March Lows in Play

March Lows in Play

8:00am (EST)

The bulls were looking good for the first half of Wednesday's action as upper resistance was tested. However, the second half fade to session lows led to a mixed session with the broader market pulling back but Tech and the small-caps closing slightly higher. The bears are still on the verge of causing chaos as the blue-chips fell below their late March intraday low.

The Dow tumbled 118 points, or 0.6%, to finish at 20,404. The blue-chips made a run to 20,546 with resistance at 20,600-20,650 easily holding. The fade to a session low of 20,379 into the closing bell split support at 20,400-20,350. The close below the previous March low of 20,412 was a bearish development and gets 20,200-20,000 in play if 20,350 cracks.

The S&P 500 slipped 4 points, or 0.2%, to end at 2,338. The index traded to a high of 2,352 but failed lower resistance at 2,360-2,370 shortly after the open. I mentioned backup support at 2,325-2,300 continues to a be a possibility if 2,335 fails to hold and was yesterday's low.

The Nasdaq advanced 13 points, or 0.2%, to settle at 5,863. Tech made a morning journey north of 5,894 to push upper resistance at 5,875-5,900 but levels that held despite the bulls holding court all session. Support is at 5,825-5,800 on another move below 5,850.

The Russell 2000 climbed 5 point, or 0.4%, to close just under 1,367. The small-caps also held positive territory throughout Wednesday with the high checking in at 1,376. Upper resistance at 1,370-1,375 and the 50/100-day moving averages were cleared but also levels the bulls couldn't nail down. Support is at 1,360-1,350.

The S&P 500 Volatility Index ($VIX, 14.93, up 0.51) cleared upper support at 13.50-12.50 after kissing 13.46 intraday. The late day surge and 10% rebound off the low tapped a high of 15.15. Resistance is at 17-17.

From desk to press, futures look like this: Dow (+6); S&P 500 (+1); Nasdaq 100 (+3).

4Q Earnings Heat Up

4Q Earnings Season Heats Up

8:00am (EST)

The bears opened the shortened weak with a win as the recent bullish Tuesday's were outweighed by a shaky dollar. News that then President Elect, Donald Trump, said in an interview with the Wall Street Journal the US dollar was "too strong" led to some uneasiness and overall market weakness.

The rest of the week was shaky as December lows came into play but Friday's action kept the bottom of the trading ranges intact. With fourth-quarter earnings season coming into full swing, the bulls will need to show continued strength while trying to regain momentum for another possible run at all-time highs.

The Dow jumped 94 points, or 0.5%, to finish at 19,827 on Friday. The blue-chips held positive territory throughout the session with the high reaching 19,843. Resistance at 19,900-20,000 held tight with a close into this level a bullish start for the week. A move above the latter gets 20,200-20,350 in play. Support is at 19,800-19,725 with a move below 19,700 likely leading to 19,600-19,500 and the 50-day moving average. For the week, the index fell 58 points but is still up 65 points for the year.

The S&P 500 climbed 7 points, or 0.3%, to settle at 2,271. The index made a run to 2,276 shortly after the opening bell to clear lower resistance at 2,275-2,300. Although this level failed to hold, the close above 2,270 was semi-bullish. Support is at 2,260-2,250. A move below the latter could lead to a continued backtest to 2,240-2,235 and the 50-day moving average. The S&P 500 fell 3 points for the week, and is 33 points, year-to-date.

The Nasdaq added 15 points, or 0.3%, to close at 5,555. Tech raced to a high of 5,574 on the open with lower resistance at 5,575-5,600 holding by a point. Support remains at 5,525-5,500 with last week's lows reaching 5,527 on Tuesday and 5,528. If these levels hold throughout the week, we can say it was a "double bottom". However, a breech of either aforementioned numbers would be a bearish development. The Nasdaq fell 19 points last week and for 2017, is showing a 172-point gain.

The Russell 2000 popped a 6-pack, or 0.5%, to end at 1,351. The small-caps traded up to 1,355 midday but failed fresh resistance at 1,360-1,365. The lower highs and lower lows throughout last week pushed lower support at 1,345-1,340 and the 50-day moving average. There is additional risk to 1,325-1,320 if this level fails to hold over the near-term. Last week's 21-point dip led the overall market pullback with the index now showing a 6-point loss for the year.

