The Big 3: ROST, MRK, AAPL

0:00Welcome back to trading 360. I'm Marley Kaden. It's time for the big three. We've got three stocks, three charts and three trades for you. Brick to Kat taking us through the charts as always here to take us through the trades. Don Coffman, the co-founder of Theo Trade. Don, great to have you on. I mean, watching a real-time reaction right now in terms of the markets and rates to the Treasury Department buying back $6 billion in longer term debt about triple the normal level within the consensus, but about $2 billion higher than the estimate. How are you looking at this reaction? Of course, it's just happening. We just got this announcement about five minutes ago. Yeah, no, we've been watching it here literally since this announcement came out. Like, I thought they were missing a zero off there. I didn't care what the estimates happen to be, but this is nominal. It really is nominal. And you can see how the markets are reacting. The ZB is really getting tagged right now about to go through some of its lows. The ZN, which of course is the 10-year fairly precipitous sell-off. I mean, look, the interest

1:03rates continue kind of explode. The Treasury, Scottie B in the Treasury is there, but clearly not enough to really support this marketplace at this point in time. Yeah, it seems to be a negative. We're just off of session lows right now, but certainly seeing a dip across the board here. But let's dive into your big three. You've got Ross stores as your first pick here. They're slightly lower on this session, but year to date performing well. They're up 25%. They're coming off a strong performance in terms of their earnings. But I know from looking across your notes that you brought us three little bears today, there's no Goldilocks to be found. So take us through how you're looking at Ross. Yeah, I'm all beared up with no place to go. And you know what, that's been working everywhere, but tech right now has been taking a little bit of heat. So let's get into it with Ross stores. So one of the reasons I selected Ross stores is this just happens to be in the midst, if you will, of some sell-side activity. The underlying just recently came off of a high of 257. It's now

2:05down to the 227 kind of handle. If you take a look though at some of the peers within the group, which happened to be like TJ Maxx, I would think of something like Coles, KSS, take a look at what's happened to Dick Sporting Goods Lulu, which is much more brand specific. Nevertheless, they're getting tagged across this sector, like retail is not looking good. Obviously, I can point to the other side of that with Gap and a few more, but specifically more in discount over here. When I look at TJ Maxx and I look at Coles, they're well off the highs. And I just think that this happens to be the most opportunistic trade within the particular sector. And that is going to be a bearish position because, as I said, I'm going to jump on trend right now, seeing some sell-side activity. But it's not getting hit nearly as hard as if you will the TJ Maxx or what Dick Sporting Goods. Nevertheless, I'm going out to the Nov 20th expiration here in Ross. Nov 20, I'm going to be buying the 220 puts and selling the 210 puts against it. So it's

3:06a nice big $10 wide put spread done for a $3.20 cent debit. And I've given myself all kinds of times. 70 days for there's some sell-side activity to persist here. And that sell-side activity, as I said, it's already begun with 257 to 227. If this trend continues, we'll be right where we need to be for that November expiration. All right. And I love when Rick brings us a surprise chart to demonstrate. Some of what you're talking about here. I mean, Ross, the clear out performer in the light blue here against TJ X, which is the green and down near the bottom of our chart. Yeah, but kind of a notable slide for many of these names here. Burlington stores really has taken a strong severe move to the downside here recently. So interesting food for thought here to give a quick visual. But so if we do look at Ross, here's those highs near 257, Don mentioned here. But we can also see from there a downward sloping channel type shape has developed. We can see then we're between those two white lines

4:10here, our top line pointing downward. Just duplicate it, put it across the lows. You can try to project potential support based on that. Certainly not going to work every time, just a general guideline here. We can see a relative low here near 218. And as well as a repeated low after the earnings gap that we saw to the upside back in April here near 207. Meanwhile to the upside, a relative low became a ceiling here near 232. Another relative high near about 247 stands out as well. If we were to look at our moving averages next, we can see that prices slip below three of them. Our exponential moving averages that we follow here are five day and dark blue is the closest. 229.26 is where that one comes in. If we did push out to above our channel type shape, we have a confluence between our 21 and 63 day near about 234. RSI is moving lower here. We are below the 50 midline. We are on the verge of breaking through our green trend line as well. So

