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Unusual Options Activity In Bed, Bath and Beyond – Part 2

July 31, 2019 Published by

Five months ago, I wrote,

Unusual Options Activity In Bed, Bath and Beyond

After the earnings announcement in January, I was itching to short Bed, Bath and Beyond through put options, but I decided to wait in case there was more upside in the price. However, yesterday, I noticed some bearish unusual option activity. The Smart Money bought over 30,000 May $14 strike put options.

What I also like is the position already established in the $12.5 strike put options as well. Lastly, what I like about the duration is the May options won’t expire before Bed, Bath and Beyond announces their next earnings in April. However, if the Smart Money is going to be right, price must breach the weekly demand at $14.50.

Needless to say, the Smart Money got this one right as well as price breached the weekly demand at $14.50 before the May put options expired.

The Smart Money is at it again. Yesterday I noticed the Smart Money bought over 10,000 put options expiring on September 20th.

Based on the previous measured move, the more recent leg down has ended. However, never bet against the Smart Money as they are typically right most of the time. The become profitable at or below $7.70. Estimated profit is 3X-4X based on the at the money puts option premium.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Can Under Armour Return To The Glory Days??? – Part 2

July 31, 2019 Published by

I wrote about Under Armour three months ago,

Can Under Armour Return To The Glory Days???

Under Armour (NYSE: UAA) used to be the IT company on Wall Street with years of sales growth great than 20%, but things went left in 2017 when sales started slowing down. The end result was company struggled to manage inventory and saw margins decline when it had to sell surplus product at heavy discounts.

That’s when Under Armour put together turn around strategy which focused on inventory control and implementing a whole new strategy for product development.

Price is clearly in an uptrend based on price making higher lows. However, based on the immediate levels in play, the weekly zones, the turnaround story might be short lived.

Under Armour reported second-quarter results on Tuesday that didn’t quite meet Wall Street expectations.  Although they the company maintained their forecast for the full year and international sales grew in the low double digits, revenue in North America grew only 1.5%.  Needless to say the stock price sold off on the news, just $0.44 away from the bottom of the weekly supply at $26.

The company attributed the lackluster results were due to softer-than-expected demand in its direct-to-consumer channel, meaning lower traffic in physical stores and lower conversion rates online. Since price is in the middle of both weekly zones, the one of the better plays right now would be to put on a iron condor, if you can get the right amount of premium. However, because of the volatility collapse after earnings, you may have to go out at least three months to find the right amount of premium.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

How One Guy CRUSHED IT Trading Beyond Meat

July 30, 2019 Published by

Active trading is more than just reading charts.   Sentiment, news announcements and sometimes just simple logic can all play a part in making a trade, especially one that offers a big move.

That’s what Guy Gentile did trading Beyond Meat (BYND)

How One Guy Crushed It Trading Beyond Meat

Beyond meat is a meatless food company (think burgers, etc.).   They had an initial public offering back in late May and the stock had basically skyrocketed since.

The hype around the company and stock was a big part of that.  Kind of like anything “new” that gets the “this is the next big thing to boom” vibe throughout the masses.

Granted meatless food products isn’t new, but they have a burger that is apparently very good and used that fact to expand like crazy and then raise a ton of money to fund it.

Either way there were plenty of signs, that atleast in the near-term the stock was far ahead of itself.

Higher Valuation Than JetBlue and Coors?

As shared in @rollandthomas post has beyond meat seen its best days the value of beyond meat had blown past some rather larger companies that do way more business such as beer maker coors and airline operator jetblue.

I’m sure the meatless burger is good, but can they sell enough to generate more revenue than the two companies above?

The chart also gives us a nice indication that things may be a bit ahead of themselves…..

There is always a Catalyst

As you can see the stock ripped higher into earnings and gave us a nice doji candle meaning the buyers were not fully in control anymore.

Now it was just a matter of what happened at earnings.  Here is the thing though, the hype around the stock was so high that even an earning beat might mean a sell off.   Buy the rumor sell the news is a mantra for a reason.

Shorting with Leverage and Safety to Crush It

Mr. Gentile made a big play with the use of options (which is good cus it establishes your risk up front) by buying weekly put options heading into the earnings announcement.

If the stock goes down he has the right to buy the stock at those lower prices or he can just sell the put option for the higher valuation it has at that point.

