Positive trade comments could no longer support the market and traders started getting nervous. I have warned for weeks that the trade deal was already priced into the market and even strongly positive comments today could not keep the rally alive. This could reverse tomorrow but the longer we go without a scheduled date for the Trump/Xi meeting, the more than likely the deal will blow up.
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.
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
ASHR - China A-Shares ETF
The long position was entered at the open.
IWM - Russell 2000 ETF
The long position was entered at the open. Stopped at $115.65, RELOAD
DELL - Dell Technologies
The long position was stopped at $55.35.
QQQ - Nasdaq 100 ETF
The long position was stopped at $172.50.
Full updates on all plays on Wednesday and Saturday. Only closed plays are updated on other days.
BULLISH Play Updates
DELL - Dell Technologies - Company Profile
Market crash and post earnings depression tanked the stock and we were stopped for a nice gain at $55.35.
Original Trade Description: Jan 26th
Dell Technologies Inc. designs, develops, manufactures, markets, sells, and supports information technology (IT) products and services worldwide. It operates through three segments: Infrastructure Solutions Group (ISG), Client Solutions Group (CSG), and VMware. The ISG segment provides traditional and next-generation storage solutions; and rack, blade, tower, and hyperscale servers. It also offers networking products and services that help its business customers to transform and modernize their infrastructure, mobilize and enrich end-user experiences, and accelerate business applications and processes; and attached software, and peripherals, as well as support and deployment, configuration, and extended warranty services. The CSG segment offers desktops, notebooks, and workstations; displays and projectors; third-party software and peripherals; and support and deployment, configuration, and extended warranty services. The VMware segment offers compute, management, cloud, and networking, as well as security storage, mobility, and other end-user computing infrastructure software to businesses that provides a flexible digital foundation for the applications that empower businesses to serve their customers globally. The company also offers cloud-native platform that makes software development and IT operations a strategic advantage for customers; information security and cybersecurity solutions; cloud software and infrastructure-as-a-service solutions that enable customers to migrate, run, and manage mission-critical applications in cloud-based IT environments; cloud-based integration services; and financial services. The company was formerly known as Denali Holding Inc. and changed its name to Dell Technologies Inc. in August 2016. Dell Technologies Inc. was founded in 1984 and is headquartered in Round Rock, Texas. Company description from FinViz.com.
Dell was taken private several years ago and disappeared from the market. When they acquired VMWare they had a tracking stock representing their 80% interest in the company under the symbol DVMT. In December they bought back that tracking stock in a complex transaction and then changed the ticker to DELL. Today, this represents all of Dell.
Over the last month Citigroup and Goldman initiated coverage with a buy rating and average target price of $60. Now that Dell is back as an operating company with strong management, we should be seeing a lot of funds and institutional investors moving back into the stock.
Dell has 145,000 employees. It is not a small company and it is a leader in the PC/Server sector and of course VMWare is a major component of the cloud.
Since the new Dell shares have only been around a month, they are definitely not over-owned.
Update 2/9: Dell said it was exploring the sale of SecureWorks (SCWX) with 4,300 clients in more than 50 countries. Dell bought the company in 2011 for $612 million then spun it off in 2016. Dell still owns 85% if the stock. The company only has a market cap of $254 million but Dell thinks it could be worth $2 billion. Dell has more than $50 billion in debt.
Update 3/2: Dell reported a loss of $287 million on revenue increase of 9% to $23.84 billion. They did NOT supply an earnings per share number with the release but in documents supplied later the earnings came out to about $1.86 per share. Analysts had expected $1.81 in adjusted earnings and a GAAP loss of $45 million on revenue of $23.83 million. Revenue in the infrastructure group rose 10% to $9.9 billion with servers and networking revenue rising 14% to $5.3 billion. They guided for full year earnings of $6.05-$6.70 and missed estimates for $6.81. I tightened the stop loss in case of post earnings depression.
Closed 3/4: Long April $47.50 call @ $2.60, exit $8.40, +$5.80 gain.
IWM - Russell 200 ETF - ETF Profile
We entered on the gap up this morning and were stopped out on the intraday decline of more than $3.50. I am recommending we reenter this position at the open on Tuesday ONLY if the Russell is positive.
Original Trade Description: March 2nd
The investment seeks to track the investment results of the Russell 2000 Index, which measures the performance of the small-capitalization sector of the U.S. equity market. The fund generally invests at least 90% of its assets in securities of the underlying index and in depositary receipts representing securities of the underlying index. It may invest the remainder of its assets in certain futures, options and swap contracts, cash and cash equivalents, as well as in securities not included in the underlying index, but which the advisor believes will help the fund track the underlying index. Company description from FinViz.com.
This is a short-term trading position based on expectations for a Chinese trade deal to be completed in March. I expect the markets to struggle higher into that president's meeting in Florida and then roll over.
The 30-min chart on the Russell shows a potential breakout ahead over the 1,600 level. The IWM has already closed over the 200-day, which has been holding the index back. It is entirely possible the Russell could run to 1,700 over the next three weeks if the China headlines continue to be positive.
However, this is a high risk position. The slightest headline about a glitch in the negotiations could tank the market. I do believe the prior highs are going to act like a tractor beam for the indexes as long as we do not suffer a headline disaster.
The end of February weakness was right on schedule and now we are poised for a directional move. Given 10-weeks of gains, that could be in either direction.
Long April $162 call @ $1.57, stopped $155.65, -.65 loss. RELOAD!
QQQ - Nasdaq 100 ETF - ETF Profile
The opening gap took the Qs over resistance, but the afternoon crash knocked them back to a 3-day low to stop us out. We still exited with a decent gain.
Original Trade Description: Dec 7th
Invesco QQQ is an exchange-traded fund based on the Nasdaq-100 Index. The Fund will, under most circumstances, consist of all of stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. The Fund and the Index are rebalanced quarterly and reconstituted annually.
The Nasdaq looks like it wants to decline further. I am profiling a dip buy at $158.15 on the hope that the Nasdaq/ETF will not decline below 6,800/155.00.
Closed 3/4: Long March $170 Call @ $1.77, exit $4.30, +$2.53 gain.
Position 12/17 with a QQQ trade at $156.85:
Long Jan $168 Call @ $1.12, see portfolio graphic for stop loss.
Long five Jan $168 Calls @ .12 each.
Expired 1/18: Adjusted cost for 6 = $.29 each. Expired, -.29 loss.
BEARISH Play Updates
No Current Puts