11:00pm (EST)

1.  Market Summary 

2.  Celldex Therapeutics (CLDX) – Worth the Risk?   

3.  Earnings 

4.  Weekly Wrap Portfolio Update 

5.  Week Ahead

(To view the charts, please log into the Members Area and go to the Weekly Wrap Premium section)

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1.  Market Summary   

The other curve ball will be Friday.  The Unemployment Rate is due out and an uptick could cause panic as investors feel the recovery could be stalling.  If the number is flat or moves lower, it will help the bulls case for higher prices.  The problem is the market will be closed on Friday so we will have to wait until the following Monday to see how Wall Street reacts.  Followed by the start of earnings on Tuesday.

We are expecting a continued rally this week with Thursday being the wildcard. (4/1/12 Weekly Wrap, Monday Morning Outlook)…

The bulls got off to a solid start on Monday as they made another run towards our near-term fluff targets for the market (Dow 13,500; S&P 1,425-1,450; and Nasdaq 3,250).  Much of the momentum came from the prior week’s strong finish as the Dow traded up to 13,300 and closed at 13,264.  The S&P and Nasdaq hit fresh 52-week highs of 1,422 and 3,123, respectively.

There was a little follow through by Tech on Tuesday morning as the Nasdaq reached 3,128 but the other indexes were lagging heading into the FOMC meeting minutes.  Wall Street seemed a little hesitant to buy stocks ahead of the news despite Ben Bernanke’s comments on the possibility of further stimulus help during the prior week which sparked a rally to new highs.  Needless to say, the bulls were shocked when the minutes came out later in the day after hearing the Fed say it was “less inclined” to do another round of quantitative easing (QE).  This caused a pullback as all of the major indexes finished the session lower but still holding support.

Overseas markets took their cue from the U.S. and finished sharply lower on Wednesday which can be blamed for some of the continued weakness here at home.  This and the fact that Spain is now back in the picture after an uneventful bond auction earlier that morning.  Spain is a lot bigger than Greece so their debt crisis does matter and it showed.  The market fell 1% for the day with the Nasdaq falling 1.5%.

Futures were pointing towards a weak open on Thursday following the release of the Jobless Claims numbers which were better than the prior week but only because of revisions.  Initial claims came in at 357,000, which was down 6,000 from the previous week’s upwardly revised 363,000 claims.  The 4-week average fell over 4,000 to just below 362,000 but analysts were expecting a print of 355,000.  The figures are still at 4-year lows but Wall Street took it as a sign that initial claims could be on the up from February’s lows.  This made traders a little nervous ahead of Friday’s Nonfarm Payrolls and Unemployment Rate numbers which lead to a mixed session.  

Although the market was closed for Good Friday, we still went to the office and we still went through our usual pre-market morning rituals as we eagerly awaited the numbers.  Futures were slightly up heading into the reports but turned on a dime once they came out.  Make no mistake about it, they were absolutely atrocious. 

Nonfarm payrolls for March dropped to 120,000 versus expectations for 205,000.  It was the lowest jobs showing since October’s reading of 112,000.  The unemployment rate dipped to 8.2%, down from 8.3%, but only because another 165,000 people threw in the towel on finding a job. 

The news sent futures spiraling which were open until 9:15am (EST).  The Dow futures were down nearly 150 points to 12,830 while the S&P 500 futures fell 20 points to 1370.  The Nasdaq 100 got crushed for 30 points and stood at 2,720 going into the weekend. 

We did some chart work Thursday night that we will get to in a moment which clearly shows the break in the uptrend lines for the major indexes even before Friday’s headlines. 

We had a good feeling the market was going to be disappointed and we took the rest of the day off on Friday because we have been preparing for a pullback.  We have been opening quite a few put option trades over the last week or two to take advantage of a possible pullback, including one of Thursday, and if things hold up, our subscribers will be loving the open on Monday despite a possible 1%+ decline.

