April 2012 | Members

MEMBERS AREA  

Please remember, ALL “Exit Targets” and “Stop Targets” are targets.  You should not have any “Hard Stops” entered to close any trades or “Exit Orders” in your brokerage account unless we list one.  We will send out a “Profit Alert” or “Trade Update” if we want you to close a position OR if a new trade comes out.  Otherwise, follow instructions at all times in the 9am and 1pm updates.  Also, we will usually give you a heads-up if we think we are going to send an email outside of these time frames but it is rare that we do.

1:05pm (EST)

Apollo Group (APOL, $34.40, down $0.44)

May 33 puts (APOL120519P00033000, $0.75, up $0.10)  

Entry Price:  $0.62 (4/20/12)
Exit Target: $1.25
Return:  21%
Stop Target:  None

Action:  Shares have traded down to $34.12 today.

 

S&P 500 Spiders (SPY, $136.40, down $1.55)     

May 134 puts (SPY120519P00134000, $1.65, up $0.50)

Entry Price:  $1.15 (4/17/12)
Exit Target: $2.30 (closed half at $1.85 on 4/23/12)
Return:  52%
Stop Target:  60 cents, raise to $1.00 (Hard Stop)

Action:  We got our dip below $136 this morning as the Spiders traded down to $135.94 which is why we closed half of the trade.  We are still expecting a drop to $132 but this is a heavy week for headlines so we will take profits when we can to avoid giving back profits.

 

Potash (POT, $42.79, down $1.14)     

May 40 puts (POT120519P00040000, $0.50, up $0.20)

Entry Price:  $0.40 (4/17/12)
Exit Target: $0.80
Return:  25%
Stop Target:  None

Action:  Shares have traded down to $42.36 and we were looking for a close below $42 this week.  Little did we know we might get the drop today which would be sweet as pie.  Our near-term target is for a dip below $40 to $38.

 

Green Mountain Coffee Roasters (GMCR, $44.25, down $0.01)

May 35 puts (GMCR120519P00035000, $0.85, flat)

Entry Price:  $0.85 (4/17/12)
Exit Target: $1.70
Return:  0%
Stop Target:  None

Action:  Shares traded down to $42.80 this morning but are rebounding.  We still believe a trip below $40 is on the horizon.


Lululemon Athletica (LULU, $72.74, down $0.96)

May 67.50 puts (LULU120519P00067500, $1.00, up $0.10)

Entry Price:  $0.90 (4/12/12)
Exit Target: $1.80 (closed half at $1.20 on 4/23/12)
Return:  22%
Stop Target:  None

Action:  We closed half of the trade after shares fell below $72.  We are still expecting a trip down to $65 but we wanted to lock in a small profit just in case there is a rebound in this name.   

 

Acuity Brands (AYI, $53.50, down $1.27)  

May 50 puts (AYI120519P00050000, $0.80, up $0.20)

Entry Price:  $0.60 (4/12/12)
Exit Target: $1.20
Return:  33%
Stop Target:  None

Action:  Near-term resistance is at $57-$58 and we would like to see a drop below $52.50 this week.  If so, there is a chance shares trade down to $47.50 which would get these options to at least $2.50.

 

LinkedIn (LNKD, $99.89, down $5.12)

May 82.50 puts (LNKD120519P00082500, $1.80, up $0.60)

Entry Price:  $0.90 (4/12/12)
Exit Target: $1.80 (closed half at $1.10 on 4/17/12, closed half at $1.90 on 4/23/12)
Return:  67%
Stop Target:  $1.10

Action:  We closed the other half of the trade on the drop below $100 and we will keep the stock on our Watch List as we could go back to the well.  Our average closing price was $1.50 ($1.10 + $1.90/ 2) and we were in for under a buck. 

Side Note:  We don’t count these half-closed trades “twice” as a winner as most other option websites do to fluff their track records, if they have one at all.  Often times you will see other option sites count a winner up to 3 or 4 times if they take “quarter and third” profits.  We don’t roll that way and we like to put our money where our mouth is.  How do we know this?  Our new subscribers have told us so thanks for the feedback folks!


Caterpillar (CAT, $105.56, down $1.17) 

May 92.50 puts (CAT120519P00092500, $0.50, up $0.05)

Entry Price:  $0.85 (4/12/12)
Exit Target: $1.70
Return:  -41%
Stop Target:  None

Action:  Caterpillar reports earnings on Wednesday.  A move above $110 would be bullish but we are looking for a drop below $100 and down to $95 on uninspiring quarterly results.

 

PowerShares QQQ (QQQ, $64.88, down $0.80)

May 65 puts (QQQ120519P00065000, $1.50, up $0.40)

Entry Price:  $1.00 (4/11/12)
Exit Target: $2.00 (closed half at $1.60 on 4/23/12)
Return:  55%
Stop Target:  None

Action:  We got our move back below $65 so we locked-in half profits on this trade as well.  We do see a test down to $60 coming and we are already looking at reestablishing positions with May or June puts.

 

Deckers Outdoor (DECK, $67.49, down $1.06)

May 50 puts (DECK120519P00050000, $0.25, up $0.05)

Entry Price:  $0.50 (4/11/12)
Exit Target: $1.00
Return:  -50%
Stop Target:  None

Action:  The company announces earnings on Thursday and we are looking for a miss and lowered guidance.  These were “cheap” out-of-the-money options so we will likely play this one out until expiration.

 

First Solar (FSLR, $19.77, down $0.88)         

May 18 puts (FSLR120519P00018000, $1.25, up $0.25) 

Entry Price:  $0.90 (4/11/12)
Exit Target: $1.80
Return:  39%
Stop Target:  None

Action:  We are still waiting for the $20 level to fall and the low for the week came in at $20.53.  The stock did trade up to $23.80 and a break above $24 would be bullish.  However, we are looking for a test down to the mid-teens once support at $20 cracks.

 

Tiffany & Company (TIF, $66.35, down $0.80)

May 62.50 puts (TIF0519P00062500, $0.70, up $0.15)

Entry Price:  $1.05 (4/9/12)
Exit Target: $2.10
Return:  -33%
Stop Target:  80 cents

Action:  We are looking for a drop below $65 this week and our near-term target is $60. 


Other 2012 Portfolio OPEN positions (3):  These are trades that are still open in the portfolio that have longer expiration dates or are on “hold” but are not worth mentioning until they turn around.  This means we would not open any new positions.  We are still keeping track of the trades and we will record the results, accordingly, when we close them or the options expire.  Click on the 2012 Portfolio link in the Members Area to view ALL open/ closed trades.

E*Trade Financial July 12 calls (from March 2012)

Bank of America January 12.50 calls 2013, July 12 calls (from March 2012)

Dendreon May 22 calls (from January 2012)

 

WATCH LIST SECTION

These trades are NOT recommendations.  They are trades that we like but have not added to the portfolio as an official recommendation because of market conditions or because we are waiting for better entry prices.  We try not to have more than 12-15 open trades at any one time which is why we created a Watch List.  We will not list entry prices because these stocks are on the verge of breaking out or they could sell off.

 

We will update this section with some fresh ideas for Tuesday.

**********************

10:40am (EST)

S&P 500 Spiders (SPY, $136.17, down $1.78)     

May 134 puts (SPY120519P00134000, $1.85, up $0.70)

Entry Price:  $1.15 (4/17/12)
Exit Target: $2.30
Return:  61%
Stop Target:  60 cents

Action:  Close HALF of the trade at current levels.

We would like to see a dip below $137.50 to start the week then a drop below $136.  Our near-term target $132 for the Spiders which will get these options to at least $2.  Resistance is at $139-$140.

 

Lululemon Athletica (LULU, $72.20, down $1.50)

May 67.50 puts (LULU120519P00067500, $1.20, up $0.30)

Entry Price:  $0.90 (4/12/12)
Exit Target: $1.80
Return:  33%
Stop Target:  None

Action:  Close HALF of the trade at current levels.

We are looking for a move below $70 this week down to $65.  From there a trip to double-nickels ($55) and a test of the 50-day MA could be in order.  A move above $77 would be bullish.

 

LinkedIn (LNKD, $99.25, down $5.76)

May 82.50 puts (LNKD120519P00082500, $1.90, up $0.70)

Entry Price:  $0.90 (4/12/12)
Exit Target: $1.80 (closed half at $1.10 on 4/17/12)
Return:  67%
Stop Target:  $1.10

Action:  Close the other HALF of the trade at current levels.

LinkedIn will report earnings next week and is coming up on its 1-year anniversary as a publicly traded company.  We are looking for a drop below $100 and we have already closed half of the trade on the first dip below par.  Our initial target is for a test to $95 which is where we will target to close the other half of the trade.  This is still way out-of-the-money, of course, but we don’t plan on holding these options for the full cycle unless shares continue lower after hitting our target.   

 

PowerShares QQQ (QQQ, $64.75, down $0.93)

May 65 puts (QQQ120519P00065000, $1.60, up $0.50)

Entry Price:  $1.00 (4/11/12)
Exit Target: $2.00
Return:  60%
Stop Target:  None

Action:  Close HALF of the trade at current levels.

Shares are right at the 50-day MA and we are looking for a move back below $65 today.  We would love to see a test down to $60 and we did a video back in January that showed if this level was broken a run to $70 would come.  We will be happy with a drop below $63 which would be worth at least a double from current levels.  A move back above $67 would be bullish.

********************************

9:00am (EST) continued…

The Dow added 65 points, or 0.5%, to settle at 13,029.  The blue-chips reached a high of 13,131 on Tuesday and 13,082 on Friday.  The close above the 50-day MA was a bonus and a break above 13,200 would get our 13,500 target back into play but it will take some major good news from the Dow components reporting earnings this week to get past resistance.  The index traded down to 12,896 on Thursday and another failed test at 13,200 will likely force the action back down to 12,800-12,750.  A break below this level gets 12,600-12,500 back into picture, followed by 12,350-12,300.  The Dow started the week at 12,849 and added 180 points, or 1.4%, by Friday’s close.  For the year, the blue-chips are up 812 points, or 6.6%.

The S&P 500 gained a little over a point-and a half, or 0.1%, to settle at 1,378.  The index traded to a high of 1,387 on Friday and 1,392 on Tuesday.  Wednesday and Thursday’s high was 1,390 so we are seeing lower highs and lower lows as 1,400 represents a brick wall of resistance.  However, a move past this level would be bullish up to 1,425.  The low came in at 1,365 to start the week.  The close below the 50-day MA was bearish and a move below 1,375 gets our near-term target of 1,350 in play.  From there, a trip to 1,325-1,300 is a strong possibility.  The S&P 500 opened Monday at 1,370 and gained 8 points, or 0.6%, for the week.  For 2012, the index is up 121 points, or 9.6%.  

The Nasdaq slipped 7 points, or 0.2%, to end at 3,000.  Tech finished the week below its 50-day MA and traded down to 2,975 on Monday.  The index surged to a high of 3,052 on Tuesday’s rally and 3,058 on Thursday’s pop higher but closed below 3,050 on those days.  The bears continue to push the March lows and a break below 2,950 will likely lead to a test down to 2,850.  A 10% correction from the March peak of 3,134 would be in the 2,825 area.  The Nasdaq was at 3,011 before Monday’s opening bell and fell 11 points, or 0.4%, for the five trading sessions.  YTD, Tech is higher by 395 points, or 15.2%.

The S&P Volatility Index ($VIX, 17.44, down 0.92) was just under 20 to start the week and reached a high of 20.47 on Monday and Friday’s low was 16.97.  The 17.50 level continues to be the battle ground with a move above 20 bearish while a dip below 16 would be bullish.

 

The Russell 2000 gained 5 points, or 0.6%, and closed at 804 on Friday.  The index traded down to 791 on Monday but closed at 810 on Tuesday which is becoming strong short-term resistance.  Wednesday’s low was 800 and Thursday was 794.  We are looking for the bears to push 780 which would get 750 into play.  A move above 810 would be bullish.  The Russell gained 8 points, or 1% for the week, after coming in at 796.  The index is up 56 points, or 7.5%, for the year but the money did not rotate out of the big cap names into the small caps and was another warning sign the market was headed lower.        

 

There are two things we are watching this week and they are the Fed and earnings.

The most important headlines will be out on Tuesday and Wednesday and what the Fed says and does.  The employment numbers have been getting worse with the 4-week jobless claims average starting to move up.  There hasn’t been much talk of QE3 from Bernanke but he could feel the need to say something because the Fed’s next meeting isn’t scheduled until June.  This is when “Operation Twist” expires so there could be some talk of extending it.

Netflix (NFLX, $106.11, down $0.98) reports earnings on Monday along with Texas Instruments (TXN, $32.47, down $0.17).  The latter could be a good read on what Apple (AAPL, $572.98, down $14.46) might say when they report earnings after the close on Tuesday. 

There are 44 analysts who “cover” Apple and on average, they are looking for $10 a share, on revenue of $36.63 billion.  The low estimates are $8.48 a share on revenue of $32.79 billion while the high numbers are $11.80 a share on $41.09 billion is sales.

Apple is going to have to do at least $11.80 a share and top $41 billion in revenue or there could be a serious selloff.  If they miss numbers, which we seriously doubt, Tech will get a major correction.    

Caterpillar (CAT, $107.73, up $0.37) reports earnings on Wednesday as well as Boeing (BA, $73.55, up $0.45).  Caterpillar is expected to do $2.13 a share on revenue of $16.22 billion, on average, by the 21 analysts who follow the stock.  While we expect them to say mostly good things about the global economy, we are looking for cautious guidance going forward which could push shares below $100.  If not, resistance at $110 will be cleared and the Dow will roll as CAT is a big Dow component. 

