Alright! First scan. Happy to be apart of the IU team and will do my best to provide value add for you guys. Lets jump right in

 

SNAP: Where to begin with this one..I’ve been pretty vocal about it so as you can imagine I’m heavily short biased still. Nice gap down Fri on news of poor earnings, congrats again Elkwood holding into ER and nailing a huge win there. Here are my notes on it from two weeks ago before lockup, excuse my language I get fired up when I find a good one. Tomorrow morning, another 600-800M employee shares become unlocked & fair game on the open market, I expect this thing to get rocked over the next week or so. May be a bit jumpy early but that’s likely just some short panic, and I am treating this as all meaningful pops are good short entries until it proves otherwise. I’m looking for a trade off an open push risking 12.50s o/u, if gets above that it’s trouble short term. End game is sub 10 by end of month imo.

TEVA: Pretty amazing chart. I was shorting this every day last week, what an amazing play. Many look at this confused and say “Why so much pressure?” Well here’s the deal: TEVA bought Allergen’s (AGN) generic pharmaceutical business Activis Generics for over $40B, and $6.75B of that deal was awarded via TEVA stock. So AGN got saddled with 100M TEVA shares, which were restricted under lockup until August 2nd. I think what happened here is pretty evident. They dumped it ALL. There’s been nearly 450M TEVA shares traded since this lockup on Aug 2nd, so it’d be fair to assume the selling is either done or close to done now, and a nice bounce is coming soon. (This story is very similar to the Valeant (VRX) story, where TEVA got way ahead of themselves dishing out all kinds of $$ to acquire products and ended up over-leveraging themselves, leaving them now with a whopping ~34B of debt and no CEO. Ouch.) I’m not sure what the future holds for TEVA, they’ll need a good, solid plan soon re: debt reduction to ease investor concerns, or else they’re in big trouble. SHORT term though, I’m looking for a bounce trade tomorrow or early this week.

HTZ: Great action here last week. I was watching the tape they did a ton of bid soaking for some reason, likely trapping more shorts. I expect some violent movement early this week, any huge blowoff moves higher on strong volume I’ll be looking to fade. It’s no secret that Hertz is a financially struggling company, and fair value is probably down closer to the $10 area where it came from. However as a short term momentum trader, you have to ignore that for the time being and just trade what you see. This stock has a very high short interest (~60-70%?). Insanely high. If you see a weak open, soak & ramps back, may just grind higher all day. Just look at WTW and what that’s been doing to people. (See: WTW Friday intraday chart for a visual of the weak open, ramp back & grind deal) HTZ will be a great short when it’s ready, but it’s simply a scalp idea now while it’s still steamrolling shorts, trapping & everyone is upside down.

WTW: This #%*^$#ing stock…every morning I tell myself I wont short it. And every morning I end up shorting it and making a daily donation. Nate and I have probably single-handedly paid Oprah’s butler Jeeves’ salary by now. If I had half a brain, I’d just be buying dips while this insanely illogical buying continues. So learn from my mistakes, don’t just jump in and short first weakness on the 1m chart here, let it set up, be smart about it, and DON’T fight with it if you get upside down, just be patient with entries here. This has turned into a RH / W nightmare. Will be a great short soon imo, but don’t be early. Simply scalps for now until the daily chart turns like it did at the end of July. I’m watching for a potential blowoff move into 50 to be the inflection point, so we’ll see what this thing has in store tomorrow.

 

 

If you’re not an IU member and would like to become one, there’s still a sale going on here, shoot me a PM anytime in chat (DGTrading101 is my IU handle) and I’m happy to discuss trade ideas with you.

See you out there.

– D