Recording
EquityScan
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S&P 500
⚠️ Breaking News: Technology stocks are taking a hit this morning, with S&P 500 futures down 2% and Nasdaq futures down 3%. This follows news that Chinese startup DeepSeek has emerged as a potential AI leader, challenging US dominance in the sector. Chip stocks like NVDA are feeling the pressure, with some down as much as 8%.
The S&P 500 closed lower on Friday, down 0.25% to 6101, after having reached a record high on Thursday.
While this surge is encouraging, current valuations make it challenging to invest in the index at this level.
We will wait for a better entry price.
SPY financed Bear Put spread expiring Feb 21st
⚠️ SPY Alert: S&P 500 futures are down sharply, pressuring our $580 naked put. SPY is currently at $595 pre-market. If it drops below $590, we'll roll our put down to $560 in March to manage risk.
Here's a breakdown:
Original Trade:
Bought $590 put, sold $580 put, sold $560 put (Feb 21st expiry)
Initial credit: $45
Recent Action (Jan 22nd):
Sold the long $590 put for $295
Total credit to date: $340 ($45 + $295)
Current Position:
Holding two short (naked) puts at $580 and $560 strikes.
Profit target: $340 per contract if both strikes above expire worthless on Feb 21st.
SPY is now trading at $607.97.
What's next? We're now benefiting from time decay ("theta") on the remaining short puts. As time passes, their value erodes, working in our favor. As you can see below there is still $250 ($81+$169) of time value left in both ‘short’ options. Each day this value will erode assuming the price of SPY remains above $580 at expiry.
Risk Management Options:
Conservative: Close the $580 short put to reduce risk. This will cost $81.28 per contract based on Friday's closing price.
Active: Hold onto the $580 short put. However, if SPY declines to $590, we can roll the $580 put down to $560 with a March expiry. This lowers our breakeven point and potentially generates additional credit.
My Plan: I'm opting for active management and keeping the $580 short put open for now, monitoring SPY closely for potential adjustments.
Long Term Buy Watchlist
We've identified fundamentally strong companies with long-term growth potential for our watchlist. However, market sentiment can shift, so we're combining technical analysis with our fundamental views to pinpoint optimal buying opportunities. We're also factoring in potential impacts from the new US administration's policies. Here's an update on stocks from our long-term watchlist that we've recently bought or are considering buying soon.
Recent Buys or considering buying soon:
Entain PLC (ENT.L): Entain PLC (ENT.L) has gone up circa 9% since we bought and remains a long-term buy, even after the recent 4% pullback yesterday. While there's potential for a 39% gain, the stock is nearing short-term resistance levels. Keep your exposure to 5% of your portfolio and, if buying on IBKR, ensure you have GBP funds to avoid FX charges
Coterra Energy (CTRA): This stock closed down 0.72% on Friday at $29.02. While it's showing short-term overbought signals, our long-term outlook remains positive with a target price of $34.59, suggesting a 17% upside.
For long-term investors: Hold tight! This stock has performed well, and we anticipate strong earnings driven by recent energy price increases.
For short-term traders: Consider taking profits now.
JD Weatherspoon (JDW.L): Shares rose 0.25% on Friday. The stock price is showing promising signs, breaking a downtrend and surpassing its 50 day moving average. We believe the stock, currently priced at £6.13, could reach £8.45 within the next 18 months, a potential 37% gain. Despite recent tax pressures in the UK, we see value in JDW.L at its current price.
Here's what you should keep in mind:
Dollar-cost averaging: Spread your investment over time to mitigate risk.
Position sizing: Limit your exposure to a maximum of 5% of your portfolio value.
Currency risk: If you're not a UK investor, ensure you have GBP funds to avoid interest charges on negative FX balances.
Potential Reversal Stocks:
Short-Term Trading Opportunities
Key Points:
This watchlist highlights stocks showing potential for a short-term price reversal.
Not all stocks listed have triggered a buy signal yet.
Carefully review the commentary for each stock to understand its current status and potential entry points.
Exercise caution with stocks approaching their earnings announcements in the next few days. Volatility around earnings can increase risk.
We have 7 stocks on the active trade reversal watchlist (3 New). See charts below with messaging on each stock.
Stocks remaining on the Watchlist:
AAPL: WAIT - not ready to trade yet
Positive Signals:
The RSI has crossed back above 30.
The Share Price remains above 200 day moving average
Reason to Hold off:
Earnings next week.
Stock remains in a short term downtrend.
Trade Parameters (if trade is triggered):
Profit Target: $229
Stop Loss: $216
GEN: WAIT - not ready to trade yet
While GEN has shown some positive signals (RSI above 30 and a broken downtrend), we're looking for a more favorable entry point.
