11:30pm (EST)

1.  Market Summary 

2.  Sarepta Therapeutics (SRPT) Betting on a Biotech Run Away

3.  Earnings

4.  Weekly Wrap Portfolio Update 

5.  Week Ahead

(To view the charts, please log into the Members Area and go to the Weekly Wrap Premium section)

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1.  Market Summary   

“The bulls have momentum but a final resolution on the Fiscal Cliff could get stretched until the last minute of 2012.  We have said we would like to see a deal get done by December 21st and that means the zombies will be working overtime.  The December holiday adjournment for Congress is this Friday, December 14th.  It will likely get extended by a week and why we went on record and said the 21st for a deal to get done.  

Of course, the zombies do not want to hang around past their scheduled time off but it is highly unlikely a deal gets done this week.  The red zombies still do not want to raise taxes and there is talk now the blue zombies are prepared to drive America off the Cliff, if necessary, to get their way.  The Democrats will blame everything on the Republicans and vice-versa but we still expect a compromise, or a kick of the can down the road, before Christmas. 

The zombies can then pat themselves on the back and say how hard they worked on overtime to get a deal done before we do it all over again at some point in 2013.  If there is no deal by Christmas, the market could still rally into yearend as hopes of a last-minute agreement before the December 31st deadline would still be in play.  If the zombies do push us off the Cliff, expect a major pullback in January.

We haven’t talked much about the Friday/ Monday closes in recent weeks because they have been mixed of late.  The bears have been winning the Monday’s and pushing lower prices into Wednesday’s before the bulls rebound to close out the week with Friday wins.  In trending markets, if the bulls are in control you will usually see up Friday/ Monday’s and when the bears are dominating, lower Friday/ Monday’s.  If the bulls are going to make a run they will once again need to start a Monday off strong.  This would signal more money coming into the market.

The other bullish sign we are seeing is the strength in the Financial stocks.  The Financial Select Sector Spider (XLF, $16.02, up $0.13) is nearing its 52-week and multi-year highs after closing above its 50-day MA late in the week.  It’s early, but a run to $20 could be in the cards at some point in 2013. 

We will be watching American Express (AXP, $56.61, up $0.49) and JPMorgan Chase (JPM, $42.56, up $1.09) as a way to play the pop.  The 52-week high for AXP is $61.42 and we may use call options for our Daily to play a possible run to $60.  

The 52-week peak for JPM is $46.49 and there are some cheap options we can play for a run past $45 over the next few weeks.

We correctly predicted Apple’s (AAPL, $533.25, down $13.99) drop to $520 last week as shares kissed $518.63 on Wednesday before bouncing back on Thursday and slipping again on Friday.  We missed a golden opportunity for a quick trade to make 200% on the December call options but we still have the stock on our Watch List.  Apple will need to get in back in gear if it is going to help the bulls rally as it is a big component of the major indexes. 

The talk all week was the “death cross” the stock is headed for unless there is a sudden reversal this week.  This technical term refers to when the 50-day MA falls below the 200-day MA but we doubt the final nail is in Apple’s coffin as better days are ahead.  A close above $550 would be very bullish for a run back to $600 but there could be a retest to $520 on further weakness.  A close below $520 would suggest $500-$475 will come into play.

We said on Wednesday the market faced a make or break moment as further damage by the bears could have fueled additional selling pressure.  The trading range from the mid-October highs and the November lows is still in play as the bulls continue to push the top of the range.  Although trading has been choppy, the bulls are making higher highs and higher lows for the most part that should continue despite the possibility of more negative rhetoric from DC this week.

We gave yearend price targets for the major indexes last week and said we believe the Dow could push new highs by the end of the year.  We are officially making it 13,777.77 as there could be some “fluff” if resistance at the highs is cleared.  If we win the contest we will give the iPad to the second best guess (sly grin).  Our target for the S&P is 1,492 and for the Nasdaq we will go with 3,140.  For the Russell 2000 we have a target of 867

The big event this week will be the Fed meeting on Wednesday.  We mentioned a few weeks ago there was talk of QE4 and it could be bullish or bearish for the market if announced.  The “Operation Twist” quantitative easing Ponzi scheme has run its course as the Fed’s purchase of short-term treasuries to buy long-term treasuries is scheduled to end this month.  QE4 would be the purchase of long-term treasuries but Big Ben could put the pressure back on the zombies.

