A Seasonal Trade Hands Us 30% and 184% Gains

On March 10th I notified readers of a good trade setup in Skechers USA (SKX). I emailed:

I'll provide the justification in tomorrow's newsletter, but it has a good seasonal pattern for the next 7 weeks, a good track record of earnings and revenue growth, and the stock has just broken above previous highs and is falling back gently to test support. The trade setup is:

Objective:
If SKX's pullback stops around support at 65 and starts to stage a rebound, and the overall market is positive, consider a new long stock or long call position in SKX. I expect most of the initial gains to occur within the next 7 weeks, and may hold it for a longer term.

Alternative trade:
The SKX Jul 2015 60 call at a debit near 9.7 may be considered as a substitute for buying the stock.

Skecher's earnings report was 7 weeks away, but its recent track record of earnings and revenue growth suggested there was more to come:

What really clinched the trade setup was the stock's track record of gains over the next 7 weeks, leading into their Q1 earnings report. Over the previous 15 years, SKX had gained an average 24.1% over the 7 weeks leading up to the Q1 earnings release:

That morning the overall market opened positively and traded upwards and SKX was showing a rebound. As it traded above the previous day's close, I recorded a trade entry of 66.90. Over the next two sessions, SKX confirmed the rebound:

During the next 7 weeks, SKX's Up/Down Volume Ratio and On Balance Volume indicator steadily climbed, showing strong institutional accumulation. We held on for the ride.

Yesterday morning Skechers USA reported both earnings and revenue numbers 9% above expectations. The stock recorded a 14.5% gain for the day:

We are now up 29.9% on the stock, which over 43 days is an annualized rate of 138%.

The alternative trade using the July 60 call is now up 184%, which over 43 days is 1565% annualized.

We have 12 other open stock trades, all entered within the last 4 months. Only 2 are down a small amount (0.3% and 3.0%), and the others are sporting gains of 13.3%, 9.4%, 11.8%, 12.5%, and 10.5%. And the alternative trades on several of those positions are up double or triple digits.

Trade selection combining fundamental, technical, and seasonal analysis consistently leads to good trade after another.

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

Copyright (C) 2015 Stock & Options Training LLC

Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.

Gregg Harris is the Chief Technical Strategist at MarketTamer.com.

The content on any of Market Tamer websites, products, or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options, and other securities involve risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities are not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options (http://www.optionsclearing.com/publications/risks/riskstoc.pdf). The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.

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