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Puts on/Short XOM Into EarningsChart scale is normal and candles are three day XOM has been in a massive triangle formation pattern for years now and just this week it looked like it was about to break out to the upside, before it ultimately failed and the market rejected the breakout. XOM has been one of the weaker stocks in the energy sector and with higher interest rates, falling oil prices and rising steel costs, the energy sector has three major headwinds against it for the short term at least. My inclination is to buy some at the money puts expiring the week earnings are released. It is possible but I doubt XOM will go down all the way to the lower bound trendline of the triangle before earnings, so the day before earnings are released you can either close the trade, roll it down (and out) or turn it into a put spread by selling a downside put to take advantage of the heightened implied volatility, depending on your convictions on how XOM will react to the earnings release of course.
NYSE:XOMShort
by johnthe5
Netflix's epic run is over: SHORTWhenever an asset grows at an exponential rate, that is a red flag that a major correction is imminent. Netflix has seen unbelievable growth (along with the other FAANG's) in the past year, and signs are now showing that correction time has begun. Last week, Netflix reported earnings and user expansion slightly lower than the sky high expectations 'analysts' had created for their quarterly report, and the stock fell over 14%. That is a very bad sign. Yes, it recovered extremely strong the next trading day, but fell back to the original 14% decline in the days following. The chart also shows signs that a correction is in store. Bearish divergence, even before the earnings report, showed weakening strength as the RSI fell and the price double topped around the $420 region. MACD has crossed over issuing a 'sell' signal, and is extremely high, increasing the possibility for a big tumble. This is a weekly chart of Netflix, which gives the broader outlook for the coming months. There is a possibility Netflix rallies back towards the $400 region in the short term, but I highly doubt it will make a new high in the coming weeks. Exponential rallies always end poorly, as they show growth is unsustainable at that rate.
NASDAQ:NFLXShort
by pstowe
5
Ebay: Another company Amazon will put out of businessIt is no secret that Amazon has taken the world by storm in the past few years as its market cap nears the unbelievable 1 trillion mark. Amazon now provides a service for nearly every demand you can think of. Food, retail products, shipping, a place to sell your goods/services, cloud services, etc. In the next few years, Amazon will probably increase its user base and put smaller companies out of business, such as Blue Apron, Barnes and Noble and Ebay. Ebay is a great fundamental short. In the next few years, their annual revenue will decrease as they begin to lose money, inevitably going bankrupt due to Amazon's dominance. Technically, the chart tells the same story. Ebay recently announced terrible earnings, causing the stock to gap down hard. It has now fallen below all significant moving averages. The 50 day moving average (yellow line) also crossed below the 200 day moving average (blue line), a very bearish sign known as a death cross. Due to the drastic recent decline, Ebay could be in for a short term bounce, but will continue to fall in the near and long term. I recently picked up Ebay puts with a break even price of $30 that expire January 18th. I would be astonished if they are not deep in the money by that time.
NASDAQ:EBAYShort
by pstowe
BAC SHORTBAC (and the rest of the banking industry) has a rough few months ahead. The major institution has seen solid gains over the past year and is about to relinquish them all. The major indication this downtrend is about to pick up steam is seen as the 50 day moving average is ready to cross below the 200 day moving average, a major bearish sign known as the death cross. Price on the weekly candle has managed to close significantly below this intersection point, a sign that a significant decline could come sooner than later as there is very little support below the current price. Seen on the chart above, RSI is also headed south with no sign of retracement anytime soon. Money Flow is in a steep downtrend as well. I anticipate BAC seeing at least a 20% decline in the coming months. The last time BAC had a similar set up with the 50 day moving average crossing over the 200 day moving average, the stock fell 33% in 6 weeks. I have picked up November and December puts for BAC (and JPM because the chart and my prediction is basically the same).
NYSE:BACShort
by pstowe
The most logical short in the stock market: TAOEarlier this month, my friend Harrison Schwartz wrote an eye opening article exposing the disaster that is in store for Chinese Real Estate investors (seekingalpha.com). The article analyzes the unthinkable situation China is in, and what is most likely going to happen. After reading it, my first thought was how can I make money off of this inevitable crash? That brought me to TAO, an ETF that tracks Chinese Real Estate. Fundamentally, this ETF could drop 80% over the next year or two. Technically, the signs are there as well. It is the most logical trade I have ever made. Looking at the chart, there is a clear head and shoulders pattern that has formed over the past 10 months. A death cross has recently occurred, marked by the 50 day moving average crossing below the 200 day moving average, a very bearish signal. There has been a recent bounce after bullish divergence on the RSI which could lead more short term gains. However, if TAO reaches the low $29's, it will most likely get stopped out by resistance in the 200 day moving average and resume its plummet, where I will be looking to enter a highly leveraged short position. Lastly, the weekly chart for TAO confirms the long term bear trend that it has entered, as RSI is pointing down hard, validating the recent bull trap.
TShort
by pstowe
5
Netflix (NFLX) - Bearish Earnings Options Action TradeOn Friday's Options Action, the crew analyzed the performance of Netflix (NFLX) stock. NFLX has recently broken out to the upside of a 10 year ascending wedge formation, which is extremely bullish. That bullish trend has however turned parabolic, which suggests that there are greater risks to the downside and primed for a possible correction. Coupled with a double top formation and earnings this week, the stock would need a signifcant beat to continue it's bullish trend. Expecting NFLX to possibly pull back on earnings, Michael Khouw suggests buying an Aug 350/370/395 Put Butterfly for a $5.00 Debit. As of Friday's close, this spread is trading at $5.00. We've structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. View this OptionsPlay on AXP - app.optionsplay.com Cost: $500 Max Reward: $2,000 Max Risk: $500 POP: 26.45% B/E: $350.00, $390.00, Days to Expiry: 33
NASDAQ:NFLXShort
by OptionsPlay
IWM - Russell 2000Sticking to adding some short delta here until we are able to start breaking out more... -1 Aug17 170/174 call spread, with a financed $162 put - overall $.10 cr. The trade has unlimited profits to the downside, in theory, but very little chance in reality. I have set a stop loss at $171, to equal around a $100/contract loss. I will probably look to manage this trade if we get a quick move to $200-300 profit, or until I don't see the same bearish-neutral bias represented. Luckily for this play, time is on my side since I received a credit.
AMEX:IWMShort
by Benji