It was fairly flat in the markets yesterday. The Russell 2000 was up the most of any indexes, which is fortuitous because the elite students and I have a position in that index to the upside! The Russell 2000 was up 0.23%. The transports were the worst performing index, down 0.46%.
Utilities (XLU) were the best performing sector, up 0.46%, while biotech (IBB) was the worst performer, down 0.42%. Were there opportunities to make money by placing either calls or puts in those sectors? Definitely! There is always money to be made in the markets. You just need the right level of financial education. A stock that could have earnt you great money last night was EDIT, in the biotech sector. We saw biotech moving to the downside last night, so we needed to be on the look-out for a stock already showing weakness. EDIT’s opening-range low was $16.90 and there was also an obvious ledge (a bearish pattern) on its five-minute chart in the opening 30 minutes. Once EDIT broke below the opening-low, it moved right down to $15.57. That is a nice move down and there was money to be made with put options – it would have been an excellent trade to the downside.
In the technology sector yesterday, Netflix was $161.70, but it reported its earnings after the market closed and then jumped up $178.98. It had strong subscriber growth and moved up significantly. There is another earnings trade I want to talk to my elite students tonight.
ACRX jumps up 31.25%
One trade we have been in recently, ACRX, has done exceedingly well. Normally we only trade options, but in this case we bought the actual stock. We bought it at $2.15, last night it moved up 31.25%. That is a big move to the upside. We have made an incredible profit in just two days and we are probably going to hold onto it. If you have got into this, perhaps close out half your position and let the other half run because you have created a riskless trade. I am very pleased with this call and have received a tonne of emails today from elite students, saying that they made a lot of money off this recommendation. Thanks for getting in touch with me!
The Asian markets are flat today and the European markets are also looking flat. There is no real stimulus coming from overseas. The futures market was down a pinch, but not really telling us a lot.
The S&P 500
The MACD on the SPX is perhaps a little over-bought. It is still pointing up, but I see a doji pattern on the chart. A doji is created by a day’s narrow trading range, meaning the opening and closing price are almost equal. Dojis indicate indecision. The S&P 500 had been moving up, but we now need to wait and see what direction it wants to head in. If it opens above the doji I’d expect the SPX to move up as other buyers will step back in. If it opens below the doji, expect more downside action.
The NDX was up last night, but the MACD (Moving Average Convergence Divergence) is starting to flatten out. I will be watching the MACD on a daily chart, to see if it starts to turn down and we get some downside movement, but it could be pausing. However keep in mind that the Nasdaq has now had seven days to the upside. That is unusual. I would be expecting a short-term sideways move. Let’s see what happens with the MACD. It is looking overbought.
However Netflix strong earnings could impact the Nasdaq. It might have an eighth day moving to the upside! There are a number of other major tech stock reporting earnings very shortly. Google will report earnings on July 24, right on the close of markets. Amazon will report earnings on July 27th as the market closes, at 4pm. Facebook has earnings on July 26th. These major technology FAANG stocks will impact the markets. Will this be the stimulus for the Nasdaq to break new all-time highs? Yes, that could happen if Netflix is anything to go by. Let’s keep watching!!!