Most Investors Will Miss This Powerful Buy Signal on Amazon's Chart

Amazon.com (NASDAQ: AMZN) may have disappointed shareholders Friday with another earnings miss, but all I see is opportunity.

At this very moment, there is a screaming post-earnings buy signal on the charts that has worked out 100% of the time over the past two years. This signal is not something most investors would spot, but I use it frequently -- and with great success.

It doesn't hurt that I'm intimate with Amazon's chart patterns, statistics and earnings trends. Our last technical trade in AMZN (although not an earnings-related trade) netted us 51% in less than two months. This time, I see an opportunity for 65% gains before year end.

[Related -Google: Still Opportunities Ahead]

AMZN sold off to the tune off 8% Friday following its third-quarter earnings release after the close on Thursday. If investors were truly running for the hills, though, we would have seen a much more violent move and the rally from the pre-market prices would have been absent. ?CEO Jeff Bezos has been very clear with investors and the media that he is focused on the bigger picture rather than quarterly results. Back in 1997, he informed them that he would be spending money to expand Amazon's empire, and from time to time, the company would incur losses as it grew.

While Amazon may be missing on the bottom line, its customer base and revenues are growing. Like Bezos, I see the bigger bullish picture for AMZN. But what's more important today is the chart action.

[Related -The Sixty Percent Alibaba Play No One Is Talking About]

Trading Amazon's Earnings Reversal

Trading earnings is one of my specialties. As an options trader, I focused heavily on the action leading up to an earnings announcement. I gauged bullish or bearish sentiment and estimated how big of a move a stock would make once the report was out.

Most of the time, I would enter a trade ahead of the report and exit almost immediately after earnings were released.

As the years of successful pre-earnings trades went by, I began to notice a large number of stocks that performed what I call an "earnings reversal."

When a stock is trending (either bullish or bearish), its earnings report can accelerate it in the direction of the trend. An earnings reversal occurs when shares move outside of their Bollinger Bands, creating an overbought or oversold condition from which the stock then reverses.

Essentially, the reaction to earnings pushes the stock too far in one direction, and if the conditions are right, a short-term reversal occurs and thrusts the stock in the opposite direction, often in a big way.

In the case of Amazon, this powerful signal was triggered after seven of the past eight earnings reports. In each instance, if a trader went long or short (depending on the nature of the signal) at the close the day following the announcement, they would have made an average of 11.4% before the next report was issued.

The most dramatic earnings reversal came in April 2013. AMZN was in a bearish trend when it gapped lower following its report. Traders who entered a bullish position at the close on April 26, 2013, made 21% in just three months.

The signal I'm seeing right now looks just as strong as the one I spotted then.

AMZN closed Friday at $287.06. Simply moving back to its pre-earnings close of $313.18 would only require a 9% gain, less than the 11% average move the stock has made after every signal in the past two years.

With a call option strategy, we can leverage that 9% gain into 65% profits in two months.

AMZN Call Option Trade

Today, I am interested in buying AMZN Dec 270 Calls for a limit price of $26.

Risk graph courtesy of tradeMONSTER

This call option has a delta of 72, which means it will move roughly $0.72 for every dollar that AMZN moves, but it costs a fraction of the price of the stock.

The trade breaks even at $296 ($270 strike price plus $26 options premium), which is 3% above current prices.

If AMZN hits my upside target of $313, then the call options will be worth at least $43. Once you enter the trade, place a good 'til cancelled (GTC) order to sell your calls at that price.

Recommended Trade Setup:

-- Buy AMZN Dec 270 Calls at $26 or less (use limit orders)

-- Set stop-loss at $13

-- Set price target at $43 for a potential 65% gain in two months

Mario Gabelli's Q3 Value Fund Portfolio Commentary

To Our Shareholders,

For the quarter ended September 30, 2014, the net asset value ("NAV") per Class A Share of The Gabelli Value 25 Fund Inc. decreased 4.7% compared with increases of 1.1% and 1.9% for the Standard & Poor's ("S&P") 500 Index and the Dow Jones Industrial Average, respectively. See page 2 for additional performance information.

Market Commentary

The third quarter saw a return of volatility to financial markets, starting with a decline in July, as macroeconomic factors, including conflict in Ukraine and Israel, a slowdown in emerging market growth, and Argentinian debt default on the last day of the month all weighed on the market. Markets rebounded sharply in August, as mostly positive second quarter earnings reports were coupled with dovish comments from Federal Reserve Chair Janet Yellen, who at the annual Federal Reserve meeting in Jackson Hole, reiterated, "that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after our current asset purchase program ends." In other words, rates are likely to remain low for some time. With the backdrop of a slowly improving economy and continued accommodative Fed policy, the S&P 500 hit an all-time high on September 19.

