QQQ’s Could Be Peaking…

The Invesco QQQ Trust (QQQ) had its 4-session winning streak snapped following the pullback to $205. Current and upper support at $205-$204.50 was triggered but held. A close below the latter would signal a possible near-term top with backtest potential towards $202.50-$202.

Resistance is at $205.50-$206. Continued closes above the latter and last Wednesday’s all-time high of $206.05 would be an ongoing bullish signal with upside potential towards $207-$207.50.

RSI has turned south on the close below upper support at 70-65. A close below the latter and the November low opens weakness towards the 60 level and late October support. Resistance is at 75.

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Monthly Lows in Focus on Yield Inversion Risk/ Profit Alert (T)

Monthly Lows in Focus on Yield Inversion Risk/ Profit Alert (T)

8:00am (EST)

The market reversed course on Wednesday after giving back the prior session gains as another sharp drop in yields sent investors back to the sidelines. Specifically, the 2-year and 10-year spread inverted for the first time since 2007 with inversions traditionally seen as indicators of impending recessions.

Although it can be debated if the U.S. is indeed headed for a near-term recession, or not, it is clear fears of a global slowdown are real. The headline news had a negative impact on the major indexes, either way, with prior support levels back in play. It is important to note, the market experienced this scenario a few months ago and bounced back after the 10-year yield fell below the 3-month yield.

The Russell 2000 dropped 2.9% after tapping a late day low of 1,465. Prior and upper support at 1,460-1,450 held with the late May and early June lows at 1,461 and 1,460, respectively.

The Nasdaq plummeted 3% following the midday backtest to 7,762 and close back below the 7,800 level. Current and upper support at 7,750-7,700 held with the monthly low at 7,662.

The S&P 500 sank 2.9% after trading to an intraday low of 2,841. The close below the 2,850 level reopens risk towards upper support at 2,825-2,800 and the 200-day moving average with last week’s low at 2,822.

The Dow stumbled 3.1% following the backtest to 25,521 while closing back below the 26,000 level. Upper support at 25,600-25,400 and the 200-day moving average was breached and failed to hold with the August low at 25,440.

There was no sector strength. Energy led sector laggards after sinking 3.9% while Financials and Communication Services skidded 3.7% and 3.6%, respectively.

Earnings for Tuesday 8-6-19

Before the open: Aircastle (AYR), Black Knight (BKI), Colfax (CFX), Dean Foods (DF), Discovery Communications (DISCA), Duke Energy (DUK), Energizer Holdings (ENR), GreenSky (GSKY), Henry Schein (HSIC), Intrepid Potash (IPI), Kamada (KMDA), LGI Homes (LGIH), Mosaic (MOS), Novanta (NOVT), Pitney Bowes (PBI), Ryman Hospitality Properties (RHP), SeaWorld Entertainment (SEAS), Shutterstock (SSTK), Tenneco (TEN), Unit (UNT), Vonage Holdings (VG), Welbilt (WBT), Zoetis (ZTS)

After the close: ADT (ADT), Beacon Roofing Supply (BECN), Cubic (CUB), Devon Energy (DVN), Extended Stay (STAY), Great Ajax (AJX), HCI Group (HCI), IntriCon (IIN), j2 Global Communications (JCOM), Key Tronic (KTCC), Lending Club (LC), Match Group (MTCH), Noodles & Company (NDLS), Papa John’s (PZZA), Red Rocks Resorts (RRR), Southwest Gas (SWX), Team (TISI), Vivus (VVUS), Weight Watchers International (WW), Zagg (ZAGG)

5 Key Indicators for Landing Top Profits

5 Key Indicators for Landing Top Profits

At Next Options, we make stock and options recommendations based on what the charts are telling us — not the talking heads and suit-and-ties on financial TV networks. We spend tons of hours every week analyzing stock charts, support and resistance levels, moving averages and numerous other technical indicators of the major indices to ensure that we’re bringing you recommendations that are set up for success.

Today, we’d like to share with you the top 5 key technical indicators we use every day when we’re trying to determine which trades are best for our Next Options subscribers. We talk about these indicators in our Daily updates and we wanted to give you our insight into the ways that you can use each of them to become a more successful, disciplined trader.

