MomentumOptionsTrading.com Weekly Wrap for 10/27/13
1. Market Summary
2. WhiteWave Foods Company (WWAV) Could be a Wave to Ride
4. Weekly Wrap Portfolio Update
5. Week Ahead
(We apologize for the later than usual delivery tonight but we had a ton of research to do to reaffirm our price targets. To view the charts, please log into the Members Area and go to the Weekly Wrap Premium section.)
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1. Market Summary
“The zombies quickly headed for the exits last Wednesday after their “vacation” was delayed by 72 hours. They had dragged their feet to get a bill passed before America turned into a pumpkin as they took one last round of jabs at attacking each other before they agreed to kick the can down the road into January. The zombies technically did not set a new debt limit and essentially decided to “suspend” the debt limit until the first week of February. They promised to talk about a budget by mid-December but don’t expand your lung capacity waiting for that to happen.
The Dow fell 1,000 points during the 2011 squabble over the debt ceiling and this time around was no different. The Christmas rally will be important to watch this year as it will give us a goof clue ahead of January on which way the market is perceiving things. Remember, the historic “Santa Claus” rally doesn’t start until after Christmas so file this in the memory bank as it will be a good tell. For now, we will leave things there with the zombie talk as we are glad it is over for now. We hate writing about politics but it does affect the market.
For the traders that were betting on a pullback, they were burned by the deal and better-than-expected numbers from a number of heavy hitters. We covered Google’s (GOOG, $1,011.41, up $122.61) massive move (and how $1,000 could have been turned into $20,000 with call options) as well as some of the other big names and this week the floodgates open. We have profiled up to 20 earnings trades for this week and trying to pick the best 5 was hard. We will cover some of them in the Daily and Weekly but there is no way we will take all of them and further research is needed on some of them.
Apple (AAPL, $508.89, up $4.39) doesn’t report earnings until next week and shares have been under pressure for much of the year so we wanted to talk about them this week following the break above $500 again. The volatility has caused an endless debate from Wall Street to Main Street on if shares are undervalued or overvalued. We use both fundamental and technical analysis in predicting a stock’s possible future move and the chart has turned favorable for Apple in our opinion.
Shares cleared $500 for the first time since early September on Wednesday and the run has been perfectly telegraphed by the recent golden crosses. The blue line on the chart is the 50-day MA, currently at $487.62. The green line on the chart shows the 100-day MA turning up and is currently at $458.76. The red line is the 200-day MA that is showing a downtrend and is currently at $451.49.
A golden cross forms when a shorter-term moving average (MA) crosses above a longer-term moving average. This is considered a bullish sign because the shorter-term MA reflects the most recent price action relative to the longer-term MA. Obviously, the bigger the difference in MA’s the better but having 2 or 3 can be used for confirmation of a continued uptrend.
A “classic” golden cross signal is when the 50-day MA crosses above the 200-day MA and from the Apple chart below (red circle) you can see where this occurred in early September. A second golden cross has also formed as you can see where the 100-day MA has crossed over the 200-day MA.