Towards the end of the month, however, markets began factoring in the possibility of a recession in Europe, a worse than expected emerging markets slowdown, the negative impact of foreign currencies on overseas earnings (especially in the Eurozone), concerns about the impact of communicable diseases on travel and leisure industries, and continued conflict around the globe, whether in Ukraine, Iraq, Syria, or elsewhere. In volatile times, we believe it is important to reiterate that, as value investors, we seek for "Mr. Market" to serve us, rather than inform us about the value of a company. We continue to use stock-specific and market dislocations (as has been with small capitalization stocks this year) in order to buy even more of the companies we own on your behalf. These are high-quality, cash generating franchise businesses, operating in industries in which we have a core competency, which have potential catalysts to surface value: a takeover of the company, financial engineering, new management, regulatory changes, a change in cash flow allocation, or some other dynamic. We note that continued low rates mean that companies will continue to have access to low-cost financing, with which they can pursue mergers & acquisitions (M&A). This underscores our confidence that the "Fifth Wave" of takeover activity is likely to continue.

Deals, Deals, and More Deals

Dealmaking continued in the third quarter, with worldwide M&A up 59% to $2.7 trillion for the first nine months of 2014, although year over year deal value declined in the third quarter. Fund holding Alere (0.3% of net assets as of September 30, 2014), a leading diagnostics company, received an inquiry from its former CEO, Ron Zwanziger, about taking the company private in September. While the company has so far rebuffed Mr. Zwanziger's advances, we believe that a transaction is still very possible and note that the company has launched a "strategic review" of its operations. Additionally, Tyson Foods completed its acquisition of Fund holding Hillshire Brands, a leading branded meat company, in August.

In addition to M&A activity, financial engineering continued in the third quarter. Fund holding eBay (1.3%) announced plans to spin off its PayPal secure payments business from its core online marketplace operations. We had long anticipated this move and think it could eventually result in the acquisition of one or both units.

Let's Talk Stocks

The following are stock specifics on selected holdings of the Fund. Favorable earnings prospects do not necessarily translate into higher stock prices, but they do express a positive trend that we believe will develop over time. Individual securities mentioned are not necessarily representative of the entire portfolio. For the following holdings, the percentage of net assets and their share prices are presented as of September 30, 2014. The Bank of New York Mellon Corp. (1.5% of net assets as of September 30, 2014) (BK - $38.73 - NYSE) is a global leader in providing financial services to institutions and individuals. The company operates in more than one hundred markets worldwide and strives to be the global provider of choice for investment management and investment services. As of June 30, 2014, the firm had $28.5 trillion in assets under custody and $1.6 trillion in assets under management. Going forward, we expect BNY Mellon to benefit from rising global incomes and the cross border movement of financial transactions.

Cablevision Systems Corp. (1.8%) (CVC )($17.51 - NYSE) provides broadband, television, and phone service to over three million subscribers in the New York metropolitan area. An industry pioneer, CVC has developed the most advanced cable plant in the country and converted over 70% of its subscribers into triple play (video, phone, and broadband) customers. In the process, CVC achieved industry leading average monthly subscription revenues and margins. This peak performance led the company to become a victim of its own success; combined with competition from Verizon FiOS in approximately half its footprint, Cablevision saw reduced growth and a sagging share price in 2012/2013. The company's efforts to address these declines appear to be paying off. Management has also been active on the financial front, spinning off Madison Square Garden (2.4%) in February 2010 and AMC Networks (1.7%) in June 2011 and repurchasing over 10% of shares outstanding. Cablevision is now a single-market, pure-play cable operator, which could facilitate an eventual consolidation of the company in our view.

CBS Corp. (3.9%) (CBS)($53.62 - NYSE) operates the CBS television network and the premium cable network Showtime and it owns 29 local television stations and 130 radio stations. We believe CBS has a number of opportunities to generate incremental non-advertising revenue from the sale of existing content to online video distributors (OVDs) and the retransmission of content agreements with traditional distributors. In addition, we expect a continued recovery in advertising to contribute to earnings growth. Finally, we believe financial engineering, including the announced $3 billion share buyback, could act as a catalyst for shares.

