11:30pm (EST)

 

1.  Market Summary 

2.  Monster Beverage (MNST) is Still a Scary Investment

3.  Allergan (AGN) in a Strong Uptrend

4.  Earnings

5.  Weekly Wrap Portfolio Update 

6.  Week Ahead

 

(To view the charts, please log into the Members Area and go to the Weekly Wrap Premium section.  Please give us an hour to update the charts.)

 

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1.  Market Summary   

“This week will be headline driven and there will be plenty to digest with the Black Friday numbers and the rhetoric from the political stage here at home and overseas.

Black Friday figures will be strong and many retailers should post nice sales results as nearly 250 million shoppers hit the stores and the Internet.  The 4-day weekend saw a 9% pop in spenders with the bill coming in at $425 compared to 226 million shoppers in 2011 that spent just under $400 over the same time period.  This could be bullish for Cyber Monday and will only add to the impressive numbers but the surge in shoppers and spending could mean the rest of the holiday shopping season will be a disappointment.

Then again, if the zombies can agree on spending cuts and tax hikes to avoid the Fiscal Cliff, all should be well for a continued rally.  The problem betting on politicians to “agree” on anything in a timely fashion will be the hard part but they do have a deadline.  There are only 5 weeks before there will be some kind of handshake because we are nearly 100% certain the zombies aren’t dumb enough to push America into another recession.

If we chop off the last week of the year then it leaves 4 weeks to solve the problem.  We would expect Congress to take their usual Christmas and New Year’s vacations so we are expecting a deal by December 21.  If the headlines out of Washington are positive to start the week and there is no muscle flexing, finger pointing, or sideshow shenanigans the bulls could be on their way to a double-digit rally to end the year.

Greece will be back in focus after European leaders failed to come up with longer-term budget solutions so the country could get its next bailout payment.  Talks are expected to resume today and the overseas zombies are in a race with the ones here at home to see who can kick the can further into 2013 then deal with any REAL solutions.

Economic news will take a backseat to the battle of the zombies but there are some important ones to watch that could impact trading.  Tuesday’s Durable Goods and the Richmond Fed Manufacturing numbers will be watched along with the Fed Beige Book on Wednesday and the Chicago PMI figures on Friday.

As far as earnings plays, there may be some call and put option players betting on the direction of ADT, AEO, BKS, GES, GMCR, KR, TIF and TIVO.  We will profile a few of these trades on our Watch List this week for possible action and our top 2 are GMCR and TIVO.

 

(from 11/19/2012 Monday Morning Daily Outlook)…

The bulls went into last week with a full head of steam following the 4% pop during the Thanksgiving holiday but got off to a slow start.  Although support held on Monday and was stretched on Tuesday by the bears, the market still looked poised to move higher.

The action picked up on Wednesday and Thursday despite the Fiscal Cliff jargon as the red zombies battled the blue zombies on sticking points to reach an agreement.  The head red zombie declared a stalemate on Friday while the head blue zombie was off in Pennsylvania throwing blame back on the reds for not get a deal done.

We try to ignore the rhetoric and we have to report it but we are still amazed America (and the market) is held hostage by the political antics of the knuckleheads who run our country.  Unfortunately, the circus in DC will continue for a few weeks and with earnings winding down, and Europe on the backburner, the Zombie Show is the main flick Wall Street is watching. 

Side Notes:  GMCR zoomed 25% after announcing earnings.  

TIVO was pushing $12 by week’s end.

As far as the market…

The Dow added 4 points, or 0.03%, to finish at 13,025 on Friday.  The blue-chips held 12,800 to start the week but did slip and overshoot to a low of 12,765 on Wednesday.  The next area of support is at 12,600-12,500 if the Dow closes below 12,800 and it would be a very bearish break below the 3-year uptrend line if there is further weakness.  Short-term resistance is at 13,200-13,250 (see Note) and a close above these levels could lead to a test of the 52-week highs.  The Dow started the week at 13,009 and gained 16 points, or 0.1%, by Friday’s close.  Year-to-date, the index is higher by 808 points, or 6.6%, but fell 71 points, or 0.5%, for the month of November.  (Note:  the 100-day MA is at 13,198 but remember this is a 3-year weekly chart.)

