Market ($SPY): The market has extended itself once again but has maintained its bullish trend thus far. I am cautiously bullish as we approach the golden $200 mark. I will remain short-term bullish for as long as the market is still trending above $192.
AAPL (100Aug2014 calls)- New iphone to launch in the Fall. Would like to enter pre-momo or at the start of the momentum. Options are still cheap with I.V. sitting at 0.18 as compared to a 0.15/0.39 52wk range. My entry will come after testing historical resistance near 93.6 (monthly pivot).
JPM (55Aug2014 calls)- With Fed rate hike 6-9months away, we can anticipate a move in U.S. banks. JPM is currently trading at a low forward-P/E 9.7 and is one of the U.S. banks who have recently gained approval for a divy increase. Banks are expected to show a decline in earnings/rev this 2Q but that may already have been priced in. I do not, however, intended to hold any options into earnings, as that may be another dip-buying opportunity. JPM will payout $0.40 divy on July 1st, so I do not inteded to enter until the charts reflect the change. I am looking for an entry after it tests res at 58.
HART- HART is a low-float recent ipo that could heat up quickly and extend for longtime. I will be looking for entry after it retests $10. Ideal entry will be on a pullback between 9.4/10.
Telecomms: I am always a fan of Telecomms. I am watching these names for a medium- to long-term hold. I am already long CALL with $25Sept calls at dirt cheap prices.
CALL
VZ
TMUS
Monday, June 30, 2014
Sunday, March 30, 2014
03/31/14 Weekly Watchist: Investing in 1Q14 Telecomm Growth
Market Overview: Considering the Ukraine/Russia geopolitics and the Feds commitment to completely tapering-off its economic stimulus, the markets (index: SPY) are on edge as investors fear for the worst. This has led to recent run-up in TLT (short-term interest rate index) and persistent spikes in VIX (market volalitity index) as investors buy insurance because they fear for the worst. Despite these bearish market forces, SPY has managed to hold technical support (50day EMA, $183.5) while keeping VIX range-bound, as TLT hits new highs since almost a year. For as long as SPY maintains support above 183.5 and VIX range-bound below 16, we will remain cautiously bullish and possibly hedged with TLT call options.
Telecomms expecting 24% 1Q earnings growth: Telecomms (index: IYZ) have been trading at its highest since the recession and are expecting a market-leading 24% growth in the first quarter 2014 (according to FactSet). VZ (Verizon) is responsible for a large majority of the growth this quarter. However, given that VZ is the IYZ leader (in terms of market cap), this growth will be felt throughout the industry as Telecomm stocks spike off VZ's sympathy. Therefore this weeks watchlist consists of VZ and telecomm sympathy plays.
Note: Although we are bullish Telecomms this week, we are long-term bullish VZ and others listed below that are trading a foward-P/E below 15, which is the forward-P/E of SPY. We expect an additional 10-15% growth throught 2015 for IYZ, once it clears resistance at $30/share.
VZ ($47Apr2014 call options)- Verizon is currently trading at foward-P/E of 12.5.
CALL (common stock)- MagicJack VocalTec is currently trading at foward-P/E of 10.1
NTLS (common stock)- NTELOS Holdings Corp. is currently trading at foward-P/E of 14.0
TMUS ($33Apr2014 call options)- T-Mobile is currently trading at foward-P/E of 31.0
TDS (common stock)- Telephone & Data Systems' forwards-P/E is N/A.
Hedge: We are considering hedging our position(s) with $110Apr2014 TLT call options.
Telecomms expecting 24% 1Q earnings growth: Telecomms (index: IYZ) have been trading at its highest since the recession and are expecting a market-leading 24% growth in the first quarter 2014 (according to FactSet). VZ (Verizon) is responsible for a large majority of the growth this quarter. However, given that VZ is the IYZ leader (in terms of market cap), this growth will be felt throughout the industry as Telecomm stocks spike off VZ's sympathy. Therefore this weeks watchlist consists of VZ and telecomm sympathy plays.
Note: Although we are bullish Telecomms this week, we are long-term bullish VZ and others listed below that are trading a foward-P/E below 15, which is the forward-P/E of SPY. We expect an additional 10-15% growth throught 2015 for IYZ, once it clears resistance at $30/share.
WATCHLIST
SYMBOL (stock or options?) - foward-P/E
CALL (common stock)- MagicJack VocalTec is currently trading at foward-P/E of 10.1
NTLS (common stock)- NTELOS Holdings Corp. is currently trading at foward-P/E of 14.0
TMUS ($33Apr2014 call options)- T-Mobile is currently trading at foward-P/E of 31.0
TDS (common stock)- Telephone & Data Systems' forwards-P/E is N/A.
Hedge: We are considering hedging our position(s) with $110Apr2014 TLT call options.
Monday, January 6, 2014
01/04/2014 Week Watchlist
Market: $SPY began consolidation into the new year as investors lock in profits at the start of the new year rather than at the end of 2013 to avoid paying taxes. I remain bullish on the market but with great caution because the market is due for a correction and its just a matter of time or the right catalyst to shakeout investors into selling after one of the best performing year in decades. While most of the sectors consolidated last week, the finance sector (index: XLK) remained strong. This is why we are bullish on finance stocks like JPM and FNMA long term because they are very cheap looking forward. If you are still 100% invested in the market, I'd recommend selling a good portion because at this point the risks of a 5-10% downwards market correction are too high. Always lock in profits.
P.S: When the market begins correcting, you can bet overvalued high-flying momentum stocks like NFLX and AMZN will sell-off. For this reason, we are only interested in buying and holding undervalued growth stocks like JPM, FNMA, SPCB and CLNT.
Options:
JPM - gapped down a bit after dividends but held up and continued to new highs (since the recession). We have a starter position in $60Mar2014 calls and plan to add more this week into a breakout. Our goal is to sell near 62/65 resistance zone. We have a hard stop under $58.2.
GE - sold off with the overall market/tech sector until we got stopped out for modest gains. We plan to rebuy Mar2014 call options once the tech sector (index: XLK) bottoms out. We still see short term upside to $29/30.
SCTY - The solar sector is awake once again and SCTY is setting up for breakout into new all time highs with tremendous upside to $80 in the medium term. Coincidentally, Monday morning Goldman Sachs upgraded it with an $80 price target. We are prepared to buy Feb2014 call options after it tests res at $63. Be prepared.
NFLX (short/puts) - Netflix has been overvalued for too long. Its got too much competition and faces a growth challenge. The chart is near broken so I expect this stock to correct over the next few weeks/months. We are prepared to buy $300March2014 puts.
Stocks:
SPCB - SuperCom are basically a security software company that acquired a major competitors business thru a very efficient deal that could triple revenue, thus making the stock much cheaper than it already is. I encourage you to read this recent seeking alpha article on Supercom. SPCB is currently trading at P/E 9 while the industry average P/E is 36. At P/E 20, which is broadly considered fair value, SPCB would be valued over $11/shr. However, if we look forward ahead of the acquisition, SPCB would be valued well over $20/shr. Anything is possible considering that technically there is no historical resistance once SPCB hits new 52wk highs at 6.13. We are long SPCB from avg $4.93 (currently $5.47). Our medium-term target is $8-10/share. Our stop is near 4.85 support.
FNMA- still consolidating under 3.3 as finance sector shows strength. We are prepared to buy the 3.3 breakout with upside short/medium term upside to $7/shr.
CLNT- Chinese stocks are heating up again. Clean Tech is a Chinese growth and value stock trading cheaply with P/E 2.7. This stock is valued somewhere in the $20s-30s (currently $5.80). Short-term upside to 7, medium-term upside to 11-13. Stop-loss is near 5/5.3
VNDA- still waiting for the breakout above neckline at $13.
P.S: When the market begins correcting, you can bet overvalued high-flying momentum stocks like NFLX and AMZN will sell-off. For this reason, we are only interested in buying and holding undervalued growth stocks like JPM, FNMA, SPCB and CLNT.
WATCHLIST
Options:
JPM - gapped down a bit after dividends but held up and continued to new highs (since the recession). We have a starter position in $60Mar2014 calls and plan to add more this week into a breakout. Our goal is to sell near 62/65 resistance zone. We have a hard stop under $58.2.
GE - sold off with the overall market/tech sector until we got stopped out for modest gains. We plan to rebuy Mar2014 call options once the tech sector (index: XLK) bottoms out. We still see short term upside to $29/30.
SCTY - The solar sector is awake once again and SCTY is setting up for breakout into new all time highs with tremendous upside to $80 in the medium term. Coincidentally, Monday morning Goldman Sachs upgraded it with an $80 price target. We are prepared to buy Feb2014 call options after it tests res at $63. Be prepared.
NFLX (short/puts) - Netflix has been overvalued for too long. Its got too much competition and faces a growth challenge. The chart is near broken so I expect this stock to correct over the next few weeks/months. We are prepared to buy $300March2014 puts.
Stocks:
SPCB - SuperCom are basically a security software company that acquired a major competitors business thru a very efficient deal that could triple revenue, thus making the stock much cheaper than it already is. I encourage you to read this recent seeking alpha article on Supercom. SPCB is currently trading at P/E 9 while the industry average P/E is 36. At P/E 20, which is broadly considered fair value, SPCB would be valued over $11/shr. However, if we look forward ahead of the acquisition, SPCB would be valued well over $20/shr. Anything is possible considering that technically there is no historical resistance once SPCB hits new 52wk highs at 6.13. We are long SPCB from avg $4.93 (currently $5.47). Our medium-term target is $8-10/share. Our stop is near 4.85 support.
FNMA- still consolidating under 3.3 as finance sector shows strength. We are prepared to buy the 3.3 breakout with upside short/medium term upside to $7/shr.
CLNT- Chinese stocks are heating up again. Clean Tech is a Chinese growth and value stock trading cheaply with P/E 2.7. This stock is valued somewhere in the $20s-30s (currently $5.80). Short-term upside to 7, medium-term upside to 11-13. Stop-loss is near 5/5.3
VNDA- still waiting for the breakout above neckline at $13.
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