With the stock trading around 230 on Friday he bought 230 strike prices down to the 215’s in 5 point increments, thousands of them.  If he was right he gets paid.  If he was wrong he loses only what he spent no more.

Well, he was right and the stock is down 30 plus point from Friday’s close.  Just booking the profits by closing out those put options is a homerun.

However, he leveled up (and did take on my risk) by selling a bunch of the 220 calls that expire this week.  Basically if the price of BYND closed below 220 this friday he will also keep all the premium collected from selling those calls.

Conviction Meets Size

There are times to make regular trades and times to load up.  He saw this as a time to load the truck up and get paid.  You won’t always be right, but to make real money actively investing you need to take the occasional big swing when all the signs line up.

Just be sure that if you are wrong it doesn’t knock you out of the game.  Never put yourself in a position where one trade can blow out your whole account.  Always live to trade another day.

You can read a detailed article about the trade including an interview with Mr. Gentile here:

Guy Gentile Made $4M In Beyond Meat, Sees 50% Downside By December

 

Microsoft’s $1bn OpenAI partnership underpinned with closer Azure ties

July 30, 2019 Published by

Microsoft’s
$1bn OpenAI partnership underpinned with closer Azure ties (ITPro)

  • Not-for-profit organisation OpenAI (co-founded by Elon Musk) and Microsoft have formed a $1bn strategic partnership focused on integrating Microsoft’s Azure cloud platform with its on-going work.
  • The two firms will jointly develop Azure AI supercomputing technologies, but also focus on creating artificial general intelligence (AGI).
  • OpenAI will port its existing services to Microsoft’s cloud and use Microsoft as preferred partner for marketing commercialised AI technologies.

Analysis and Comments

  • The main difference between AI and AGI is that AGI is not developed for a specific application and therefore more multi-functional in nature. So, while an AI can be incredibly good at one task (e.g. screening scans for cancer), the aim for AGIs is to have the ability to perform any task that a human can.
  • Some experts have predicted the development of an AGI to be achieved as early as 2030, however, most lean towards later dates, such as the year 2060 or even 2099.
  • Regardless, OpenAI has already achieved several impressive milestones in the AI world, for example, by setting new benchmarks for robot dexterity, with one of its video gaming bots recently beating human champions at Dota 2, while one of its text-generation systems can write anything from fake news articles to convincing song lyrics and short stories.

Microsoft’s Stock Price

UPS Was Downgraded Because…

July 30, 2019 Published by

Amazon Air includes 50 planes and several new regional hubs, including a $1.5 billion hub opening in northern Kentucky in 2021.   Amazon’s play into logistics and shipping is so they can lower their shipping cost and control their destiny of getting that package to your house…the so called “last mile.”  Amazon even had the nerve to in their 2018 annual financial filing to list “transportation and logistics services” as competitors for the first time.  However, according to UPS Amazon is years away from this happening.

UPS Inc. (NYSE: UPS) reported on Wednesday, July 24 that next-day air volumes in its second quarter surged by 30 percent over the year-earlier period, a pace of year-on-year gains that no one can ever recall. The numbers were likely skewed by volumes from e-tailer Amazon.com, Inc. (NASDAQ: AMZN) which migrated to UPS after FedEx Corp. (NYSE: FDX) said in early June that it wouldn’t renew its U.S. air services contract with Amazon.

Still, coming on the heels of UPS reporting an 8 percent year-on-year increase in the first quarter, Wednesday’s results indicate that after 20 years in the desert, next-day air has found a trend – namely the push toward one-day delivery spearheaded by Amazon’s move to compress delivery commitments for users of its “Prime” service – it can sink its teeth into.

Source

However, UPS was downgraded by Stifel’s today with a $118 target price.  Stifel stated that investors may want to consider waiting for a better opportunity to buy the “large, improving cash flow machine” of a company. Was the downgrade, random or planned? The downgrade occurred right when price came into daily and monthly supply, so the downgrade wasn’t random….this is just how Wall Street works.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Are All Semiconductor Companies On Fire???

July 30, 2019 Published by

The Semiconductors have been on fire as of late.  Taiwan Semiconductor Manufacturing Company (TSM) is the world’s largest manufacturer of semiconductors beat analyst estimates for sales for this past quarter and signaled a rebound in the chip sector.  Memory chipmaker Micron Technology (MU) reported better-than-expected earnings and say it expects demand to recover in the second half.