 

1. Volume

Volume is one of the most basic, yet most important, technical indicators that traders have at their disposal when analyzing different stocks. Volume bars are included at the bottom of almost every stock chart out there, and certainly all of the charts we include in our Daily Updates, but this technical indicator is often unwittingly disregarded by many new traders.

Volume is simply the number of stock shares or options contracts traded during a given period of time. Volume is extremely important, as it helps determine a stock’s momentum. On charts, you can see the volume indicator by going to the settings. Each vertical bar represents one day’s trading volume.

The taller the volume bar, the greater the number of shares traded that day. Volume can also be useful when determining whether a stock is getting ready to breakout or breakdown.

If a stock is increasing in price while volume remains low, it could mean that the move is unsustainable, as there will not be enough buyers to support the stock at a higher price. On the other hand, if a stock is decreasing in price while volume remains low, it could mean that buyers are simply absent from that stock on a given day, and the stock might not actually deserve to be declining.

However, if you see above-average volume on a stock that is either gaining or declining, this could be confirmation that the breakout or breakdown process is beginning, as it shows strong demand from large institutional traders.

When it comes to buying options, we always make sure there is plenty of open interest. Open interest is basically the same as a stock’s average daily volume. This is a measurement of options contracts changing hands between buyers and sellers.

When an option has low open interest, it can be harder to get the trade executed at the price you want, so we look for high volume as an indicator of strong liquidity, and you should, too. When there’s a lot of volume and/or open interest, you’ll know you aren’t the only one buying in and, when you want to close the trade, you’ll have someone to whom you can sell your securities.

 

2. Support and Resistance

Support and resistance are two different levels on a chart that indicate where a stock’s share price might experience an inflection point. The easiest way to think about support is as a “floor” for a stock’s price, while resistance can act like a “ceiling.”

If a stock continually bounces off of a clearly defined price level when falling from prior highs, that level is called “support.” It is a temporary floor for the stock. The more times the stock touches this area and fails to continue down through this level, the stronger this support level becomes.

Once a stock’s price starts to rise, it will often climb back to the prior high that had been reached before. A stock will usually continue to rise until it hits a price level called “resistance.” This is a temporary “ceiling” for the stock. The more times the stock touches this area and fails to continue up through this level, the stronger this resistance level becomes.

After you discover support and resistance levels for a stock, you can lay the foundation for most of your trades. This is very important. As mentioned above, if these support and resistance levels break, it is likely that the stock has reached an inflection point. If a stock breaks down through its support level, its role reverses and that level will now act as a new resistance level for the stock the next time it starts to make its way higher again.

Conversely, if a stock breaks out above its prior resistance level, that level then becomes support. This new support level will come back into play if that stock starts to decline again. If the stock begins to decline again and the support level is strong, the stock is likely to stop falling at or possibly bounce off of that level.

While it doesn’t take long to learn how to spot support and resistance levels on a stock’s chart, there are many, many, many software programs that will use an algorithm to do it for you. But save yourself some money as most of the major online brokers have resources that tell you the support and resistance levels of individual stocks that should be no charge.

These levels are extremely useful when evaluating a stock, as the way a stock acts around either its support or resistance levels can give us great insight as to which way the stock is likely to move next. If a stock breaks below support, we may recommend a bearish put option call option position. If a stock breaks above resistance, we may recommend a bullish position.

 

3. Moving Averages

Moving averages are technical indicators that can help you identify the “support” and “resistance” levels mentioned above for a stock or index. A moving average (MA) is the average price of a stock over a specified time period. Some of the most common time periods used are 20, 50, 100 and 200 days. Moving averages are used to help spot price trends and are perhaps the most commonly used chart indicator. All good stock charting software includes built-in moving average indicators, and most of the financial sites have them as well.

On the daily, monthly, and yearly charts of the major indexes, you can see the trend of the index along with the 20-day, 50-day, 100-day and 200-day moving averages. These moving averages help me determine if the index (or stock) is above or below support or resistance levels. 

