I have two stocks here that require attention right at market open. They are both coiled springs and we can only get in them if they did not yet blow and if there has been no big movement between today's close and tomorrows open.
The last coiled spring we did went huge. Hopefully we get this kind of price action. Another thing that is in our favor is that we are going to be firing with the Novembers with this one...it should add to more volatility and gains. So lets get to it.
First, lets take a look at BRKS. This company has its fingers in everything to help companies from automated line technology to on site aid and repair: from semiconductor chips to pharmaceutical companies. What do the analysts say about it for this quarter and the upcoming earnings? Take a look below:
Note that for the last 3 out of 4 quarters there have been upside earnings surprises. This will have people buying before earnings and upward pressure. Now look at the growth est for this quarter. Minus 53.80 in the red. That will have selling pressure. Lets take a look at the Technical Mechanics for the stock:
Another Coiled Spring. This coiled spring could blow to the upside or the downside. All I know is that this technical pattern is like a snake coiled up into itself as potential energy waiting to explode. On one hand, there could be a big upside surprise due to the last 3 out of four quarters having an upside surprise, with one of the quarters a big upside surprise. On the other hand, there could be a downward surprise with that growth estimate being in the red way below the industry or sector benchmark. So in this case, this would be a situation where we once again do a straddle, we purchase a call and a put at the same time. Hold on. Got one more coiled spring...
VLCCF. This company specializes in the seaborne transporatation of dry bulk cargo. Once again, we turn to the analysts expectation:
While there have been more earnings surprises to the negative, there is one thing that is giving people pause: Look at next years crazy over one thousand percent growth. People are wondering if that big growth next year is going to rub off this year, more specifially, perhaps this quarter. And this stock is also coiling up into a coiled spring. And looking at the chart below, there is one more thing that I like about it:
I like that the way the chart is run with the prices that the movement is more multi whole numbers...This means as the pricing on the y axis is pretty liberally quickly run because of the volatility of the price action, there is the potential to having a pretty big option movement, especially being closer to Nov options expiration.
So: We need to watch both of these stocks at open. If there is no gap up or gap down at open for one or both of these, we are going to jump in with a straddle, i.e. we are going to buy both a call and a put as near to at the money as possible.
If this goes down, it will happen at approx 8:45 Chicago central time, so check back then. In case you can't get to my site and you are just checking the market on your phone, if both of these stocks open about the price they closed yesterday, get in with straddles at the money for November expiration.
More in the morning,
Mark
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