5:11look for that to happen if you have more of a bearish outlook as well as a slip below that 30 level for further bearishness. We can see our volume profile study shows that we have a node here between about 223 to 236. We are basically right on our point of control, our heaviest trading area of all that comes in just below 228. Another node down here, 209 to 217. Another one to the upside, 249 to 255. So we have the luxury of some very clearly defined areas of heavy trading to look for potential support or resistance if we do get a strong directional move in the coming days. Yeah, right now that direction, at least over the last month, is to the downside. We've had more than 11% pullback in raw stores after that run up that you just highlighted there, Don. Another one with the big run up is Merck, which is your second pick here in the big three. They came out with a really positive trial news. Perhaps we're one step closer to curing melanoma or having at least a profound treatment for it. But losing, you know, maintaining their momentum, they're

6:12up about 14% but falling off of those highs. How are you looking at Merck? Yeah, Merck is actually very similar to the first trade is I'm looking at if you will, the strongest relative to the to a particular sector in this particular case, health care. Specifically, if I looked over it like the XLV took a huge hit in the last two trading sessions, along with a lot of the other peers within this particular sector. So what am I doing in here? I'm using Merck's relative strength, which has been great. Okay, and it's held up and it's up about 40% year to date and it's completely unscathed. Okay, in terms of some of the recent cell side activity, not recent cell side activity, as I said, it really started to hit the XLV and a few of the health care stocks in the last two trading sessions. And you're going to see Merck completely and totally unfazed by that selling. So the relative strength of Merck, okay, literally being its liability down the road is what I'm looking for. All right, so for Merck, I think this one's going to be a little bit tougher. I'm going to give myself a bit more time

7:15for the trade to actually develop for that. Okay, this is not so much a short-term trade is this is going to be if you will an investment to the downside. The options trade is going out to the D-18. Again, D-18 options expiration. All right, that's a hundred days out. I'm going to be buying the 140 puts, buying the 140 puts, selling the 130 puts against it. This one's done for a $2.95 cent debit. Again, a very similar conceptual setup to what I did in raw stores. This one being applied to the health care sector specifically to Merck, which as I said, relative strength is great versus the rest of the sector. But as we well know, markets often move, the sector moves, and the individual stocks will then move with it. All right, so as we look at Merck, it's just fractionally lower right now, but I see multiple sets of converging lines on the chart here, Rick. So walk us through what you're seeing. Yeah, late stage failure of Novartis's cardio vascular drug seems to have been a bit of a bucket of ice water on the group, but as outside Merck holding

8:19up pretty well. So here's some of our lines starting with those highs, 156.92. This triangular shape is what we've seen developed recently. After a big gap to the upside here before that, we had more of a rising wedge type shape here, which often is regards being a little bit more of a bearish type of setup. But as you can see, it can really go either way. What you're looking for is a breakout beyond either of those two boundary lines, same deal here. We have now this kind of more triangular type shape here. We have our extreme low after the push to the upside and your 145, our extreme high 156.92. So if we were to move lower, some traders might be looking for the gap to be filled near about 138 or so. That's our green lines that we have highlighted here on our chart. Now we also find ourselves slipping below our five day exponential moving average during the past few sessions here. That comes in at 149.18. This point, we have our teal 21 day EMA coming in at 145.62. That would represent a breach of our lower trend line in this case. So that could be a

9:21supportive area traders would be looking for. We can see now as well. We have a green upward sloping trend line on the RSI here. That is in danger of being broken today as well. We sit at 57 right now. So again, a break below the 50 midline would be noteworthy if we were to move beyond that trend line that we have there. We have our volume profile showing that there were some takers in terms of trading activity up here at these elevated levels. 148 to 153 is where the bulk of that happened here. Things start to pick up again much more notably between about 126 to 130 back down here if we were to fill the gap and move lower. All right. Right now, Merck is at 147 at 65 down about a half of a percent as Rick just highlighted there. The whole entire sector got a little bit of cold water thrown on it with that no-vartus trial failure not yielding the expected result. Now your last one I find the most interesting just because of the timing of today's event. You've got Apple as your three in the big three here. How are you looking at Apple? You're