These indicators are so important because each time we see one of these levels being tested and violated, we’re able to evaluate trades so that my profit targets of making a 100% return with options that are sync with the underlying trend of the major indexes. This also goes to show why we often say “Don’t fight the momentum,” as it takes strong support or resistance to stop a market that is already on the move.

 

4. Monday/Friday Closes

We use the Monday and Friday closing prices for each of the major indices as a way of looking at whether money is flowing into or out of the market. You are not likely to hear this in any other financial publication, as it is an exclusive indicator that we have developed over our years trading the market.

In general, Monday/Friday up sessions are bullish and indicate that money is still “flowing” into the market. Negative Monday/Friday closes are bearish and usually mean cash is leaving the market. Mixed Monday/Friday closes can signal a choppy market or a trading range.

A quick glance at these charts is all it takes to see that the Monday/Friday closes are very helpful in predicting possible breakouts or sharp corrections in the market.

While they are not always going to be spot-on accurate — no technical indicators are — the Monday/Friday closes provide a broad overview of the money flow trend either entering or exiting the market and can give us good clues as to when the market may be ready to reverse higher or lower.

 

5. Futures

You can get a brief overview of the futures-trading activity that happens in pre-market trading hours. While futures are not direct indicators of where the market will end up on a given day, they can be used to predict where the major indices may open for trading.

Keep in mind that my goal is not to predict where the market will trade on a given day, but to predict the trends and ride the momentum of the market. If we have a general idea of what direction the market is going to move in, we will be better prepared to capture profits when they are available by using call or put options.

Again, there are hundreds — if not thousands — of indicators that traders can use to help navigate the market. It would be senseless to learn or use them all, but the handful we have reviewed in this report are some of the key ones that we use and talk about most often. 

Because we do all the homework for you at NextOptions.com, you’re never required to put them to work for yourself. However, we’re always interested in teaching those who want to know what’s helped us become a successful trader over the past two decades.

NextOptions.com Index and Earnings Options Play List for 8/16/2018

Major Support Levels in Play

8:00am (EST)

The market was weak throughout Wednesday’s session following Turkey’s implementation of taxes on American goods from cars to tobacco. Turkey continues to blame the U.S. for its economic woes and imposed retaliatory tariffs on U.S. products after the White House had increased its own tariff levels last week.

Gold and silver stabilized after tapping fresh 18-month lows while copper fell and is approaching late July lows. Potential for contagion in other emerging markets along with possible currency wars push volatility to new heights.

The Russell 2000 sank 1.3% following the backtest to 1,663 and close below the 50-day moving average. July support is at 1,660-1,650 on continued weakness.

The Nasdaq stumbled 1.2% after testing an intraday low of 7,732. Fresh support at 7,750-7,700 and the 50-day moving average held with a close below the latter being a continued bearish development.

The S&P 500 tanked 0.8% after trading to a low of 2,802. The index held major and mid-July support at 2,800 with a close below 2,790 and the 50-day moving average being a bearish development.

The Dow dropped 0.5% after tumbling a low of 24,965. The blue-chips held major and early July support at 25,000 and the 50-day moving average with risk to 24,800-24,600 and the 200-day moving average on a close below this level.

Utilities and Real Estate were sector leaders after rising 0.9%. Consumer Staples added 0.4% to round out the winners.

Energy got hammered after falling 3.5% and was easily the weakest sector. Materials and Communication Services were hit with losses of 1.6% and 1.4%.

The S&P 500 Volatility Index ($VIX) stayed elevated throughout the session while surging to a morning high of 16.86. We warned of risk to 17.50 on continued moves or a close above 14.50-15 and the 200-day moving average.

There is still upside risk to 20 if 17.50 fails with the July peak at 18.08 and the June high at 19.61 on the peak of Italian election fallout.

Rising support at 13.50-13.25 and the 50-day moving average on a close below 14.50 and a level the bulls likely need to recover this week to avoid panic selling.

RSI is at June highs after clearing lower resistance at 60-65. There is risk to 70-75 and January highs on a move above the latter with the February peak at the 90 level. A close back below support at 55-50 would be bullish for the market.

unknown.png

The Spider S&P 500 ETF (SPY) fell for the 5th-time in 6 sessions with Wednesday’s low tapping $280.16. Upper support at $280-$279.50 held with a move below the latter getting $278.50-$278 and the 50-day moving average in play.

Lowered resistance is at $282-$282.50 with a move back above the latter signaling a possible short-term bottom.

RSI has been in a downtrend and is approaching support at 50. A move below this level would get 45-40 and June lows in play. Resistance is at 55-60.

unknown_1.png

The Utilities Select Spider (XLU) extended its winning streak to 3-straight sessions after trading to a high of $53.98. Fresh resistance at $54-$54.50 with a close above the latter being a continued bullish development. The 52-week peak is at $57.23.

The 50-day moving average cleared the 200-day moving average earlier this month and a development we said to watch for in mid-July. This formed a golden cross and is typically a bullish technical pattern for higher highs.

Near-term support is at $53.25-$52.75. A close below $52.50 would signal a short-term top.

RSI is back in a slight uptrend with resistance at 65-70. A move above the latter could lead to a run towards 75-80 and early July highs.

unknown_2.png

Briggs & Stratton (BGG), Caci International (CACI), Cisco Systems (CSCO), NetApp (NTAP), SpartanNash Company (SPTN) reported earnings after Wednesday’s closing bell.

Despegar.com (DESP), JC Penney (JCP), JD.com (JD), LSI Industries (LYTS), Qiwi (QIWI), Walmart (WMT) are announcing numbers this morning. 

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Our top triple-digit winning option recommendations for 2018:

+400% Spider Dow Jones February 250 puts (February 2018)

+400% PowerShares QQQ February 162 puts (February 2018)

+300% Intel February 47 calls (January 2018)

+225% CVS June 65 calls (May 2018)

+209% Boston Scientific BSX July 31 calls (June 2018)

+191% Sony February 48 calls (January 2018)

+175% Big Lots June 40 puts (June 2018)

+168% American Airlines July 40 puts (June 2018)

+133% Progenics Pharmaceuticals May 8 calls (March 2018)

+117% Energous May 17.50 calls (April 2018)

+100% Papa John’s International August 40 puts (August 2018)

+100% Progenics Pharmaceuticals August 8 calls (June 2018)

+100% Spider Dow Jones February 258 puts (January 2018)

+100% Marvell Technology (March 2018)

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Boston Scientific (BSX, $34.89, up $1.19)

BSX September 36 calls (BSX180921C00036000, $0.85, up $0.50)

Entry Price: $0.35 (8/2/2018)

Exit Target: $1.10

Return: 139%

Stop Target: None

Action: Resistance is at $35-$35.25 on continued strength. Support is at $34.25-$34.

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Viavi Systems (VIAV, $10.46, down $0.47)

VIAV September 11 calls (VIAV180921C00011000, $0.35, down $0.10)

Entry Price: $0.30 (8/13/2018)

Exit Target: $0.90 (Limit Order)

Return: 50%

Stop Target: 30 cents (Stop Limit)

Action: Support is at $10.40-$10.30. Resistance is at $10.50-$10.60.

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Upcoming Earnings

Thursday 

After the close: Applied Materials (AMAT), Nordstrom (JWN), Nvidia (NVDA), Voxeljet (VJET), Zoe’s Kitchen (ZOES)

Friday

Before the open: Deere & Company (DE)

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Nasdaq Closes Below 50-Day MA/ Trade Alert (PGNX)

NextOptions.com Index and Earnings Options Play List for 7/31/2018

Nasdaq Closes Below 50-Day MA/ Trade Alert (PGNX)

8:00am (EST)

The market showed some strength on Monday’s open but spent most of the session in negative territory as Wall Syreet prepares for the Fed. The Nasdaq was the weakest of the indexes, falling more than 1% amid calls of a potential market top for the so-called “FANG” group of tech stocks.

Support was tested and breached on the pullback as the major indexes closed near session lows. Volatility remains heightened and is showing signs of a continued market selloff if the VIX clears 15.

The Nasdaq stumbled 1.4% after testing an intraday low of 7,604. Upper support at 7,650-7,600 and the 50-day moving average failed to hold with a close below the latter being a continued bearish development.

