Hello readers,
We are looking at most likely a pullback today, but it will not be one of terrible significance, in my opinion. The market is just not going to make any big moves because there is not a lot of news and volatile items to fuel it today. There is no major economic data points. One thing that we can get excited about, though, is our play in Sonic Automotive that was recommended as an Overnight Trade of the Day yesterday. We got into it at 9.50 in the late morning. The company this morning beat estimates with a 0.18 vs. 0.15 EPS, and it is up around 10.00 in pre-market trading. That appears to be good for over 5% for us. We will sell at the market open.
A solid play from yesterday but what about today…
Buy Pick of the Day: Direxion Daily Energy Bear ETF (ERY)
Analysis: Oil has been out of control in a 3-week rally up to the high side of its range at $80 per barrel. Yet, today, with the market looking down, oil is treading backwards. The market has dropped down significantly in early trading, and one would expect the oil inverse ETFs to be ready to make a run up. That is why I am looking at Direxion Bear Oil ETF (ERY) as a great play. The ETF, though, is only up just over 1% in pre-market trading. It is not even beating DUG, which is Proshares inverse oil play, and ERY is a 3x ETF. Now, while it may not play at 3x DUG, it should be more volatile. That phenomena could mean a multitude of things, but I am hoping it means undervalue.
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Over the past three weeks, ERY has fallen in value over 15%. The stock made its first slight jump yesterday in that period, and it should be ready to make a continued jump today. The market is looking down and without much to rally on, most stocks are going to be in sell mode. Most of the market, in the short term, is relatively overvalued, and it should be time for a lot of investors to take some profits, which could be a slight dent in the gains these stocks have seen over the past few weeks market-wide. This trend would mean that the market will sell down, leading to a boost for ERY.
I am not sure how powerful that trend…
