9:00am (EST) continued…
The Russell 2000 popped 3 points, or 0.3%, to end at 802.90. The small-caps fell to a low of 799 ten minutes into trading but were pushing green for the rest of the day shortly afterwards. The high was 804.84 and a close above 810 would confirm a possible push to 820-825 while a break below 790 would cool the momentum.
The S&P Volatility Index ($VIX, 15.28, down 0.04) was flat for the day after peaking at 15.67.
DeVry (DV, $19.68, up $0.04) reported quarterly earnings after the close on Thursday and they were a disaster. The company earned $8 million, or 12 cents a share, versus $75 million, or $1.08 a share, in the year ago period. Enrollments were down 3%. After adjustments, write-offs, write-downs, restructuring expenses and whatever else DeVry added to the tax books, earnings were 47 cents a share. Wall Street expected 46 cents a share so it was actually a “beat” if you go by the numbers.
Shares flew past $21 in extended trading but kissed $19 shortly afterwards before finishing after-hours flat.
We have been harping on the for-profit colleges for years and some of the shenanigans that go on with all of our tax-paying dollars. Remember, these schools are funded by the zombies (including the G.I bill which these colleges love) and student loans have now reached $1 trillion. Yep, there are new regulations that have recently put in place to keep the lease a little tighter in helping students find jobs and repay debt but many (not all) of the online colleges are shams.
Futures are lower this morning as we head to press and look like this: Dow (-42); S&P 500 (-5), Nasdaq 100 (-7).
Do not risk more than 5% of your trading account on any one trade but do try to take ALL of the trades. 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.
Wynn Resorts (WYNN, $101.53, down $1.18)
September 80 puts (WYNN120922P00080000, $0.40, flat)
Entry Price: $0.85 (8/2/12)
Exit Target: $1.70
Stop Target: None
Action: We would like to see a close below $100 today but there is risk up to $112. We still believe once shares fall below $90, a test to $80 will come into play, possibly $60. The 52-week low is $90.11 which was set last week.
Veeco Instruments (VECO, $38.11, up $0.22)
September 30 puts (VECO120922P00030000, $0.35, down $0.10)
Entry Price: $0.90 (8/2/12)
Exit Target: $1.80
Stop Target: None
Action: We said we might add the September 40 calls (VECO120922C00040000, $1.30, up $0.25) on a close above $38 but we don’t like buying options on Friday’s. Let’s see where shares are at on Monday.
Apollo Group (APOL, $28.22, up $0.11)
September 24 puts (APOL120922P00024000, $0.55, down $0.05)
Entry Price: $1.10 (7/31/12)
Exit Target: $2.20
Stop Target: None
Action: DeVry (DV, $19.68, up $0.04) came in with absolutely terrible numbers but shares quickly traded past $21 after the close. In extended trade, DeVry also reversed course and traded own to $19 before ending flat. Hopefully, shares are taken to the wood shed which would mean good news for our current put option if the beating spreads.
Apollo Group hit a fresh 52-week low of $25.77 last week and we have a near-term target of $20. Longer-term we expect shares to trade to the mid to lower teens. A break above $30 would force us out of the trade.
Other 2012 Portfolio OPEN positions (8): 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.
Bank of America January 12.50 calls 2013 (from March 2012)
iShares Dow Jones US Real Estate August 57 puts (from June 2012)
AOL August 24 puts (from June 2012)
Consumer Discret Select Spiders August 41 puts (from June 2012)
Freeport McMoRan Copper & Gold August 29 puts (from June 2012)
PowerShares QQQ August 59 puts (from June 2012)
Dow Jones Industrial Average Spiders September 119 puts (from July 2012)
S&P 500 Spiders September 123 puts (from July 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.
Pepsi (PEP, $72.14, down $0.43)
September 72.50 calls (PEP120922C00072500, $0.75, down $0.25)
September 75 calls (PEP120922C00075000, $0.12, down $0.08)
October 75 calls (PEP121020C00075000, $0.43, down $0.12)
January (2013) 75 calls (PEP130119C00075000, $1.05, down $0.22)
Thoughts: If the bulls continue to run, we can play the “safer” stocks for little pops. Shares of Pepsi are at 52-week highs and could make a run at $80 if the all-time high of $79.79 from January 2008 is challenged.
Taiwan Semiconductor Manufacturing (TSM, $14.33, up $0.24)
January 15 calls (TSM130119C00015000, $0.70, up $0.10)
Thoughts: We would wait for a move above $14.50 to go long.
Buffalo Wild Wings (BWLD, $72.54, down $0.21)
September 80 calls (BWLD120922C00075000, $0.65, down $0.10)
September 65 puts (BWLD120922P00065000, $1.00, up $0.10)
Thoughts: Shares of BWLD have been volatile of late. In late July, the stock fell from $78.90 to $70.43 the day after the company reported earnings and traded down to $68.71 intraday. The recovery high was $75.01 which is near-term resistance. This is the level we will need to watch for a bullish breakout and buy calls. A move below $70 would suggest we use put options for a possible test down to $65-$60.
SanDisk (SNDK, $41.59, down $0.11)
September 45 calls (SNDK120922C00045000, $0.70, flat)
September 38 puts (SNDK120922P00038000, $0.70, flat)
October 35 puts (SNDK121020P00035000, $0.80, flat)
Thoughts: We would wait for a move past $42.75 before going long which is the end of July high. A close below $40 would be bearish and could lead to retest of $35 or worse.
Dillard’s (DDS, $74.19, up $3.88)
September 75 calls (DDS120922C00075000, $3.20, up $0.15)
September 60 puts (DDS120922P00060000, $0.60, down $1.00)
Thoughts: The calls traded up to $4 on Thursday which would have been an great exit on the open.
Broadcom (BRCM, $34.33, up $0.43)
September 35 calls (BRCM120922C00035000, $0.95, up $0.15)
September 32 puts (BRCM120922P00032000, $0.60, down $0.15)
Thoughts: The 52-week high is $39.66. We would wait until shares clear $35.25 before going long and on a break below $32 we might look to go short.
Ingersoll-Rand (IR, $44.73, up $0.52)
September 40 puts (IR120922P00040000, $0.40, down $0.10)
September 45 calls (IR120922C00045000, $1.40, up $0.25)
Thoughts: A move above $43.50 could lead to a test of the 52-week high which is $45.62 and why we have listed the calls this week. We are looking for a drop to $36 by mid-September and would wait for shares to move below $41 before playing the puts.
Akamai Technologies (AKAM, $36.21, up $0.03)
September 33 puts (AKAM120922P00033000, $0.55, flat)
September 37 calls (AKAM120922C00037000, $1.25, flat)
Action: A close above $36 could lead to a test of the 52-week high of $39.14. If shares make a move past $40 it would represent blue-sky territory and a possible push to $45-$50. A drop below $33 would be bearish and could lead to a test of $30.
KLA-Tencor (KLAC, $53.06, up $0.55)
September 55 calls (KLAC120922C00055000, $0.85, up $0.15)
September 48 puts (KLAC120922P00048000, $0.40, down $0.10)
Thoughts: We have recommended 4 put option trades on KLAC since April and they made 172%, 144%, 29%, and 6%. It might be time to get bullish if $50 continues to hold. Shares look headed to double-nickels ($55) but a move below $50 would reverse the recent uptrend.