March 25, 2019
Hello there! Below is your edition of this week’s newsletter. We hope you have a great trading week!
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State of the Markets
Last week markets did have a warm and fuzzy end to them. In fact they had their worst day of 2019 on Friday. The Nasdaq feel 2.5%, while the Dow Jones Industrial average, and the S & P 500 both fell nearly 2%. All bounces got quickly sold into, and there was very little opportunity to make any money to the long side. As we know, markets tend to fall much faster than they move up. There is a lot of fear currently about global economic growth. We have been seeing the signs for slowdown since late December of last year, but the markets ignored that in a major way as the majority of focus shifted to China trade talks, and interest rates. No one cared, that Germany was having its worst Q4 in 25 years, or that Chinese export numbers were getting thumped. All anyone cared about was interest rates and trade deal talks. Some people were blindsighted by Friday, which is astonishing to me. The only thing that is surprising to me is that markets have held on for as long as they have. The Nasdaq Composite is still up 15% on the year! Do not be surprised if in the coming weeks, a large portion of that gain is wiped off the board, as investors start to finally narrow in on what is most important, and that is our global economic healthy, which has been shouting for warnings signs for months. This isn’t a big scary crash situation to me, but do expect bears to have their way in coming weeks.
Notable Market News
Attorney General William Barr said that special counsel Robert Mueller’s Russia investigation did not find sufficient evidence to establish that President Donald Trump committed an obstruction of justice offense, or that the president’s campaign coordinated with Moscow’s efforts to influence the 2016 election.
- LYFT expected to IPO this week between $62 and $68.
Nasdaw Composite has its worst day of 2019 last Friday dropping 2.5%.
Fed decides to not raise rates based on poor economic data.
Global economic growth shows signs of weakening.
KAF's Stock Picks
WRITTEN BY: KAF – LEAD TRADER
Levi Strauss (LEVI) freshly IPO’d this past Thursday. Lets start off by taking a look at the range that this stock traded within in its first two days of a public company. That range is $1.32. Not too bad for a $22 dollar stock, that about 5.5% of volatility. Now lets consider the information about the IPO. We know it was heavily oversubscribed, and it opene dup $5 higher than it’s initial IPO pricing. These are signs of an over extended IPO. Additionally, when taking a closer look at IPO’s lets consider how they tend to fair. Roughly 70% of IPO’s will drop to their initial IPO price within the first year, and a large percentage of those will fall below. This isn’t the IPO market it once was, even with UBER and LYFT trying to convince investors otherwise. In conjunction with a panic selloff day on Friday, and more panic selling on our futures tonight, this likely will be an ugly couple of weeks for LEVI, and I will start a short position on a crack under $22 tomorrow. Don’t expect it to make major moves real fast, I will be look for close to $21 for my price target, potentially $20.50 if markets are really getting ugly, and a stop loss over highs of $23.32. SO nothing too crazy. Just looking for a 1:1 risk to reward ratio here on sizing of about 700 shares.
Zuora Inc (ZUO) is a cloud based software company in the billing and commerce space. They released some poor earnings on Thursday afternoon and we had 3 winning trades on it on Friday for over 1k in profits! It was a dream to trade, and I expect the dream to continue. Look for any strength to size into a decent sized short position. I’m looking for a position of roughly 500-700 shares depending on daily intraday action. This is likely a short swing for a week or so for a full move down and under ther $20 level.
Penny Stock Picks
WRITTEN BY: CQB – Penny Stock Moderator
Advaxis, Inc. (ADXS) is a Biotechnology company in the Healthcare sector. Looking at the last ten days, this stock is setting up nicely for a gap fill over the $0.50 critical resistance level up to $0.56 area, but even after that there is very little resistance above. There is no fresh news catalyst for the up-trending price action, but the stock has been denied that $0.50 critical resistance several times over the last few days, and it is primed for a breakout into that gap. I plan to day trade this over that $0.50 level for the gap fill pattern, but do not intend on swinging this!
DPW Holdings, Inc. ($DPW) is a Diversified Electronics company in the Technology sector. The previous ten days have been busy for this company, as it managed to go from highs of $1.94 to lows of $0.59 on two different news catalysts. First, on March 14th DPW announced a 1-for-20 reverse stock split, naturally starting its 10-day downtrend. As the stock was still trying to find bottom on March 18, the company released another announcement, stating it plans to spin-off its Crpyto-Mining Unit by Q2 (MT Newswire). This sent shares skyrocketing, gaining +34% the same day, as well as gaining another +25% in Friday’s trading session. As the gap fills to the upside from the stock offering, I plan to day trade this over the $0.82 critical resistance level. Since the company just did a reverse split, I am not worried about swinging this if needed!