The S&P 500 Volatility Index ($VIX, 11.54, down 1.24) stayed deflated throughout Friday's session with the low tapping 11.53. The 10% pullback and close just outside of support at 11.50-11 looked bullish. The 52-week low is at 10.93 with 10 and single-digits looking possible on a move below 10.75. Resistance is at 12.50-13.50 and the 50/100-day moving averages with continued closes above the latter leading to 14.50-15 and a breech of the 200-day moving average.

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How to Trade E*Trade’s Earnings

A sneaky play without taking the direct hit of an earnings announcement might be a bullish trade on E*Trade Financial (ETFC, $36.93, up $0.21). Shares have been in a strong, tight range for two weeks but have been setting higher highs and fresh 52-week peaks since mid-November.

Analysts are expecting a profit of $0.42 a share on revenue just shy of $502 million. The high estimate is pegged at $0.45 a share with the low at $0.39. The high revenue estimate is north of $517 million while the lowball is at $459 million. The company has topped estimates by 12 cents and 10 cents, twice, over the past three quarters.

The ETFC February 38 calls (ETFC170217C00038000, $0.95, up $0.15) look attractive at current levels and would give the trade a month to play out. If ETFC shares can clear $40 by mid-February, these options would easily double from current levels. Of course, an earnings miss, or lowered guidance, could cause a pullback in the stock.

NextOptions.com Index and Earnings Options Play List for 12/7/2016

NextOptions.com Index and Earnings Options Play List for 12/7/2016

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8:00am (EST)

The market was sluggish for much of Tuesday before picking up steam in the second half of action. The continued momentum was beautiful to see as I mentioned the bulls needed to show some follow through. The run to fresh all-time peaks were lead by the small-caps and another bullish sign.

The Dow advanced 35 points, or 0.2%, to close at 19,251. The blue-chips were weak throughout the first half of trading with the bears pushing a low of 19,184. Support at 19,100-19,000 has now held for 10-straight sessions with a solid floor being formed. The push to 19,255 keeps upper resistance at 19,200-19,350 in play. Continued closes above the latter could lead to a move towards 19,500-19,600 by yearend.

The S&P 500 added 7 points, or 0.3%, to finish at 2,212. The index slipped a couple of points to 2,202 shortly after the open with rising support at 2,200-2,195 holding. A move back below 2,190 would be a bearish development. Resistance at 2,215-2,225 was challenged on the bounce to 2,212 ahead of the closing bell. If the latter is cleared, pencil-in a test to 2,250, possibly, over the next 3-4 weeks.

The Nasdaq gained 24 points, or 0.5%, to settle at 5,333. Tech made a brief trip into negative territory midday to 5,299 with fresh upper support at 5,300-5,275 getting slightly stretched. The turnaround to just below 5,334 into the close was a bullish signal. Near-term resistance remains at 5,350-5,375.

The Russell 2000 surged nearly 15 points, or 1.1%, to end at 1,352. The small-caps tested 1,335 intraday with rising support at 1,330-1,325 trying to be established for the rest of the week. Prior resistance at 1,335-1,340 was blown away following the move to 1,353 and another all-time high.

The S&P 500 Volatility Index ($VIX, 11.79, down 0.35) traded in negative territory for much of the day following a brief look at 12.30 on the opening sluggishness. Short-term resistance has now moved down to 12.50-11.50. Continued closes below 11.50 should get a 10 handle and possibility, single-digits on the map.

Analogic (ALOG), Dave & Buster's Entertainment (DAVE), Sigma Designs (SIGM) announced earnings after Tuesday's close.

Hooker Furniture (HOFT), Lulelemon Athletica (LULU), Star Gas Partners (SGU), United Natural Foods (UNFI) are announcing numbers this morning.

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We are a Daily newsletter that provides precise entry and exit points for our call and put option recommendations. If you do not know how to trade options, you can trade the stock. Some traders buy or short the stock based on where we believe a stock is headed following the earnings announcement.