The Dow fell 15 points, or 0.1%, to finish at 13,060 on Thursday.  The blue-chips reached a high of 13,297 on Monday but the close below 13,200 was the first wave of broken short-term support.  The next important test comes at 12,800-12,750 if the 13,000 level fails on Monday and from there 12,600.  A move back above 13,200 would keep the chance of hitting 13,500 in play.  For the week, the Dow fell 152 points, or 1.2%, after starting the week at 13,212.  Year-to-date, the blue-chips are up 843 points, or 6.9%.   

The S&P 500 slipped a point, or 0.06%, to end at 1,398.  The index traded to a high of 1,422 on Monday and nearly cracked our 1,425-1,450 target but we may have seen a top for now if there isn’t a rebound on Monday.  The next areas of support will come in at 1,375 and then 1,350.  A break below these levels would be ugly.  The S&P 500 started Monday at 1,408 and lost 10 points, or 0.7%, for the week.  For the year, the index is up 141 points, or 11.2%.   

 

The Nasdaq added 12 points, or 0.4%, to settle at 3,080.  We mentioned earlier Tech kissed a high of 3,128 but a run to 3,250 probably won’t happen if 1Q earnings come in weaker-than-expected.  The low for the week came on Wednesday when the index touched 3,052.  This area has been tested numerous times over the past few weeks and a break below this level could quickly lead to a test down to 3,000-2,950 which is a 3%-4% drop from current levels.  A test down to 2,850 would be a 7% decline.  Tech was at 3,091 before Monday’s opening bell but finished the week lower by 11 points, or 0.4%.  For 2012, the index is up 475 points, or 18.3%.

 

The S&P Volatility Index ($VIX, 16.70, up 0.26) fell to a low 15.02 on Monday’s rally but reached a high of 17.74 on Wednesday’s selloff.  We have been warning of a move above 17.50 as a possible sign for a pullback and a close above this level would be bearish.  A move into the 20’s could be coming if there is no rebound on Monday. 

The Russell 2000 gave back 2 points and closed at 818 on Thursday.  The index raced to a high of 840 on Monday and hit 841 on Tuesday but fell shy of 850.  The break back below 830 on Wednesday wasn’t a good sign and 810 will be crucial in holding on a pullback.  We said there could be a chance for a rally up to 875-900 if the money rotated out of large-cap stocks and into the smaller caps but we this wasn’t the case.  A break below 800 could be in the cards if there is further weakness.  The Russell dropped 12 points for the week, or 1.5%, after starting Monday’s session at 830.  The index is up 78 points, or 10.4%, for the year.         

First-quarter earnings get underway on Tuesday with Alcoa (AA, $9.63, down $0.18) stepping up the plate.  It’s hard to get excited about a $10 stock leading off the parade but there are some notable companies reporting this week that could add to the market’s pains or gains.  The two key names will be Google (GOOG, $632.32, down $2.83) and JPMorgan Chase (JPM, $44.34, down $0.07).

Google can easily move 50 points and will weigh on Tech while JP Morgan will lead the direction of the financial stocks.  If these two companies miss Wall Street’s expectations or lower estimates going forward, the market will likely continue testing lower levels of support.

If Googs and JP are somehow able to beat estimates AND raise guidance for the quarter and year, then maybe the expected pullback we get on Monday’s open will hold.  If not, things could get nasty.

For those of you who get nervous when the market is pulling back or if there is a correction, don’t be.  We always remind our subscribers that you can make just as much, if not MORE, when the market is going down.  Stocks like to take the steps higher but when things get sketchy they tend to take an elevator down.

While we should get the pullback we have planned on, we still have to guard for a snap-back rebound because the Fed could be in play again.  Many believe the Fed wasn’t going to act on another round of quantitative easing because the economy was “recovering” but the latest headlines are painting a different picture.

The important clues to watch for will be the major support levels we have just covered.  If they hold, and the Fed does do something, then the pullback could be mild.  If the bears gather enough momentum and crack several layers of support while the Fed sits idle, then we will be on the verge of a trend change.

It’s not often one can time a market pullback perfectly, but we have come pretty close and our put options trades for our Daily should pay off in spades.  As far as the Weekly Wrap, we were called away from a number of positions in March and there is a chance we close a few more for April.  Even better, if there is a pullback or correction, we will be able to get a number of our favorite stocks on sale. 

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Key of Technicals Used In Following Articles

 

 

2.  Celldex Therapeutics (CLDX) – Worth the Risk?

Investing in any biotech company that is losing money and has yet to release a product is risky.  Even investing in well established biotech companies can be risky, since any negative news or rumors on a drug trial could hurt the stock.  However, well established biotech firms have several drugs on the market and in their pipeline, so the negativity on one drug can be lessened and may not affect it much.  Smaller, developmental stage biotech companies do not have this safety net.  Celldex Therapeutics (CLDX, $5.02, up $0.02) falls in the latter category but is a interesting stock.

The company develops immunotherapies designed to work with a patient’s immune system, focusing primary in oncology and the treatment of tumors.  It uses monoclonal antibodies, laboratory proteins identical to antibodies created by the immune system, to activate a patient’s immune system against specific forms of cancer and other diseases.  The monoclonal antibodies can be fitted with a toxin that attach to antigens on cancer cells, where the antibody is then absorbed by the cancer cells and the toxin is released, killing the cancer cells.  In its Antigen Presenting Cell (APC) Targeting Technology, a cancer specific antigen can be attached to these antibodies to directly target dendritic cells, a type of antigen presenting cells or APCs in the immune system.  From here the antibodies are replicated and distributed to T-cells, which search out and kill the cancer cells.

Below is a table of the company’s pipeline.

The two drugs getting the most attention are rindopepimut (CDX-110) and CDX-011.  CDX-110 is an immunotherapy vaccine in Phase III clinical trial and targets a tumor-specific gene called epidermal growth factor receptor (EGFR) variant III, a functional and permanently activated mutation of the EGFR.  It is also in Phase II clinical trial for the indication of recurrent glioblastoma.  CDX-011 is an antibody-drug conjugate in Phase IIb clinical trial for metastatic breast cancer and advanced melanoma.  Much of the hype around the stock is focused on results from this drug, which will be presented at the American Society of Clinical Oncology (ASCO) conference.  The conference will be held from June 1st – 5th at McCormick Place in Chicago, Illinois, and could make or break the stock.  Abstracts for the conference release date is May 16th, so watch this date in addition to the June conference to get a feeling of what the company will present at the conference.  A bad abstract could lead to a bad outcome.

In March, the company reported a net loss of $12.7 million, or -$0.29 a share, compared to net income of $22.7 million, or $0.71 a share, in the year ago period.  The year ago quarter of 2010 was the only quarter in the last 3 years where the company reported a profit.  Net income for that quarter included one-time items of $30.5 million related to rindopepimut (CDX-110) after Pfizer ended its license agreement and thus paid a royalty expense.  Excluding these one-time items, on a non-GAAP basis, the company would have reported a net loss of $7.8 million, or -$0.24 per share, which is shown on the earnings graph below.

 

 

Looking at the 1-year below shows that the stock price jumped in January and plunged in late February after the company raised $43.5 million by selling 12 million shares, thus diluting the share value.  The offering price was $3.85 a share, which was close to the trough of the wave-like pattern.  This helped raise the current ratio to 3.83, reflecting that current assets are nearly four times current liabilities.  Thus, if the rate of spending does not increase, they have enough current assets to last about one year without diluting the stock again.  In this sense, the stock has no reason to fall again unless it is simply profit taking.

Analysts have a low target of $6.00 made by the 7 who follow it.  Mean target is $8.57, median target is $7.00, and high target is $14.00.  Using a scale of 1.0 as a strong buy and 5.0 as a sell, the average rating of the stock was 1.2, up from 1.3 a week ago. 

