T2108 Update – Bullish Momentum Continues With A Wary Eye On Volatility

  • 3D Systems (DDD): A downgrade knocked DDD off its upward momentum. After DDD cracked 50DMA support, buyers regained enough force to close the stock above support. Trading volume was over 50% above the 90-day moving average. A lower close will confirm the end of the current bullish setup. Otherwise, I am sticking with the call.
  • Wynn Resorts Ltd. (WYNN): WYNN has fought off a downgrade last week to reclaim 50DMA support. I think the stock can continue with its bullish setup from here.
  • U.S. Steel (X): X is still making new marginal 52-week highs. I have not made a trade on this one.
  • Cliffs Natural Resources Inc. (CLF): The stock’s levitation has now allowed the upper-Bollinger Band (BB) to drift up and away from the stock. Fresh upside potential is opening up. I have yet to make a new trade on this one. I might buy a new high OR a dip to support (like the bottom of the current uptrend channel).
  • Joy Global (JOY): JOY made a picture-perfect bounce after a small 3-day pullback. It looks ready to run higher.

Lastly, I made a fresh trade on Freeport-McMoRan Inc. (FCX). In the past, I played the nice trading range in FCX. Last week, FCX finally broke out. I changed strategy with a hedged play: a strangle – out-of-the-money calls and puts. Wherever FCX is headed next should be a big move. Either 1) FCX will soon make a major breakout and move past its 2016 high, or 2) the current breakout will fail and FCX will quickly fall back to the bottom of the old trading range. I might grow this position depending upon general market conditions.

Freeport-McMoRan Inc. (FCX) broke out of a two-month trading range. Can the momentum continue to a new 2016 high or will the breakout fail?

Freeport-McMoRan Inc. (FCX) broke out of a two-month trading range. Can the momentum continue to a new 2016 high or will the breakout fail?

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Reference Charts (click for view of last 6 months from Stockcharts.com):
S&P 500 or SPY
U.S. Dollar Index (U.S. dollar)
EEM (iShares MSCI Emerging Markets)
VIX (volatility index)
VXX (iPath S&P 500 VIX Short-Term Futures ETN)
EWG (iShares MSCI Germany Index Fund)
CAT (Caterpillar).
IBB (iShares Nasdaq Biotechnology).

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Full disclosure: long SSO call options, long JOY call options, long WYNN call options, long calls and puts on FCX, long UVXY shares

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