Quick Takes Pro Market Technician Michael Kahn Analyzes the S&P 500:
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SPX was trading at 2,036.53 at the time of analysis, up 0.78 on the day. Last week we were watching the rounded-top pattern that’s emerged as well as the resistance level just above 2040 as they both appeared to be in danger of breaking to the upside. SPX has since pulled back in the last couple of days and Michael believes that break-out, while still possible, likely will not occur. He’s quick to point out the MACD crossover as well as a weakening in oil may be indicators that the rally has hit the end of the road. Additionally, Michael also points that this could be the calm before the storm with the jobs report on the horizon as we’ve seen RSI coming back down a bit and NYSE volume still downtrending. Michael closes by pointing that while there’s still not a definitive break-down, SPX could always break-out to the upside.
Michael Kahn’s Chart of the Day: Yahoo! Inc. (YHOO):
Yahoo! Inc. was trading around the $35.85 level during the time of analysis, above its 50-day moving average of $31.19. Michael begins his analysis by pointing out that YHOO has broken out of a double bottom formation we saw over the last 6 months and believes resistance now exists just below $36. He thinks YHOO should be able to break above that resistance level based on several bullish indicators. On Bounce Volume (OBV) has been accelerating as well as seeing higher highs. The current price is barely above YHOO’s Nov/Dec ‘15 highs while OBV is clearly above it and heading back into the territory we saw at the end of ‘14. Money has been flowing into the stock, the 200-day moving average has broken out, RSI momentum is strong, and relative performance is finally starting to outperform. All-in-all, Michael thinks the breakout is happening now and should the trend continue believes YHOO could climb as high as $44.50.
TradeKing “Options Guy” Brian Overby Analyzes Yahoo! Inc.’s Volatility & Dividends:
Yahoo! Inc.’s 30-day Implied Volatility (IV) is on the high end of the 52 week range with recent news about soliciting potential suitors for a buyout of the company playing a role.
Yahoo! Inc. does not pay a dividend and its next earnings announcement is anticipated to be on 04/19/16 after the close of the market.
Brian Overby Shares YHOO Paper-Trading Strategies:
Brian’s first paper trade was a Short Put Spread, a neutral to bullish strategy that allows you to bring in a credit. His second paper trade is an in-the-money Long Call a slightly more aggressive bullish play, because the stock must increase for this strategy to be profitable.
Brian’s First Paper Trade - Short Put Spread
- Buy 1 Apr 15th 2016 YHOO 32 Put- Sell 1 Apr 15th 2016 YHOO 34.50 Put
- 17 days to expiration
- Net Bid 0.43, Mid 0.45, Ask 0.46 for the strategy
- Net credit is $0.45 if we get it at the mid-price, though note this is not always possible
- Maximum potential loss: $2.05
- Maximum potential gain: $0.45
- Total commission to enter this trade at TradeKing is $6.25
Brian’s Second Paper Trade - Long Call
- Buy 1 Apr 15th 2016 YHOO 34 Call
- 17 days to expiration
- Net Bid 2.41, Mid 2.43, Ask 2.44 for the strategy
- Net debit is $2.43 if we get it at the mid-price, though note this is not always possible
- Maximum potential loss: $2.43
- Maximum potential gain is unlimited in theory.
- Total commission to enter this trade at TradeKing is $5.60
Important notes: Option prices are given as a per-contract amount. Multiply loss and gain figures by 100 shares and by the number of contracts traded to determine the amount of the full potential loss or full potential gain. No additional calculations are needed to determine commission costs.
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