May 2012 | Members

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.

 

9:00pm (EST)

Green Mountain Coffee Roasters (GMCR, $49.52, down $0.22)   

May 35 puts (GMCR120519P00035000, $0.40, up $0.10)

Entry Price:  $0.85 (4/17/12)

Exit Target: $1.70
Return:  -53%
Stop Target:  None

Action:  We will close half of the trade at the open and we will send out a Trade Alert when we do. 

 

 ********************

 

2:00pm (EST)

Arena Pharmaceuticals (ARNA, $2.60, up $0.26)

July 3 calls (ARNA120723C00003000, $1.10, up $0.10)

Entry Price:  $1.00 (4/30/12)
Exit Target: $2+
Return:  10%
Stop Target:  None

Action:  We should hear news next Thursday on the company’s obesity drug, Lorcaserin, and we expect the stock to be halted for the day while the FDA panel reviews the results.  We are looking for a breakout past $3.50 on good news.

 

KLA-Tencor(KLAC, $51.90, down $0.33)

June 48 puts (KLAC120616P00048000, $0.80, up $0.10)

Entry Price:  $0.45 (4/26/12)
Exit Target: $1.00
Return:  78%
Stop Target:  None

Action:  The June options have 44 days before they expire and we are expecting a dip below $50 this week.

 

First Solar (FSLR, $18.09, down $0.33)         

June 15 puts (FSLR120616P00015000, $1.10, up $0.10) 

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -1%
Stop Target:  50 cents

Action:  Shares have traded to a low of $17.65 today.

 

iShares Russell 2000 (IWM, $81.68, up $0.13)           

June 75 puts (IWM120616P00075000, $0.85, down $0.05)

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -24%
Stop Target:  50 cents

Action:  We were looking for $83 to hold as resistance. 

 

Joy Global (JOY, $70.45, down $0.20)

May 65 puts (JOY120519P00065000, $0.60, up $0.05)

Entry Price:  $0.85 (4/25/12)
Exit Target: $1.70
Return:  -29%
Stop Target:  None

June 60 puts (JOY120616P00060000, $0.95, up $0.05)

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -15%
Stop Target:  50 cents

Action:  Joy Global has traded down to $68.75 today.    

 

Apollo Group (APOL, $34.42, down $0.69)

May 33 puts (APOL120519P00033000, $0.45, up $0.10) 

Entry Price:  $0.62 (4/20/12)
Exit Target: $1.25
Return:  -27%
Stop Target:  None

Action:  Our near-term target is for a test down to $30.

 

Potash (POT, $43.46, down $0.35)   

May 40 puts (POT120519P00040000, $0.25, up $0.05)

Entry Price:  $0.40 (4/17/12)
Exit Target: $0.80
Return:  -38%
Stop Target:  None

Action:  We are looking for $44-$45 to hold on a continued rebound but we still expect a drop below $40 over the next week or two.   

 

Green Mountain Coffee Roasters (GMCR, $48.98, down $0.76)   

May 35 puts (GMCR120519P00035000, $0.40, up $0.10)

Entry Price:  $0.85 (4/17/12)
Exit Target: $1.70
Return:  -53%
Stop Target:  None

Action:  The company announces earnings on Thursday.    

 

Lululemon Athletica (LULU, $79.32, up $3.27)

May 67.50 puts (LULU120519P00067500, $0.20, down $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:  $1.00 

Action:  Continue to hold.   

 

Acuity Brands (AYI, $56.89, up $0.16)           

May 50 puts (AYI120519P00050000, $0.20, flat)

Entry Price:  $0.60 (4/12/12)
Exit Target: $1.20
Return:  -67%
Stop Target:  None

Action:  Continue to hold.                

 

PowerShares QQQ (QQQ, $66.98, up $0.11)

May 65 puts (QQQ120519P00065000, $0.45, flat)

Entry Price:  $1.00 (4/11/12)
Exit Target: $2.00 (closed half at $1.60 on 4/23/12)
Return:  3%
Stop Target:  None

Action:  Continue to hold.

 

Other 2012 Portfolio OPEN positions (5):  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)

Tiffany & Company May 62.50 puts (from April 2012)

Caterpillar May 92.50 puts (from April 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 in the morning.

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

9:00am (EST) continued…

The Dow added 66 points, or 0.5%, to finish at 13,279.  The blue-chips traded to a low of 13,174 (-39) at the start but bounced to a high of 13,338 (+125) intraday after the better-than-expected ISM number.  The bulls were able to hold the 13,200 level while making an attempt at 13,350.  If cleared, our near-term 13,500 target from late January will become official.

The S&P 500 popped 8 points, or 0.6%, to end at 1,406.  The index kissed a low of 1,395 but was able to reclaim the 1,400 level after reaching a peak of 1,415.  We have mentioned a possible push to 1,425 on this current back test and our near-term targets from January were 1,425-1,450 if the 1,350 level was cleared.  The 52-week high for the S&P is 1,422 which triggered at the beginning of April.

The Nasdaq advanced 4 points, or 0.1%, to close at 3,050.  Tech touched a low of 3,041 and soared to a high of 3,085 (+39) before giving back most of its gains.  The 52-week high is 3,134 (March 27) and we said in January with the Nasdaq at 2,905 if 3,000 were cleared the index could make a run at 3,250. 

Through the first 3 months of the year, 90% of our trades were mainly call options but in late March and early April we started loading up on put option trades.  Since then, we recommended 26 straight put option trades before this week’s call option trade.  We have closed most of our May put option trades (14 winners in-a-row) and while we didn’t expect a RETEST of the highs, we certainly warned of one and here we are.

Chart patterns can change but often times they are very useful in predicting market direction.  Most of our current plays are in June options which have over 40 days before they expire and we have building positions as the market has rallied over the past week.   

