Before we get into a new opportunity, we have to get rid of the Himax (HIMX) positions in the portfolio. We can’t look at them any more. This company had such an opportunity with Google Glass… and it just fell apart. If you haven’t done so already, close them out. Let them go.
Hold all other positions. We’ll make up for the HIMX losses in short order.
Losses will unfortunately happen. But the winners have been solid. Since May 23, 2014, for example, we closed out 13 winning positions, including half of the Quiksilver (ZQK) November 3 calls for gains of 65% in a week.
Kandi Technologies (KNDI) fell $2.50 in Wednesday trade. We don’t believe the fall is over, though, as it just begins to fail at double top resistance with overbought MACD and RSI. We’d like to see a gap refill to $14 before we’d think of going long. Believing there’s further technical downside, we’re recommending that you buy to open the KNDI September 2014 19 put up to $3.50. We’ll have a mental stop of -35% on the trade.
As for long opportunities, Xilinx (XLNX) took a $6.89 hit on earnings and guidance, followed by a flurry of downgrades. The pile-on effect created very heavy selling pressure that we don’t believe is sustainable. One analyst agrees with us, saying the fall has created a great entry opportunity. After a stock has been this crushed this fast, a near-term bounce is likely. We’re just looking to get in and get the heck out with quick gains here. To profit from a potential recovery, let’s go with a long-dated call. Buy to open the XLNX January 2015 42 call up to $2.40… We’ll have a mental stop of at least -35% here, too.
As usual, we just ask that you never risk the house on any trade ever. The market is still wildly volatile in the summer doldrums with geopolitical tensions throwing constant curve balls. Be safe out there. We’ll talk again soon.