 

Current Month

Last Month

Two Months Ago

Three Months Ago

Strong Buy

5

5

4

4

Buy

1

2

2

1

Hold

0

0

0

1

Underperform

0

0

0

0

Sell

0

0

0

0

We are cautious on Celldex Therapeutics as well feel there are better biotech companies to invest your money in but the stock is getting attention and could be on the move over the next few months.

 

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3.  Earnings 

The companies in BOLD, we are looking at as possible trades and we may list call or put options on them in our Daily Newsletter.  If they become official recommendations, we sent out Trade Alerts or include them in our 9am and 1pm updates that come out during the week (Quotes are as of Friday’s close, 4/5/12)


MONDAY
 

Andatee China Marine Fuel Services (AMCF, $3.00, Flat), Argan (AGX, $15.79, down $0.08), Arrhythmia Research Technology (HRT, $3.81, down $0.10), Commerce Bancshares (CBSH, $39.81, down $0.25), CompuCredit Holdings (CCRT, $5.35, down $0.16), Greenbrier Companies (GBX, $19.70, up $0.07), Hollywood Media (HOLL, $1.08, up $0.02), Imperial Holdings (IFT, $2.68, down $0.10), Life Partners Holdings (LPHI, $4.00, down $0.09), Mesabi Trust (MSB, $30.16, down $0.06), MFRI (MFRI, $7.60, up $0.06), MGT Capital Investments (MGT, $2.50, up $0.10), Penford Corporation (PENX, $6.90, down $0.05), Zep (ZEP, $14.34, down $0.32)

TUESDAY

Agria Corporation (GRO, $1.12, up $0.07), Alcoa (AA, $9.63, down $0.18), API Technologies (ATNY, $3.53, up $0.07), Asia Pacific Wire & Cable Corp (APWC, $3.30, Flat), Chimera Investment Corporation (CIM, $2.79, down $0.03), Enterprise Financial Services (EFSC, $11.41, down $0.20), FreeSeas (FREE, $1.03, down $0.05), Global-Tech Advanced Innovations (GAI, $5.21, down $0.55), Griffin Land & Nurseries (GRIF, $25.30, up $0.14), Lentuo International (LAS, $3.69, up $0.01), Northwest Pipe (NWPX, $20.05, down $0.31), Standard Microsystems (SMSC, $24.76, up $0.06), SUPERVALU (SVU, $5.13, down $0.26), Talbots (TLB, $3.02, up $0.01), Top Ships (TOPS, $2.16, down $0.02), ZST Digital Networks (ZSTN, $2.22, down $0.01)

WEDNESDAY

Adtran (ADTN, $29.26, down $0.87), Apogee Enterprises (APOG, $13.31, down , $0.02), Art’s-Way Manufacturing (ARTW, $6.94, up $0.26), Chromcraft Revington (CRC, $1.29, down $0.06), CHS (CHSCP, $29.71, down $0.04), Green Bankshares (GRNB, $1.73, up $0.01), Hooker Furniture (HOFT, $13.75, up $0.29), Landmark Bancorp (LARK, $19.85, down $0.15), Mission West Properties (MSW, $9.79, down $0.02), Northern Technologies International (NTIC, $15.62, up $0.35), Raptor Pharmaceuticals (RPTP, $6.67, up $0.02), Richardson Electronics (RELL, $11.80, down $0.04), Titan Machinery (TITN $27.32, up $0.21)

THURSDAY

Bank of the Ozarks (OZRK, $31.43, down $0.17), Cherokee (CHKE $12.51, up $0.11), Fastenal (FAST, $52.97, up $0.03), Fuwei Films (FFHL, $1.84, Flat), Google  (GOOG, $632.32, down $2.83), Gushan Environmental Energy Limited (GU, $1.44, down $0.05), JB Hunt Transport Services (JBHT, $55.92, up $0.20), Joe’s Jeans (JOEZ, $1.35, down $0.10), Lakeland Industries (LAKE, $10.60, down $0.05), Layne Christensen (LAYN, $22.36, down $0.28), LDK Solar (LDK, $3.38, down $0.11), MEDTOX Scientific (MTOX, $17.18, up $0.09), RiT Technologies (RITT, $3.68, up $0.10), Rite Aid (RAD, $1.73, up $0.02), Streamline Health Solutions (STRM, $1.79, up $0.15), Washington Federal (WAFD, $16.75, up $0.21)