Bernanke has been vocal in the past for the zombies to get their house in order but with the fragility of the economy in his hands, he will keep the printing presses on (and rates low).  We expect the Fed will continue to add $40-$50 billion a month to the system but Bernanke’s speech on Wednesday at 2:15pm could be crucial as far as market direction for the week.

If Tech and Apple can rebound and the Financial stocks can keep their momentum then the bulls will have something to work with.  A higher Monday close and a framework from the zombies to get a deal done would also add to the momentum.  If these events start to take a negative tone, expect the bears to attack and make a push back to the bottom of the current trading range.” (from 12/9/2012  Weekly Wrap)…

The bulls had their 3-week winning streak snapped as Tech stayed in a funk with Apple (AAPL, $509.79, down $19.90) dipping to new lows.  The market powered past resistance on Tuesday and was flat on Wednesday before the bears found their groove.  Tuesday’s rally was enough to zoom past the first level of support and the bulls nearly caught the second wave before the tide came in on Bernanke’s comments.

We said midweek we didn’t think there was enough momentum to clear the next hurdle but there was a good chance paper-thin support (which was prior resistance) would hold.  Friday’s action was tight as the zombies wasted a golden opportunity to make a statement concerning the Fiscal Cliff and in our midday update we pointed out the market was still UP for the week.  

The talking heads and slick talking pros are bailing on the bulls but the technical picture still looks semi-bullish.  It is amazing to see where the action is pinned at and the charts we have drawn up for you show you the exciting battle that lies ahead.  This week should be interesting as the deadline for the Cliff draws near and as Air Force One warms up the engines for a trip to Hawaii – deal or no deal.

The Dow declined 31 points, or 0.3%, to settle at 13,135 on Friday.  The blue-chips started the week by kissing 13,195 and we mentioned a close above 13,200 would be bullish.  After coming that close, we knew there was a good chance a run to 13,350 would be coming and Wednesday’s pop to 13,329 was just 21 points away from tripping.  The index is trapped between the 50-day and 100-day MA’s with the 200-day right at 13,000.  A break below 13,100 would be bearish and would confirm 13,000 will get tested but a drop below 12,800 would be even worse.  A close back above 13,200 would be a sign the bulls haven’t given up hope.  Watch for a close above 13,300 for a sign on hitting new highs for the year.  The Dow started the week at 13,155 and was only down 20 points, or 0.2%, by Friday’s close.  For the year, the index is showing a gain of 918 points, or 7.5%. 

The S&P 500 dropped a 6-pack, or 0.4%, to close at 1,413.  We wanted to see a close above 1,425 to start the week and Monday’s high was 1,421.64.  Tuesday’s push past the 50-day and 100-day MA’s to 1,434 put 1,450-1,475 on the map as the S&P closed at 1,427..84.  This level held on Wednesday but a close back below 1,425 on Thursday have our upper end targets on hold.  We said to watch for dip buying at 1,410 and Friday’s low was 1,411.  If there is a break below these levels 1,400 will come into play.  A breech of this level would lead to 1,375.  The S&P 500 was at 1,418 on Monday’s open and was down 5 points, or 0.3%, for the week.  For 2012, the index is up 156 points, or 12.4%.    

The Nasdaq dipped 21 points, or 0.7%, to settle at 2,971.  We said at the start of last week that just clearing 3,000 was not enough and that the bulls needed to top 3,025 to keep our hopes up for a continued yearend rally.  The Nasdaq kissed 2,997 on Monday and closed at 3,022 on Tuesday after trading up to 3,033.  Wednesday’s high was 3,035 but Bernanke ruined any chance of the bulls sticking 3,025 as the index closed at 3,013.  The pop past the 50-day and 100-day MA’s was bullish but Thursday’s close below 3,000 at 2,992 was a sign 2,975 and the 200-day MA would be tested.  Friday’s low was 2,963 and it will be crucial the bulls hold 2,950 to start the week.  If not, there could be a test to 2,900 in a hurry.  The bulls will need to push and hold 3,000 then 3,025 if we are going to see a run to 3,100-3,150 by 2013.  The Nasdaq started Monday’s session at 2,978 and was gave back 7 points, or 0.2%, for the week.  For the year, the index is still up 367 points, or 14.1%.

