Stocks are trading higher in the last day of 2018. While the pre-holiday session has been mostly quiet, automaker Tesla Inc (NASDAQ:TSLA), healthcare issue Heron Therapeutics Inc (NASDAQ:HRTX), and weed stock Aphria Inc (NYSE:APHA) are all making notable moves. Below, we'll take a look at the news on shares of TSLA, HRTX, and APHA.

Electrek Report Sets TSLA Back

TSLA shares are dipping slightly today, last seen down 1.6% at $328.51, following a report out of Electrek that the company has more than 3,000 Model 3 vehicles left in inventory in the U.S. Tesla stock earlier found a bottom near the 10-day moving average, and at these levels would close 2018 up 5.7%.

As for sentiment on the high-profile auto stock, short interest remains high, accounting for more than one-fifth of the float, but some bears have been hitting the exits. In fact, short interest has been trending lower since peaking at 39.1 million shares back in June, last seen at 26.7 million shares.

FDA Buzz Gives HRTX a Boost

The Food and Drug Administration (FDA) granted HRTX's non-opioid painkiller priority review, and plans to have a final decision on the drug by the end of this coming April. While shares of the drugmaker are up 7.9% today at $25.63, they remain in their channel of lower highs that's been in place since August. Moreover, Heron Therapeutics again topped out near the downtrending 50-day moving average.

Even with the recent technical weakness, HRTX analysts have remained bullish. All 10 covering brokerage firms have "strong buy" or "buy" ratings. Today, Cantor Fitzgerald reiterated an "overweight" rating and $50 price target -- two times today's price -- saying the FDA news should be viewed as a "significant positive." Further, the brokerage firm said that considering "HRTX stock has retraced most of its 2018 gains, we believe [it] offers a compelling investment opportunity going into 2019."

Short Seller Calls Out Aphria (Again)

APHA stock is down 9.8% at $5.64, after long-time short seller Hindenburg Research suggested an interview with the CEO of Green Growth Brands (GGB) confirms suspicions of shady ties between the two. Late last week, Hidenburg said GGB's planned buyout of Aphria was essentially a publicity stunt meant to "generate the appearance of demand." Green Growth Brands today said Aphria does not have influence over the company, and any "informal relationships that may exist are separate from Green Growth's business decisions."

Hindenburg also took a swipe at APHA earlier this month, calling the company's Latin American acquisitions "virtually worthless." The stock subsequently touched a record low of $3.75 on Dec. 6, about a month after debuting on the New York Stock Exchange (NYSE) around $12.

The shares of Alibaba Group Holding Ltd (NYSE:BABA) are up 2.3% this morning at $142, after the company settled its class-action lawsuit in California. The Chinese e-commerce concern will have to pay $75 million through insurance payouts to settle a dispute initiated back in 2015. 

Despite the upside today, it's been an ugly end to 2018 for Alibaba stock, which fell to a fresh annual low of $129.77 last Monday. The shares tested that $130 level back in late October, and the subsequent bounce from there was neatly blocked by $170 level and their 120-day moving average. For the quarter, BABA has shed 15%, its worst since December 2016.

Analysts are firmly entrenched in the bullish camp. All 21 of the brokerages covering BABA rate it a "buy" or better, while its consensus 12-month price target of $202.68 is a 45.7% premium to Friday's closing perch of $139.09. 

However, shorts are slowly building up their courage. Short interest increased by 8.3% in the last two reporting periods to 115.23 million shares, the most since early August. This represents a healthy 8.5% of the stock's total available float, and 6.1 times the average daily trading volume. 

Amazon.com, Inc. (NASDAQ:AMZN) shares are up 2.8% to trade at $1,518.96 this morning, amid reports the e-tail giant will be expanding its Whole Foods stores next year. Amazon's aim is to put more customers in range of its Prime Now delivery service, with potential new stores in Idaho, Utah, and Wyoming, sources told The Wall Street Journal (subscription required). 

The stock is still set to end 2018 with a gain of roughly 30%, despite the beating AMZN and other tech stocks have taken in the past few months. The equity touched a 10-month low early last week, but popped higher after announcing record-breaking sales for the holiday season. In fact, AMZN shares just finished back above their 10-day moving average after several weeks of staring up at the trendline. 

Analysts are still on Amazon's side, too, with an overwhelming 26 of the 28 giving it a "buy" or better rating, while the other two are calling it a tepid "hold." The security still has a ways to go though if it wants to hit the 12-month consensus price target of $2,136.26, though, which represents a near 42% premium to current levels. 