FRIDAY

China Natural Resources (CHNR, $7.31, up $0.07), Duckwall-ALCO Stores (DUCK, $9.10, up $0.15), iGATE Corporation (IGTE, $16.70, down $0.07), JPMorgan Chase (JPM, $44.34, down $0.07), Retractable Technologies (RVP, $1.13, down $0.15), Taylor Devices (TAYD, $10.44, up $0.27), Ventrus Biosciences (VTUS, $9.99, down $0.19), Vestin Realty Mortgage (VRTA, $1.11, Flat), Vestin Realty Mortgage (VRTB, $1.49, Flat), Wells Fargo & Company (WFC, $33.73, down $0.15)

 

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4.  Weekly Wrap Covered Call Portfolio Update (Closing prices as of 4/5/12)

 

Other Closed Trades for 2012 (17-0, overall):  SZYM +55%, VVUS +38%, CALL +19%, BAC +20%, SYMC +16%, DAR +20%, TIVO +5%, MGM +22%, ZNGA +13%, SGMS +6%, VVUS +17%, F +8%, AA +7%, CLNE +27%, DNDN +18%, MGM +19%, ACAS +3%.   

 

Scientific Games (SGMS, $11.88, down $0.01)   

Original Entry Price:  $11.10 (3/20/12)

Lowered Price from Selling Options:  Waiting for shares to reach $12-$13

Exit Target:  $15+

Return:  7%

Stop Target:  None

Action:  Given the huge jackpots across the country recently, online lottery sales have surged which means Scientific Games will probably beat estimates.  The company will report their quarterly earnings in late May (keep this in mind for the Daily as a possible call option trade down the road).  We have been thinking about selling the May 12.50 calls (SGMS120519C00012500, $0.50, flat) but we really like this stock.   

Shares traded to a high of 12.29 last Tuesday and held their 50-day moving average for the week.  Our 2012 price target is $15 and we are looking for $11 to hold on a pullback.  A close above $12.50 would be bullish. 

 

We recommended buying the stock at $11.10 on 3/20/2012.

 

Pandora (P, $9.92, down $0.13)

June 13 calls (P120616C00013000, $0.25, flat)

Original Entry Price:  $10.58 (3/20/12)

Lowered Price from Selling Options:  $10.18

Exit Target:  $12

Return:  -3%

Stop Target:  None

Action:  Pandora closed below double-digits on Thursday and there is further risk down to $9.50.  If shares hold support and rebound, resistance will be strong at $10.50-$11.

We recommended buying the stock at $10.58 on 3/20/2012 and for every 100 shares to sell the June 13 calls for 40 cents.  This lowered the cost basis to $10.18.

If shares are called-away by mid-June at $13 the trade makes 28%.

 

E*Trade Financial (ETFC, $10.66, down $0.03)

April 10 calls (ETFC120421C00010000, $0.75, down $0.10)

Original Entry Price:  $9.73 (2/29/12)

Lowered Price from Selling Options:  $9.28

Exit Target:  $12

Return:  15%

Stop Target:  None

Action:  Shares held their 200-day MA for the week and there is further help at $10 and the 50-day MA ($9.85).  Resistance is at $11-$11.50 going forward.    

We recommended buying the stock at $9.73 on 2/29/2012 and for every 100 shares to sell the April 10 calls for 45 cents.  This lowered the cost basis to $9.28.

If shares are called-away by mid-April at $10 the trade makes 8%.

 

Bebe Stores (BEBE, $9.42, up $0.01)   

Original Entry Price:  $9.00 (2/22/12)

Lowered Price from Selling Options:  Waiting for shares to reach $10

Exit Target:  $8

Return:  5%

Stop Target:  None

Action:  Bebe traded to a high of $9.50 last week and the 52-week high is $9.58 which was hit in mid-March.  The $10 level represents multi-year resistance and where we are looking to sell a call option.  Support has been strong at $9 and the 50-day MA.