United Parcel Service (UPS, $80.27, up $0.41) will announce their numbers on Thursday, before the bell, along with Amazon.com (AMZN, $189.98, down $1.12).

This will be one of the biggest weeks as far as earnings and any negative surprises could have a ripple effect on the indexes as each one of these stocks is a key component with heavy weightings. 

Ben Bernanke has a good poker face and he will need to be strong and sturdy in his words, no matter what he says about the economy.  If he cracks and fails to mention the Fed’s “backup” plan then the market could suffer as the bulls see no QE3 relief.

The charts look bearish, and following a 3-week trading range, this could be the week that we break out of it.  To us, the upside appears more limited than the downside but the old market saying of “don’t fight the Fed” may come into play if Bernanke pulls a rabbit out of his hat.  We could see one last retest of the year highs but resistance is going to be hard to overcome and the companies reporting earnings are going to have to come in with some superb numbers.

Futures are showing a lower open this morning and look like this:  Dow (-xx); S&P (-xx); Nasdaq (-xx). 

 

Please remember, ALL “Exit Targets” and “Stop Targets” are targets.  You should not have any “Hard Stops” entered to close any trades or “Exit Orders” in your brokerage account unless we list one.  We will send out a “Profit Alert” or “Trade Update” if we want you to close a position OR if a new trade comes out.  Otherwise, follow instructions at all times in the 9am and 1pm updates.  Also, we will usually give you a heads-up if we think we are going to send an email outside of these time frames but it is rare that we do.

 

Apollo Group (APOL, $34.84, down $0.39)

May 33 puts (APOL120519P00033000, $0.65, flat)  

Entry Price:  $0.62 (4/20/12)
Exit Target: $1.25
Return:  5%
Stop Target:  None

Action:  We got into this position on Friday on the drop below $35.  This is decade long support and our initial target is for a test down to $30.  Our 6-12 month target is $20.  DeVry (DV, $32.26, down $0.07) announces earnings on Tuesday so any negative news could push Apollo shares lower.

 

S&P 500 Spiders (SPY, $137.95, up $0.23)     

May 134 puts (SPY120519P00134000, $1.15, down $0.15)

Entry Price:  $1.15 (4/17/12)
Exit Target: $2.30
Return:  0%
Stop Target:  60 cents

Action:  We would like to see a dip below $137.50 to start the week then a drop below $136.  Our near-term target $132 for the Spiders which will get these options to at least $2.  Resistance is at $139-$140.

Potash (POT, $43.93, up $0.52)     

May 40 puts (POT120519P00040000, $0.30, down $0.20)

Entry Price:  $0.40 (4/17/12)
Exit Target: $0.80
Return:  -25%
Stop Target:  None

Action:  We would like to see a close below $42 this week and our near-term target is for a drop below $40 to $38.

Green Mountain Coffee Roasters (GMCR, $44.26, up $0.84)

May 35 puts (GMCR120519P00035000, $0.85, down $0.25)

Entry Price:  $0.85 (4/17/12)
Exit Target: $1.70
Return:  0%
Stop Target:  None

Action:  Near-term resistance at $45 and then $47 and a break above $50 would be bullish.  Shares can be volatile and the company will announce earnings on May 2.  There have been accounting issues at Green Mountain in the past and we are hoping their numbers look funny to Wall Street when they report next week.  We are looking for a trip below $40 and down to $35 as competition heats up in this sector.  Shares are on the verge of a major move either way.

Lululemon Athletica (LULU, $73.70, up $0.74)

May 67.50 puts (LULU120519P00067500, $0.90, down $0.20)

Entry Price:  $0.90 (4/12/12)
Exit Target: $1.80
Return:  0%
Stop Target:  None

Action:  We are looking for a move below $70 this week down to $65.  From there a trip to double-nickels ($55) and a test of the 50-day MA could be in order.  A move above $77 would be bullish.


Acuity Brands (AYI, $54.77, down $0.23)  

May 50 puts (AYI120519P00050000, $0.60, down $0.10)

Entry Price:  $0.60 (4/12/12)
Exit Target: $1.20
Return:  0%
Stop Target:  None

Action:  Near-term resistance is at $57-$58 and we would like to see a drop below $52.50 this week.  If so, there is a chance shares trade down to $47.50 which would get these options to at least $2.50.