The Russell 2000 fell 0.6% following the backtest to 1,653. It was the 2nd-straight close below the 50-day moving average with fresh support at 1,650-1,640 holding.

The S&P 500 slid 0.6% after trading to a low of 2,798. The index held key support at 2,800 and a level that has held for 10-straight sessions. A close below this level would be a bearish development.

The Dow also fell 0.6% after testing a low of 25,287. The close back below the 25,400 level was a slightly bearish development with risk to 25,000 on continued weakness.

Energy was up 0.8% to lead sector strength. Healthcare added 0.1% while Financials were flat.

Communications Services and Technology tumbled 1.6% to pace sector laggards. Industrials were down 1%.

The S&P 500 Volatility Index ($VIX) soared to a high of 14.46 intraday with fresh and upper resistance at 14-14.50 and the 200-day moving average holding. A close above 15 would likely trigger panic selling with risk to 17-17.50. Rising support is at 13.50-13 and the 50-day moving average.

The Spider S&P 500 ETF (SPY) fell for the 3rd-straight session following the intraday backtest to $279.36. Upper support is at $279.50-$279 held with a move below the latter signaling additional weakness towards the $277.50 area.

Lowered resistance is at $280-$280.50 with a close back above the latter being a slightly bullish signal for another possible push towards $282-$282.50. 

The 50/200-day moving averages remain in solid uptrends and are signaling longer-term higher highs.

RSI is in a slight downtrend with near-term support at 50. A close below this level would signal additional weakness towards 45-40 and June lows. Resistance is at 55-60.

The Financial Select Sector Spiders (XLF) has been in a tight trading range over the past 5 sessions with Monday’s high reaching $28.35. Continued closes above May resistance at $28.25 would be a bullish development.

The 50-day moving average is trying to level out after falling below the 200-day moving average earlier this month. The lower lows ahead of the death-cross formed a nice bottom before the back of the month rebound.

Support is at $28-$27.75 with a close below the latter likely signaling additional weakness towards the major moving averages.

RSI is trying to clear upper January resistance at 65-70. Continued closes back above the latter would be a slightly bullish signal for continued strength. A close below support at 60 would suggest another backtest towards 55-50.

The Fed meets today and Wednesday, but no change is expected in rates. There has been no signal from policymakers that they are preparing to boost rates again after hiking in June. The policy statement, however, should be supportive of a move up in rates at the September 25th, 26th meeting.

Analysts believe the Fed will be a little more upbeat in its outlook on the economy given the 4.1% increase in growth, and can note the fact that most inflation measures have hit the goal. However, Chairman Powell has indicated he’s not ready to declare victory on inflation just yet, while others remain concerned over the potentially recessionary signals from a yield curve inversion, and cautious over the effects of tariffs.

 

AvalonBay Communities (AVB), Blackbaud (BLKB), Denny’s (DENN), Gladstone Commercial (GOOD), Illumina (ILMN), Knoll (KNL), NutriSystem (NTRI), Rambus (RMBS), Stifel Financial (SF), Texas Roadhouse (TXRH), Vornado Reality Trust (VNO), Woodward (WWD) reported earnings after Monday’s closing bell.

American Tower (AMT), BP (BP), Cummins (CMI), Honda Motor (HMC), Johnson Controls (JCI), Lumber Liquidators (LL), OshKosh (OSK), Procter & Gamble (PG), Ralph Lauren (RL), Sanofi (SNY), Sony (SNE), Timken (TKR), Vulcan Materials (VMC), Xylem (XYL) are announcing numbers this morning. 