Ideal Scenarios:
Pullback: Wait for a slight dip back to the $27 level. Whilst we haven’t got below $27 we continue to be patient and wait for a more attractive buying opportunity with a tighter stop loss.
Breakout: Alternatively, a decisive move above the $28 intraday resistance would signal stronger momentum.
Current Status:
Last closing price: $27.49
Earnings date: Earnings on 30th - best to avoid until after earnings.
Trade Parameters (if triggered):
Profit Target Prices:
Initial target: $27.50
If breaks above $28: $28.90
Stop Loss Price: $25.70
MORN: Tradeable with Bullish Signals
MORN is showing positive signs and remains a potential short term trade. Here's why:
Bullish Momentum: The stock has triggered a buy signal with the RSI crossing above 30, indicating increasing momentum.
Trend Reversal: MORN has broken its recent short-term downtrend, suggesting a potential shift towards an upward trajectory.
No Immediate Earnings Risk: Earnings are not expected until February 20th.
Trade Parameters:
Yesterday's closing price: $328.77
Profit Target Price: $337 (approximately 3% gain)
Stop Loss Price: $315
BKNG: Tradeable with Bullish Signals
BKNG is showing positive signs and remains a potential short term trade. Here's why:
Bullish Momentum: The stock has triggered a buy signal with the RSI crossing above 30, indicating increasing momentum.
Trend Reversal: BKNG has broken its recent short-term downtrend, suggesting a potential shift towards an upward trajectory.
No Immediate Earnings Risk: Earnings are not expected until February 20th.
Trade Parameters (if trade is triggered):
Profit Target: $5000
Stop Loss: $4135
FICO: WAIT - not ready to trade yet
Positive Signals:
The Share Price remains above 200 day moving average
Buy Signal given on RSI a couple of days ago.
Reason to Hold off:
Made a lower low yesterday and new short term do
The stock has broken above a recent short term downtrend but is back testing it again
Trade Parameters (if trade is triggered):
Profit Target: $2034
Stop Loss: $1700
TMUS: Wait, continue to monitor for Re-entry.
We traded TMUS previously and closed it. While there are some positive signs now, we're looking for a better entry point.
Reasons to wait:
Target price has been hit. We prefer to lock in profits and re-evaluate the trade at a potentially more favorable price level.
Earnings Risk on January 29th.
Positive Signs:
The RSI has moved back above 30, indicating increasing momentum.
TMUS has broken its recent short-term downtrend.
Re-entry Opportunity:
We'll be watching for a potential pullback to the $212 level. This would offer a more attractive entry point.
Trade Parameter (if triggered):
Profit Target Price: $218
Stop Loss Price: $196
DSV: WAIT - not ready to trade yet
Why We're Waiting: The stock has jumped up too close to resistance. We will wait for a pullback.
Trade Trigger:
A pullback to 1440 level.
Trade Parameters (once triggered):
Profit Target: 1,481 Danish Kroner
Stop Loss: 1,347 Danish Kroner
TLT Short Put: February 21st Expiration
Quick update on our TLT short put position:
Current Price: TLT is trading around $87.22.
Our Position: We sold the $84 put for $100 premium, giving us a breakeven of $83.
Original Goal: We initially wanted TLT to drop below $84 so we could be "assigned" the shares at that price. This would allow us to buy TLT at a discount, anticipating a future price increase.
What's Changed: With TLT currently above $84, assignment is looking less likely.
New Plan: We'll let the trade expire on Feb 21st. If TLT stays above $84, the put expires worthless and we keep the $100 premium as profit.
In Summary: While our initial plan to acquire TLT shares may not pan out, we're still in a good position to profit from this trade.
EUR/USD Put Option: March 7th Expiration
Here's a summary of our EUR/USD put option trade:
Current Status: The EUR/USD is currently trading at 1.0462. We sold a put option on the March futures contract with a strike price of parity (1.0000) and received a premium of $488. We are now in substantial profit on this trade. This has been an excellent trade!
Profit Scenario: If the EUR/USD remains above parity (1.0000) through expiration on March 7th, the option will expire worthless and we keep the $488 premium as profit. This scenario favors continued USD strength.
Assignment Scenario: If the EUR/USD falls below parity, the option may be assigned. This means we would be obligated to buy EUR/USD at 1.0000. Note: that this is cash settled.
Current Outlook: No action is needed on this trade for now. We will continue to monitor the EUR/USD and assess the situation as we approach the expiration date. We will let Theta work for us.
Any questions?
Call me or book a web meeting.
Happy Investing & Trading
Stephen
Invest with Confidence