BY MARK SEBASTIAN
January 07, 2024
Each week, my team will give an overview of a stock. I’ll discuss fundamentals, Licia will analyze the charts, and AG will break down the volatility.
Have a stock YOU want us to review? Email my team here. – Mark
Hey Trader,
For our first Pit Report of the year we are going to do something a little different.
The financial media, talking heads, twitter bros….just about everyone puts out a year end prediction for the markets…
We are not going to be doing that…but what we are going to do is share our single best idea for 2024.
It might be an index, it might be a stock, Licia, Andrew and Myself will reveal what we are buying to start off the new year…
2024
2023 was the year of the megacap… 2022 was the year of energy….2021 was the year of nonsense stocks….
It seems every year there is a theme…for 2024 I think the overall theme will be stabilizing interest rates. I do not think that they are going to drop like a stone, I do not think the FOMC is going to aggressively cut rate….but if rates simply stop going up, stabilize, or even go down a little there is one clear winner…
Midcap and community banks….
KRE, the midcap bank ETF has had a nice run over the last few months
It is well off the lows from may when it was below 40, but it is still WELL below where it was prior to March of 2023 when it was in the mid 60s.
Now within KRE there are great stocks…and stocks that are maybe not as great. On the not so great side, I might point a finger at HBAN…this stock was troublesome before the mess last March.
But there are great stocks like FITB, CMA, and TFC.
Of those names FITB probably has the least upside. TFC probably the most upside. But with a mix of being a great bank and having really nice upside I present Comerica Bank.
This stock was over 75 dollars in February of 2023. It sits at 54.68. I am a buyer of calls in this bank…
Ill reveal WHAT calls on Monday during the Option Pit Ticker show.
Put a little Biotech in your back pocket
The market flavor of the year was AI. I see the potential but i think the big area it will help is biotech and gene sequencing for better therapeutics. I am not an ace when it comes to biotech so I just go with the ETF and both of the bigger ones, biotech NASDAQ IShares Biotech ETF (Ticker: IBB) and baby biotech SPDR S&P Biotech ETF (Ticker: XBI).
Both names are near the pre-Covid area price level which was a good spot to enter Mega Cap tech last year. Most of the drug stocks got hammered post COVID when hot money fled the sector. That money is now in Mega Cap tech. I like these as investment grade ETFs that pay small dividends. I am selling some social media stocks I bought this year and adding more Biotech ETFs.
5 year IBB chart with 1 day candles
5 year XBI chart with 1 day candles
My biggest biotech holding is Regeneron Pharmaceuticals (Ticker: REGN). This was one of the handful of companies that created a therapy to help treat severe COVID patients. I have sold puts in this name at the 400 strike and 500 strike over the last couple of years but at this level I a just holding the stock. If the stock dips severely this year, I would write one (1) 600 level put. It is a bit of a monster trading so a $200 swing in a year is not out of the question. REGN sees $1000 in 2023.
5 year RGEN chart with 1 day candles
The Option Pit Team…
P.S. To see the live show every Monday at 10:30 just sign up for any paid service here at Option Pit... or call 888) 872 3301.
Questions about anything? Leave a comment below!
Mark Sebastian
Founder & CEO, Option Pit
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CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain