Buy These Stocks Before They Spring Higher
Money-Doubling Options Trades From Earnings Hits & Misses
The number of stocks that pulled back to their 50-day moving average was on the rise early this week, attracting our attention as potential “technical bounce” candidates. While support from a key moving average is important, it can be improved upon by incorporating some options data into the approach. Our historical analysis has shown that stocks tend to find support when they trade in close proximity to large amounts of put open interest. This support is often attributed to the mechanics involved with the puts (hedging) and the sentiment that is conveyed by the put activity at that price.
The model that results from combining these approaches uncovers companies that are trading close to their respective 50-day moving averages while being in close range of large put open interest. The outcome is a list of stocks that are ready to bounce back and likely take the lead the next rally.
1. Aruba Networks (ARUN)
Money-Doubling Options Trades From Earnings Hits & Misses
These days it seems all you have to do is say “cloud” and Aruba Networks, Inc. (NASDAQ: ARUN) goes up. Seriously, this networking company has been lighting it up for the past year, going from $8 to its current $21 as cloud computing gains momentum.
Look at the stock and its 50-day trendline and you’ll see why this trade makes sense today. We’re looking for the stock to move to $24 over the next few weeks, which is why we recommended a call option on this stock to our Winning Edge subscribers.
2. Nike (NKE)
Money-Doubling Options Trades From Earnings Hits & Misses
There was a great article last week that represented Nike, Inc. (NYSE: NKE) as the Tiffany & Co. (NYSE: TIF) of developing countries.
The athletic apparel company continues to grow , and the stock and looks to have support ready to kick in at the $80 mark. Watch for a move to $85.
3. Starwood Hotels & Resorts (HOT)
Money-Doubling Options Trades From Earnings Hits & Misses
Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT) has seen some choppy trading after a great earnings report, but the stock remains in a strong technical trend.
HOT is really pressing on its 50-day right now, but a successful test of this trendline will catapult it back toward $60. With large put open interest at the $50 and $55 levels, we like the intermediate-term odds of this happening.
4. PPG Industries (PPG)
Money-Doubling Options Trades From Earnings Hits & Misses
After breaking through the $70 level, PPG Industries, Inc. (NYSE: PPG) has been on a market-beating pace.
The recent selling pressure knocked this stock from $80 to $75. Our model is indicating that it will respond to support at this price and resume its upward trend to $80 again.
5. Market Vectors Agriculture ETF (MOO)
Money-Doubling Options Trades From Earnings Hits & Misses
Commodities took a hit across the board over the past week. Everything from gold to grain saw massive selling as speculative traders took profits. That doesn’t mean the run is over though.
The Market Vectors Agribusiness ETF (NYSE: MOO) represents the agriculture business by holding companies like Deere & Co. (NYSE: DE), Monsanto Co. (NYSE: MON) and Potash Corp. of Saskatchewan, Inc. (NYSE: POT). These shares are headed to $52 again very soon.
Money-Doubling Options Trades From Earnings Hits & Misses — Learn how to cut through the rumor and manipulation surrounding corporate earnings announcements and bank money-doubling option trades all year long. Download our FREE trading guide here.