But are all Semiconductors on fire.  Off the top of my head, I would say no and suggest stick to the name brand semis.  However, a fellow mate wanted me to look at three semis: NVIDIA Corporation (NVDA) and Himax Technologies, Inc. (HIMX).

NVIDIA Corporation (NVDA)

Nvidia needs no introduction, but just to remind you, not only is Nvidia the leader in gaming, but also the leader in supplying chips needed for artificial intelligence and high performance computing the data center arena and driverless vehicle market.  NVidia was once up over 300%. However, NVidia sold off with the Markets from its all-time high of $289.39 per share back in October.  Nevertheless, the stock is up over 20% YTD.

The bullish investing thesis on Nvidia (NASDAQ:NVDA), the current leader in GPUs, is pretty clear. GPUs work better than CPUs for artificial intelligence applications and as a result, the chip maker — and NVDA stock — seem well positioned in a market with what is essentially huge growth potential.

Source

If price is going to get to $200, it must get through this band of support / resistance.

Himax Technologies, Inc. (HIMX)

Himax fabless semiconductor company, provides display imaging processing technologies in China, Taiwan, the Philippines, Korea, Japan, Europe, the United States, and internationally.  The company creates semiconductors for touch screen displays, microdisplays like smart glasses and VR goggles, images sensors for cameras, and more. However, its down over 60% the last several years and was down 61% in 2018.  But as some of the new technologies continue to develop, Himax products may soon be more in demand.

First and foremost, its CMOS image sensor business is a promising one. As the world looks for better ways to secure and protect arenas, airports, train stations, and more, Himax may be working on the solution.  In fact, the company is working on a machine-vision sensor product line with Emza at the moment. Essentially, machine vision gives an automated way to detect threats in these areas, and considering the market at the moment, demand for its WiseEye AIoT intelligent vision solution could see momentum. There’s also promise in the LCoS business, which is being used in Google’s AR device. While the device from Google may not generate significant revenue for a few years, the product is slated to be met with high demand and gives the company the ability to boost margins in the long run. Finally, the company’s 3D sensing arm could see strong demand as smartphone manufacturers look to include the latest and greatest technologies in their upcoming product launches.

Source

Right now price is at a major monthly support/resistance line at $3.25.  If this level doesn’t hold, the chart suggest price will head down to the monthly demand at $1.40 where is would be selling at a major discount.  Even if the $3.25 level holds, the next test would be the $5.15 level. I personally would think it would be a buy above $5.15 and a bigger buy at $1.40.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Mohawk Industries Inc. Just Got Scalped

July 29, 2019 Published by

Mohawk Industries, not a household name, but Mohawk Industries is a leading global flooring manufacturer for remodeling and new constructions of residential and commercial markets. From carpet, rugs, ceramic tile, laminate, wood, stone and vinyl flooring, Mohawk supplies it. Its core brands include: American Olean, Daltile, Durkan, Karastan, Marazzi, Mohawk, Pergo, Unilin, Quick-Step and IVC.

Mohawk Industries Inc. reported their second-quarter earnings on Friday.  They beat profit expectations, but missed on revenue.  In addition, forecasted a dismal third quarter.  The news was enough to send the stock down double digits making them the biggest decliner listed on the NYSE.

Mohawk CEO Jeffrey S. Lorberbaum said in a statement that “most markets we operate in remain soft, with pressure on volume and pricing, and we anticipate the environment to remain difficult.”

Lorberbaum said Mohawk is taking action to address the uncertain business environment, with plans to streamline operations, consolidate facilities, and take out higher-cost assets. “We are reducing overhead structures and controlling investments,” he said. “We are improving our administrative costs while investing in sales to support new products and enter new geographies.”

Source

Given the recent news on the state at Mohawk Industries, the chart suggest price is going to retest the weekly demand at $105.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Align Technology Just Got Misaligned

July 28, 2019 Published by

Align Technology, Inc. designs, manufactures, and markets a system of clear aligner therapy, intraoral scanners, and computer-aided design and computer-aided manufacturing (CAD/CAM) digital services. Align Technology is famous for making the Invisalign.

