Couple Of Plays I'm Eyeing Here Across Tech, Biotech And China
First off, stocks had a really nice rally today on the backdrop of bonds rallying. The gameplay we have been talking about for weeks is still very much in rotation. I would keep it that simple. If the bonds go up on stock weakness, buy stock weakness.
I'm looking at a couple of plays from here that are peaking my interest. Most notably it has to be Facebook, or META.
We are clearly holding the long term trend line, much like the IWM index chart we posted earlier this week. This is also a medium term nice little base. I think we could easily trade up to the anchored VWAP to try and gap fill earnings around 250.
Average street target on this is around 260.
With a stop loss at around 160, this is a very asymmetric trade where the winds are starting to slowly shift into a more favorable situation. I'm looking at buying the stock outright, not calls, and try to hold at least until the November earnings. I hope that we might be able to reach the targets before that happens though but given the broad volatile nature of the market here, we could easily be range bound (which is why I don't want to be long options right now).
China stocks are also setting up something interesting. Take a look at JD for example. Sitting right around this tight coil. We believe that the volume thrust in March was a big low and we have since consolidated. This could easily trade back up to the mid 80's
Check out this retest on KWEB, the China stock ETF
Biotechs doing the same flagging pattern.
In short, I'm taking a stab at Facebook, Biotechs and China stocks here. The later are more tactical given their flag nature in this range and the Facebook position I am holding to earnings later in the year. Feel free to reach out with questions.