares spiked in the middle of the day on Thursday after TheStreet posted an article explaining Elliott' s game plan. The close at $27.92 was a 15-year high. Since Elliott announced his position at $24.69 the shares have risen about $3.50 with $2 of that the first day. Elliott is in for the long term and they will not be bailing on a $3 gain. They have a much larger goal in mind.

Earnings Nov 17th.

A lot of investors follow these activist funds and I would expect the stock to continue to rise as the headlines appear. More than 7,000 Jan $30 calls were bought today against an open interest of only 3,944.

Because of the afternoon spike I was going to put an entry trigger on the position just over the afternoon high. However, the S&P futures are down hard again tonight and maybe we will get an opportunity to buy the stock lower so I did not add the trigger. Support is $26.

Position 10/14/16:

Long MENT shares @ $28.54, see portfolio graphic for stop loss.


Long Jan $30 call @ $1.35, no stop loss.

We will hold the option as a lottery ticket play is the long stock position is stopped.

BEARISH Play Updates

VXX - Volatility Index Futures - ETF Description


Nearing a new historic low.

Since this is a long-term play, I am not going to comment on it every day. Just forget it is in your portfolio and hope for a strong market rally in Q4.

Original Trade Description: September 6th.

The VXX is a short term volatility product based on the VIX futures. As a futures product it has the rollover curse. Every time they roll to a new futures contract they have to pay a premium and that lowers the price of the ETF. It is a flawed product with a perpetual decline built in from the monthly roll over in the futures contracts.

As evidence of this flaw, they have now down four 1:4 reverse stock splits. The last four reverse splits occurred at $13.11 (11/2010), $8.77 (10/2012), $12.84 (11/2013), $9.52 (8/8/16). The prospectus says it can reverse split anytime it trades under $25 for a prolonged period and the splits will always be 1:4.

After the August split the ETF moved sideways for four weeks at $36. I think everyone was waiting for the typical August volatility. When it did not show up and the market rallied on Friday that support broke. And the decline has begun.

Because there may be some September volatility, anyone in this position must understand that it may move higher before it moves lower BUT it will always move lower. We just have to wait it out. Volatility never lasts forever.

Unfortunately, put options are expensive with a volatility instrument at this price level. The only recommendation is to short the ETF and forget it. If we do get a prolonged rally as some are expecting we could see strong gains in the next 2-3 months. This will be a long-term position. This is not a 2-3 week play. I can guarantee you, if history holds, we can play this until it splits 1:4 again at $10. Once we are in the position and profitable I will put a trailing stop loss on it. We will take profits and then look for a bounce to get back in. We could keep this play in the portfolio on a trading basis permanently.

Position 9/7/16:

Short VXX shares @ $33.88, no initial stop loss.

No options recommended because of price.

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