Nine months ago, the stock crashed 25% due to lower average selling prices for the Invisalign clear aligners as a result of the company running promotional programs during the third quarter that included discounts for its clear aligners and product mix changes. The CEO said the promotional programs are temporary, so the current issue seems to be temporary. Nevertheless the stock fell from all-time highs.

This past week, Align Technology announced their second quarter earnings. Despite strong growth in Europe and Brazil, the stock fell big time again.

On top of reporting an earnings miss in the quarter, Align shipped 377,100 of its core Invisalign cases which fell 5,800 units short of expectations. Hogan told CNBC’s Jim Cramer Thursday much of the weakness can be attributed to China.

China is Invisalign’s second largest market and the company hoped to see 70% growth in the second quarter, the CEO told Cramer. But Thursday’s report showed just 20%-30% growth and the weakness is not due to any competitive or operational issues.

“It’s just basically a consumer backlash right now, we feel, from a standpoint of making decisions on going ahead with aligners or not,” Hogan said.

Source

The chart suggests there is more downside risk in the stock, at least to the weekly demand at $166.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

BP sees electric cars charging 100% in 5 mins by 2021

July 28, 2019 Published by

BP sees electric cars charging 100% in 5 mins
by 2021 (BNEF)

  • As the oil major BP is expanding its footprint in EV charging, the company has stated it is focusing on reducing charging times, “…to have a battery in a car by 2021 that can be charged completely in five minutes – for a lot more than 100 kilometers”.
  • After its acquisition of BP Chargemaster for US$170m, BP is now in the process of installing ultra-fast EV chargers at service station in China, Germany, and the UK.
  • BP is also investing in biofuel development, as it considers the technology to be “the best way of decarbonizing long-distance jet transport”.

Analysis and Comments

  • This level of super fast charging is the holy grail of EVs. As cost comes down, and as the charging network grows, the last big barrier to overcome is the inconvenience of the time it takes to charge.
  • This shift, if achieved, could open up the EV market to those city dwellers who don’t have off street parking (so no easy home charging option).
  • To be clear, the BP target is just that; a target. The article claims, that the technology from a BP investment in an Israeli company called StoreDot already allows ultra high speed charging of mobile phones but the EV version seems to be work in progress.
  • The technology (FlashBatteries) seems to be a combination of the use of organic compounds in the cathode (plus Silicon?) and some form of capacitor technology (those of you with good memories will recall that Tesla recently purchased Maxwell Technologies – a global leader in ultra and super capacitors).  
  • Normally, I would be sceptical about such claims – the “we have found a way of producing super batteries” story appears on a regular basis in the tradepress. But with BP money behind them, perhaps this approach has a future.

The International 2019 raises largest prize pool in esports history

July 27, 2019 Published by

The
International 2019 raises largest prize pool in esports history (Esports
Insider)

  • Valve’s ‘The International 2019’ (TI19 – the world championship for its game Dota 2) has officially raised the largest single-event prize pool in esports history.
  • Currently, the total prize pool amounts to $30.4m, thereby surpassing the previously highest single-event prize pool of $30m (provided by Epic Games for its Fortnite Word Cup).
  • The tournament will be held in China for the first time in 2019, hosted by the Mercedes-Benz Arena in Shanghai from August 15th-25th.

Analysis and Comments

  • This is a significant development for a number of reasons:
  1. Dota’s ‘The International’ prize pool is almost entirely crowdfunded via an in-game sale of a so-called ‘Battle Pass’,
  2. only 25% of the in-game sales actually go towards the prize pool,
  3. there are still more than 30 days left before cowdfunding stops, and
  4. since the inception of crowdfunding the TI prize pool, the event has consistently broken its own record every year.
  • In summary, this is an all-time high in prize pool money for any esports event, showcasing both strong and growing support from the gaming community as well as from developers themselves: Last year, Epic Games announced it would support its Fortnite esports scene by providing a total of $100m for the 2018-2019 season, with the game’s World Cup featuring a $30m prize pool. This is the most any publisher has ever committed.
  • Esports serve a number of purposes, the main being extending the life of a game by encouraging and supporting an active gaming community. This is more important now than ever, as developers/publishers are moving away from the one-time up-front payment model towards in-game monetisation via downloadable content (DLCs) over the life of the game.
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