Real Life Trading Fall Portfolio 2016: First Edition
Real Life Trading Fall Portfolio 2016: First Edition
Fall. It's a verb that can also be a noun. In this case, a noun, representing the season that I'll be enjoying here in Nashville, TN. In your part of the world it might be different. I have a lot of traders in the southern hemisphere where spring will begin for them.
However you look at it, this particular season will be an amazing opportunity to experience new things, enjoy various sensations and indulge in the bliss of earnings season, political debates, presidential elections, baseball world series, football, gorgeous weather and hot cocoa. I love the fall. I love all seasons! I just love life, live life and trade it!
Speaking of trading, let's dive into some charts like an eager Labrador dives into a fresh pile of leaves.
Every season is a new portfolio that we at Real Life Trading like to follow and share with the world, to enrich lives. We set up various trades, both long term and short term. They might be call and put trades, credit spreads, covered calls or potentially nothing, but each month you can rest assured you'll get your fair share of delicious brain food. Let's rage.
#1 Micron Technology: MU
Each Tuesday we host Tech Giant Tuesday from 5-6 pm Eastern and we cover the tech sector, what's hot, what's cold, what's moving and we look over the stocks you request. MU comes up pretty much daily because of how volatile this stock is.
Here are three charts spanning over three months on MU, so you can 'see' my thoughts in the past and how the analysis played out.
At this point, MU has had its gorgeous accumulation and break out from the $12 lows as predicted. The current trend looks very strong (almost too strong) and that's why I would be waiting for this stock to either trade sideways or have a nice dip before looking to buy.
Therefore, I don't think I'll be looking to trade it bullish or bearish yet, but mostly allow the trade to come to me and if not, get paid to be 'paytient'. It's a fun system.
In selling a put, one would need to be comfortable owning shares. This is not a get rick quick strategy and it does require a healthy sized account and years of option trading experience to master. The goal is to have MU:
Close above $15.50 by the 4th of November and the put expires worthless, ORClose below $15.50 by the 4th of November and you are 'put' the shares. How many?
Depends on how many contracts you sell. 10 contracts would mean you're willing to own 1,000 shares of MU, spending effectively $15,500 for shares. However, the put sale brings in $0.30. So, that's $300 of premium that you keep regardless if A or B happens above. This means if you are comfortable owning MU it's a win win, and I like that.
#2 LINE Corporation: LN
What the heck is LINE Corporation, you probably asked? Well, it's a social type of company…similar to FB or Snapchat. Here's a quick brief run down. 'LINE Corporation develops and provides platform for mobile messaging and communication services, content distribution, and advertising in Japan and internationally. The company offers LINE, a cross-platform messenger application that enables users to communicate through free instant messaging, and voice and video calls, as well as serves as a smart portal to its other applications and services. It also provides communication and content sales and advertising services through the LINE platform.â€
Bottom line, it's a brand new tech IPO that you've probably never heard of. The fundamentals are going to be rough and skeptical for a while and it's going to be pure sentiment that moves this stock either up or down.
I actually like newer IPO's, because it's a new company to learn about, the stock chart is undiscovered territory and price action truly is king for the first two to three years as the sellers and buyers fight it out. Therefore, the traders who specialize in candlestick analysis can really reap big rewards on stocks like this.
The market has seen myriads of new tech IPO's in recent years and this is just another one to add on the list, and it's one I'll be tracking. It's already got options too!
I'm looking for LN to do one of two things:
First, if it breaks out above $49.04, first target would be $54 with a stop at $46.65 is what I'm planning.
Secondly, if LN trades lower down into it's newly established 50 EMA, around $44.12, I would look to buy there, which could also be the retest of the double bottom neckline that formed on September 8th. One way to find out, and that's to plan the trade and trade the plan!
#3 First Majestic Silver Corp: AG
Let me introduce you to my high school sweetheart. The first stock I really ever 'traded' and the first company I ever traded for a profit.
