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Archive for September, 2018

Momo inc. (MOMO): A Growth Stock for Value Investors

Sunday, September 30th, 2018

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.  The actual Terry’s Tips portfolio that trades most of these ideas started out 2018 with $5000.  Along the way, we withdrew the entire $5000 from the portfolio so subscribers who were following it would have all their money back and be playing with their profits.  The portfolio is now worth $4980 which is pretty darn close to doubling their money in nine months.  Other portfolios we conduct for paying subscribers have done better, but we are proud of this one as well.

Terry

Momo inc. (MOMO): A Growth Stock for Value Investors

It’s rare to see a growth stock that is offered at good value, this article makes a compelling case that MOMO falls into that category – Have Investors Priced in Momo Inc’s Growth? and the following article provides several additional reasons for why we may see more upside – One Chart Tells You All You Need to Know About Where MOMO Stock Is Going.

MOMO Chart September 2018

MOMO Chart September 2018

The technical outlook for MOMO points to strong downside support and highlights upside potential.  The stock closed on Friday above a confluence of support which includes the 50-day moving average, a horizontal level at $43.17 as well as the lower bound of a rising trend channel that has encompassed price action for the past month. Also, in candlestick analysis, Friday’s candle has taken the shape of what is commonly known has a bullish hammer candle.  This signals a strong hold of support and potential for a reversal from the recent eight-day correction.

*source Tradingview.com

If you agree there’s further upside ahead for MOMO, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open MOMO 02Nov18 41 Puts (MOMO181102P41)
Sell To Open MOMO 02Nov18 43.5 Puts (MOMO181102P43.5) for a credit of $1.00 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MOMO was trading near $144.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $97.50 and your broker would charge a $250 maintenance fee, making your investment $152.50 ($250 – $97.50).  If MOMO closes at any price above $43.50 on November 02, both options would expire worthless, and your return on the spread would be 64% (730% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates September 27, 2018

IBD Underlying Updates September 27, 2018

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Consider Buying the Post-Earnings Dip in Adobe Systems (ADBE)

Sunday, September 23rd, 2018

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Terry

Consider Buying the Post-Earnings Dip in Adobe Systems (ADBE)

Adobe’s stock price has seen a steady rise over the last few years, and from both a technical and fundamental standpoint, there is a strong case to be made that it will continue.  These following two articles discuss the recent earnings report and where the stock may go from here – Adobe: Stock Marches Forward With Another Record Quarter and Should You Buy Adobe Systems at Its All-Time High?.  As well, there have been several price target upgrades as of late and a few of the more bullish analysts think the stock can even cross above the $300 price point.

ADBE Chart September 2018 Adobe

ADBE Chart September 2018 Adobe

ADBE corrected lower in the past week and is seen trading near a significant confluence of support.  The 50-day moving average is coming into play, a horizontal level at $256 that was respected as both support and resistance last month, and two rising trend channels.  The small channel formation originates from a low posted in late July while the longer term trend channel has encompassed price action for a few days short of a year.

If you agree there’s further upside ahead for ADBE, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open ADBE 26OCT18 255 Puts (ADBE181026P255)
Sell To Open ADBE 26OCT18 260 Puts (ADBE181026P260) for a credit of $1.97 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $261.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be $2.50 per spread.  Each contract would then yield $194.50 and your broker would charge a $500 maintenance fee, making your investment $305.50 ($500 – $194.50).  If ADBE closes at any price above $260 on October 26, both options would expire worthless, and your return on the spread would be 64% (730% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates September 20, 2018

IBD Underlying Updates September 20, 2018

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Has Netflix (NFLX) Found A Bottom?

Saturday, September 15th, 2018

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.  The actual portfolio that Terry’s Tips carries out with these plays we send to you each week has gained 98.5% so far this year.  We started out 2018 with $5000 in the portfolio and withdrew that amount in June so that subscribers who mirrored it in their own account or had trades executed for them with the free Auto-Trade service at thinkorswim have almost $5000 left and it is entirely profits for them.

Terry

Has Netflix (NFLX) Found A Bottom?

Despite a recent correction, market sentiment towards Netflix stock remains positive while certain analysts see a notable upside from current levels.  Take a look at this recent article posted on Investopedia that states a 30% rally could be in the cards for NFLX and the following article posted on Seeking Alpha that builds a strong case for remaining bullish.

There are several technical developments over the last month or so that suggest Netflix has turned bullish once again.  The stock price is seen climbing above horizontal resistance at $356 and holding above the 20-day moving average.  Aside from that, a recent convergence with the S&P 500 might be sending the strongest signal of all.  Note that NFLX diverged from the index for about a month starting from mid-July to correct lower.  Since around the middle of August, the stock price has once regained its correlation with the popular index, which is often a tell that an important bottom might be in place.  The S&P 500 is added to the chart below and denoted in bars to illustrate the divergence and subsequent convergence.