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Our top triple-digit winning option recommendations for 2018:

+400% Spider Dow Jones February 250 puts (February 2018)

+400% PowerShares QQQ February 162 puts (February 2018)

+300% Intel February 47 calls (January 2018)

+225% CVS June 65 calls (May 2018)

+209% Boston Scientific BSX July 31 calls (June 2018)

+191% Sony February 48 calls (January 2018)

+175% Big Lots June 40 puts (June 2018)

+168% American Airlines July 40 puts (June 2018)

+133% Progenics Pharmaceuticals May 8 calls (March 2018)

+117% Energous May 17.50 calls (April 2018)

+100% Progenics Pharmaceuticals August 8 calls (June 2018)

+100% Spider Dow Jones February 258 puts (January 2018)

+100% Marvell Technology (March 2018)

Our top triple-digit winning option recommendations for 2017:

+900% Lumber Liquidators August 27.50 calls (August 2017)

+400% Limelight Networks December 4 calls (November 2017)

+300% JDcom June 37 calls (May 2017)

+300% Kate Spade March 20 calls (March 2017)

+300% Imax May 30 puts (May 2017)

+286% Fastenal May 49 puts (April 2017)

+246% Dick’s Sporting Goods June 45 puts (May 2017)

+244% Starbucks February 57.50 puts (February 2017)

+200% GameStop April 22.50 puts (March 2017)

+173% Alibaba February 100 calls (January 2017)    

+169% Amicus Therapeutics August 12 calls (July 2017)

+116% iShares Russell 2000 (November 2017)

+110% Amicus Therapeutics July 8 calls (June 2017)

+100% Cisco Systems October 32 calls (September 2017)

+100% Bank of America July 23 calls (June 2017)

+100% PowerShares QQQ ETF February 122 calls (January 2017)                        

+100% Array BioPharma January 8 calls (January 2017)

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Sony (SNE, $52.34, down $1.06)

SNE August 51 puts (SNE180817P00051000, $1.20, up $0.45)

Entry Price: $0.75 (7/30/2018)

Exit Target: $1.50

Return: 58%

Stop Target: None

Action: Monday’s low tapped $52.18 with upper support at $52.25-$52 holding. Resistance is at $52.75-$53.

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Starbucks (SBUX, $51.90, down $0.25)

August 50 puts (SBUX180817P00050000, $0.60, flat)

Entry Price: $0.80 (7/25/2018)

Exit Target: $1.60

Return: -25%

Stop Target: None

Action: Shares traded down to $51.76 yesterday with upper support at $51.75-$51.50 holding. Resistance is at $52.25-$52.50.

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Progenics Pharmaceuticals (PGNX, $8.31, up $0.65)

PGNX August 10 calls (PGNX180817C00010000, $0.45, flat)

Entry Price: $0.55 (7/3/2018)

Exit Target: $1.10-$1.65, raise to $4

Return: -17%

Stop Target: None

Action: Raise the Exit Targets from $1.10-$1.65 to $4 with a Limit Order on HALF the position.

Shares closed at the session high before being halted ahead of Monday’s close.

The FDA granted the approval of Azedra injection for intravenous use for the treatment of adults and adolescents age 12 and older with rare tumors of the adrenal gland. More specifically known as pheochromocytoma or paraganglioma, adrenal glands cannot be surgically removed after spreading beyond the original tumor site and require systemic anticancer therapy. 

This is the first FDA-approved drug for this use, the FDA noted. As it is a radioactive therapeutic agent, Azedra includes a warning about radiation exposure to patients and family members, which should be minimized while the patient is receiving Azedra.

We’re hoping continued momentum can carry shares past $10 and towards $12-$14 on this morning’s open. If so, we should get filled on the aggressive $4 Exit Target. If not, I will likely send out a Trade Alert with further instructions.

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Upcoming Earnings

Tuesday 

After the close: Akamai Technologies (AKAM), Apple (AAPL), Baidu.com (BIDU), Cheesecake Factory (CAKE), Hologic (HOLX), Lydall (LDL), NuVasive (NUVA), Pandora Media (P), Quality Systems (QSII), Red Rock Resorts (RRR), Terex (TEX), Zagg (ZAGG)

Wednesday

Before the open: AMC Entertainment (AMC), Bunge (BG), Caesars Entertainment (CZR), Dominion Energy (D), Ferrari (RACE), Garmin (GRMN), HanesBrands (HBI), Kforce (KFRC), LittelFuse (LFUS), Molson Coors Brewing (TAP), Pitney Bowes (PBI), Radware (RDWR), SodaStream (SODA), Vonage Holdings (VG)

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