Energizer Holdings Inc. (1.3%) (ENR)($123.21 - NYSE) became an independent company after it was spunoff from Ralston Purina in April 2000. Energizer manufactures, markets and sells dry cell batteries and lighting products worldwide. Subsequently, Energizer expanded its product portfolio through acquisitions, including Schick-Wilkinson Sword (2003), Playtex (2007), Edge/Skintimate (2009), American Safety Razor (2010), and most recently, J&J's feminine hygiene brands (2013). Today, Energizer reports results for two segments: Household ($2.0 billion of revenue), which includes the domestic and international battery businesses, and Personal Care ($2.4 billion), which includes wet shaving, skin, feminine and infant care. In April 2014, ENR announced its intention to split the company into two publicly traded firms through a tax-free spin-off of the Household division. The transaction is expected to be completed by July 2015. This may be the first step in realizing the full value of the two businesses, as both divisions may be more attractive acquisition candidates on a standalone basis.

Flowserve Corp. (1.1%) (FLS)($70.52 - NYSE) is one of the largest global pump companies, serving the petroleum, chemical, and power industries. The company's products include engineered and industrial pumps, automated and control valves, actuators, and seals. About 40% of FLS revenues are derived from the oil and gas industry, and should benefit from the refurbishment of the aging refineries in developed countries and the first time build out of the infrastructure in developing nations around the world. Further, oil companies are bringing up dirtier, heavier, and harder to access crude from thousands of feet below ground, as the cleaner, lighter, and easier to obtain crude that is closer to the surface is depleted. This demands more highly engineered pumps, valves, and seals that can work under very high pressure, high temperature, or underwater, boding well for FLS products.

Liberty Media Corp. (0.6%; 1.2%) (LMCA)($47.18 - NASDAQ; LMCK - $46.99 - NASDAQ) is a diversified investment vehicle guided by cable television pioneer John Malone (Chairman) and former Microsoft (0.4%) CFO Greg Maffei (CEO). The company owns over half of satellite radio provider Sirius XM, 27% of cable operator Charter Communications, the Atlanta Braves baseball club, and stakes in several other public and private entities. Malone and Maffei have created significant value for shareholders over the past several years as they taxefficiently distributed, traded, or sold interests in Discovery Communications (1.2%), News Corp. (0.5%), Time Warner Inc. (1.4%), DIRECTV (2.9%), Starz and QVC among others. Liberty announced it would spin-off its cable investments, including Charter, into a new company known as Liberty Broadband late in 2015. The remaining Liberty Media could then be merged into Sirius XM, a plan proposed and abandoned early in 2014.

Madison Square Garden Co. (2.4%) (MSG)($66.12 - NASDAQ) is an integrated sports and media company that owns the MSG networks (MSG/MSG+ and Fuse), the New York Knicks, the New York Rangers, the Radio City Christmas Spectacular, and the iconic New York venue, Madison Square Garden. These evergreen content assets benefit from sustainable barriers to entry and long term secular growth. We believe the now completed Transformation project and the rising value of sports programming, as demonstrated by the NBA's recently contract renewal with TWX & DIS, will dramatically increase MSG's earnings power through 2018.

Newmont Mining Corp. (1.6%) (NEM)($23.05 - NYSE) based in Denver, Colorado, is one of the largest gold mining companies in the world. Founded in 1921 and publicly traded since 1925, NEM is the only gold company included in the S&P 500 Index and Fortune 500. We expect the company to produce approximately 4.9 million ounces of gold and 110 million pounds of copper in 2014, with over 60% of this production coming from Australia and Nevada. Newmont is in the process of reviewing its business units and cutting operating costs post the 27% drop in the gold price in 2013. The company has sold non-core assets and has committed to deploy the proceeds from these sales into building new projects, which it expects will generate superior rates of return for shareholders.

Sony Corp. (1.1%) (SNE)($18.04 - NYSE) is a diversified electronics and entertainment company based in Tokyo, Japan. The company manufactures televisions, PlayStation game consoles, mobile phone handsets, cameras, and operates the Columbia film studio and Sony Music entertainment group. We expect the new PlayStation launch and operational improvements in consumer electronics and entertainment to generate EBITDA growth through 2015. We also think the spin-off of the entertainment assets will be a potential catalyst. Time Warner Inc. (1.4%) (TWX - $75.21 - NYSE), located in New York, New York, is a diversified media company with operations in cable networks through HBO, TNT, TBS & CNN, and film & television production. We like the company's cable networks, high margins and low capital intensity. We expect the company to use its free cash flow to return capital to shareholders through its $1.27 per share dividend and aggressive share repurchases. Following the $85 per share bid by Twenty-First Century Fox (2.2%), we expect Time Warner could be an acquisition target.