In the same vein, options traders have been quite bullish about the FAANG stock, too, with AMZN's Schaeffer's put/call open interest ratio (SOIR) of 0.92 sitting in just the 9th percentile of its annual range. This suggests that short-term options players are more call-heavy than usual right now. Plus, Amazon's Schaeffer's Volatility Scorecard (SVS) sits at an 83, hinting that the stock has had a tendency to exceed option traders' volatility expectations during the past year. 

Deutsche Bank AG (NYSE:DB) is up 2.4% this morning at $8.24, after the company's Chairman Paul Achleitner said its turnaround effort was working and it wouldn't need to rely on government intervention or a merger. Bloomberg reported earlier this month that the German government was working on a plan to merge Deutsche with Commerzbank AG.

Of course, none of this has enthused investors much, as DB shares have fallen from around $20 coming into 2018 to today's perch in single-digit territory. The stock hasn't traded above its 50-day moving average since September and touched an all-time low of $7.62 last Thursday.

This skepticism has played out in the options pits, too, where put buying has been extremely popular. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day put/call volume ratio of 3.58 for Deutsche Bank, a reading that ranks in the 100th annual percentile.

Options traders may want to think again when it comes to buying premium on DB at the moment, though. The security's 30-day at-the-money implied volatility comes in at 59.4%, which sits in the 100th annual percentile, meaning short-term options contracts are pricier than normal.

The following is a reprint of the market commentary from the January 2019 edition of The Option Advisor, published on December 28. For more information, or to subscribe to The Option Advisor -- featuring 10 new option trades each month -- visit our online store.

"...while there have been a number of broad-market shocks in recent years that have carried VXX up to or above its longer-term, under-the-radar 320-day moving average -- including those in October 2014, January and September 2015, and January 2016 -- this latest VIX explosion didn't meet that bar. At its Feb. 9 intraday peak of $56.50, there was still plenty of daylight between VXX and its 320-day moving average.

"Given the relatively brief history of VXX... there aren't too many prior examples of the ETN rallying above its 200-day moving average but stopping short of its 320-day. In fact, there's exactly one we can find, and it occurred in early December 2015. Following that instance, VXX experienced a brief cooldown before spiking again...

"So... it might be fair to say there's still some fear left to be wrung out (and some more choppy trading ahead) before we return to a state of calm in the stock market."
-- Anatomy of a VXX Breakout, Chart of the Week, Feb. 19, 2018

"...2018 is unique in that VXX has never before been up more than 50% year-to-date through the end of February...

"Broadening the scope of our analysis beyond simple monthly returns, VXX is (as of this writing) ensconced in an unusually lengthy streak above its 160-day moving average. While VXX has yet to challenge its 320-day moving average during this 'Great Volatility Ramp of 2018,' the ETN has now notched more than 30 successive daily closes atop its 160-day trendline.

"...Stock market bulls, of course, will be hoping that this latest signal plays out like those in 2011 and 2016, and not like the 2015 signal that preceded notable SPY underperformance over every time frame."
-- What to Make of the Unprecedented VXX Action in 2018, The Option Advisor, March 23, 2018

"...[VXX] settled Thursday's session at $36.87, just a hair's breadth above its descending 320-day moving average at $36.84. The photo finish above this trendline, which previously contained the late-March/early April VXX incursion, directly preceded Friday morning's sharply lower open for VXX.

"...In the meantime, the 320-day moving average should prove to be a trendline worth watching, as a break by VXX above and away from this descending ceiling would be truly remarkable."
-- Crucial VXX Moving Average Jumps Back Into Play, Chart of the Week, Oct. 14, 2018

Per the excerpts above, we've been tracking the unusual, remarkable -- and in some cases, completely unprecedented -- action in the iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) throughout 2018. So as we prepare to file our final commentary of the calendar year in this space, and as VXX approaches the Jan. 29, 2019 maturity date on which it will cease trading, it seems only fitting to discuss the implications of a rare, recent technical formation on VXX's daily chart.

As of Friday, Dec. 14, the exchange-traded note (ETN) -- which, as suggested by its name, is designed to track the action in short-term Cboe Volatility Index (VIX) futures -- completed a "golden cross," wherein its 50-day moving average rose above its 200-day moving average. This crossover, generally viewed as "confirming" a bullish price trend, has occurred only five previous times in VXX's not-quite 10 years of trading history -- and the instance earlier this month was the second of 2018, per the table below.