LinkedIn (LNKD, $105.01, up $0.43)

May 82.50 puts (LNKD120519P00082500, $1.20, down $0.20)

Entry Price:  $0.90 (4/12/12)
Exit Target: $1.80 (closed half at $1.10 on 4/17/12)
Return:  28%
Stop Target:  $1.10

Action:  LinkedIn will report earnings next week and is coming up on its 1-year anniversary as a publicly traded company.  We are looking for a drop below $100 and we have already closed half of the trade on the first dip below par.  Our initial target is for a test to $95 which is where we will target to close the other half of the trade.  This is still way out-of-the-money, of course, but we don’t plan on holding these options for the full cycle unless shares continue lower after hitting our target.   


Caterpillar (CAT, $107.73, up $0.37) 

May 92.50 puts (CAT120519P00092500, $0.45, down $0.10)

Entry Price:  $0.85 (4/12/12)
Exit Target: $1.70
Return:  -47%
Stop Target:  None

Action:  Caterpillar reports earnings on Wednesday and we covered the numbers.  We would say this could be an all-or-nothing trade but these options have nearly 4 weeks before they expire.  A move above $110 would be bullish but we are looking for a drop below $100 and down to $95 on uninspiring quarterly results.

 

PowerShares QQQ (QQQ, $65.68, down $0.18)

May 65 puts (QQQ120519P00065000, $1.10, flat)

Entry Price:  $1.00 (4/11/12)
Exit Target: $2.00
Return:  10%
Stop Target:  None

Action:  Shares are right at the 50-day MA and we are looking for a move back below $65 today.  We would love to see a test down to $60 and we did a video back in January that showed if this level was broken a run to $70 would come.  We will be happy with a drop below $63 which would be worth at least a double from current levels.  A move back above $67 would be bullish.

 

Deckers Outdoor (DECK, $68.55, up $1.42)

May 50 puts (DECK120519P00050000, $0.20, down $0.10)

Entry Price:  $0.50 (4/11/12)
Exit Target: $1.00
Return:  -60%
Stop Target:  None

Action:  The rebound in DECK was unbelievable last week as shares were on the verge of falling below $60.  The company announces earnings on Thursday and we are looking for a miss and lowered guidance.  These were “cheap” out-of-the-money options so we will likely play this one out until expiration.

 

First Solar (FSLR, $20.65, down $0.75)         

May 18 puts (FSLR120519P00018000, $1.00, up $0.15) 

Entry Price:  $0.90 (4/11/12)
Exit Target: $1.80
Return:  11%
Stop Target:  None

Action:  We are still waiting for the $20 level to fall and the low for the week came in at $20.53.  The stock did trade up to $23.80 and a break above $24 would be bullish.  However, we are looking for a test down to the mid-teens once support at $20 cracks.

 

Tiffany & Company (TIF, $67.15, up $1.00)

May 62.50 puts (TIF0519P00062500, $0.55, down $0.30)

Entry Price:  $1.05 (4/9/12)
Exit Target: $2.10
Return:  -48%
Stop Target:  80 cents

Action:  We are looking for a drop below $65 this week and our near-term target is $60.  A move above $70 and the 50-day MA would be bullish.


Other 2012 Portfolio OPEN positions (3):  These are trades that are still open in the portfolio that have longer expiration dates or are on “hold” but are not worth mentioning until they turn around.  This means we would not open any new positions.  We are still keeping track of the trades and we will record the results, accordingly, when we close them or the options expire.  Click on the 2012 Portfolio link in the Members Area to view ALL open/ closed trades.

E*Trade Financial July 12 calls (from March 2012)

Bank of America January 12.50 calls 2013, July 12 calls (from March 2012)

Dendreon May 22 calls (from January 2012)

 

WATCH LIST SECTION

These trades are NOT recommendations.  They are trades that we like but have not added to the portfolio as an official recommendation because of market conditions or because we are waiting for better entry prices.  We try not to have more than 12-15 open trades at any one time which is why we created a Watch List.  We will not list entry prices because these stocks are on the verge of breaking out or they could sell off.

Fossil (FOSL, $128.44, down $1.48)

May 105 puts (FSLR120519P00105000, $1.20, up $0.20)

Thoughts:  A move above $135 would be bullish, $125, bearish.

 

Netflix (NFLX, $106.11, down $0.98)      

May 80 puts (NFLX120519P00080000, $1.20, up $0.20)

Thoughts:  Netflix will report earnings after the bell today!

Sears Holdings (SHLD, $53.12, down $2.54)

May 45 puts (SHLD120519P00045000, $1.35, up $0.35)

Thoughts:  We like these puts a lot and we will make a move on a drop below $50 with these options or cheaper ones.