Investment Scorecard

Top contributors to performance included eBay (1.3% of net assets as of September 30, 2014) (+13%), which announced the long awaited spin-off of PayPal; Madison Square Garden (2.4%) (+6%), in which an activist investor has called for the initiation of a share repurchase program; Republic Services (2.1%) (+4%), which should benefit from a recovery in the US and lower fuel prices; Time Warner Inc. (1.4%) (+8%), the subject of a failed takeover bid from Twenty-First Century Fox (2.2%); and Macquarie Infrastructure (0.7%) (+8%), which reached an agreement to purchase its 50% partner in its liquids storage business.

Detractors from performance included Viacom (7.3%) (-13%) and CBS (3.9%) (-11%), which declined amid concerns about the television advertising market, ratings and pay-television subscriber growth; Rolls- Royce (2.0%) (-15%), which experienced weaker marine aftermarket performance in the first half; National Fuel Gas (2.2%) (-10%), which reflected lower natural gas prices; and Diageo (2.6%) (-8%), whose global footprint has exposed the company to the effects of currency moves.

Conclusion

As always, in volatile times, our process remains unchanged. We conduct bottom-up research on companies and industries in order to uncover undervalued businesses we would be happy to own for many years. Our Private Market Value (PMV) with a Catalyst™ stock selection process identifies potential acquisition targets and likely candidates for financial engineering. Should volatility return and "Mr. Market" provide us with an opportunity, we remain prepared to increase our ownership of businesses that fit these characteristics, as well as invest in new opportunities as they become available.

October 9, 2014

Note: The views expressed in this Shareholder Commentary reflect those of the Portfolio Managers only through the end of the period stated in this Shareholder Commentary. The Portfolio Managers' views are subject to change at any time based on market and other conditions. The information in this Portfolio Managers' Shareholder Commentary represents the opinions of the individual Portfolio Managers and is not intended to be a forecast of future events, a guarantee of future results, or investment advice. Views expressed are those of the Portfolio Managers and may differ from those of other portfolio managers or of the Firm as a whole. This Shareholder Commentary does not constitute an offer of any transaction in any securities. Any recommendation contained herein may not be suitable for all investors. Information contained in this Shareholder Commentary has been obtained from sources we believe to be reliable, but cannot be guaranteed.

Minimum Initial Investment – $1,000

The Fund's minimum initial investment for regular accounts is $1,000. There are no subsequent investment minimums. No initial minimum is required for those establishing an Automatic Investment Plan. Additionally, the Fund and other Gabelli/GAMCO Funds are available through the no-transaction fee programs at many major brokerage firms. The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days after the date of p

New Home Sales At Six-Year Highs

Related XHB Existing Home Sales Rise, Beat Forecast Buckingham Initiates Coverage On Several Homebuilders

New Home Sales reached a six-year high, as reported by the Commerce Department, with sales increasing 0.2 percent to an annual rate of 467,000 units. However, August had a sharp downward revision of 466,000 from 504,000.

Price concessions may be behind the rise in sales, as the median price dropped nearly 10 percent to $259,000. The year-over-year rate of -4.0 percent is only the second negative reading in the last two years.

Initially, the S&P 500 sold off on the report, but it has since regained the levels it was at prior to the release.

Shares of the Homebuilder ETF (NYSE: XHB) were trading lower by 0.36 percent at 30.68.

Posted-In: News Econ #s Markets

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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'Captain America' Chopper Sells for $1.35 Million

Damian Dovarganes/APA "Captain America" Chopper from the 1969 film "Easy Rider." | A star-spangled chopper reportedly ridden by Peter Fonda in the classic film "Easy Rider" sold for $1.35 million, making it one of the most expensive motorcycles ever sold. Auction house Profiles in History sold the bike over the weekend for far above the reserve price of $1 million. The chopper, known as the "Captain America" chopper for the name of Fonda's character in the 1969 film, was owned by Los Angeles collector Michael Eisenberg. The price came despite media reports that cast doubt on the authenticity of the bike. The Los Angeles Times reported that an earlier "Captain America" chopper had been sold that also claimed to be the last remaining of its kind from the film. Fonda told the Times before the sale: "There's a big rat stinking someplace in this."

Running A Succesful Company

In the first part of this series, we covered the first five rules that Walton left us that can help us run a successful company. Here are the remaining five rules:

Rule 6: Celebrate your successes. Find some humor in your failures. Don't take yourself so seriously. Loosen up, and everybody around you will loosen up. Have fun. Show enthusiasm — always. When all else fails, put on a costume and sing a silly song. Then make everybody else sing with you. Don't do a hula on Wall Street. It's been done. Think up your own stunt. All of this is more important, and more fun, than you think, and it really fools the competition. "Why should we take those cornballs at Wal-Mart seriously?"