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12/7/2016 comments:

Sprint (S, $8.17, up $0.12)

January 8 calls (S170120C00008000, $0.65, up $0.10)

Profiled Price: $0.55 (11/16/2016)

Exit: $1.10

Profit: 18%

Stop: None

Thoughts: Monday's high reached $8.61. Resistance is at $8-$8.25. Support is at $7.75-$7.50.

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12/7/2016 comments:

Rambus (RMBS, $13.46, up $0.48)

January 14 calls (RMBS170120C00014000, $0.30, up $0.13)

Profiled Price: $0.36 (11/21/2016)

Exit: $0.75+

Profit: -18%

Stop: None

Thoughts: Resistance is at $13.50-$13.75. Fresh support is at $13.

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12/7/2016 comments:

Array BioPharma (ARRY, $8.66, down $0.05)

January 8 calls (ARRY170120C00008000, $1.15, down $0.10)

Profiled Price: $0.75 (11/28/2016)

Exit: $1.50

Profit: 48%

Stop: None

Thoughts: Resistance is at $9. Support is at $8.50. We have a Price Target of $10 by mid to late January for the stock that would get these call options to $2 "in-the-money".

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12/7/2016 comments:

Toll Brothers (TOL, $31.93, up $1.46)

January 30 calls (TOL170120C00030000, $2.50, up $0.90)

Profiled Price: $1.00 (12/5/2016)

Exit: $2.00+

Profit: 60%

Stop: $2.05

Thoughts: Set a Stop at $2.05 to ensure a triple-digit profit.

Shares traded to a peak of $32.18 yesterday with the calls kissing $2.55. We said we liked these calls to play a run to $32 on better-than-expected numbers and the company delivered.

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12/7/2016 comments:

PowerShares QQQ ETF (QQQ, $116.88, up $0.28)

January 120 calls (QQQ170120C00120000, $0.75, flat)

Profiled Price: $0.65 (12/5/2016)

Exit: $1.50

Profit: 12%

Stop: None

Thoughts: Resistance is at $117.50-$118. Support is at $115. We like these call options to play a rebound to $120 and all-time highs by mid-January.

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Upcoming Earnings

Wednesday

After the close: Casey's General Store (CASY), H&R Block (HRB), Ollie's (OLLI)

Thursday

Before the open: Argan (AGX), Ciena (CIEN), Hovnanian Enterprises (HOV), Methode Electronics (MEI), Peak Resorts (SKIS), Vince Holding (VNCE)

No new recommendations today.

Groupon (GRPN) Gets an Upgrade

Chicago, Illinois-based coupon service Groupon (GRPN, $3.85, up $0.36) surged 10.32% after an analyst upgraded the stock to overweight from neutral, and raised its 1-year price target to $6. The company plans to spend $150-$200 million more for marketing in 2016 than in 2015.

The increased marketing will largely be in the U.S. The analyst believes this would attract 3.5-4.5 million new active accounts in 2016, and the company would also attract similar numbers in 2017. This is believed to add annualized gross profit of $215-$280 million. In 2015, the company had a gross profit of $1.385 billion.

On April 28, the $2.18 billion company reported 1st quarter results that beat on earnings and revenue. It reported earnings per share (EPS) of -$0.01 on $731.97 million in revenue, compared to EPS of $0.03 on $750.4 million in revenue a year ago. Analysts had expected EPS of -$0.02 on $718.36 million in revenue.

For the 2nd quarter, which it reports on July 27 after the close, analysts are expecting EPS of -$0.02 on $710.97 million in revenue, compared to EPS of $0.02 on $738.4 million in revenue a year ago. For full year fiscal 2016, the company forecasts revenue of $2.75-$3.05 billion.

Analysts estimate EPS of $0.20 on $2.97 billion in revenue, compared to EPS of $0.14 on $3.12 billion in revenue in 2015. Analysts give the stock a 1-year price target of $4.07. High target is $6. The stock has no trailing PE, a forward PE of 72.64, price/book of 5.83, price/sales of 0.74, and a current ratio of 0.81. Short interest is 12.81%, which means that shares could see a short squeeze on good news.

Protected: NextOptions.com Index and Earnings Options Play List for 7/15/2016

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