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THE WEEK AHEAD: ANF, BBY EARNINGS; XOP, EWZ, GDX, SMHIt's a short market week here, but this is what we've got ... . EARNINGS: HPE (43/33): Announces Monday after market close. ANF (85/80): Announces Tuesday before market open. BBY (70/42): Announces Tuesday before market open. HPQ (50/36): Announces Tuesday after market close DE (34/29): Announces Wednesday before market open. Of these, ANF and BBY appear most appealing from a volatility contract standpoint. The setup pictured here is an ANF 16 short straddle in the December 20th month, paying 2.87 (.72 at 25% max) versus 15.93 spot (18.0%), with the defined risk 11/16/16/21 iron fly paying 2.60 with a buying power effect of 2.40 (.65 at 25% max). The BBY December 20th 65/80 short strangle is paying 1.75 (.88 at 50% max), with the correspondent 60/65/80/85 iron condor in the same cycle paying 1.60 (.80 at 50% max). EXCHANGE-TRADED FUNDS: TLT (36/12) SLV (29/20) GLD (23/11) USO (21/33) XLE (19/20) As with last week, short duration premium selling remains less than ideal here, so either hand sit, keeping powder dry, or look to deploy in longer duration setups. Here's what's on my list for longer duration setups in which at background implied volatility is higher: XOP: January, where the at-the-money short straddle is paying 2.20 versus 21.05 spot (10.5%) EWZ: March, where the at-the-money short straddle is paying 5.12 versus 43.16 spot (11.9%) GDX: March, where the at-the-money short straddle is paying 3.14 versus 26.76 spot (11.7%) SMH: May, where the at-the-money short straddle is paying 17.95 versus 130.92 spot (13.7%) BROAD MARKET: SPY 10/13 IWM (7/16) QQQ (7/16) As with the exchange-traded funds, you're looking at either hand sitting on shorter duration setups or going out farther in time to get paid, with the expiries in which the at-the-money short straddle is paying greater than 10% in September for SPY and June for both IWM and QQQ (ugh). FUTURES: /6B (67/12) /NG (41/60) /6C (30/5) /SI (29/18) /GC (23/11) Cable I get, but what's with the Loonie? VIX/VIX DERIVATIVES: With the January, February, and March contracts trading at 16.68, 17.76, and 18.05 respectively as of Friday close, VIX term structure trades in those expiries remain viable. For all other short volatility trades, I'd wait for a VIX pop above 20 to consider starting to add short position, as well as consider taking off some risk if we see another drop back into the 2019 lows at 12. It finished Friday at 12.34 ... .
NYSE:ANF
by NaughtyPines
Balfour Beatty - Share price about to crumble?Sell Balfour Beatty (BBY.L) Balfour Beatty plc is an infrastructure company that provides maintenance, upgrade and management services in power transmission, utilities infrastructure, and road and rail. The Company operates through three segments: Construction Services segment, which is engaged in the physical construction of an asset; Support Services segment, which is engaged in supporting existing assets or functions, such as asset maintenance and refurbishment, and Infrastructure Investments segment, which is engaged in the acquisition operation and disposal of infrastructure assets, such as roads, hospitals, schools, student accommodation. Market Cap: £1.57Billion Balfour Beatty is trading in a long-term downtrend on the chart and is currently at the upper end of a bearish triangle pattern. The price action has been slightly bullish in recent weeks as the shares gapped higher in August on results. Crest Nicholson today posted a profit warning and expect profits to dip over the next 2 years. That could be a warning shot to all construction companies in the UK. We would prefer to reduce exposure to anything construction related at present and look at speculative short positions. Stop: 242p Target 1: 202.4p Target 2: 184.6p Target 3: 168.2p Interested in UK Stocks? Join our free Telegram channel for up to date analysis on the best main market opportunities in the UK right now - t.me
LSE:BBYShort
by Investamate
TGT, BBY Earnings: Retail Brick & Mortar Topping Patterns Target and Best Buy reported earnings today and their stock values fell, TGT worse than BBY. The retail brick and mortar stores are the last group to report each season. The ubiquitous AMZN has put most of this type of store at risk of total displacement as consumers prefer the ease and speed of online shopping over driving to a store. Technical patterns are even more important in a downtrend as the 3 primary market participant groups that sell short are technically oriented rather than fundamentalist or emotional buyers or sellers. Study both weekly and daily charts before you choose stocks to sell short, in order to calculate potential support bounce levels, and to anticipate how far a stock can drop. This is one of the newer topping formations that developed in the past few years as the market became fully automated for the Institutions.
