Real Life Trading Summer Portfolio 2017: Second Edition

Aug 03, 2017

Real Life Trading Summer Portfolio 2017: Second Edition

My friends! Welcome! How are you? I hope life is going purely and wickedly fantastic.

How is the weather in your part of the Globe? It’s a beautiful summer day here in Nashville, TN. I mean, straight up ridiculously nice weather. We’ve got a Real Life Trading pool party this Saturday at a traders house and then I’m hopping on a jet plane. I figured I would rock this out beforehand to ensure you had all the information, charts and set ups ready to go.

August is Volunteer Month here at Real Life Trading. Do you already have plans and goals for where you will be volunteering some time this month?

Winston Churchill was 100% correct when he said:

“We make a living by what we get, but we make a life by what we give.” Let’s make this life a good one and continue enriching lives around the world. Now, onto the good stuff.

1. Delta Airlines - Ticker DAL: Analysis on August 3rd, 2017

Well, wouldn’t you know it. This little sneaker is messing everything up for me. As of market close today, all of our trades were up massively, except Delta.

You’ll note in the image below from the last portfolio, we were  all quiet confident that DAL would retrace (and it did); it just pulled back further than I personally anticipated. And that’s okay. I rarely get trades to the exact penny, but what is exciting is I think DAL represents a great price to bounce.

This chart represents my bull put spread set up on DAL. I know there’s a lot of traders in this one, which is another reason I wanted to get this update out, so we all know what to do.

I triggered into the bull put spread and had I used the stop to unravel my position I would have made a killing. Why didn’t I? Because I’m a giant chicken I guess. Now, DAL is below my spread and I’m looking at a decent paper loss.

The silver lining on this goat, DAL is bouncing off of the 100 SMA on the daily chart with a tweezer bottom. Oh yeah. I like that action.

I also really like the perfect doji that formed yesterday on DAL. Therefore, my goal from here is to certainly unravel the bull put spread if DAL breaks below the tweezer bottom. Unraveling meaning to buy to close the 51 put and hold onto the 50 long put position. Otherwise, it seems DAL will bounce and since I still have 3 weeks, I’ll be keeping a close eye on it. But I think we will get just days away from expiration and I’ll be able to close out for breakeven. That’s my thoughts at least.

I do anticipate DAL to go higher. Below is my chart and expectations on what she does from here.

If you are not under water with a bull put spread (like me) or if you aren’t in any bullish position on DAL, highly consider one down here. It’s had a nice pull back and looks bounce ready.

         DAL price from the first article: Down $4.89 [8.81%]

2. Applied Optoelectronics - Ticker AAOI: Analysis on August 3rd, 2017

Wow. What a lightening bolt this thing has been! Geeze. The real winner of the portfolio, honestly. Such a volatile and quick moving champion. I mean, look at this weekly chart! Snapdragons! Oh, you know, just a 1,000% gain in the last 12 months. Don’t mind me.

So what now? Well, as you likely know, earnings was tonight. And they were actually pretty good. But the stock is tanking right now after hours. It’s down almost 30%.

Why?

My take, you had millions of investors quite pleased with the gains on this stock and they sold to lock in those profits. Sure, their earnings were solid, but they didn’t justify a 700% increase in stock value since December. They were good, just not that good.

Here were my thoughts a few days ago. I figured if AAOI gapped into the Mid $80 price range, the strong bullish trend would prop it up and keep it higher. And I was very confident if AAOI gapped up, traders would have certainly sold shares locking in a gain. That would have been the easiest fade in a long time.

However, AAOI is around $71 right now. Today was a bullish (white) candle, therefore, this is a gap and go. AAOI likely trades down into $65ish range tomorrow and from there? It’s anyone's guess. I personally think it goes lower, but with earnings that positive and a lot of investors who missed the boat on this run, people will be looking to buy the dip. Meaning, I’m not 100% sure. AAOI probably forms a doji or high wave candle tomorrow. From there, just take whichever direction it breaks.

Today’s gap is reason #1 you don’t hold super volatile, non blue chip stocks over earnings (unless you bought some kind of protection). And even blue chip stocks can have massive gap downs on certain instances, but they have a higher propensity to recover quicker. Congrats to those Real Life Traders who bought this cookie over 1 month ago and sold before earnings. Proud of you!

