Forgotten Profits Trade Setup Archive

As hoped, Bed Bath & Beyond (BBBY) popped beautifully off the lows.  Our BBBY August 60 calls – first picked up on June 17, 2014 at $2.70 — now trade at $4.20.  That’s good for a 56% gain.  Sell to close just half of the position.  Hold the second half for a bit longer.  At this pace, BBBY could see $68 on a gap fill.

We’ve had some losers in Forgotten Profits, but the win ratio is tough to ignore.  Since we launched in December 2013, we’ve closed 30 winning positions and five losers for total cumulative gains of 1,629% in eight months.

Not too shabby…

Today, hoping to continue that impressive streak we’ve found another position for your portfolios.  It’s Ross Stores (ROST).

As it just begins to reverse off lows, traders are finding good value in shares of Ross Stores (ROST).  It has a solid history of double-digit revenue growth, earnings and dividends to boot.  Expansion plans could double its base.  And despite a small move up, the stock is still undervalued in need of further upside.

With at least $3 of upside, near-term, we’re recommending that you buy to open the ROST November 2014 65 calls up to $3.

When we picked up the EBAY January 2015 52.50 calls on June 30, the underlying stock was on the floor. MACD and RSI were excessively oversold, allowing us to pick up these calls around $2.60.

The calls now trade at $3.70 for a gain of 42%.

While there’s still plenty of time remaining on these calls, we’re recommending that you sell to close it for gains now. The underlying stock looks a bit toppy and oversold on our technical pivot points. Knowing we can always buy back in, we’re taking our gains and walking away.

Hold all other positions. Look for newer positions shortly.

With just a “little” bit of geopolitical tension raging, the market has taken pause at an historic top.  Russia, Ukraine, Israelis, Palestinians, Middle Eastern folks, and our own economic uncertainties at home have created such chaos the market doesn’t know where to run at the moment.  Plus, we’re in the summer doldrums at the moment.

The market hates uncertainty.

So we need to wait it out for a few days.  It’s never safe to buy with this much tension because then you’re just throwing something at the wall, hoping it sticks.  That’s not a safe way to invest.  Contrarians, momentum buyers, and shorts alike, we’re all waiting to see what happens next.

After closing many winners in Easy Retirement, we do hold some losers.  But they all remain on hold. We’re also finding new opportunities all the time.

Our newly issued buy on the Lumber Liquidators (LL) November 60 calls is already picking up traction, running up about 19% since recommendation.  LL still has a massive gap to fill around $70 off oversold MACD and RSI.  This shouldn’t take too long.

The eBay (EBAY) January 52.50 calls are up about 10% as the underlying stock shows signs of life off the lows.  The Bed Bath & Beyond (BBBY) August 60 calls may be down -24% at the moment but the stock is coming back.

We also hold the Staples (SPLS) December 12 calls.  These were bought at 60 cents.  They now trade at 50 cents.

The Quiksilver (ZQK) January 2014 3 calls haven’t worked out well yet.  But we still have plenty of time.  Insiders have been buyers in recent months.

We’re down on the GameStop January 50 calls, the Coach January 50 calls, and the LULU December 50 calls but we’re still holding with plenty of time remaining.  What we may look to do – at some point – is close them out and open new trades to make up for the losses.

Overall, Forgotten Profits has been rolling along beautifully with good gains closed out.  We’ll have new positions out soon, too.  We have about six new trades on radar.  We’d rather not issue them in such a toppy, volatile market when geopolitical tensions could cripple everything.

After closing many winners since we launched in December 2013, we do have some positions that are down.  We have no worries about them, though… and are continuing to hold all open positions.

We’ve been watching Lumber Liquidators (LL) closely after watching it plunge from $75 to $55.  We believe the sell off is overdone even with broad weakness in the building sector.  RSI is again deep in the red zone where it typically bounces.  MACD has also over-extended itself to the downside in desperate need of mean reversion.  It’s also well under its lower Bollinger Band.  Williams % Range is on the floor.  DMI has spiked too much.

The put-call ratio on LL sits just above 2.4.  That tells us – at these levels – the fear is beginning to reach unsustainable levels.  Extreme negativity looks to have been priced in.  At some point, shares of LL need to move higher to even everything out.  While there is risk here, we believe the reward outweighs it, near-term.  We’re simply looking to jump in and out quickly.

We’re recommending that you buy to open the LL November 2014 60 calls up to $5.

We’ll talk again soon.  If you have any questions, comments, or have a chart you want us to take a look at for potential buy interest, please let us know.  We’re happy to help.