NYSE:TGT
by MarthaStokesCMT-TechniTrader
THE WEEK AHEAD: BBY, DE, GPS, LOW EARNINGS; UNG, XOP, NFLXIn spite of the shortened trading week due to the Thanksgiving holiday, there are balls to hit out there ... . Earnings: BBY (95/57) (announcing Tuesday before market open): The December 21st 57.5/75 short strangle shown here is paying 2.42 with break evens near the one standard deviation line. I tried pricing out a defined risk iron condor, but it looks like some strikes need to populate post-November opex in order for me to price a setup where I'd want to set up my tent (i.e., short strikes between the 20 and 30 deltas, longs 3-5 strikes out with the setup paying at least one-third the width of the wings). LOW (78/40) (announcing Tuesday before market open): As with the DE play, I'm able to price out a short strangle -- the 80% probability of profit December 21st 80/105 pays 1.35, but not an iron condor due to the population of strikes around where I'd like to set up. I'll just have to wait until NY open to price a defined risk setup. GPS (87/54) (announcing Tuesday after market close): To me, it's small enough to short straddle, with the December 21st 26 short straddle paying 3.17, but I could also see going with the 23/29 (paying 1.05) to give yourself a little more flexibility with defense if you're not a fan of defending the straddle via inversion (which is generally what you have to do with a short straddle where the move is greater than the expected). Alternatively, the December 21st 21/26/26/31 iron fly pays 2.71 with a buying power effect of 2.29, which are the metrics I'm looking for out of an iron fly (risk one to make one or better; credit received at least one-fourth the number of strikes between the longs). DE (81/48) (announcing Wednesday before market open): The December 21st 135/160 is paying 4.53 with near one standard deviation break evens; the 130/135/160/165 iron condor in the same expiry pays 1.75. Non-Earnings Single Name: NFLX (69/54) still has some juice in it post-earnings. The December 21st 240/245/325/330 is paying 1.56 -- not quite one-third the width, but you're only working with 33 days until expiry. Exchange-Traded Funds: The top symbols: SLV (100/24), UNG (100/97), EEM (63/27), OIH (77/41), and XOP (77/42). Unless you've been living under a rock, UNG, OIH, and XOP "friskiness" are understandable here, with oil prices taking a header from more than $75/bbl. to a low $20 below that since the beginning of October. Conversely, a fire got lit under natty's ass due to seasonally early weather-related pressure, shooting up from a less than a 3.50 print at the start of November to 4.93 mid-month. It's eased back to 4.39 since then, but yeesh ... . Were it not natural gas, I'd be inclined to sell premium in UNG given the rank/implied metrics, but I'm patiently waiting for my standard seasonality play -- a downward put diagonal with the front month in Jan, the back month mid year. Since we're only in November with plenty of winter in front of us, I'm satisfied with waiting on more potential upside before pulling the trigger on that setup. With XOP and related products, I've been selling nondirectional premium, although I could see potentially skewing things bullishly, adding some petro underlying long delta to existing setups, or just taking an outright bullish assumption shot (e.g., /CL short puts, XOP/OIH/XLE short puts, upward call diagonals, etc.), since oil has been totally crushed here. Majors: SPY (31/21); QQQ (53/25); IWM (54/23); DIA (37/19). Temporarily, it looks like QQQ is where the broad market premium is at, followed by IWM.
NYSE:BBY
by NaughtyPines
4
Retail Rally Comes to A Screeching HaltToys R Us refuses to die. The hedge funds that own the debt of the bankrupt toy retailer decided to cancel an auction of assets and instead plan to revive the brand and even open new retail outlets. The prospects of another Toys R Us revival could become symbolic: the timing coincided with what looks like a top in retail stocks as represented by the SPDR S&P Retail ETF (XRT). XRT fell 3.3% on high trading volume to close at a 2-month low. The move confirmed the previous day’s 50DMA breakdown. The resulting reversal of XRT’s last breakout gives the index a very toppy technical pattern. While XRT is back to the consolidation pattern that preceded the breakout, a test of 200DMA support seems highly likely given the intensity of selling. XRT last closed below its 200DMA last November. A 200DMA breakdown would confirm XRT’s top. If I were still playing my 2018 retail recovery thesis, I would have just sold everything here to lock in profits. I would next resolve to wait until holiday season headlines picked up steam for deciding next sector-wide moves. For now, I went scrambling for headlines trying to assess whether fundamental events agreed with the bearish technicals. Two other events stand out. First, Amazon (AMZN) raised its minimum wage to $15/hour and lobbied Congress to raise the national minimum wage from a paltry $7.25/hour. Wall Street hates sharing profits and wage hikes shift a small amount of the loot from shareholders to workers. Moreover, wage increases translate into cost pressures and margin compression – anathema for stock prices. Second, Stitch Fix (SFIX), an online retailer which sells customized clothing, was absolutely clobbered after its earnings report completely failed to satisfy investors hopped up on high expectations. The stock closed with a 35.2% loss that is still just a 2-month low. SFIX is a surprisingly sizable component of XRT with a 1% share. The largest holding has a 2.1% share (more on that later). I have been fascinated by the SFIX story ever since I heard the CEO tell her story. Now I am even more fascinated given the current volatility and a float which is sold 24% short. Carvana (CVNA) is the largest holding in XRT with a 2.1% share. This company sells used cars online and delivers them from multi-story vending machines. CVNA dropped 5.2% on the day and broke down below its 50DMA. This 2017 IPO is on a tear and is up 185% year-to-date. CVNA traded almost down to $8 in 2017. The stock now looks like a short, but short interest is extremely high. I took particular interest in the news events surrounding what looks like a topping pattern in the making around all-time highs: a large owner dumped a significant number of shares, an important competitor made a noteworthy financial deal (I first learned about Shift 2 1/2 years ago in an intriguing talk by the CEO Minnie Ingersoll at Stanford University’s eCorner: “A Drive to Disrupt“), and an analyst upgraded CVNA to outperform right into the teeth of the selling with no effect. A complete reversal of post-earnings gains would confirm the top. Surprisingly, Best Buy (BBY) does not show up in the top 10 holdings for XRT (cut-off at 1.4% share of assets). Still, the stock’s 4.8% drop and 50DMA breakdown confirmed the weakness in the retail sector. BBY is extremely important to watch here because a test of 200DMA support is in play. BBY last tested its 200DMA in September, 2017. BBY last closed below this support in July, 2016! Finally, I checked out one of my favorite retail plays: Nordstrom (JWN). JWN sold off with the sector to close right at 50DMA support. The price is still too high for me, but I am a buyer if it manages to return to the extended consolidation period that preceded the impressive August post-earnings breakout. Now retail has joined forces with other indices like small caps and financials to add weight to the anchor loading down the stock market. AT40 (T2108), the percentage of stocks trading above 40DMAs, dropped to a 6-month low at 37.2% even as the S&P 500 (SPY) closed flat (still near all-time highs) and the volatility index, the VIX, also closed flat. Losing retailers to a fresh sell-off like the one in 2017 would make me doubt the underlying health of the consumer and the stock market as a whole given home builders have struggled for most of 2018. Stay tuned… Be careful out there! Full disclosure: long SPY calls, long UVXY puts {Look me up at Dr. Duru on StockTwits or Twitter or my blog!}
AMEX:XRTShort
by drduru
2
Stock Market’s Stop Signs Fail to Yield to A Busy Earnings WeekLast week was chock full of earnings. There was enough GOOD news to lift the market out of the doldrums, but profit-takers were instead the most active. Some individual stocks perform fantastically and will be the ones to watch going forward. They may leave the rest of the market behind as the major indices get weighed down by some big under-performers. The Market’s Stop Signs Fail to Yield to A Busy Earnings Week drduru.com $SPY $QQQ $IWM $XLF $XRT #VIX #T2108 #AT40 $AAPL $AMZN $AZO $BA $BBY $CAT $CMG $FB $FSLR $INTC $MMM $MSFT $ORLY $GLD $SLV $DXY $USD $AUDJPY #forex
SP:SPXShort
by drduru
SPY clean bounce Welcome traders!! Continuing from the break of yesterday's resistance at the 264.74 area, we can see in the 30 min chart that we've now had a clean bounce off of that same level meaning we should expect to continue seeing upward movement hopefully breaking through the upper descending triangle. On our 4 hour chart the MACD looks to be going for a bullish crossover which is looking good and some are starting to show, like BBY & AAPL, but keep in mind we still have yet to test that resistance level up top. This is an analysis of what "I" see in these charts, so take it as you wish, as always good luck and safe trading!