                 AAOI price from the first article: Up $30.69 [45.6%]

3. Momo Inc. - Ticker MOMO: Analysis on August 3rd, 2017

Well done friends. Superb job. Another fun little pop on this trade. This stock has randomly become a favorite amongst the Real Life Trading community.

Since MOMO never came down to bounce off of the 100 SMA like we wanted in the last write up, this is the trade we played in the afternoon swing trading room. It traded nicely, right up to that previous all time high resistance area. Good for a tad over 1R gain.

Earnings is still a couple of weeks out. I don’t expect anything monumentally exciting on this stock. But, I do like the look of this chart.

My thought, I’m planning for MOMO to trade down to that 100 SMA and bounce. It still looks like a viable play to me. Keep an eye peeled for some kind of bullish play on this monster.

We’ve got a few traders with put sales expiring soon. Plenty of money to be made on this stock. It’s been fun to trade!

                 MOMO price from the first article: Up $5.28 [13.4%]

4. Sanderson Farms - Ticker SAFM: Analysis on August 3rd, 2017

This one has been a sleeper folks. Some traders even forgot it was in the portfolio. GASP! Poor Sanderson.

But, for the traders who didn’t forget about this animal, congrats on some of the easiest money I’ve seen in a while. The signals on this champion were so obvious, with such a high degree of certainty…just plain gorgeous. Let’s talk about it more.

Two days after my last article, SAFM pulled into that strong 100 SMA on the daily chart [which is what we wanted to occur] and then people came in to buy it up, forming a nice hammer-ish candle. You know, the one you see me pointing to below with the purple arrow.

And then what followed next? Only the most beautiful new white solider candle that I’ve seen in a while, completing a wonderful evening star reversal pattern. One of the most powerful ones possible. Where the 2nd candle is an indecision bearish candle (with a lower shadow), off of a support level and the third candle is a bullish gap and go? Just silly.

Not to mention, almost the exact same pattern happened at the exact same price back in May. Did you spot it?

Anyway, at this point, you can probably hear the excitement in my voice, even though I’m typing and not speaking. Haha.

How to play SAFM now? Well, the trend is certainly bullish. Earnings are still a few weeks out, sounds like a buy the dip to me. Or better yet, #buythesalsa.

This is one of those stocks you could certainly consider holding over earnings. It just depends on where you bought in, right? If you did buy in back there at $115.19, then you could easily hold over earnings. Very small chance SAFM gaps down that far. The decision to hold over earnings is often about your dollar cost. If you don’t have any room before you lose on the trade, don’t risk it. If you are only marginally up, buy some protection. If you’ve got plenty of room and even a 20% gap down wouldn’t get close to your buying spot, then the intention of doing anything dramatic declines nicely. Kind of like AAPL for most traders. Speaking of…

SAFM price from the first article: Up $16.66 [14.2%]

5. Apple Inc. - AAPL: Analysis on August 3rd, 2017

And here's AAPL being the largest company in world, which is continuing to get bigger. AAPL had some pretty outstanding earnings (shocker) and it was followed by a delightful retest gap.

My analysis on AAPL is always simple. Bullish, but where and how long? With a gap up to the all time high area after completing a pretty decent distribution phase since May, it makes sense that AAPL fills the gap some.

This selling is pure profit taking. Traders locking in those massive gains, since literally anyone who ever bought AAPL ever would have been profitable at the open of Wednesday.

My ‘line in the sand’ with Apple is $148. If we break that price, huge chance AAPL pulls lower into approximately $143. If that occurs, look to buy again. Even longer term, AAPL’s chart isn’t overly extended.

It had a nice pull back to the 20 ema, this week's candle looks pretty nice so far…yep, my analysis remains the same. Buy the dip on AAPL until it stops working. And then just keep owning it until it works again. Enjoy. This one should continue remaining simple for a while.

AAPL price from the first article: Up $11.39 [7.89%]

Exciting times for sure! If you have any questions about the trade set ups or analysis, make sure to email me ~ jerremy@reallifetrading.com OR simply post in the comments section below. I would be pleased, blessed and honored to assist in anyway I can.

I hope while you read this, you enjoyed the $99 this would easily cost you at any other site. But hey, I’m changing the industry one trader at a time and I LOVE IT!!

You totally rock! Thanks for being a Real Life Trader and helping us Enrich Lives.

Until Next Time,

The future beer drinking champion of Germany

Jerremy Alexander Newsome.

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