Welcome back to the trading week, friends and fellow traders, though I certainly wish we could have started the new week on a more bullish foot. Then again, we've talked about this a few times of late... we knew something like this could be in the cards. At least the market hasn't yet stumbled below the point of no return.
In any case, we've got a couple of updates for the site's Featured Stocks.
You may have seen it, but if not, Staffing 360 Solutions (STAF) opened another Monroe Staffing branch in North Carolina. That's the company's third in the state, the 20th overall.
In any case, I thought James Brumley had a great point about the news - up until this point the bulk of the story has been about the company's acquisitions, and how scaling up would allow it to operate more efficiently and therefore more profitably. Let's not forget, however, the company is still working to expand its footprint with its existing divisions too. The fact that it's opened another office should serve as a reminder it's got more than one way to grow its top line to that target of $300 million per year.
And it wouldn't take a whole lot to make a big dent in this way. The U.S. temporary staffing market is worth about $120 billion per year. A small sliver of that market will be a windfall for STAF, and there's little doubt it's got one of the higher-quality services operating within the industry.
The other news item wasn't news from the company, but news about one of our Featured Stock's charts... Double Crown Resources (DDCC). After running up in April and May, a handful of profit-takers went to work. They may be done now, freeing up the stock for another round of bullishness.
The daily chart of DDCC below tells the tale. All it took was a brush of the 100-day moving average line (gray) on Friday to firm a hammer-shaped reversal bar, and the bulls followed-through with a respectable gain today. From a risk/reward perspective, anybody who was waiting to get into DDCC may not find a better opportunity than now. The next wave of bullishness may not abate the way the last one in May did.
We'll continue to monitor all of our Featured Stocks, not just for news, but for trading opportunities.
As for the market, no need for a lot of discussion today. I'll just show you an updated version of the S&P 500 daily chart, pointing out the 50-day moving average line ended up acting as a floor. Volume was pretty light too. You also have to wonder if (once again), the VIX's crazy surge has left it no way to move any higher. With that much fear materializing this fast, I'm getting a whiff of capitulation even before stocks tanked. We'll see.
Of course, we'll also continue to monitor the combined wisdom of some of the market's best and brightest trading/investing veterans, giving you a little bit of their insight if we can. Today's comes from the Black Ops Team.
On the off chance you didn't hear, Microsoft (MSFT) will be acquiring LinkedIn (LNKD), for a measly $26.2 billion.... all cash. It's a great deal for LNKD owners. For Microsoft? Not so much. Microsoft CEO Satya Nadella clearly sees something there though, so we'll see.
In any case, after a read the news and put by eyeballs back in my head, I went on about my usual day. Big mistake. What I should have done is what the guys over at the Black Ops Trader newsletter DID do, which is recognize the reality that with Microsoft putting some money on the table to get into the social networking game, odds are good it could have started a proverbial land grab in that space. By that, I just mean before the rest of the good ones are gone, suitors are apt to make a play on the remaining social networking sites. They're apt to pay a nice premium for those stocks too; Microsoft just did.
As the Black Ops newsletter explained:
"..However, we've seen this game all too often, whereby the company being acquired gets beaten up for a good while before the idea in question ends up getting bought out.
This is a classic Wall Street game. Look at what shares of LNKD had done before being bought out. Although the stock has most definitely held up way better than both [removed by editor] and [removed by editor], it was still well off its all-time high of $276 before today's announcement. The game goes like this... short the stock heavily, take it down to extreme lows, then buy it all up before the acquisition announcement. If you don't think this happens all of the time, take some time to research this classic Wall Street play.
With that, we'll go ahead and suggest both [removed by editor] and [removed by editor] today for long-term buy and holds. Although both stocks could continue to trade well in the days ahead, we're convinced the long-term prospects for both offer an excellent opportunity for speculators based on today's Microsoft announcement."
He's right. In every way.
Sorry I couldn't show you the exact tickers the Black Ops team suggested, but that wouldn't be fair to current BOT members. I'll see if I can divulge them down the road. Still, there's no problem in sharing you the notion that social networking stocks are apt to heat up now that Microsoft tipped its hand, and forced other buyers to step up to the plate.
If you want to know which social media stocks the BOT just suggested, it's not too late. Sign up today and gain access to all the archives.