 

The S&P 500 gained a fifth of a point, or 0.02%, to close at 1,416.  The index held 1,400 on Monday but closed below this level on Tuesday.  Wednesday’s low was 1,385 and a perfect back test to the 200-day MA of 1,384 before the bounce.  The index closed above 1,400 at 1,409.93 and we have talked extensively about the 1,410 level giving us a clue for higher prices to 1,425.  Thursday’s high was 1,419.70 and Friday checked-in at 1418.86.  A close above 1,425 could lead to a run to 1,450-1,475 over the near-term.  The S&P 500 started Monday at 1,409 and advanced 7 points, or 0.5%, for the week.  For 2012, the index is higher by 159 points, or 12.6%.  For November, the S&P was up 4 points.

The Nasdaq slipped 2 points, or 0.06%, to settle at 3,010.  Tech held 2,950 to start week, which is the 50-week MA on the 3-year chart below, but fell to a low of 2,935.  We called for the 5% pullback in mid-October to 2,900 and we thought this level would be a memory following the print of 2,912 on November 21.  Instead of a memory, it is a strong reminder how volatile the market could get on the political rhetoric but the close back above 3,000 on Thursday and the hold on Friday was bullish.  Resistance this week will be at 3,050.  The Nasdaq came into Monday’s open at 2,966 and zoomed 44 points, or 1.5% points, by the weekend.  For the year, the index is higher by 405 points, or 15.6%, and for the month of November, the Nasdaq gained 33 points, or roughly 1%. 

The Russell 2000 was down just over a point, or 0.02%, to finish at 821.  The small-caps closed above 800 all week long but did test 798 on Wednesday’s pullback at the open.  The break below the 200-day MA of 806 was stretched but we wouldn’t get bearish until 780 trips on the downside.  The 50-day MA is at 820 and held which was bullish for a run to 830 this week.  If 840 is triggered, look for new highs by yearend or sometime in January.  The Russell 2000 was at 807 before Monday’s open and jumped 14 points, or 1.8%, by Friday’s closing bell.  For 2012, the index is showing a gain of 80 points, or 10.9%.  November’s gain was 3 points.

The S&P Volatility Index ($VIX, 15.87, up 0.81) popped 5% higher on Friday and came into the week at 15.14.  We said to watch the 17.50 level on a pullback and Wednesday’s high was 16.98 on the selling pressure at the open.  This was another good clue support would hold as the VIX finished Wednesday at 15.51, down 0.41 for the session.  There is still risk up to 20 because volatility could pick up over the next few weeks so continue to watch 17.50.  The bullish case was Friday’s low of 14.89 on the VIX and a continued rally could get the low teens back into play.   

The slow start by the bulls was to be expected as the zombies wandered their way back from the Thanksgiving holidays but it didn’t take long before the finger-pointed started.  We hate talking politics so let’s keep this short.  The red zombies felt the proposal by the blue zombies and Tim Geithner on Friday was a joke. 

The plan called for $1.6 trillion in new revenue, $400 billion in entitlement cuts, $50 billion in infrastructure spending, and the best one of all…the power for the head zombie to increase the debt ceiling whenever he wants.  Of course, Mr. G was laughed out of the room and shortly after a “stalemate” was declared.  The red zombies are against tax hikes and want more spending cuts but they are expected to agree on higher tax rates on the top 2% of America’s wealthy as some point.

We have said a deal would be announced by December 21st because the zombies will not want to work one minute past a 2-week vacation until after the New Year.  If talks continue to stall, and they likely will, as long as the bottom of the uptrend channels hold the bulls should be good to go.  If there is no deal by yearend, then we could see a 5%-10% pullback.    

Wednesday’s action saw the Dow rise and fall 100 points in the same session for the first time all year but it remains to be seen if it was THE bottom.  We called the pullback perfectly in mid-October and we said a few weeks ago the indexes were ready to bounce off the Fibonacci retracement levels following the test to support.  They have recovered a little more than half and a continued rally could lead to a 100% retracement or a test of the 52-week highs.

December is usually a bullish month for the market so history is on the bulls side.  Although the rhetoric is negative, the price actions in the indexes are pointing to a deal getting done.  Over the past 30 years, December has been the strongest month of the year for the market with average gains of 2%.  We also have the “January Effect” in play that will start in mid-December and is usually a time frame where the small-caps outperform the big-cap stocks through January.

Given the time frames of when we expect a deal and the normal bullish setup for the January Effect to play out, we could have a mini, volatile trading range over the next few weeks.  At least that is how we see it until a nice yearend rally takes shape.  Remember, the “Santa Claus” rally doesn’t start until after Christmas and when the slick-talking pros miss the action because they are on vacation so be patient.

We have fielded some questions on Gold and Silver so we wanted to go over their charts real quick. 

We correctly called the lows in July on Gold and said there would be a rally up to $1,800 that we got in October.  There was a break below the $1,700 level in early November but as you can see, the uptrend line held.  We are expecting Gold to clear $1,800 in the first quarter of 2013 if support holds.

Silver was a pounding the table “buy” at $26 back in July and we told you to load up on American Eagle coins.  Support is strong at $32 and we are expecting a run to $36 on a breakout past $35. 

As we head to press, futures are showing a slightly higher open for Monday.  Dow futures are up 31 points to 13,039 while the S&P 500 futures are higher by 3 points to 1,417.  The Nasdaq 100 futures are advancing 11 points to 2,687. 

 

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Key of Technicals Used In Following Articles

2.  Monster Beverage (MNST) is Still a Scary Investment

By Michael Bryant

 

While the FDA regulates caffeine levels in sodas, it doesn’t for energy drinks.  Why?  This question has been brought up by lawmakers and lawsuits after the deaths of at least 13 people have been linked to energy drinks.  This legal battle has plagued the industry and caused the stock of Monster Beverage (MNST, $52.05, up $0.36) to plunge from $78 to $41.  It recovered some ground over the past month, but is it safe to get back in?  Does it have more room to fall?  Are there going to be more lawsuits?

After filing for bankruptcy in 1988, the business was bought by the California CoPackers Corporation and renamed Hansen Beverage Company.  In 2006, it signed a distribution agreement with Anheuser-Busch in the U.S. and Grupo Jumex in Mexico.  In 2008, it switched distributors from Anheuser-Busch to Coca Cola.  The company sells its products in Australia, Brazil, Canada, Europe, Mexico, and the United States.

The Java Monster drinks are brewed premium coffee with the Monster blend added.  The Nitrous drinks are Monster blend drinks with nitrous oxide added to create a unique texture.  The Rehab drinks are mostly non-carbonated with a refreshing flavor added to their Rehab blend.

The Worx brand is a two-ounce shot to boost one’s energy.  And the Blue Sky brand of all-natural sodas contains no caffeine and no high-fructose corn syrup. 

The company’s operations are divided into two segments.  The Direct Store Delivery (DSD) segment primarily sells energy drinks.  The Warehouse segment primarily sells juice and soda beverages.  The DSD segment sells products primarily through a distributor network, whereas the Warehouse segment sells products primarily direct to retailers.

The stock has been hammered down by news that several deaths had been linked to the drink.  On October 22nd, a 14-year old girl died after drinking two 24-ounce cans of Monster Energy within 24 hours.  It was found that the girl had a case where her blood vessels were thin.  Then on November 07th, a class action lawsuit was filed in California and claims one of its drinks contains a green tea extract that can cause the same potentially fatal liver damage seen in users of the controversial supplement Hydroxycut.  Plaintiff Jennifer Wooding is targeting Monster Rehab Green Tea and Energy, which contains epigallocatechin-3-gallate, or EGCG, an ingredient whose consumption can lead to liver failure, hepatitis and other liver injuries.  The lawsuit claims that the company failed to warn consumers of a potentially dangerous component of its Monster Rehab Green Tea and Energy Drinks.

Revenue has been climbing on the success of its DSD segment, which, as noted earlier, primarily sells energy drinks.  If that revenue growth is halted due to lawsuits, the company will see growth stagnate, since the other division is not growing much.  Further, analysts see revenue falling until the next quarter, but perhaps revenue may fall more than analysts expect when combined with the current lawsuits, possible FDA action, and bad publicity.  It seems that analysts’ current estimates are in line with the cyclical pattern in revenue, and have not factored in all the bad scenarios.  The stock will likely fall as analyst downgrade their estimates.

At $52.05, the stock is between its low target of $42.00 and median target of $55.00 made by the 6 analysts recorded by Thomson/First Call.  Mean target is $56.17, and high target is $77.00.  Using a scale of 1.0 as a strong buy and 5.0 as a sell, the average rating of the stock was 2.7, unchanged from a week ago. 

 

Current Month

Last Month

Two Months Ago

Three Months Ago

Strong Buy

0

0

1

1

Buy

4

4

4

4

Hold

5

5

4

4

Underperform

1

1

1

1

Sell

0

0

0

0

 

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3.  Allergan (AGN) in a Strong Uptrend

 

Allergan (AGN, $92.75, up $0.42) has been on our Watch List for a possible breakout so we wanted to provide a quick snapshot of the company.  

The company operates in two segments:  specialty pharmaceuticals and medical devices.  The specialty pharmaceuticals segment includes ophthalmic products for chronic dry eye, glaucoma, inflammation, infection, allergy, and retinal disease.  It makes Botox and skin care products for acne, psoriasis, and eyelash growth.  It is developing a product portfolio for patients with overactive bladder (OAB) and other urological and genitourinary disorders.

The medical devices segment includes breast implants for augmentation, revision, and reconstructive surgery, as well as tissue expanders.  It offers obesity intervention products comprising the Lap-Band System and the Orbera Intragastric Balloon System.  It also sells facial aesthetics products. 

Revenue seems stable, but the stock has been rising much faster.  The medical device segment might see problems if breast aesthetics and facial aesthetics continue their sharp decline.

At $92.75, the stock is between its low target of $85.00 and its mean target of $101.69 made by the 21 analysts recorded by Thomson/First Call.  Median target is $103.00, and high target is $110.00.  Using a scale of 1.0 as a strong buy and 5.0 as a sell, the average rating of the stock was 1.9, unchanged from a week ago.

 

Current Month

Last Month

Two Months Ago

Three Months Ago

Strong Buy

10

10

10

9

Buy

8

8

7

7

Hold

8

9

8

8

Underperform

0

0

1

1

Sell

0

0

0

0

 

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4.  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 from 11/30/12 close)

By Catherine Tierney

 

Monday

China Natural (CHNR, $5.38, up $0.08), Cms Bancorp (CMSB, $7.75, Flat), Conns (CONN, $28.28, up $0.19), Daxor (DXR, $7.77, down $0.08), G-III Apparel (GIII, $38.05, down $0.25), Geospace Technologies (GEOS, $76.17, up $0.86), IF Bancorp (IROQ, $13.82, Flat), Lakeland (LAKE, $5.50, Flat), Mesabi Trust (MSB, $22.28, up $0.18), MFRI (MFRI, $5.12, up $0.02), Panhandle Oil (PHX, $28.32, down $0.24), Pep Boys (PBY, $10.57, down $0.08), Permian Basin Royalty Trust (PBT, $13.60, down $0.05), PMC Commercial Trust (PCC, $7.08, down $0.01), Prudential (PBIP, $6.15, down $0.31), RLJ (RLJE, $6.45, up $0.05), Saba Software (SABA, $7.82, down $0.18), SandRidge Permian Trust (PER, $17.34, up $0.06), Streamline Health (STRM, $5.29, up $0.04), Technical Communications (TCCO, $5.83, up $0.26), United Bancshares (UBOH, $9.77, up $0.12), United Security Bancshares (USBI, $5.25, down $0.17), Value Line (VALU, $9.12, down $0.11), Village Super Market (VLGEA, $37.66, up $0.77), Emerald Oil (EOX, $5.11, up $0.02)

 

Tuesday

AeroVironment (AVAV, $20.41, down $0.57), AutoZone (AZO, $383.77, up $3.99), Big Lots (BIG, $28.16, up $0.04), Exa (EXA, $12.43, down $0.06), The Female Health (FHCO, $7.20, up $0.10), JTH Holding (TAX, $13.89, up $0.08), Mattress Firm (MFRM, $28.61, up $0.06), Mitcham (MIND, $14.49, up $0.04), NCI Building (NCS, $13.09, down $0.08), Oxford Industries (OXM, $54.64, down $1.83), Pandora Media (P, $8.72, down $0.07), Photronics (PLAB, $5.15, up $0.02), Powell (POWL, $40.04, down $0.33), Resource America (REXI, $6.87, down $0.07), SeaChange (SEAC, $9.25, down $0.05), Toll Brothers (TOL, $31.84, down $0.22), Vail Resorts (MTN, $56.32, down $0.18)

 

Wednesday

Ascena Retail (ASNA, $20.10, down $0.16), Finisar (FNSR, $13.57, down $0.11), Francesca’s (FRAN, $26.03, up $0.49), Greif (GEF, $41.03, UP $0.15), Hooker Furniture (HOFT, $13.89, UP $0.14), The Men’s Wearhouse (MW, $32.44, DOWN $0.35), Patriot Transportation (PATR, $25.85, UP $0.87), REX American (REX, $18.84, UP $1.01), SAIC (SAI, $11.53, down $0.14), Sigma Designs (SIGM, $5.75, down $0.05), Synopsys (SNPS, $32.86, up $0.21), Toro (TTC, $44.86, up $0.44), Vera Bradley (VRA, $27.71, down $0.48), Verint (VRNT, $27.77, up $0.26)

