June 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.

1:00pm (EST)

FedEx (FDX, $86.63, down $1.06)

July 77.50 puts (FDX120721P00077500, $1.05, up $0.18)

Entry Price:  $0.92 (6/12/12)
Exit Target: $1.95
Return:  14%
Stop Target:  45 cents

Action:  FedEx is on track to test $80 or worse by mid-July if resistance holds.   

 

Potash (POT, $38.47, down $0.17)       

July 35 puts (POT120721P00035000, $0.70, up $0.05)

Entry Price:  $0.75 (6/11/12)
Exit Target: $1.50
Return:  -7%
Stop Target:  None

Action:  Resistance at $40 has been strong and our price target is calling for a drop below $35 for Potash by mid-July. 

 

iShares Russell 2000 (IWM, $76.53, up $0.31)

July 70 puts (IWM120721P00070000, $0.95, flat)

Entry Price:  $1.20 (6/6/12)
Exit Target: $2.40
Return:  -21%
Stop Target:  60 cents

Action:  We are looking for a close below $75 this week.  

 

Veeco Instruments (VECO, $33.94, up $0.04)

July 30 puts (VECO120721P00030000, $1.00, down $0.05)

Entry Price:  $1.00 (6/6/12)
Exit Target: $2.00
Return:  0%
Stop Target:  50 cents

Action:  Resistance at $35 should hold on further strength but we would like to see a close below $33-$32.50 this week.  .   

 

Illinois Tool Works (ITW, $55.14, down $0.34) 

July 50 puts (ITW120721P00050000, $0.60, up $0.05)

Entry Price:  $1.05 (6/4/12)
Exit Target: $2.10
Return:  -43%
Stop Target:  None

Action:  We are looking for a drop below $53.50 over the next 2 weeks which will quickly bring $50 into play.

 

Constant Contact (CTCT, $17.07, down $2.45)

July 17.50 puts (CTCT120721P00017500, $1.45, up $0.75)

Entry Price:  $0.55 (5/24/12)
Exit Target: $1.10 (closed half on 6/13/12 at $1.35)
Return:  155%
Stop Target:  None

Action:  We wanted to close half of the trade into strength and shares are at their lows for the day.

 

First Solar (FSLR, $14.45, down $0.50)

July 10 puts (FSLR120721P00010000, $0.35, up $0.05) 

Entry Price:  $0.62 (5/23/12)
Exit Target: $1.20
Return:  -44%
Stop Target:  None

Action:  These are cheap options on a volatile stock so try not to get frustrated as we wait for a drop to single-digits.

 

Apollo Group (APOL, $33.20, down $0.04)

August 27 puts (APOL120818P00027000, $0.75, flat)

Entry Price:  $0.90 (5/10/12)
Exit Target: $1.80
Return:  -17%
Stop Target:  45 cents

Action:  We said we would like to see a dip below $33 this week and a close below this level gets $30 in play again.  One this level of long-term support is penetrated shares could fall to the low $20’s.    

 

Arena Pharmaceuticals (ARNA, $8.24, up $0.36)  

July 3 calls (ARNA120723C00003000, $5.40, up $0.40)

Entry Price:  $1.00 (4/30/12)
Exit Target: $2+ (closed half on 6/5/12 at $3.40)
Return:  340%
Stop Target:  $3.75 (Hard Stop on other HALF)

Action:  We have a price target of $10+ if there is no delay with their obesity drug, Lorcaserin, which could go to market by the end of the year if all goes well.  For those of you just joining us, the company will meet with the FDA on June 27.

 

Other 2012 Portfolio OPEN positions (4):  These are trades that are still open in the portfolio but are down over 50%.  They have longer expiration dates and 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 if 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)

RealD June 10 puts (from May 2012)

Best Buy July 16 puts (from May 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 but these are the trades we are watching as new candidates.

We will update this section in the morning.

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10:30am (EST)

Constant Contact (CTCT, $17.49, down $2.03)

July 17.50 puts (CTCT120721P00017500, $1.35, up $0.65)

Entry Price:  $0.55 (5/24/12)
Exit Target: $1.10
Return:  145%
Stop Target:  None

Action:  Close HALF of the trade at current levels.

