The markets

I spoke about this on Tuesday as a likely scenario and yes, it has happened. The Nasdaq has broken all-time highs. My forecast was the headline of Tuesday’s blog, ‘Positive FAANG Stock Earnings Could Push the Nasdaq to All-Time Highs’. I pointed out that Netflix had announced great earnings and the other FAANG stocks were on the cusp of releasing their earnings. The Nasdaq has moved up nine days in a row. It has hit all-time highs. It is as high as it’s ever been in history. The big question now is will Facebook, Amazon, Apple and Google announce strong earnings? Netflix already has. The elite students have a few earnings trades on right now, and we are hoping to ride these earnings trades right up until the release of the earnings report and then we will take the next crucial steps. If you want to start trading options and then join us in the elite program, begin by watching my free training video:

Will the Nasdaq keep moving higher?

What sort of impact will the FAANG earnings reports have on the Nasdaq? Will the Nasdaq continue its crazy move to the upside? It could if we have positive earnings reports from the major technology companies, including the FAANG stocks. But my assessment of the Nasdaq has played out as I suggested two days ago.

The elite program also has a trade on the Russell 2000 to move up and guess what? It was up the most of the major indexes last night, up 1%. The S&P 500 was up 0.54%, the Dow Jones Industrials were up 0.31%, but the transports were down, 0.6%. There were some poor earnings reports from major transport companies.

The sectors

There was a lot of strength in energy and biotech. Energy was up the most, 1.46%, while biotech was not too far behind, up 1.42%. Technology was up 0.51%.

With biotech, there is money flowing in, but the IBB needs to get past the 323 level. If it breaks above this level you could see a significant move up in biotech. People are getting into a speculative phase with the market, given that the Nasdaq is at all-time highs. Traders are looking for areas that haven’t yet taken off, and if biotech breaks above the 323 level it will be very attractive. In recent years people weren’t putting money into biotech, it was beaten down, but that appears to be changing. It had a strong day to the upside overnight and I intend to keep my eye on biotech.

AAOI goes from strength to strength

This week we had a big win on the stock, AAOI. We entered this position four days ago when the stock was worth $78, it is now worth $92.54, and was up again last night – $2.36. The reason we got into AAOI was because it was breaking to all-time highs and it had high-short interest. When a stock has high-short interest and is breaking to all-time highs, people who are short that stock have to buy to cover their positions. There is unlimited risk when you short a stock to the upside – you are looking for it to move down when you have a short stock position, so if it is moving up you must buy to cover your position. This causes a short-covering rally and that is what we have seen with AAOI. My elite students are mighty pleased to have made such incredible money on this trade. In fact, all of our earnings trades are doing well! With AAOI we bought the 80 August call four days ago for $7.50. It is now worth $17. These are the types of trades I find for my elite students. This is what I specialise in. This is what I do for a living.

Today with AAOI, we are again going to roll-up and profit. We had already created a riskless trade so we cannot lose, but we need to be aware that AAOI has earnings coming up. They will be released on August 3 as the market closes at 4pm. We must be out of that position by then as anything could happen with this stock. But AAOI is looking really good, just 12 months ago it was only worth around $11. Now it is worth $92. That is incredible, but we have made impressive profits in just four days. Every $750 you invested, you would now have $1,700. That’s a $1,000 profit per contract in less than a working week!

Going forward …

Earnings are coming up, please keep that in mind. We have an earnings trade on Apple and that is doing well. Apple will release earnings on August 1. Amazon also has earnings coming up, out on July 27th right on the market close. Facebook will release its earnings on July 26, also at the close of the market. Keep these dates in mind and focus on these trades. We already have many of them as earnings trades, but we also want to find out what sort of affect their earnings will have on the Nasdaq.

I do also like the look of biotech, although we are not heavily involved in biotech right now. We have a couple of smaller positions but I’m waiting for the IBB to clear 323. If it does, we have some great ideas – in fact I will mention a trade to my elite students tonight that they may want to get in now.