Sep 28 Earnings: Rite Aid - Way Oversold, Earnings Will SurpriseThe company's share price has been under severe pressure since the deal with Walgreens $WBA has fallen through and low pharmacy reimbursement rates.
Rite Aid's organic growth remains impressive, posting double digit sales growth in 2016. Earnings should get a boost from aggressive cost cutting measures.
I believe the company's share price is way oversold and earnings revisions should prove fruitful in the next 6 months.
I'm initiating the company with a $3.50 PT for the post-earnings move and upward of $4.00 heading into 2018.
RAD
PLUG LONG BUYGeorge McNamee, chairman of Plug Power's board of directors, purchased 200,000 shares of Plug stock worth more than $426,000 in September.
McNamee now owns 661,131 shares of Plug’s common stock, according to a U.S. Securities and Exchange Commission disclosure filed on Monday.
CEO Andy Marsh has been working to make Plug profitable for the first time in 20 years. He came to Plug Power in 2008 with an overhauled business plan and has spent the last nine years converting Plug from a research company into a manufacturer. (bizjournals.com)
RAD SHORTExpect RAD to breakdown towards 2.00 levels or more.
We just broke down the downward channel, meaning a further sharp fall is ahead.
SL over 3$
1 TP on 2.00$
2 TP on 1.75$
THE WEEK AHEAD: XOP/OIH/XLE, COSTPremium Selling
For the umpteenth week in a row, there is little in the market for high quality premium selling plays. Screening for 52-week >70 implied volatility rank, you'll basically get one quality hit at the moment, and that is COST, which has dipped significantly on AMZN/WFM merger news. A few names are approaching that 70 mark, but they have earnings three to four weeks out; you might as well wait to put on volatility contraction plays around earnings announcements in those cases. I previously set out a nondirectional play in COST (see Post below) that I didn't enter, having been distracted by something or other; I may reconsider that play now that the market's had an opportunity to digest the AMZN news.
Other names, such as NBR (petro, part of whose operations are deep water),* RAD (pharmacy in merger and acquisition with WBA), and BBRY (a kind of WTF, why are they still around) are too small in dollar value to be worth playing unless you dive in and go straight-on covered call or near-to-the-money short put.
Directionals
I've been waiting for several weeks to put on a bullish XOP, OIH, and XLE play. Each time I look at them, it appears that oil has trundled lower on rising rig count, total stock build, lackluster inventory draw, or a combination thereof.
I've been primarily watching oil prices around the supposed average shale production break even at $40 to go long in one of these underlyings. We may be close enough for me to make a play, but I'll probably continue watching. Lower is better for either a net credit put diagonal or a Poor Man's Covered Call in these guys.
Low Volatility Plays
With VIX continuing on its sub-12 bender, there probably isn't a better time to go put-side low volatility strategy in broad index underlyings (SPY, IWM, QQQ, DIA) using either calendars, net credit put diagonals, or debit diagonals. These capitalize on volatility expansion and movement of the underlying toward the put side, ideally allowing you to exit the short put aspect of the setup at worthless and recapture any value left in the long at the expiry of the front-month short. Heck, the dam has to break at some point ... .
* -- I regard most companies that rely substantially on deep water operations as largely doomed here. Most deep water operations require high per barrel prices that we haven't seen for a substantial period of time and aren't going to see in the short- to medium-term.
$RAD SHORT TERM BOUNCE OFF SUPPORTGOING LONG ON $RAD IF IT BREAKS FALLING WEDGE...LOOKING FOR .20/30 PROFIT.
TRADE IDEA: RAD APRIL 21ST 6 LONG CALLSI do these lotto trades once in a while ... .
I won't take credit for it, and I'm not the only "genius" who's thought of it given open interest in the March, April 6 and 7 calls ... .
Here's the low-down, courtesy of Motley Fool: www.fool.com
Because I'm paying a debit for this up front (the mid price for the April 21st 6 call is currently .37), I'll need price to finish above 6.37 to make any money ... . If you're more of a gambling sort, consider the 7 calls; they're going for .04 at the mid ... .
RAD. Possible wave countwe are in a wave 3 of wave C of ABC down.
C=A = 4.58
C=1.272 A = 61.8 Fib = 3.6-3.7
C=1.618 A = 78.6 Fib = 2.2-2.4
Rite Aid: 3 Drives Pattern & Harmonic PullbacksThe last time I looked at this stock I had a bullish Bat Pattern on my radar, which resulted in a move back up to previous structure before continuing short. That movement down ended up being the 3rd drive in a bullish 3 Drives pattern (in yellow) and what I would expect is a minimal move back up to previous structure (orange arrows).
Typically when traders look at harmonic moves they only look at the extensions and not the retracements like in a normal AB=CD pattern. But when the market is moving harmonically it will often give us pullbacks that are equal moves to the previous pull backs. In this example a 3rd equal pullback would place us exactly at the previous structure level providing a great exit place for short term traders.
I don't follow the stock market as much as I used to so I'm not up to date on Rite Aid's fundamentals but I do know that it recently beat earnings projections, but also lowered it's earnings guidance for the second time this year. Regardless I'm still bullish this stock both as an investor and trader and this looks as good as a point as ever to enter.
Rite Aid's PullbackRite Aid and I have a long history going back to a buy when it was well less than a dollar. We've recently seen a steady bullish move until the recent news that competitor Walgreen Company was looking to buy the remaining 55% of Alliance Books putting them into international markets for the first time which would potentially allow them to undercut Rite Aid.
For those looking to hop on the bullish trend this pullback into previous structure seems like the right place to do so. Add that to fact that the symbol has also completed a bat pattern in that same area.
As a trader I strictly follow the technicals. "Trade What You See" However when I put on my investors hat, I like to create a confirmation bias based on the bigger bigger and then use the technicals to gauge my entries and exits.