Rule 7: Listen to everyone in your company. And figure out ways to get them talking. The folks on the front lines — the ones who actually talk to the customer — are the only ones who really know what's going on out there. You'd better find out what they know. This really is what total quality is all about. To push responsibility down in your organization, and to force good ideas to bubble up within it, you must listen to what your associates are trying to tell you.

Rule 8: Exceed your customers' expectations. If you do, they'll come back over and over. Give them what they want, and a little more. Let them know you appreciate them. Make good on all your mistakes, and don't make excuses. Apologize. Stand behind everything you do. The two most important words I ever wrote were on that first Wal-Mart sign: "Satisfaction Guaranteed". They're still up there, and they have made all the difference.

Rule 9: Control your expenses better than your competition. This is where you can always find the competitive advantage. For 25 years running — long before Wal-Mart was known as the nation's largest retailer — we ranked number one in our industry for the lowest ratio of expenses to sales. You can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you're too inefficient.

Rule 10: Swim upstream. Go the other way. Ignore the conventional wisdom. If everybody else is doing it one way, there's a good chance you can find your niche by going in exactly the opposite direction. But be prepared for a lot of folks to wave you down and tell you you're headed the wrong way. I guess in all my years, what I heard more often than anything was: a town of less than 50,000 population cannot support a discount store for very long.

"Those are some pretty ordinary rules, some would even say simplistic. The hard part, the real challenge, is to constantly figure out ways to execute them. You can't just keep doing what works one time, because everything around you is always changing. To succeed, you have to stay out in front of that change."

Now the most important thing. Do you think that Wal-Mart still abides by the rules laid out by his founder? In what ways is the company still on the road, and in what ways has the company shifted away? Just as Mr. Walton mentioned, everything is changing around us, and, paraphrasing Charles Darwin, it is the most adaptable (Company) to change that will win the race.

About the author:Brian Flores"I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you." - Charlie Munger