We recommended buying the stock at $9.00 on 2/22/2012

 

Pizza Inn (PZZI, $4.64, up $0.03)

Original Entry Price:  $4.50 (2/22/12)

Lowered Price from Selling Options:  No options available

Exit Target:  $8

Return:  3%

Stop Target:  None

Action:  Shares trended lower all last week but bottomed at $4.47.  Support has been solid at $4.50-$4.25 and our near-term target is $6.  We haven’t done the boot-to-the-ground research, yet, but we are hoping to visit a location soon.  Longer-term, shares could trade to $8 if the company can manage its growth.  They have revamped their website and are accepting franchise applications.  We cannot sell options on this position, yet, because there are none listed.     

We recommended buying the stock at $4.50 on 2/22/2012.  

 

OCZ Technology Group (OCZ, $7.44, up $0.71)

Original Entry Price:  $9.60 (2/7/12)

Lowered Price from Selling Options:  Waiting for shares to reach $10

Exit Target:  $12+

Return:  -23%

Stop Target:  None

Action:  Shares traded down to $6.60 last Thursday before making a surge off the lows.  OCZ was up over 10% following news the company introduced it latest SSD’s (solid-sate drives).  We said there could be further risk down to $6 but let’s hope last week’s pop starts a rally back to $8.  

 

We recommended buying the stock at $9.60 on 2/7/2012.

 

Arena Pharmaceuticals (ARNA, $3.07, up $0.05) 

July 3 calls (ARNA120723C00003000, $1.30, up $0.05)

Original Entry Price:  $1.88 (2/2/12)

Lowered Price from Selling Options:  $1.33

Exit Target:  $3+

Return:  122%

Stop Target:  None

Action:  Arena will meet with the Endocrinologic and Metabolic Drugs Advisory Committee in early May to discuss the safety and efficacy of its obesity drug, Lorcaserin.  We expect a good outcome from the committee which will make a recommendation to the FDA for a meeting scheduled in June.  Support has been solid at $3 and there is further help at $2.40.  A break above $3.50 would be bullish for another leg higher.

We recommended buying the stock at $1.88 on 2/2/2012 and for every 100 shares to sell the July 3 calls for 50 cents.  This lowered the cost basis to $1.33.

If shares are called-away by mid-July at $3 the trade makes 117%.

 

MGM Resorts (MGM, $13.60, up $0.05)

April 14 calls (MGM120421C00014000, $0.20, flat)

Original Entry Price:  $13.77 (2/2/12)

Lowered Price from Selling Options:  $12.67

Exit Target:  $15

Return:  7%

Stop Target:  None

Action:  Short-term support has been strong at $13.50 and the 200-day MA at $11.97 is trending up.  Shares tested $14 and the 50-day MA for much of the week but had trouble clearing this level given the market’s pullback.  Our-near-term target is $15-$16 on a move above this level, $20 by year-end.    

 

We recommended buying the stock at $13.77 on 2/2/2012 and for every 100 shares to sell the March 15 calls for 45 cents.  This lowered the cost basis to $13.32.

On 3/20/12 we recommended selling the April 14 calls for $0.65 which lowered the cost basis to $12.67.

If shares are called away in mid-April at $14 the trade will make 10%.

 

Patriot Coal (PCX, $5.70, down $0.18)

April 9 call (PCX120421C00009000, $0.03, flat)

Original Entry Price:  $8.91 (1/12/12)

Lowered Price from Selling Options:  $8.31

Exit Target:  $15

Return:  -31%

Stop Target:  None

Action:  Patriot fell below $6 on Thursday and hit a low of $5.67 on Thursday.  We mentioned there could be further risk down to $5 and a break below this level gets ugly.  At current prices, the company is a possible buyout candidate. 

We recommended buying the stock at $8.91 on 1/12/2012 and for every 100 shares to sell the February 10 calls for 40 cents.  This lowered the cost basis to $8.51.

