Blue Horseshoe Stocks: AAP, NPTN & More

Advance Auto Parts AAP – Options

We have a confluence of favorable conditions to look AAP for potential options trades as we kick off a new trading week this morning. As of the end of last week, the stock was trading very near to its annual lows , and has a significant gap on the chart to the upside. Combine that with the company’s strong earnings report including a solid beat on profits, and we’re interested to see where this one will take us.

To try and take advantage of the present scenario, we’re going to tag both a shart and a longer term set of ideas, in the event that the stock sees an extended recovery, as the the chart setup suggests it might. We’ll be looking to AAP Weekly $85-95 Calls, and the 01/19 $95-105 Calls.

NeoPhotonics Corp. NPTN

We also would like to go over the move made by NPTN after we signaled it for observation last Monday morning. Subsequent to that point we ‘ve witnessed a respectable run from a low of    5.10 to a high of 6.66, a gain of 31%

We saw the stock record higher lows every single day last week, and will look for that trend to continue. If the stock can break the double top formation that’s currently on the chart, we could be in line to see much more significant gains.

Extended Watchlist:

ONP, NQ, APP & Extended Watchlist

Orient Paper, Inc. ONP
ONP was a good pick from yesterday’s extended watchlist. We included it after after noticing that the stock was gapping up pre-market. It did so, and after touching a morning low of 2.15, we observed a move from ONP which took the price as high as 2.55. That was good for an intraday spike of 19%

This came on the heels of the company’s release of unaudited preliminary third quarter figures, which included 25% increases in both net income and earnings-per-share, and a 23.5% boost to gross profit. This is a steadily growing business that we will want to keep an eye on moving forward.

NQ Mobile, Inc. NQ

Another winner from the extended watchlist yesterday came in the form of NQ. The stock saw a daily range from 8.74 up to 12.18, and afforded us the opportunity at gains of up to 39% It seems we caught this play off of its bottom and mentioned it at just the right time.

As is generally the case when we come across such a play, today we’re on the lookout for the stock to post higher highs and higher lows to confirm an uptrend off of that bottom.

American Apparel, Inc. APP

On October 8th, we mentioned that we were watching for a bottom on an old favorite of ours, APP. It had been steadily downtrending since the beginning of August, and it seemed like the right time to re-alert the stock. Just two days later, we saw that bottom, as APP touched 1.04. After waiting patiently for just a few weeks, it seems that APP has finally begun a reversal and is now headed up once again. Yesterday APP broke through a key resistance point, the 50DMA at 1.31, and several indicators are showing strength, including the MACD, which is currently diverging, and we have an RSI which is heading straight into the power zone.

The timing here couldn’t much better, as APP has been one of our favorite retail stocks heading into the holiday season for years now. For example, last year, the stock saw a move from .90-2.40 between the months of November and April. The year before, it was from the .50-range up to 1.20. We are excited to see where this year’s retail season takes APP, especially after catching it right off of its dead bottom.

Extended Watchlist:

SKTO, AAPL & Extended Watchlist

SK3 Group, Inc. SKTO

SKTO was one play from our marijuana watchlist to really have a bang-up session yesterday. On more than 5X the 3mo. average volume, the stock surged nearly 40% from its early morning low of .0135 to a late afternoon high at .0188.

The move not only broke through previous resistance at .015, but continued to roll, surpassing the current 200DMA (.016) as well. Moving forward, we’d ideally like to see support hold above .015.

Apple, Inc. AAPL

Apple’s quarterly earnings exceeded Wall Street’s expectations on Monday, fueling some extremely volatile post-market trading. After hours, we saw a significant pull-back followed by a bounce which has AAPL currently trading in the low 530′s. Yesterday afternoon’s high in the $542-range is going to act as the next resistance barrier.

We made the right choice with our last options call in moving our strike price up to $525, which as it now stands, should be pushed deep into the money with the current trend.

Extended Watchlist: