OA JR. GETS A LESSON IN STOCK TRADING

My son started a Stock Market challenge today at his Middle School. Last night we bonded over discussions about “finding vulnerable short sellers in order to insert their balls into a vise” as well as “finding out what all the idiots around you are doing, then betting against them” and also my preference for “Chinese Burritos” when picking out sound companies to invest in.

He told me that his teacher was a self proclaimed master at financial markets. His rule sheet clearly illustrated this fact. Here’s his teacher’s tips to trade:

Trade What You Know – Since most know very little, this is a terrible starting point. He’d be knee deep in Nike, Sony and Doritos.

Tools to Live By: Apply a fast stochastic to your stock chart and look to buy under 20 and sell above 80. – Sounds legit.

He stated many times to look for high beta as well. This criteria has to be set to a value of 2 or greater.

There were a few other suggestions, but I crumpled up the paper and told him that we ought to “make our own rules and try to beat up your teacher.”

He gets a 500K portfolio, and a one month deadline.

What I want to know is…How would you position your kids portfolio?

I started him with a pool of 10 stocks – but five essentials to start on today. These five stocks inculde: $SHLD, $TWTR, $DEPO, $CMCM, $MEET. My five reserves were $ADXS, $WTW, $LL, $PI and $TAHO.

WWYD?

OA BUYS

I bought some $LIXXF for a dirty dash breakout play. Booked some $QCOM, sold my $LGCY for a scratch and picked up some $FXE and $CVRR for earnings.

See you in After Hours with Option Addict.

NASDAQ TARGET HIT

Back in November, I wrote this piece about the broadening formation in equities. That pattern gave an upside target of 5800 in the $COMPQ, which was hit about 30 minutes ago.

Sentiment has significantly improved and morale is the highest it’s been in quite some time.

Color me cautious here, but I’d start shopping for short term hedges.

I think the first few market declines will all be less than 5%. But there’s a big one coming this year. Don’t forget that.

@JACK GIVES 425,998 REASONS TO BUY TWITTER YESTERDAY

It was disclosed a few minutes ago that Jack Dorsey bought 425,998 shares of $TWTR. Nice timing.

Shares of Twitter Inc. (TWTR) edged higher in the extended session Tuesday after Chief Executive Jack Dorsey bought a large chunk of shares. Twitter shares advanced 1.4% to $16.74 after hours, following a gain of 4.5% during the regular session, which put shares at a 1.4% gain year to date. In a filing with the Securities and Exchange Commission late Tuesday, Dorsey disclosed he had purchased 425,998 shares of Twitter at prices ranging from $15.84 to $16.60 a share beginning on Monday. Prior to the filing, Dorsey owned just over 15 million shares, or a 2.1% stake of outstanding shares, according to FactSet data.

NEED A FAVOR. WILL PAY HANDSOMELY

I need a favor. I’m heading to Oregon this weekend. I need someone with a contact at Nike to hook me up with passes to get into the employee store.

I take my boys out to a basketball tournament there each year and this year my pass fell through.

If you can hook this up for me, I will exchange your kindness with gifts. Email me at jeff@tradingaddicts.com if you’d be willing to help me out.

Thank you.

TIME TO BET ON TWITTER

I’m betting on the timing of this just based purely on the series of events leading up to this big decline in Twitter over earnings recently.

As you may or may not know, I took out some March calls on Twitter yesterday. That timing looks to be ok.

It’s been some time since the “for sale” conversation took place. Since then, Twitter has languished near its all time lows.

Going into earnings, I loved the last minute upgrade. It allowed some big players to unload the stock before it got bludgeoned over earnings.

Prior to earnings, I discussed Twitter being a great buy once it broke its trading lows of $16, with a target buy range of $15.50-$15.00. I figured that move would be the ultimate move of discouragement, and would surely encourage anyone holding stock to give up and accept defeat.

Today, Twitter is trending stronger than most. It’s clearly rejected that breakdown, which has become such a great trigger to enter trades.

Very bullish on this set-up and sentiment, at least in the near term.

OA BUY: $ARCH

I took a loss on $AMZN this morning and went into $ARCH calls instead, which I’ve been stalking for a few weeks.

More later,

OA

THIS FEELS LIKE THE FINAL CAPITULATION IN $TWTR

That last upgrade into earnings was a ploy to unload shares to the mentally challenged going into a calamitous earnings event.

This move lower in $TWTR that is underway is going to mark it’s final move lower.

TWTRFATALITY
I actually think the low is already in. I don’t believe $TWTR is gunning for those lows, but I have been talking in After Hours with Option Addict about waiting for a move to take out these lows over the last few months at $16.

$15-$15.50 was the area I wanted to wait for. If that hits, I’m looking at some 2-3 month calls.

FRESHLY SQUEEZED $SHLD SHORTS THIS MORNING

I misplaced my February seasonal data on Sears, but its compelling with a 10 year track record.

*Nevermind, found it: ($SHLD seasonality…last 13 years. March is best (+10.66%), February is 2nd (+8.35%). Both months were up 9 of 13 years.)

Some of the most memorable short squeezes I’ve ever seen were in this stock. As I mentioned in the last couple weeks, I built a position in this stock for the retail exposure…but also for the squeeze potential.

Long a sum of shares that has been keeping me up at night. Now I can get some fucking sleep.

Struggling retailer Sears Holdings Corp. laid out a plan to turn its business around by sharply cutting costs and said it had amended its credit facility to add borrowing power.

Shares of the company shot up 40% in premarket trading, which would push the company’s market value to about $840 million; the stock had dropped 55% over the past three months through Thursday’s close.

Under the restructuring plan announced Friday, the big-box retailer said it hopes to reach at least $1 billion in annualized cost savings and reduce its debt and pension obligations by $1.5 billion.

“To capture these savings, we plan to reduce our corporate overhead, more closely integrate our Sears and Kmart operations and improve our merchandising, supply chain and inventory management,” Chief Executive Edward Lampert said in a statement.

Sears also noted it had “right-sized” its asset-based credit facility, adding $140 million to its available borrowing capacity.

Sears, poised to report its seventh consecutive annual loss, has been stumbling through efforts to return to profitability as customers have continued to shift spending online and away from brick-and-mortar stores. It has focused on assortment, sourcing, pricing and inventory-management practices — sometimes at the expense of sales.

So far this year, Sears has sold its Craftsman brand and a number of real estate properties to generate extra cash. The company is continuing to explore options for its Kenmore, DieHard and Auto Centers business.

Sears also reported preliminary results for the fourth quarter, saying it expects a loss of $535 million to $635 million. It also forecast revenue of $6.1 billion, above the $5.69 billion consensus forecast of analysts polled by Thomson Reuters.

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