Visit Brian Flores's Website

Currently 5.00/51 Saturday, October 18, 2014 Week's Winners and Losers: Baristas and Cord Cutters Score Elaine Thompson/AP There were plenty of winners and losers this week, with the world's leading search engine failing to live up to expectations on decelerating ad growth and the leading premium java retailer coming through with a pay increase at a time when other establishments are being criticized for their wages. Here's a rundown of the week's best and worst. Google (GOOG) -- Loser Is an earnings miss really a surprise if it just keeps happening? Google posted a lower-than-expected profit in Thursday's quarterly report, but this is the fourth consecutive time that the search giant has failed to live up to Wall Street's bottom-line targets. That isn't a big deal. Google's investing in data centers and new businesses that don't carry the kind of immediate payoffs that it has in paid search. The only problematic aspect of the report is that paid clicks rose just 17 percent over the prior year. That may seem like a lot, but Google had posted gains of 26 percent and 25 percent during the year's first two quarters. Starbucks (SBUX) -- Winner It pays to be a barista. Starbucks announced on Thursday that its employees will receive a pay increase come January. "The company didn't disclose pay rates, which vary according to market; a Starbucks employee recently told The Seattle Times he started at $9.50 an hour. Job-reviews website Glassdoor indicates the average barista wage is $9.32 an hour." At a time when many fast-food chains and retailers are being taken to task for their low wages, Starbucks finds a way to shine. It's not the only change at Starbucks. It's relaxing many of its conduct and dress codes. It will allow employees to wear nose studs. They also won't have to cover up tattoos, as long as they are not on the face or neck. Baristas who used to be able to have a complimentary drink during a shift can now also have a food item. The changes are ultimately about attracting and retaining employees, lowering its turnover and training costs. Netflix (NFLX) -- Loser If you're known for providing conservative guidance, you'd better not fall short. Three months ago, Netflix was forecasting that it would close out the third quarter with 53.74 million streaming accounts worldwide. It wound up having just 53.06 million subscribers on its rolls. Netflix blamed the shortfall on consumer reaction to its May price increase, but it may be more than that. After all, Netflix also grandfathered in existing members to the original $7.99-a-month rate. If $8.99 was too high to woo new subscribers, wouldn't the grandfathering at least help retention efforts? Another loser here is BTIG Research, which had upgraded the stock the day before the earnings report. Cord Cutters -- Winners Folks kissing their hefty cable and satellite television bills goodbye are starting to get more options for video entertainment. Time Warner's (TWX) HBO and CBS (CBS) announced plans for stand-alone streaming services. CBS is charging $5.99 a month for its streaming platform that offers access to live and legacy CBS content. HBO didn't offer pricing details, but it's a big deal if folks will be able to watch shows like "Game of Thrones" and "True Detective" next year without needing either a pay-TV subscription or an uncle willing to share his HBO Go password. Tesla Motors (TSLA) -- Loser Tesla may have been a market darling a week ago after unveiling bar-raising features for its Model S sedan, but this week it was a different story. The electric car maker was held back after an analyst suggested that the Model X crossover SUV could be delayed until the second half of next year. It wouldn't be a surprise to see a new car run into some roadblocks before hitting the market, and it could also explain why Tesla held last week's event to update its Model S sedan's options, as a way to buy itself some time. Another piece of bad news for Tesla came out of Michigan, where plans for it to open a dealership were shot down by legislation that prohibits an automaker from selling directly to consumers. Tesla's been battling this old way of thinking in many states, and sometimes it falls short. More from Rick Aristotle Munarriz •Apple's New iPad Air 2: Thinner, Faster, Irrelevant •Will a Refreshed 'Words With Friends' App Score for Zynga? •Netflix Discovers $8.99 a Month Might Be Too Much to Ask Tuesday, October 14, 2014 Why JPMorgan’s Earnings are Good News for Visa, MasterCard English majors know that the subtext is often more important than they text. Sterne Agee’s Terry McEvoy and team apply that principle to JPMorgan Chase’s (JPM) earnings–and its results contain a nugget of good news for Visa (V) and MasterCard (MA): Reuters JPMorgan Chase generated 11.7% YoY growth in card spending, consistent with last quarter's growth rate and a positive read through for Visa's U.S. payment volume growth (JPM is V's largest issuer). Chase Paymentech, JPMorgan Chase's merchant acquirer division, also posted double digit YoY growth in volumes (+14.7%) which bodes well for both Visa and MasterCard, and the merchant acquirers. Of note, despite double-digit growth in volumes, merchant services transactions slowed, the third consecutive quarter of slowing growth in transactions. The disconnect could be attributable to more transactions being aggregated, or significantly higher average ticket amounts per transactions. We would speculate it is due to transaction aggregation given Chase Paymentech's legacy strength in eCommerce (online), and the fact aggregation is used more frequently for online purchases. Shares of JPMorgan Chase have fallen 1.4% to $57.37 at 10:30 a.m., while Visa is unchanged at $204.29 and MasterCard has gained 1.3% to $70.66. Thursday, October 9, 2014 JC Penney: That Wasn’t Good For the past week or so, analysts have been warning that JC Penney (JCP) would have a hard time living up to expectations at its Analyst Day today. It appears they were right. Getty Images JC Penney said same-store sales would grow at a low-single-digit clip duringthe third quarter of 2014 fiscal year, down from its previous prediction of mid-single digits after a September sales slowdown. JC Penney also said its 2015 gross margins would increase significantly over 2014 and that it would be free cash flow would be positive. Investors weren’t happy with the news, as shares of JC