AMEX:SPY
by therealhybrid
THE WEEK AHEAD: M, BBY, OIH, VIXEARNINGS ANNOUNCEMENT/VOL CONTRACTION PLAYS: M announces earnings on 2/27 before market open. Preliminarily, the March 24/30 short strangle is paying .84 at the mid, which isn't very juicy. Given the size of the underlying, it may be more amenable to a short straddle or iron fly, with the March 9th 27 short straddle paying 2.95 and the 23/27/27/31 iron fly paying 2.13 with the longs camped out around the 16 delta strikes. I would shoot for 25% max profit or .74 in the case of the short straddle; .54 for the fly. BBY announces on the 1st of March before market open. The March 9th 20-delta 66.5/81 short strangle is paying 2.05 at the mid, with the defined risk variant 63.5/66.5/81/84 iron condor paying just a smidge short of one-third the width of the wings -- .92/contract. HIGH IMPLIED VOLATILITY EXCHANGE-TRADED FUNDS: The exchange-traded funds screened for percentile greater than 70% and ranked by percentile are IYR (background 20%); XLI (background 20%); FXI (background 26%); EEM (background 22%); and XLU (background 18%). Ranked by background implied: GDXJ (33%; 33rd percentile); XOP (32%; 64th percentile); OIH (32%; 80th percentile); GDX (28%; 42nd percentile); and EWZ (28%; 19th percentile). Generally speaking, I like to pull the trigger on a premium selling trade when the percentile is greater than 70% and the background implied is greater than 35%, so I would pull the trigger on an OIH setup here, even though it's slightly short of that 35% background metric. Here are a couple of possible plays: Neutral Assumption/Undefined: OIH April 20th 25 short straddle Probability of Profit: 54% Max Profit: $224/contract Max Loss: Undefined Break Evens: 22.76/27.24 Notes: Look to take profit at 25% max or .25 x 2.24 or .56/contract. Intratrade defenses: roll of untested side toward current price, delta hedging. Neutral Assumption/Defined: OIH April 20th 22/25/25/28 iron fly Probability of Profit: 44% Max Profit: $176/contract Max Loss: $122/contract Break Evens: 23.22/26.78 Notes: As with the short straddle, look to take profit at 25% max or .25 x 1.76 or .44/contract. Intratrade defenses: Delta hedging. THE VIX After this recent pop, I'm still watching the VIX and VIX futures term structure to return to its ordinary "contango look." While the structure has returned to contango if you look at the March, April, and May expiries, May is in backwardation relative to June, June in contango relative to July, July in backwardation relative to August, with the remainder of the structure in contango.
NYSE:M
by NaughtyPines
THE WEEK AHEAD: HD, CSCO, TGT, BBY, WMT, GPS, AMAT EARNINGSWe have bevvy of retail earnings announcements next week as the full season tapers off: HD announces earnings on Tuesday before market open with a background implied volatility of 23% (top quarter of 52-week range). CSCO -- Wednesday before market open with a background of 27 (near 52-week high). TGT -- Wednesday before market open, at 36 (top quarter of 52-week range). BBY -- Thursday, before market open, at 53 (near 52-week high). WMT -- Thursday, before market open, at 25 (near 52-week high). GPS -- Thursday, after market close, at 44 (above middle, but below top quarter of 52-week range). AMAT -- Thursday, after market close, at 41 (near 52-week high). I generally prefer playing earnings where the background volatility exceeds 50%, and it's in the top-quarter of its 52-week range, implying that the best candidate for an earnings contraction play would be BBY with AMAT close behind/worth watching for an increase in implied volatility running into the announcement. Broad-market exchange-traded fund-wise, there isn't much to play: the Brazilian exchange-traded fund continues to print implied volatility percentages at or above 30% (currently, 35-ish), followed by the petro exchange-traded fund, XOP (34). For non-earnings individuals, TEVA (72/upper end of its 52-week range) continues to garner my attention, along with CTL (56), which -- post-earnings -- maintains high volatility. The majors -- well, there isn't much to look at. IWM leads with a background implied of 16, which is basically tied with the QQQ's at 16. SPY comes in at a paltry 13 ... . On the volatility product front, the first /VX future trading at or above 16 is out in May (184 DTE), meaning that a <90 DTE VIX Term Structure trade isn't in the offing for me. However, the VXST/VIX ratio finished Friday's session somewhat elevated (.92), so it's worth keeping an eye out for any >1.00 pops in which to consider Contango Drift trades, particularly as we wind into a rollover with VIX spot trading at 11.29 relative to the Nov contract's 11.60 (2 DTE).
NYSE:HD
by NaughtyPines