The good news is futures are getting whacked this morning after a weak ADP Employment Change report. 

As we head to press, Dow futures are down 51 points to 13,167 while the S&P 500 futures are off by 7 points to 1,393.  Nasdaq 100 futures are showing a decline of 12 points and are at 2,706.

 

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.

 

Arena Pharmaceuticals (ARNA, $2.34, down $0.10) 

July 3 calls (ARNA120723C00003000, $1.00, flat)

Entry Price:  $1.00 (4/30/12)
Exit Target: $2+
Return:  0%
Stop Target:  None

Action:  We should hear news next Thursday on the company’s obesity drug, Lorcaserin, and we expect the stock to be halted for the day while the FDA panel reviews the results.  We are looking for a breakout past $3.50 on good news.

 

KLA-Tencor(KLAC, $52.23, up $0.10)

June 48 puts (KLAC120616P00048000, $0.70, down $0.05)

Entry Price:  $0.45 (4/26/12)
Exit Target: $1.00
Return:  56%
Stop Target:  None

Action:  The June options have 44 days before they expire and we are expecting a dip below $50 this week.

 

First Solar (FSLR, $18.42, up $0.02)         

June 15 puts (FSLR120616P00015000, $1.00, down $0.05) 

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -10%
Stop Target:  50 cents

Action:  Shares traded to a high of $19.48 yesterday and $20 held as resistance.  The company reports earnings on Thursday.

 

iShares Russell 2000 (IWM, $81.55, up $0.08)        

June 75 puts (IWM120616P00075000, $0.90, flat)

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -19%
Stop Target:  50 cents

Action:  We were looking for $83 to hold as resistance and shares traded to a high of $82.97 before fading. 

 

Joy Global (JOY, $70.65, down $0.12)

May 65 puts (JOY120519P00065000, $0.55, down $0.05)

Entry Price:  $0.85 (4/25/12)
Exit Target: $1.70
Return:  -35%
Stop Target:  None

June 60 puts (JOY120616P00060000, $0.90, down $0.10)

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -19%
Stop Target:  50 cents

Action:  Joy Global traded down to $70.16 yesterday and continues to flirt with a breakdown.  A drop below $70 should quickly lead to $65 or worse.

 

Apollo Group (APOL, $35.11, down $0.11)

May 33 puts (APOL120519P00033000, $0.35, flat) 

Entry Price:  $0.62 (4/20/12)
Exit Target: $1.25
Return:  -44%
Stop Target:  None

Action:  Our near-term target is for a test down to $30.

 

Potash (POT, $43.81, up $1.33)   

May 40 puts (POT120519P00040000, $0.20, down $0.15)

Entry Price:  $0.40 (4/17/12)
Exit Target: $0.80
Return:  -50%
Stop Target:  None

Action:  We are looking for $44-$45 to hold on a continued rebound but we still expect a drop below $40 over the next week or two.   

 

Green Mountain Coffee Roasters (GMCR, $49.74, up $1.01)   

May 35 puts (GMCR120519P00035000, $0.30, down $0.10)

Entry Price:  $0.85 (4/17/12)
Exit Target: $1.70
Return:  -65%
Stop Target:  None

Action:  The company announces earnings on Thursday.  Herbalife (HLF, $56.30, down $14.02) dropped 20% when a hedge fund manager questioned the company about its business operations.  We said we would like to see some skeletons come out of Green Mountain’s closet when they hold their conference call.

 

Lululemon Athletica (LULU, $76.05, up $1.91)

May 67.50 puts (LULU120519P00067500, $0.30, down $0.30)

Entry Price:  $0.90 (4/12/12)
Exit Target: $1.80 (closed half at $1.20 on 4/23/12)
Return:  -17%
Stop Target:  $1.00 

Action:  Continue to hold.   

 

Acuity Brands (AYI, $56.73, up $1.16)           

May 50 puts (AYI120519P00050000, $0.20, down $0.15)

Entry Price:  $0.60 (4/12/12)
Exit Target: $1.20
Return:  -67%
Stop Target:  None

Action:  Continue to hold.            

 

PowerShares QQQ (QQQ, $66.87, up $0.11)

May 65 puts (QQQ120519P00065000, $0.45, flat)

Entry Price:  $1.00 (4/11/12)
Exit Target: $2.00 (closed half at $1.60 on 4/23/12)
Return:  3%
Stop Target:  None

Action:  Continue to hold.

 

Other 2012 Portfolio OPEN positions (5):  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)

Tiffany & Company May 62.50 puts (from April 2012)

Caterpillar May 92.50 puts (from April 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.

 

TiVo (TIVO, $10.95, up $0.16)

August 12 calls (TIVO120818C00012000, $0.70, up $0.05)

August 13 calls (TIVO120818C00013000, $0.45, up $0.05)

Thoughts:  We are hearing takeover chatter, again, in TiVo and it has been a favorite trade of ours for the Weekly Wrap.  Open Interest (OI) stands at 10,000 contracts for the 12’s and for the August 13’s, OI is over 16,000 contracts.

 

Ross Stores (ROST, $62.46, up $0.96)

June 65 calls (ROST120616C00065000, $1.05, up $0.30)

Thoughts:  Shares are in a STRONG uptrend. 

 

PetSmart (PETM, $58.42, up $0.16)

May 60 calls (PETM120519C00060000, $0.70, up $0.10)

Thoughts:  Watch for now.

 

MGM Resorts (MGM, $13.29, down $0.13)

June 14 calls (MGM120616C00014000, $0.45, down $0.10)

June 13 puts (MGM120616P00013000, $0.60, flat)

Thoughts:  MGM announces earning on Thursday.