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

9:00am (EST)

The Dow surged 162 points, or 1.3%, to close at 12,573.  The blue-chips made a run at 12,600 once again and reached a high of 12,577 just before the bell sounded.  If cleared, the next level of resistance is at 12,800.  The 50-day MA for the Dow is at 12,784 while the 200-day is at 12,298.

 

The S&P added 15 points, or 1.2%, and settled at 1,324.  The index went out near its peak but failed once gain to clear and hold 1,325.  If the bulls can clear this level and then 1,335, it would set the stage for a run to 1,350.  The 50-day MA for the S&P is at 1,353.  The 200-day MA is at 1,289.

The Nasdaq jumped 33 points, or 1.2%, to end at 2,843.  Tech also closed on its highs but below the 2,850 level which has been a busy battle ground area this week.  A break past 2,875 could lead to a run at 2,900 while a move under 2,825 would confirm another test to 2,800 – or worse.  The 50-day MA for the Nasdaq is at 2,939, the 200-day MA is at 2,771. 

The market looked bullish yesterday but a deeper look at the charts show another failed test at resistance and the downward slope that is still in play.  It is hard to say how the rest of the week unfolds but the action is making a lot of traders nervous.  We have no clue where the market will close today or by Friday, NO ONE DOES.  All we can do is use the charts to predict a longer-term move which we have pegged for July and that is lower.

There is an old saying on Wall Street that keeps us in check and that is “plan your trades, trade your plan”.  It’s that simple and that is what we are doing. 

Sometimes, the market can turn on a dime and we have been pretty solid at identifying trend changes all year long.  It’s one of the reasons why we have been right on 83% (98-20 Track Record) of our trades for 2012.  While there is a feeling among the talking heads and suit-and-ties there could be a breakout, we still don’t mind sticking to our guns by saying we could also easily see a 10%-15% correction from current levels over the next month or 2.  

We continue to remind readers we are neither, bullish or bearish, we are both and we use the charts to plan or trades.  Of course, we also factor in a host of other variables to get the best read we can on the market and we gave you a lot of those tools on Monday morning on what we are looking for this week.

Futures are showing a lower open to start today’s session.  Dow futures are lower by 45 points to 12,469 while the S&P 500 futures are off 7 points to 1,312.  The Nasdaq 100 futures are down 10 to 2,534.   

 

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.

 

FedEx (FDX, $87.68, up $1.40)

July 77.50 puts (FDX120721P00077500, $0.87, down $0.09)

Entry Price:  $0.92 (6/12/12)
Exit Target: $1.95
Return:  -5%
Stop Target:  45 cents

Action:  There is risk up to $90 but shares fell below $86 before rebounding.  FedEx is on track to test $80 or worse by mid-July if resistance holds.   

 

Potash (POT, $38.64, up $1.06)       

July 35 puts (POT120721P00035000, $0.65, down $0.30)

Entry Price:  $0.75 (6/11/12)
Exit Target: $1.50
Return:  -13%
Stop Target:  None

Action:  Resistance at $40 has been strong and our price target is calling for a drop below $35 for Potash by mid-July. 

 

iShares Russell 2000 (IWM, $76.22, up $0.95)

July 70 puts (IWM120721P00070000, $0.95, down $0.30)

Entry Price:  $1.20 (6/6/12)
Exit Target: $2.40
Return:  -21%
Stop Target:  60 cents

Action:  Shares touched a low of $74.78 before bouncing higher and we are looking for a close below $75 this week.  

 

Veeco Instruments (VECO, $33.90, up $0.86)

July 30 puts (VECO120721P00030000, $1.05, down $0.15)

Entry Price:  $1.00 (6/6/12)
Exit Target: $2.00
Return:  10%
Stop Target:  50 cents

Action:  Veeco touched a low of $32.78 yesterday.  Resistance at $35 should hold on further strength but we would like to see a close below $33-$32.50 this week.  .   

 

Illinois Tool Works (ITW, $55.48, up $0.46) 

July 50 puts (ITW120721P00050000, $0.55, down $0.05)

Entry Price:  $1.05 (6/4/12)
Exit Target: $2.10
Return:  -48%
Stop Target:  None

Action:  We are looking for a drop below $53.50 over the next 2 weeks which will quickly bring $50 into play.