On 2/29/12 we recommended selling the April 9 calls for $0.20 which lowered the cost basis to $8.31.

If shares are called away in mid-April at $9 the trade will make 9%.

 

Bank of America (BAC, $9.23, up $0.03)     

April 8 call (BAC120421C00008000, $1.30, flat)

Original Entry Price:  $6.75 (1/12/12)

Lowered Price from Selling Options and Dividends:  $6.34

Exit Target:  $15

Return:  45%

Stop Target:  None

Action:  Shares tested a low of $9.11 last Wednesday and support is at $8.50, followed by $8.25.  We would like to see a move back above $10 but we will likely be called away at $8 if shares hold up for the next 2 weeks.  If we are called-away, we will look to establish another position.

We recommended buying the stock at $6.75 on 1/12/2012 and for every 100 shares to sell the April 8 calls for 40 cents.  This lowered the cost basis to $6.35.

If shares are called-away by mid-April at $8 the trade makes 26%.

  

Alcoa (AA, $9.63, down $0.18)

April 11 calls (AA120421C00011000, 0.03, down $0.01)

Original Entry Price:  $9.65 (1/12/12)

Lowered Price from Selling Options and Dividends:  $9.17

Exit Target:  $11

Return:  5%

Stop Target:  None

Action:  Alcoa reports earnings on Tuesday.  The drop below the 50-day MA during the prior week is causing some downward pressure and shares could fall below $9 if Wall Street isn’t happy with their numbers.  Shares could move past double-digits if Alcoa says something good and resistance at $10.50 will be hard to clear unless they hit it out of the park.   

We recommended buying the stock again at $9.65 on 1/12/12.    

On 1/23/12 we recommended selling the March 11 calls for $0.25 which lowered the cost basis to $9.40.

On 2/1/12 the company paid a 3 cent dividend which lowered our cost basis to $9.37.

On 3/20/12 we recommended selling the April 11 calls for $0.20 which lowered the cost basis to $9.17.

If shares are called away in mid-April at $11 the trade will make 20%.

 

Newpark Resources (NR, $7.91, down $0.10)

Original Entry Price:  $9.45 (7/27/11)

Lowered Price from Selling Options: $7.85

Exit Target: $10+

Return:  1%

Stop Target: None

Action:  Newpark retreated with the overall market last week and closed below $8 on Thursday.  Support has been strong at $7.50 but a break below this level would be bearish.  We would like to see a move back above the 50 and 200-day MA’s and a run towards $10 before writing another call option.

 

We recommended buying the stock at $9.45 on 7/27/11 and for every 100 shares to sell the August 10 calls for 50 cents.  This lowered the cost basis to $8.95.

On 9/15/11 we recommended selling the December 10 call option for $0.85 which lowered the cost basis to $8.10.

On 1/25/2012 we recommended selling the March 12.50 call at 25 cents which lowered our cost to $7.85. 

Trades on HOLD:  Rambus (RMBS, $6.06, up $0.19), Rare Element Resources (REE, $5.85, down $0.21), AKS Steel Holding (AKS, $7.22, down $0.12), DryShips (DRYS, $3.24, up $0.11)

 

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5.  Week Ahead

There are no economic reports scheduled for Monday so Wall Street won’t get much help here at home.  Bernanke is speaking on Monday night and his comments will be closely monitored.

Tuesday gets started with Weekly Chain Store figures at 7:45am (EST), followed by Wholesale Trade Inventories at 10am.

Wednesday will be busy with the MBA Mortgage Index numbers due out at 7am.  Import and Export prices will be released at 8:30am while Crude Inventories will be announced at 10:30am.  Later in the day, the Fed’s Beige Book and the Treasury Budget will be out.

Thursday’ Initial and Continuing Claims will carry a little more weight this week and the Producer Price Index will be announced as well, all at 8:30am.  The monthly Trade Balance numbers could also impact the market.

Friday wraps up with the Consumer Price Index and the Consumer Michigan Sentiment numbers.