A "knee jerk" contrarian read on the VXX golden cross might be that it's a signal of fear and panic becoming overdone, and therefore a suggestion that a short-term (or long-term) bottom has been reached in the stock market. The graph below, which denotes VXX golden crosses as yellow dots alongside the SPDR S&P 500 ETF (SPY) price action since 2011, shows that has sometimes been the case -- but certainly not always. In particular, note on the graph below that a relative "cluster" of VXX golden crosses coincided with a period of choppy, sideways-to-bearish SPY trading during the period from early 2015 through early 2016.

In other words, a deeper dive here is required. This latest VXX golden cross, unlike the March 2018 occurrence, took place simultaneously with a convincing breakout by the ETN above its 320-day moving average -- a trendline that previously provided resistance, as noted in the accompanying excerpts. And yet, the current VXX ramp has yet to equal the magnitude of its first-quarter counterpart in terms of (a) producing any kind of a "climactic" share volume spike; and (b) generating an equivalent peak in the 20-day Relative Momentum Index (RMI), with the RMI level of 82 (as of this writing) falling about 10 points short of the mid-February high-water mark.

Taken in context with the rapid deterioration in the technical outlook for SPY itself, these "shortcomings" in the most recent VXX spike should give investors pause -- as should the table below, which summarizes average SPY returns following the five VXX golden cross instances detailed above, compared against the SPY's "at any time" returns for the same time frames.

While the small sample size is a worthy caveat, note that SPY's average one-year return following a VXX golden cross is 9.61%, with 75% of returns positive -- undershooting its average "anytime" one-year return since 2011 of 12.09%, with 90% positive returns. Further, SPY's standard deviation of returns in that post-golden cross year is 15.49%, pointing to higher-than-normal volatility relative to the 8.26% standard deviation logged in other 12-month time frames.

And to brace you just a bit further for the possibility of SPY underperformance in the 12 months ahead, consider also that those underwhelming post-VXX golden cross one-year SPY returns were all racked up during a decade-long bull market. If we're in the midst of transitioning into a bear market, the long-term SPY performance going forward could be considerably less impressive than even history would suggest.

U.S. stocks are set to wrap up their worst year since the financial crisis, with the S&P 500 Index (SPX) on pace for a 6.9% loss. However, if recent history is any indicator, several stocks and sectors could be on the verge of big gains to start 2019. Among them, UnitedHealth Group Inc (NYSE:UNH) could be a blue-chip stock that shines in January, while the iShares Silver Trust (SLV) exchange-traded fund (ETF) is one to watch in the weeks ahead.

Below are the 25 best S&P stocks to own in January, based on monthly returns over the past decade, courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. In order to make the list, stocks had to have at least eight years' worth of data.

Along with FAANG name Netflix (NFLX), which tops the list with a massive average January return, UnitedHealth shares made the cut. The Dow stock has ended January higher 80% of the time in the past 10 years, with an average gain of just over 4%.

While the SPX and Dow Jones Industrial Average (DJI) are both set to end 2018 in the red, UNH is sitting on a 13.2% gain. The stock has certainly struggled recently, though, on pace for a December loss of more than 11% -- its worst month since July 2012. The equity touched a record high of $287.94 on Dec. 4, but healthcare stocks retreated after an Obamacare ruling in Texas. At last check, UNH shares are trading just under $250 -- another 4% pop in January would place them back around $260, and above support in the $255 area.

An exodus of option bears could propel UnitedHealth stock higher, too. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.36 is in the 88th percentile of its annual range. In other words, options buyers have picked up UNH puts over calls at a much faster pace then usual since the aforementioned Affordable Care Act ruling.

Meanwhile, below are the 20 best ETFs to own in January, again looking at data from the past 10 years. The iShares Silver Trust is near the top of the list, averaging the biggest gain of all at 4.59%. In the past 10 years, SLV has ended January higher seven times.

While Wall Street has suffered in December, SLV has shot higher, set for a monthly gain of 8.4% -- its best month since January 2017. The ETF is now staring up at its 200-day moving average, which hasn't been toppled on a daily closing basis since June. For 2018, however, SLV is still on pace for a loss of nearly 10%. From its current perch around $14.44, another 4.59% gain would place it around $15.10 -- back above the aforementioned trendline -- to start February.

The shares of Workday Inc (NASDAQ: WDAY) are up 55.6% year-to-date to trade at $158.07, hitting a record high of $172.67 earlier this month. Now, WDAY just came within one standard deviation of its 10-month moving average -- a historically bullish trendline that could be signaling more upside for the software name. 