10:23you're not going to be a user of the flip phone, the foldable phone. Oh, I love the idea. I really do. I love the idea at some $2,200. I do not love that idea. You know, I'm just crazy enough to own just about every Apple product out there. But there's no way I'm paying. You get this $2,200 for a for a flip phone. It's just I think that that's a bit extreme and you know, I again, this marketplace in Apple. Look, Rick, I'm not even looking at the chart on this one. I'm fading the flip phone. That's that's what it comes down to. I'm fading the flip phone. This one's going to be a very, very short-term trade. And you know, I've actually seen this with the number of some of the recent product releases from Apple. So major product release comes out. The marketplace kind of absorbs it. Has a little sell side activity after that's really what I'm going after over here. But again, the price increases. Look, I you know, I've never said this before, but when it comes to a to a phone, a thousand bucks, I can swallow that maybe 1200. Let's get crazy. But when you start

11:26talking about $2,000 for a phone, I'm out of the contest at that point. With that, I'm going to go out to the Sep 18. That's not that far out, right? So Sep 18 is going to be a rather short-terration trade. We're not talking zero DTE, but about a week out. I'm going to be buying the three 10 puts, buying the three 10 puts selling the three or five puts against just a nice tight five dollar wide put spread done for a dollar 40 debit. Just a little sell side activity. Look, you may see a pop after this announcement, which should actually make this trade even more ahead and cages to get into. But the truth is I want to fade a $20, $200 flip phone, which by the way is unfortunately it's a little you know too late. If you haven't looked pretty much everybody out in the Android side already has that. Not saying a man's right, I'm not going to go that far, but I'm not thrilled with the price point on this Apple product. All right, fade the flip phone. We're going to talk a lot more about this foldable phone in our next segment, but before we get to that, let's take a look at the technical setup coming into John Ternis's first event as CEO.

12:30I can certainly see the thinking behind all this. I'm personally quite curious to see what becomes of Siri. I don't think I'm being unfair or controversial if I see Siri has been a laggard among AI helpers here to put it mildly. But we can see here 344.57 was our high point that we had shortly before our last earnings event, which was July 30th. From there you could draw a boundary line going along these subsequent highs that we formed. Not really a trend line yet, a trend line would connect three or more points, but in this case you could say that we have a upward sloping channel that did develop after earnings. We hit our lows that we established here near 300. We had some relative lows that were formed near 313. But today's price activity were dipping below the channel and we're breaking through those relative lows. So not really the greatest setup here if you're having a more bullish outlook as the day is still quite young, though we still have this event coming up. So great deal could change from there, but not the most encouraging setup that you could see here. 330 was where we had our gap that gap has been filled. Another small gap here

13:34near 337 would be two of our notable upside areas to be on the lookout for if things do start to turn around. Now we can see that we have slipped below our five day and 21 day exponential moving averages. Those come in at about 316, 317 or so. We are also approaching our 63 day exponential moving average near 310 to the downside. That could be a supportive area, the longer term the moving average, the more significant it is as a source of potential support. We have also broken out of our green trend line on the RSI, slipping below our 50 midline as well. So this is starting to develop into more of a bearish technical situation at this point. Now we can see here again we have some very distinct nodes on our volume profile study here. 308 to 314 is it especially heavy trading area here. Another smaller pocket of activity here 295 to 300 as well as a very slight area here near 330. All right, right now Apple is at 312 40 down about 1.2 percent as we prepare for this

14:37event which will kick off here in about 90 minutes or so. But of course we'll be listening. Don appreciate you joining us today for big three and being with us as always every week Don Kaufman and Brickdew Cat for taking us through the technicals there.