This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
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The market always saves the best for last, and there is no better company to essentially close out the earnings seasons than Nvidia Corp. ($NVDA). The actual results could even be better than hype because according to the options market the post-earnings results move could be huge.
The long straddle options strategy using the $207.5 strike price, set to expire on November 17, are pricing in a 9 percent move. The cost to buy one put and one option is $18.58 which implies a post-market trading range of $189.00 to $226.00. A massive range for sure, one that means the market is expecting an enormous move in shares of the stock price over the next week.
Nvidia’s chart suggests shares could be set up for a pull back, it is worth noting, that my analysis on Nvidia was wrong the last time, but a few bearish signals are flashing that are worth noting. First, the stock has risen on declining level of volume. Second, the stock has been rising as the relative strength index has not, and appear to have topped out. Warnings signs are flashing.
Bottom line, the stock is set up for a massive level of volatility while the technicals are flashing warnings sign. Hold on to your hats! It is gonna be an exciting one.
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Biotech shares are showing signs that they have bottomed, but now we need to the see the the turn higher. The IBB ETF has found reasonable support around the $312 level and has butted up against an uptrend line.
Biogen shares also appear to be flashing signs of a bottom being put in place.
Celgene seems like it is on the cusp of a move higher as well, and may try to refill that gap.
Finally, my last comments on Acadia will be this. The post-result trading action today entirely and utterly caught me off guard. The results, in my opinion, did not warrant a sell-off like this. But the chart shows sign the bottom may be near.
Oil has now officially broken out and looks set to rise back towards $62; it is a positive for the energy space and the XLE.
But you should be asking yourself what does it mean for inflation. It likely means this..
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Michael Kramer and the clients of Mott Capital own shares of ACAD and CELG
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.