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, the security has pulled back to this long-term moving average after a lengthy stretch above it three other times in the past three years. WDAY has seen a higher return each time -- averaging a 8.4% return four weeks later, and a 29% return three months later. For perspective, a similar move this time around would place the stock above $200 in the next three months.

The tech concern could see additional upgrades on its next leg higher, too, with the 32 analyst evenly split between "buy" or better and "hold" or worse ratings. What's more, options traders have been unusually bearish, with WDAY sporting a 50-day put/call rating of 1.22 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Plus, this ratio sits in the high 98th percentile of its annual range, which means that traders have had an unusually high appetite for bearish bets -- a potential catalyst for tailwinds should this pessimism begin to unwind.

It was a wild ride on Wall Street this week, as volatility reared its ugly head once again. In addition to the worst Christmas Eve sell-off of all time, the Dow racked up its biggest one-day point gain ever on Wednesday. That was followed by a dramatic pivot higher in the final hour of trading on Thursday. Amid all this whipsaw price action, the Dow, S&P 500, and Nasdaq are all set to notch weekly gains for the first time this month.

FAANG Stock News

Strong holiday sales for e-commerce giant Amazon (AMZN) helped the stock snap a four-day losing streak. Fellow FAANG stock Facebook (FB) bounced back mid-week, too, but not before Wedbush removed the stock from its "Best Ideas" list. On the other end of the spectrum, even after a dismal bottom on Christmas Eve, one analyst continues to see 80% upside for Apple (AAPL) stock. 

Volatile Week for Biotech Stocks

Several drug stocks made outsized moves this week, too. Acorda Therapeutics (ACOR) popped earlier in the week after the Food and Drug Administration (FDA) approved the company's new Parkinson's drug. Crispr Therapeutics (CRSP) also jumped after Vertex Pharmaceuticals (VRTX) took a stake in the gene editing company. Plus, H.C. Wainwright issued buy ratings on two biotech stocks, while Opko Health (OPK) got a boost after the company's CEO settled with the Securities and Exchange Commission (SEC). 

JD, TSLA, NVDA Make Headlines Again

Chinese stock JD.com got a late-week lift amid reports the company was restructuring a key unit. Earlier in the week, the e-commerce name had announced a $1 billion buyback plan, while Tesla (TSLA) climbed amid Model 3 buzz. Elsewhere, chip stock Nvidia (NVDA) was slapped with yet another bear note, while this "recession-proof" stock flashed a pretty intriguing bullish signal. 

Powell, Jobs Data Kick Off 2019

Next week will put a stamp 2018 and also kick off the new year. Markets will be closed on Tuesday, Jan. 1, for New Year's Day, but 2019 will hit the ground running with a speech from Fed Chair Jerome Powell and the monthly jobs report.

Traders will continue to keep an eye on D.C. and the government shutdown, as well as volatile oil prices. Meanwhile, Schaeffer's Senior V.P. of Research Todd Salamone explains when to start selling stock market rallies, while these underperforming stocks could start the year off with a bang.

Stocks are volatile again, but the Dow remains on pace for a weekly win. Three individual names making notable moves today are health insurer Centene Corp (NYSE:CNC), weed stock Aphria Inc (NYSE:APHA), and cellular therapy issue Vericel Corp (NASDAQ:VCEL). Here's what's happening with shares of CNC, APHA, and VCEL.

CNC Stock Gets Big Piper Jaffray Endorsement

CNC stock is down 0.6% at $113.06, even though Piper Jaffray said it would be a name to buy if a recession hits. On the flip side, the brokerage firm said it would sell hospital operator Community Health Systems (CYH). On the charts, Centene is up 125% in 2018, though it recently took a notable trip south of the 200-day moving average for the first time in over a year.

Bullish analyst attention is nothing new for CNC. In fact, 11 of the 14 firms in coverage have "buy" or "strong buy" ratings, with zero "sells" to be found.

APHA Holds Gains Despite Scoffing at Takeover Bid

APHA's rise is one of the few big stories on Wall Street today, with the cannabis concern last seen up 13.5% at $6.28, on news of a hostile takeover attempt from Green Growth Brands (GGB). The company has responded saying the proposal of $2.1 billion, or $8.09 per share, "significantly" undervalues Aphria.

The shares remain on pace for their first close above the 20-day moving average since the trendline first formed in late November -- but remain far below their Nov. 7 peak at $13.45. There had been notable options activity on the security coming into today, with 9,458 calls bought to open in the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to just 1,179 puts.