 

Thursday

AMREP (AXR, $7.98, down $0.96), Analogic (ALOG, $73.67, up $0.05), Bio-Reference (BRLI, $26.33, up $0.14), Cantel Medical (CMN, $27.44, down $0.02), Cherokee (CHKE, $14.33, down $0.12), Comtech Telecommunications (CMTL, $25.56, up $0.04), The Cooper (COO, $94.94, down $0.96), Esterline (ESL, $61.14, down $0.17), Ferrellgas (FGP, $18.67, up $0.15), First Savings (FSFG, $19.60, down $0.40), H&R Block (HRB, $18.03, down $0.13), Hi Tech Pharmacal (HITK, $30.20, down $1.05), Korn/Ferry (KFY, $14.42, up $0.02), Layne Christensen (LAYN, $22.99, up $0.39), Met-Pro (MPR, $8.91, up $0.05), Methode Electronics (MEI, $9.03, down $0.21), Palo Alto Networks (PANW, $54.42, down $1.45), Smith & Wesson (SWHC, $10.60, down $0.12), Smithfield Foods (SFD, $22.37, up $0.31), Sonic Foundry (SOFO, $7.12, down $0.28), Stein Mart (SMRT, $8.54, down $0.02), Titan Machinery (TITN, $22.22, down $0.48), Triangle Petroleum (TPLM, $6.25, up $0.13), UTi Worldwide (UTIW, $14.12, down $0.19), Williams Controls (WMCO, $15.42, up $0.02)

 

Friday

ALCO (ALCS, $9.40, up $0.15), JW Mays (MAYS, $22.04, Flat), KMG Chemicals (KMG, $18.22, up $0.10), Orchard Supply Hardware (OSH, $7.75, down $0.13)

 

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5.  Weekly Wrap Covered Call Portfolio Update (Closing prices as of 11/16/12)

Our Closed Trade Track Record for 2012 is 26-0 (42-0, overall since 2011):  TASR +25%, ARNA +117%, SZYM +11%, BAC +26%, EFTC +8%, 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%, P +9%, BAC +6%, AA +3%, TIVO +6%.

 

 

Bank of America (BAC, $9.86, up $0.03)

Original Entry Price:  $9.89 (11/27/12)

Lowered Price from Selling Options:  $9.89

Exit Target:  $12+

Return:  -0%

Stop Target:  $8

Action:  This is our 4th trade of the year on BAC and the first 3 yielded gains of 20%, 26%, and 6%.  We were hoping shares would make one last dip to $8.50 a few weeks ago but support held at $9.  We were going to wait for shares to trigger $10 but we decided to go in early.

Shares of  BAC looked poised to clear double-digits and could push $12 if the Financial stocks can gather some momentum.  The 52-week high is $10.10.  We will look to start selling options against the position once shares clear $11.

We recommended buying the BAC at $9.89 on 11/27/12.

 

CubeSmart (CUBE, $13.80, up $0.08) 

Original Entry Price:  $13.59 (11/27/12)

Lowered Price from Selling Options:  $13.59

Exit Target:  $16+

Return:  2%

Stop Target:  $11

Action:  Shares hit a fresh 52-week high of $13.83 on Friday and have been in a solod uptrend.  Support is at $13 or the 50-day MA.  We will wait to sell an option and would like to see shares clear $15 before doing so.

We recommended buying CUBE at $13.59 on 11/27/12.

 

American Capital (ACAS, $11.98, up $0.04)

Original Entry Price:  $11.90 (11/27/12)

Lowered Price from Selling Options:  $11.90

Exit Target:  $15+

Return:  1%

Stop Target:  $8

Action:  Shares are near their 52-week high of $12.24 which was set back in mid-October.  As you can see, shares have been in a solid uptrend as well.  and this is an old favorite we sold too soon.  Support is at $11.25, or the 100-day MA on a pullback.

We recommended buying ACAS at $11.90 on 11/27/12.

 

Solazyme (SZYM, $7.46, up $0.01)

Original Entry Price:  $12.35 (8/9/12)

Lowered Price from Selling Options:  $11.55

Exit Target:  $15+

Return:  -35%

Stop Target:  $5

Action:  Solazyme is rebounding and we would like to see a close above $8 this week.

