We will be monitoring Junk Bonds (JNK) and crude oil today, as black gold settles into a range to start the week. If crude moves lower, we anticipate XLE could follow. Reference the 4-hour chart for Brent crude above.
Financials are mixed, with select banks on the IBD50 list exhibiting relative strength. By contrast, the big banks are fading at recent highs. Morgan Stanley and Goldman Sachs look the weakest by comparison.
Technology (XLK) has been very strong, so we will focus on this group this week. NVDA is the stand out among the group. Volume picked up, as price action moved back above the 9/20ema. VBP resistance tapers off above the 106.00 zone. MACD and RSI suggest higher levels are in order.
WB is printing a pattern that looks very similar to NVDA. It appears on the IBD50 list this week.We are watching this for a follow through bullish continuation candle.
NTES is exhibiting signs of interest, as volume and price action take on a bullish tone. The current pattern looks like a cup and handle, with VBP resistance overhead at Friday’s closing high. RSI suggests higher prices are in order. STO responded as well.
MOMO will likely continue on its bullish path, as volume and RSI remain elevated, signaling institutions remain interested.
NKTR Income Trade
We were considering another covered call trade on NKTR, as the stock breaks higher. Pre-market the stock is up on news, so we’ll let this settle first. The last time we took this trade, the stock was contained within a range between 11.41 lows and 13.75 (+/-) highs (re: top of VBP resistance). Friday saw buyers step in at 14.96, just above the flat 200ma. Now the news is propelling the stock higher+ $2.90 with the 20.00 (+/-) zone as possible top side for now.
To enter this trade, we were going to buy shares of NKTR stock at $15.13 (+/-) per share in multiples of 100 shares and sell 1 option contract per 100 stock shares of the 2017 21-APR 13.0 call option for $2.65. This trade will expire in 35 days and return 4.2% if the stock is assigned at expiration. Now we have to wait and look for additional trades.
The weekend video news letter goes into more detail, if you haven’t had a chance to review.
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