Can These Two Rebound Candidates Generate Income While Their Recoveries Unfold?

Dual Edge Research publishes two powerful newsletters that work great individually — and even better together. The Bull Strangle Newsletter focuses on stocks and options, combining stock ownership with premium-selling strategies to generate consistent income and market-beating returns. The Smart Spreads Newsletter specializes in seasonal commodity futures spreads, offering a diversified approach with low correlation to equities. Together, they deliver a complete investment perspective — one focused on income, the other on diversification — all under one simple subscription.

Introduction

One of the core principles of the Bull Strangle Strategy is that the best opportunities often emerge when a stock begins to transition from weakness to stability. Rather than chasing momentum at new highs, the strategy frequently benefits from identifying stocks that have established support, improved their technical structure, and are beginning the early stages of a recovery. This week's watch list includes two stocks that fit that profile: First Majestic Silver (AG) and Baxter International (BAX). While they operate in very different sectors, both are showing signs that selling pressure may be easing and that a more constructive technical backdrop is developing.

First Majestic Silver: Recovery Attempt After a Sharp Correction

The precious metals sector has experienced significant volatility this year, and First Majestic Silver has been no exception. After peaking near $32 in March, shares declined sharply before finding support near $19.

Since then, AG has begun to stabilize. The stock has formed a series of higher lows and recently reclaimed both its 20-day and 50-day moving averages. That improvement suggests sellers are losing control and buyers are beginning to re-enter the market.

The next major test remains the 100-day moving average near $22.25. A decisive move above that level would further strengthen the recovery case and potentially open the door for a continuation higher. Until then, AG remains in a rebuilding phase, with support near $19-$20 the key area to monitor. For Bull Strangle investors, AG offers an interesting combination of elevated option premiums and an improving technical picture. While volatility remains higher than for many traditional income candidates, the recent stabilization provides a more favorable backdrop than it did several weeks ago.

Baxter International: Early Stages of a Longer-Term Rebuild

Baxter International presents a clear opportunity. Unlike AG, which is attempting to recover from a sharp correction, BAX is emerging from a much longer-term downtrend. Shares recently broke above a multi-month descending trendline and reclaimed both the 20-day and 50-day moving averages.

That breakout represents an important change in character. Stocks often experience multiple failed rallies during prolonged downtrends. The ability to reclaim key moving averages while simultaneously breaking trendline resistance suggests that buyers may finally be gaining traction. The next challenge is the 200-day moving average near $20. This level has capped rallies throughout much of the past year and remains the primary resistance area. A sustained move above the 200-day average would strengthen the case that Baxter is transitioning from a recovery trade into a developing uptrend. While the technical picture has improved considerably, the stock remains in the early stages of rebuilding its longer-term structure. As a result, position selection and strike placement remain especially important.

Why These Setups Matter for Option Sellers

Many investors focus primarily on option premiums when evaluating potential income trades. In practice, the quality of the underlying stock often matters far more than the premium itself.

Both AG and BAX illustrate an important concept that recurs in Bull Strangle research: the strongest opportunities often arise when a stock transitions from deterioration to stabilization.

The objective is not to predict the exact path of either stock. Instead, the goal is to identify situations where:

• Support appears established.
• Technical conditions are improving.
• Selling pressure is easing.
• Risk can be managed through appropriate strike selection.

When those conditions align, option sellers can potentially benefit from both income generation and improving underlying stock performance.

Final Thoughts

Neither First Majestic Silver nor Baxter International has fully recovered. Both still face important resistance overhead and remain works in progress. However, recent improvements in their technical structures make them noteworthy candidates for further evaluation.

For Bull Strangle investors, these are exactly the types of stocks worth monitoring: companies that have moved beyond the most vulnerable stage of a decline but have not yet become crowded momentum trades. That middle ground often provides the most attractive balance between risk, premium generation, and long-term opportunity. The Bull Strangle Newsletter publishes weekly watch lists featuring stocks that meet specific technical, liquidity, and option-income criteria. The objective is not to chase market predictions but to identify high-quality opportunities where structure, consistency, and disciplined execution can work together over time.

More Information

To learn how this approach is applied in a structured, repeatable way, the Bull Strangle Strategy provides a complete framework for combining stock ownership with option income.

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• For stocks and options, the Bull Strangle Newsletter shows you how to combine stock ownership with dual option selling — a disciplined strategy that has consistently outperformed the S&P 500.
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Each newsletter is designed to deliver consistent income on its own — but when used together, they create a complete, diversified trading approach that works in any market environment.

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Darren Carlat

Dual Edge Research

(214) 636-3133

DualEdgeResearch@gamil.com

www.BullStrangle.com

Disclaimer

This information is for informational purposes only and should not be considered as investment advice. Past performance is not indicative of future results, and all investments carry inherent risk. Consult with a financial advisor before making any investment decisions.