VCEL Shares Jump

VCEL stock is rallying today, last seen near session highs at $17.25, up 9.2% on the day. The reason for the strong price action isn't clear, though this move puts the shares back above the $16 and $17 levels that briefly acted as support in the past two months. The equity is a long-term outperformer, more than tripling in value on a year-to-date basis.

Despite this, it's seen little attention from analysts and traders. Specifically, just four brokerage firms are in coverage (though they all have "strong buy" ratings) and only 194 options were bought to open during the past two weeks at the ISE, CBOE, and PHLX.

The shares of Wingstop Inc (NASDAQ:WING) are up 2.3% this morning at $62, after Wedbush upgraded the restaurant chain to "outperform" from "neutral" while trimming its price target to $69 from $71. The analyst in coverage waxed bullishly on the company's valuation, and sees room for upside to its 2019 earnings per share and margins.

Since early 2017, Wingstop stock has essentially been carving out a channel of higher highs, culminating in an all-time Oct. 17 peak of $72. WING subsequently pulled back with the broader market, though, and has shed nearly 7% this quarter as of yesterday's close. However, the damage appears to have been contained by the shares' 160-day moving average, a trendline that was support for a similar pullback in August. Year-to-date, the stock still boasts a 74% gain.

A short squeeze could add some wind to WING's sails. Short interest fell by 5% in the last two reporting periods, yet the 3.82 million shares sold short still represents a healthy 13.2% of the equity's total available float. At its average pace of trading, it would take shorts more than eight days to buy back their bearish bets. 

There is pessimism in the options pits too, it seems. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Wingstop sports a 10-day put/call volume ratio of 4.96, which ranks 4 percentage points from an annual high. This indicates the rate of put buying relative to call buying has been quicker than usual.

Echoing that, WING's Schaeffer's put/call open interest ratio (SOIR) of 1.81 sits in the 80th percentile of its annual range, indicating that near-term traders have rarely been more put-biased in the past 12 months. 

Subscribers to Schaeffer's Options Advisor service scored a 100% profit with the Western Digital Corp (NASDAQ:WDC) April 47.50 put we recommended. We'll take a closer look at why WDC appeared on our bearish radar, and how the winning options trade unfolded.

In the latest December issue of Options Advisor, Western Digital stock had already shed 50% year-to-date. On Oct. 26, WDC fell 18.2% in a brutal post-earnings dive. This bear gap took the shares below their 2018 half-high at $53.50, settling under the $47.50 level, an area that has since served as stiff resistance.

Short sellers were starting to come out of the woodwork, too. Short interest was up almost 47% from its mid-June lows, yet that only accounted for a slim 4% of WDC's total available float. Further, this total was 70% off its peak short interest levels from 2016. In short, there was ample room aboard the bearish bandwagon. 

In the options pits, there was plenty of optimism to be unwound. The stock's 10-day call/put volume ratio stood at 1.24 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). A shift in sentiment was in play to pressure the shares even lower. Plus, WDC had tended to make outsized moves relative to what the options market was expecting, per its SVS reading of 82 -- making it an attractive target for premium buyers.

After our put recommendation, Western Digital stock continued to slide on the charts. A C-suite transition, and some ensuing bear notes, put added pressure on the semiconductor name. We closed our position on Monday, Dec. 24, allowing our subscribers to lock in a 100% profit in less than a month.

 

The shares of Opko Health Inc. (NASDAQ:OPK) are up 28.1% to trade at $3.31, after the biotech's Chairman and CEO Philip Frost agreed to a $5.52 million settlement with U.S. Securities and Exchange (SEC) over a civil suit alleging penny stock "pump-and-dump" schemes. Opko Health was also fined.

It's been a volatile stretch for the stock, per its 120-day historical volatility of 88%, which registers in the elevated 97th annual percentile. In fact, the shares had a one-day gain of 20.6% as recently as Nov. 12, but also dropped 11.5% back on Nov. 9. Plus, OPK slid to an eight-year low of $2.34 yesterday.

This negative price action has certainly rewarded short sellers, who have started closing out of their winning bets. Short interest fell 6.1% in the most recent reporting period, but the 62.29 million OPK shares still sold short accounts for one-fifth of the stock's available float, or 14.8 times the average daily pace of trading.

Elsewhere on Wall Street, just three analysts cover Opko Health and their opinions of the drug stock vary, with one maintaining a "strong buy," one a "hold," and one a "strong sell." The average 12-month price target, meanwhile is perched squarely at $10 -- a 250% premium to OPK stock's current perch.