This was a raging roller coaster of profits without people even noticing. AG formed a gorgeous accumulation pattern and then ran over 600% (yep, you read that right) from January to August when the 'bubble' finally popped. Such huge and massive growth, but this is a company that tracks very closely to silver, of course. When silver does well, this stock will do well. It has a lot of volume and trades nice and volatile-like. It has retraced 50% in just two months from its highs of $19.15. Stairs up, elevator down. At this point I'm seeing it as a discount and seeing what it has already done and what it could do from here. I'll be watching this one closely for sure. Silver in general could have one more slight pull back, but it's in an area and a zone where the metal could slowly start climbing, especially if rates begin to rise in December.
Anyway, with a close above $8.86, I'll love this stock as a bullish three to four month trade minimum, maybe even longer. We shall see!
#4 Bristol Myers Squibb: BMY
A pharmaceutical company that everyone knows about and many longer-term traders invest in. This chart is a little bit more of a zoomed out version - showing the moves that BMY has had on a weekly scale. I don't know about you, but I can look at these this chart and see some eerie similarities to the 1998-2001 moves and the moves from 2015 to now on BMY.
Am I predicting or inferring a giant 2008 'crash like' move is coming on BMY? No, but I am saying we can look at the past data and see what it 'did' and then begin to plan toward the future accordingly. My plan on BMY at this point? BMY likely trades up back into the $60 price range in the next two to three weeks, retesting the old support as new resistance (like it did the week of March 20th 2000). Then, potentially trade lower into $48 where some great short term and long term buying opportunities could present themselves.
BMY has had over a $20 sell off in approximately four months. You can rest assured that some traders will see this as a 'great discount' price to snag up some shares on BMY.
Below is my shorter-term plan and perspective. Of course, I don't know for sure what's going to transpire on BMY, but my goal is simply creating an easy plan and then following it if the market decides to do what I anticipate. Earnings is coming up soon on BMY, which is always a fun question mark in the life of a pharm company, even one as stable as BMY.
#5 Apple Inc: AAPL
Feel free to dampen your torches and put your pitchforks down. I saved it until the end, but here's your glorious AAPL analysis. I've decided to track this beast of a company in each portfolio edition we create. I mean, why not? It's often viewed as one of the most influential companies in the world and with the iPhone7 already creating quite the stir, it doesn't appear AAPL is going to lose its delicious taste on the pallet of investors, just yet.
Thanks to AAPL, in recent moves after its July earnings gap, I (along with many of my friends, students and Real Life Traders) garnered one of the most profitable trades of my career, mostly because I had been waiting for such a gap and planning it's exact move for over a year. It finally did what I wanted it to do, and I don't think it's done yet.
Some traders are in the January $120 calls with me already. Many other traders who have shares also have the $120 covered call on AAPL expiring just before earnings. What's interesting is right now AAPL has posted two perfect tweezer bottoms on the daily charts on 9/23, 9/26 and 9/29, 9/30. I find that really interesting. If those lows aren't broken, I don't see any technical reason (nor fundamental reason) why AAPL couldn't at least slowly climb into it's previous all time high area of $130 over these next few weeks, especially if AAPL has great earnings coming into the holiday season.
Right now, those $120 Oct covered calls could be bought back for $0.12. I'll probably consider that pretty hard into next week, just in case AAPL does pop hard, no reason to limit my upside, since those calls could be bought back for less than they were sold, realizing a gain.
Well my friends, thank you for being Real Life Traders and truly, thank you for all of your support! We are achieving one of our goals by totally revolutionizing the stock market education company and it's all thanks to YOU and your support.
I appreciate you reading this article. Feel free to share with anyone who would be interested. It's free for all! I'll see you next month for the next update! Until then, remember, Love Life, Live Life and Trade It! YOU ROCK!
Jerremy Alexander Newsome ~ CEO and guy with the smoothest chest at Real Life Trading.