NFLX Chart September 2018

NFLX Chart September 2018

*source Tradingview.com

If you agree there’s further upside ahead for NFLX, consider this trade which is a bet that the stock will continue to advance over the next four weeks, at least a little bit.

Buy To Open NFLX 12OCT18 362.5 Puts (NFLX181012P362.5)
Sell To Open NFLX 12OCT18 365 Puts (NFLX181012P365) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NFLX was trading near $365.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $115.50 and your broker would charge a $250 maintenance fee, making your investment $134.50 ($250 – $115.50).  If NFLX closes at any price above $365 on October 12, both options would expire worthless, and your return on the spread would be 86% (1256% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates September 13, 2018

IBD Underlying Updates September 13, 2018

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Mastercard (MA) Expected to Continue the Steady Rise

Monday, September 10th, 2018

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

The actual Terry’s Tips portfolio which trades essentially every weekly play that we send to you has gained 91% so far this year (after paying all commissions, of course).  The portfolio started out the year with $5000, and on June 15, 2018, we withdrew $5000 from the portfolio so that all subscribers who followed it would all their money back and be playing with pure profits.  The portfolio is now worth $4552.

I especially like this week’s idea because I like Mastercard and believe that last week’s weakness in the stock price was unwarranted.  Enjoy the full report below.

Terry

Mastercard (MA) Expected to Continue the Steady Rise

Among the list of IBD Top 50 companies Mastercard stands out as its uptrend is far steadier than any of the other companies.  These two articles suggest the stock will continue the trend – Mastercard’s Stock May Have Big Gains Ahead and Mastercard’s Strategy Suggests Further Stock Price Growth Ahead After 60% Rise.

MA has been trading in an uptrend channel that originates back to a low posted in December 2017.  The stock price pulled back in the past week and is near support that consists of a horizontal level at $208 as well as the 20-day moving average.  Slightly below the support confluence is the lower bound of the uptrend channel.  In this context, the stock appears to be well support with a clear upside bias.

MA Chart September 2018

MA Chart September 2018

*source Tradingview.com

If you agree there’s further upside ahead for MA, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open MA 12OCT18 207.5 Puts (MA181012P207.5)
Sell To Open MA 12OCT18 210 Puts (MA181012P210) for a credit of $0.93 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MA was trading near $211.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $90.50 and your broker would charge a $250 maintenance fee, making your investment $159.50 ($250 – $90.50).  If MA closes at any price above $210 on October 12, both options would expire worthless, and your return on the spread would be 57% (650% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates September 6, 2018

IBD Underlying Updates September 6, 2018

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Can GrubHub (GRUB) Continue the Upside Momentum?

Monday, September 3rd, 2018

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

The Terry’s Tips portfolio that takes actual positions in most of these weekly ideas has gained 88% (after commissions) so far in 2018, taking all the completed gains and losses into consideration.  The portfolio currently has five spreads in place, and all of the underlying stocks are trading at a price which is higher than the max gain bogey price, so we are looking for even better results going forward.

Terry

Can GrubHub (GRUB) Continue the Upside Momentum?

GrubHub’s stock price recently broke to record highs and these two analysts are optimistic there’s further growth ahead – Why GrubHub Is a Better Growth Stock Than Starbucks and Is GrubHub (GRUB) Outperforming Other Computer and Technology Stocks This Year?

GRUB fell into a consolidation in the first half of August after turning from resistance around $138.  The stock price regained some upside momentum in the second half of the month, breaking both above resistance and to fresh record highs.  The horizontal level is now seen as support in the event of a near-term pullback.  The higher time frames show a clearer outlook as the weekly chart shows a distinct upward continuation from the prior consolidation.  On a Monthly chart, the stock closed near highs which indicates strength.  As well, it managed to do so despite a long tail on the prior candle which suggests the selling pressure in late July was temporary.

GRUB Chart August 2018

GRUB Chart August 2018

If you agree there’s further upside ahead for GRUB, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open GRUB 05OCT18 141 Puts (GRUB181005P141)
Sell To Open GRUB 05OCT18 144 Puts (GRUB181005P144) for a credit of $1.33 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when GRUB was trading near $144.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $130.50 and your broker would charge a $300 maintenance fee, making your investment $169.50 ($300 – $130.50).  If GRUB closes at any price above $144 on October 05, both options would expire worthless, and your return on the spread would be 77% (878% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates August 30, 2018

IBD Underlying Updates August 30, 2018

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

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I have been trading the equity markets with many different strategies for over 40 years. Terry Allen's strategies have been the most consistent money makers for me. I used them during the 2008 melt-down, to earn over 50% annualized return, while all my neighbors were crying about their losses.

~ John Collins