 

Constant Contact (CTCT, $19.52, down $0.05)

July 17.50 puts (CTCT120721P00017500, $0.70, down $0.05)

Entry Price:  $0.55 (5/24/12)
Exit Target: $1.10
Return:  27%
Stop Target:  None

Action:  Shares kissed a low of $18.66 yesterday while the options reached a high of 89 cents.  Although shares ended higher, the technical damage being done is calling for a drop to $15 by mid-July.

 

First Solar (FSLR, $14.95, up $2.62)

July 10 puts (FSLR120721P00010000, $0.30, down $0.25) 

Entry Price:  $0.62 (5/23/12)
Exit Target: $1.20
Return:  -52%
Stop Target:  None

Action:  Shares soared over 20% yesterday as the shorts ran for cover.  We don’t want to overreact to a story that demand has picked for the sector because First Solar is in survival mode.  These are cheap options on a volatile stock so try not to get frustrated as we wait for a drop to single-digits.

 

Apollo Group (APOL, $33.24, down $1.07)

August 27 puts (APOL120818P00027000, $0.75, up $0.15)

Entry Price:  $0.90 (5/10/12)
Exit Target: $1.80
Return:  -17%
Stop Target:  45 cents

Action:  Apollo made a break below $33 down to $32.98 yesterday.  We said we would like to see a dip below $33 this week and a close below this level gets $30 in play again.  One this level of long-term support is penetrated shares could fall to the low $20’s.    

 

Arena Pharmaceuticals (ARNA, $7.88, up $0.81)  

July 3 calls (ARNA120723C00003000, $5.00, up $0.70)

Entry Price:  $1.00 (4/30/12)
Exit Target: $2+ (closed half on 6/5/12 at $3.40)
Return:  320%
Stop Target:  $3.20, raise to $3.75 (Hard Stop on other HALF)

Action:  Shares reached a peak of $7.92 on Tuesday and we are looking for a break above $8 this week.  We have raised the Hard Stop again from $3.25 to $3.75 with yesterday’s big move. 

We have a price target of $10+ if there is no delay with their obesity drug, Lorcaserin, which could go to market by the end of the year if all goes well.  For those of you just joining us, the company will meet with the FDA on June 27.

 

Other 2012 Portfolio OPEN positions (4):  These are trades that are still open in the portfolio but are down over 50%.  They have longer expiration dates and 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 if 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)

RealD June 10 puts (from May 2012)

Best Buy July 16 puts (from May 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 but these are the trades we are watching as new candidates.

 

Freeport-McMoRan Copper & Gold (FCX, $33.56, up $0.61)

July 30 puts (FCX120721P00030000, $0.75, down $0.15)

August 29 puts (FCX120818P00029000, $0.95, down $0.05)

Thoughts:  Shares look like they could test $30 over the near-term and the mid-$20’s by August is a good possibility.  The 52-week low is $28.85 and yesterday’s low was $32.94.

 

Coinstar (CSTR, $63.09, up $1.25)   

July 52.50 puts (CSTR120721P00052500, $0.50, down $0.10)

July 55 puts (CSTR120721P00055000, $0.75, down $0.30)

Thoughts:  We are warming up to the July 55’s.  We would like to see shares test $65 which is where we would look to go short (again).

 

KLA-Tencor (KLAC, $47.65, up $0.66)

July 44 puts (KLAC120721P00044000, $0.70, down $0.15)

September 37 puts (KLAC120922P00037000, $0.60, down $0.05)

Thoughts:  We would like to see a quick pop to $50 which is where we might start half positions.  We may add the September 37 as a speculative trade with the 200-day south of $34.

 

Apache (APA, $83.27, up $1.44)

July 72.50 puts (APA120721P00072500, $0.90, down $0.25)  

Thoughts:  We are still waiting for another break below $80 before possibly going short.   

 

Schlumberger (SLB, $64.93, up $0.86)

July 57.50 (SLB120721P00057500, $0.90, down $0.20)

August 55 puts (SLB120818P00055000, $1.15, down $0.20)

Thoughts:  Shares are right at resistance but could test $67 on fluff.  We like the July 57.50’s if $65 holds over the next day or two. 

 

PowerShares QQQ (QQQ, $62.56, up $0.76)

July 60 puts (QQQ120721P00060000, $1.00, down $0.30)

Thoughts:  Watch for now.