We recommended buying SZYM at $12.35 on 8/9/2012 and for every 100 shares to sell the September 12.50 calls for 80 cents.  This lowered the cost basis to $11.55.

 

Vivus (VVUS, $11.30, down $0.14) 

Original Entry Price:  $22.70 (7/27/12)

Lowered Price from Selling Options:  $20.90

Exit Target:  $30+

Return:  -46%

Stop Target:  $15

Action:  Vivus traded in a tight range last week with $11.02 the low while the high was $11.81, both on Tuesday.  The 50-day MA is at $16.41 and where we believe shares are headed over the next 6 weeks.  Support is $11 with $10 serving backup.  The Aflac news was big a deal for the company’s diet drug and should gain traction in the weeks ahead. 

We recommended buying VVUS at $22.70 on 7/27/2012 and for every 100 shares to sell the August 24 calls for 95 cents.  This lowered the cost basis to $21.75.

On 9/6/12 we sold the September 24 calls for 40 cents which lowered our cost basis to $21.35.

On 10/16/12 we sold the October 23 calls for 45 cents which lowered our cost basis to $20.90.

 

Antares Pharma (ATRS, $4.00, flat)

Original Entry Price:  $4.94 (7/13/12)

Lowered Price from Selling Options:  $3.94

Exit Target:  $8+

Return:  2%

Stop Target: None

Action:  Shares continue to trade in a tight range near $4 and a close above $4.20 would be bullish.  Support is at $3.70.

We recommended buying ATRS at $4.94 on 7/13/2012 and for every 100 shares to sell the August 5 calls for 70 cents.  This lowered the cost basis to $4.24.

On 9/6/12 we sold the November 5 calls for 30 cents which lowered our cost basis to $3.94.  If we are called away at $5 in mid-November the trade will make 27%.

 

Scientific Games (SGMS, $8.33, down $0.06)

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

Lowered Price from Selling Options:  $11.10

Exit Target: $13

Return:  -25%

Stop Target:  None

Action:  Shares have rebounded nicely from their recent lows to clear the 50-day and 100-day MA’s.  The next level of resistance is at $9 and the 200-day MA.

Pizza Inn (PZZI, $3.27, up $0.07)

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

Lowered Price from Selling Options:  No options available

Exit Target: $9

Return:  -27%

Stop Target:  None

Action:  Pizza Inn struggled at $3.40 last week but is holding its 200-day MA.  A close above $3.50 would be very bullish and could easily lead to a run back to $3.75-$4.00 over the near-term.

We recommended buying PZZI at $4.50 on 2/22/12.

 

MGM Resorts (MGM, $10.15, up $0.14)

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

Lowered Price from Selling Options:  $12.67

Exit Target: $15

Return:  -20%

Stop Target:  None

Action:  Shares are within a stone’s throw of tripping their 50-day and 100-day MA’s.  They have had trouble clearing the 200-day MA since early May and a close above $11.50 would be super bullish.  This is one of our favorite trades at the moment and the Casino stocks have underperformed all year long.

We recommended buying MGM 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.

 

NewparkResources (NR, $7.80, down $0.01)

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

Lowered Price from Selling Options:  $7.85

Exit Target: $11

Return:  -1%

Stop Target:  None

Action:  A close above $8 would be great as it represents near-term resistance.  We may close the trade to move on to another trade we like better but we will wait to see if shares can clear resistance.  Support is at $7.50 on a pullback.  The company recently reported great earnings numbers. 

We recommended buying NR at $9.45 on 7/27/2011 and for every 100 shares to sell the August 10 calls for 50 cents.  This lowered the cost basis to $8.95.

On 9/15/2011 we recommended selling the December 10 calls for $0.85 which lowered the cost basis to $8.10.

On 1/25/2012 we recommended selling the March 12.50 calls for $0.25 which lowered the cost basis to $7.85.

 

Trades on HOLD:  DryShips (DRYS, $1.69, down $0.11), AKS Steel Holding (AKS, $4.01, down $0.12), Rare Element Resources (REE, $3.55, down $0.02), Rambus (RMBS, $4.89, down $0.04), Patriot Coal (PCXCQ, $0.10, flat), OCZ Technology Group (OCZ, $1.67, down $0.01), Bebe Stores (BEBE, $3.76, down $0.02), Antares Pharma February (2013) 7.50 calls

 

= = = = = = = = = = = = = = =  

 

6.  Week Ahead