Penney dropped 11% to $8.17 today. S&P Capital IQ’s Efraim Levy explains why: JC Penney shares are lower as it cut Q3 sales outlook after disappointing September sales. Even though management reiterated that other metrics for the quarter and full year were still on plan, and provided some outlook for future growth and improved profitability, some investors may be concerned about demand and what JC Penney also admitted (albeit no surprise) is a promotional environment. Near-term “conservative” margin outlooks were below historical levels. A bright spot was in-store Sephora retailing operations that are exceeding expectations and could provide additional growth. What did everyone expect–that JC Penney would reach its former heights in record time? Saturday, October 4, 2014 5 Breakout Stocks Under $10 Set to Soar DELAFIELD, Wis. (Stockpickr) -- There isn't a day that goes by on Wall Street when certain stocks trading for under $10 a share don't experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sound risk management are banking ridiculous coin on a regular basis. Just take a look at some of the big movers in the under-$10 complex from Thursday, including XTL Biopharmaceuticals (XTLB), which exploded higher by 104%; Qualstar (QBAK), which ripped sharply higher by 37%; Female Health Company (FHCO), which spiked big to the upside by 32%; and One Horizon (OHGI), which jumped higher by 10.5%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading. Must Read: Must-See Charts: How to Trade 5 Big Stocks for Big Gains One example of an under-$10 stock I flagged recently that exploded to the upside was networking solutions player Aviat Networks (AVNW), which I featured in July 18's "5 Stocks Under $10 Set to Soar" at around $1.23 per share. I mentioned in that piece that shares of Aviat Networks had been uptrending over the last two months and change, with shares marching higher from its low of 99 cents per share to its recent high of $1.35 a share. That uptrend was starting to push shares of AVNW within range of triggering a major breakout trade above some near-term overhead resistance levels at $1.28 to $1.30 a share and then above $1.35 a share. Guess what happened? Shares of Aviat Networks started to trigger that breakout in late August with decent upside volume flows. Volume on August 21 registered 928,000 shares, which is well above its three month average volume of 375,556 shares. Shares of AVNW have uptrended strong since triggering that breakout, with the stock tagging a recent high of $1.82 a share. During that uptrend, shares of AVNW have continued to make higher lows and higher highs, which is bullish technical price action. That trend would have been easy to ride since AVNW never violated its previous lows as it continued to march higher. That move represents a massive gain of close to 50% for anyone who bought AVNW and anticipated the breakout. Low-priced stocks are something that I tweet about on a regular basis. I frequently flag high-probability setups, breakout candidates and low-priced stocks that are acting technically bullish. I like to hunt for low-priced stocks that are showing bullish price and volume trends, since that increases the probability of those stocks heading higher. These setups often produce monster moves higher in very short time frames. When I trade under-$10 names, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 names with a catalyst, but that's secondary to the chart and volume patterns. With that in mind, here's a look at several under-$10 stocks that look poised to potentially trade higher from current levels. Must Read: 5 Stocks With Big Insider Buying WaferGen Bio-Systems One under-$10 medical diagnostic and testing equipment player that's quickly moving within range of triggering a big breakout trade is WaferGen Bio-Systems (WGBS), which develops, manufactures and sells systems for gene expression quantification, genotyping and stem cell research for the life sciences and pharmaceutical drug discovery industries in the U.S., Canada, Europe and the Asia Pacific. This stock has been under heavy selling pressure over the last three months, with shares down large by 81%. If you take a glance at the chart for WaferGen Bio-Systems, you'll see that this stock has been trending sideways and consolidating for the last month and change, with shares moving between $4 on the downside and around $5 on the upside. Shares of WGBS have now started to take out some near-term overhead resistance levels at $4.50 to $4.57 a share. That move is quickly pushing shares of WGBS within range of triggering an even bigger breakout trade. Traders should now look for long-biased trades in WGBS if it manages to break out above Thursday's intraday high of $4.70 a share to some more key overhead resistance at $5 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 16,848 shares. If that breakout triggers soon, then WGBS will set up to re-test or possibly take out its next major overhead resistance levels $7 to its 50-day moving average of $7.27 a share, or even $8 to $8.50 a share. Traders can look to buy WGBS off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $4.26 to $4.14 a share or right below its 52-week low of $4 a share. One can also buy WGBS off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point. Must Read: How to Trade the Market's Most-Active Stocks Jakks Pacific Another under-$10 stock that's starting to move within range of triggering a big breakout trade is Jakks Pacific (JAKK), which designs, produces, markets and distributes toys and related products, pet toys, consumables and related products, electronics and related products, kids indoor and outdoor furniture, and other consumer products. This stock hasn't done much over the last three months, with shares up just 1.1%. If you take a look at the chart for Jakks Pacific, you'll see that this stock recently formed a double bottom chart pattern at $6.47 to $6.46 a share. Following that bottom, shares of JAKK have started to spike higher back above its 50-day moving average of $6.76 a share and it has just started to take out its 200-day moving average of $7.22 a share. That bullish move is now quickly pushing shares of JAKK within range of triggering a big breakout trade above some near-term overhead resistance. Market players should now look for long-biased trades in JAKK if it manages to break out above some near-term overhead resistance levels at $7.33 to $7.60 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 427,702 shares. If that breakout kicks off soon, then JAKK will set up to re-test or possibly take out its next major overhead resistance levels at $8.40 to $8.60 a share, or even $9 to its 52-week high at $9.48 a share. Traders can look to buy JAKK off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $6.76 a share or near those double bottom support levels. One can also buy JAKK off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point. Must Read: 5 Stocks Spiking on Unusual Volume LoJack Another under-$10 stock that's starting to move within range of triggering a big breakout trade is LoJack (LOJN) which provides technology products and services for the tracking and recovery of mobile assets, stolen vehicles, motorcycles, construction equipment, motorcycles, cargo and people at risk of wandering. This stock has been hit hard by the sellers over the last three months, with shares down sharply by 34%. If you take a glance at the chart for LoJack, you'll see that this stock has been downtrending badly over the last three months, with shares sliding lower from its high of $6.18 to its recent low of $3.77 a share. During that downtrend, shares of LOJN have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of LOJN over the last month have started to trend sideways and consolidate, with shares moving between $3.77 on the downside and $4.20 on the upside. Shares of LOJN nave how started to spike higher off that $3.77 low with monster upside volume. That spike is quickly pushing shares of LOJN within range of triggering a big breakout trade above some key near-term overhead resistance levels. Traders should now look for long-biased trades in LOJN if it manages to break out above some near-term overhead resistance levels $4 to $4.14 a share and then above $4.20 to its 50-day moving average of $4.33 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 40,739 shares. If that breakout materializes soon, then LOJN will set up to re-test or possibly take out its next major overhead resistance levels at $4.80 to its 200-day moving average at $4.92 a share, or even $5.25 to $5.30 a share. Traders can look to buy LOJN off weakness to anticipate that breakout and simply use a stop that sits right below its intraday low of $3.76 a share. One can also buy LOJN off strength once it starts to bust above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point. Must Read: Buy These 5 Momentum Movers to Stomp the S&P Sportsman's Warehouse An under-$10 sporting goods player that's starting to trend within range of triggering a big breakout trade is Sportsman's Warehouse (SPWH), which operates as an outdoor sporting goods retailer in the U.S. This stock has been drilled by the sellers so far in 2014, with shares off sharply by 29%. If you look at the chart for Sportsman's Warehouse, you'll notice that this stock has recently come out of a downtrend that was marked by the $5.43 low in early September. Since tagging that low, shares of SPWH have now started to uptrend and move back above its 50-day moving average. Shares of SPWH have also recently formed a major bottoming chart pattern right above its 50-day, with the stock finding buying interest at $6.50, $6.26 and $6.40 a share. Shares of SPWH are now starting to bounce higher off those support levels and it's quickly moving within range of triggering a big breakout trade. Market players should now look for long-biased trades in SPWH if it manages to break out above some near-term overhead resistance levels at $7 to $7.25 a share and then above more resistance at $7.46 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 263,769 shares. If that breakout triggers soon, then SPWH will set up to re-test or possibly take out its next major overhead resistance levels at $8 to $8.73, or even $9.50 to $10.14 a share. Traders can look to buy SPWH off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $6.40 to $6.26 a share. One can also buy SPWH off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point. Must Read: 5 Stocks Set to Soar on Bullish Earnings Zogenix One more under-$10 stock that's quickly moving within range of triggering a major breakout trade is Zogenix (ZGNX), which develops and commercializes therapies for the treatment of central nervous system disorders and pain. This stock has been destroyed by the bears so far in 2014, with shares down sharply by 63%. If you take a glance at the chart for Zogenix, you'll notice that this stock has formed a major bottoming chart pattern over the last two months and change, with shares finding buying interest each time it has pulled back below $1.20 a share. That bottoming pattern is coming after shares of ZGNX were downtrending badly for the last six months, with shares dropping sharply from over $3 to its new 52-week low of $1.14 a share. Shares of ZGNX have now started to rip higher right above some key near-term support levels at $1.15 to $1.14 a share. That move is quickly pushing shares of ZGNX within range of triggering a major breakout trade above some near-term overhead resistance levels. Traders should now look for long-biased trades in ZGNX if it manages to break out above some near-term overhead resistance at its 50-day moving average of $1.28 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average action of 1.78 million shares. If that breakout triggers soon, then ZGNX will set up re-test or possibly take out its next major overhead resistance levels at $1.43 to $1.47 a share. Any high-volume move above those levels will then give ZGNX a chance to tag its next major overhead resistance levels at $1.60 to $1.73 a share, or even $1.80 to $2 a share. Traders can look to buy ZGNX off weakness to anticipate that breakout and simply use a stop that sits right below its new 52-week low of $1.14 a share. One can also buy ZGNX off strength once it starts to clear its 50-day at $1.28 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point. -- Written by Roberto Pedone in Delafield, Wis. RELATED LINKS: >>4 Bargain Bin Stocks to Pad Your Portfolio in October >>5 Big-Volume Stocks to Trade for Big Breakouts >>3 Big Stocks on Traders' Radars Follow Stockpickr on Twitter and become a fan on Facebook. At the time of publication, author had no positions in stocks mentioned. Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. 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