The Russell 2000 fell a half-point, or 0.05%, to finish at 823.75.  We have said for a few weeks now the small-caps would be the best clue on market direction and that they usually outperform the other indexes from here on out and into January.  The index closed above 830 on Tuesday and we mentioned last week if this level triggered there could be a run to 850 in the coming weeks.  Wednesday’s high was 837 but the small-caps finished at 829 on Thursday’s pullback.  Thursday’s low was 822 and Friday’s low was 821.  As long as the 50-day (816) and 100-day (817) MA’s hold to start the week, the bulls should challenge these levels again.  If not, watch for dip buying at 806 and the 200-day MA and then 800.  If these levels fail to hold, look out below as 780 could be back in the mix.  The Russell 2000 came into the week at 822 and was up 1.5 points, or 0.2%, by the weekend.  For 2012, the index is showing a gain of 82 points, or 11.2%. 

The S&P Volatility Index ($VIX, 17.00, up 0.44) trended higher throughout the week and topped out at 17.15 on Friday.  The index is still holding 17.50 but a break above this level could lead to a test to 20.  Anything above that and the market will be in correction mode.  A test back towards 15 will lead to higher prices and a drop below this level would indicate a test to new highs for the S&P.

The zombies decided to work the extra week as we expected and are now set to adjourn from Congress this Friday.  It was refreshing to know Obama has a tripped plan to Hawaii regardless on if a deal gets done or not.  For all the teamwork that was promised during the election, where has it been?  We have know since August 2011 this Fiscal Cliff was coming and during that time nothing was done until after he last minute as the U.S. lost its triple-A credit rating.     

The zombies dragged their feet again last week and while we didn’t believe a deal would get done, we were hopeful just so that we could stop typing the word Fiscal Cliff.  We thought Thursday’s late night session between the head Z’s would create some Santa magic for Wall Street but after an hour there was still a stalemate. 

Friday’s action was slightly bearish but the indexes are still holding support.  We were looking for a small gain of any kind on Friday just so that we could have said the market closed higher on a Monday and Friday for the first time since October.  This is usually one of the clues we look for when the market is in a trend but with the close, it is easy to say we are still in a choppy, slightly bullish, now bearish market.  

The Financial stocks made a push past resistance to start the week and traded above the $16.20 level.  A push past $16.40 would indicate a breakout while a dip below $15.80 would be the start of a possible new trend lower.  The bulls will need the Financial stocks to pull their weight, along with Tech, if the indexes are going to make a run at the 52-week highs.

We will again watch American Express (AXP, $56.65, down $1.07) for clues on how the Financial stocks are doing.  We were up 40% on the January 57.50 calls (AXP130119C00057500, $0.95, down $0.45) by Wednesday as they had reached a high of $1.40 on the stock’s pop to $58.35.  We were looking for a run to $60, which could still happen, but we locked in profits of 20% as we felt a pullback was coming.  The long-wick candle stick on the daily chart below made us nervous and our instincts served us well as we would be down 5% on the trade if we had left it open.  We still think shares can make a run to $60 but a close below $56 and the 50-day MA could lead to a test down to $53 again.  If so, we will be ready to pounce on put options.

We have been all over Apple’s (AAPL, $509.79, down $19.90) chart like grass on dirt but we haven’t pulled the trigger on a trade yet.  However, we may be getting close.  We mentioned last week a close below $520 would lead to a test to $500 and Friday’s 4% haircut was an eyesore.    

It has always been risky to bet against Apple as far as buying put options because it has been a strong company for many years.  However, in recent quarters that has been some slipups and earnings misses so it could go either way with their next earnings release.  Wall Street will have a wide range of numbers as the suit-and-ties make last minute adjustments and analyze their numbers and supply chains.  Apple will need to knock the cover off the ball and then some as an earnings match won’t be enough.  We will cover more on this story in the coming weeks and there could be some litigation news out this week concerning the company.  Good or bad, the verdict could also have a major impact on the stock. 

The Apple December options are risky and the January options may not provide enough time to play a $100 move in the stock but let’s watch them to see how they trade.  The January 600 calls (AAPL130119C00600000, $3.40, down $1.05) were down 23% on Friday and the January 400 puts (AAPL130119P00400000, $1.62, up $0.74) surged nearly 85% after opening at $1.05 and closing at 88 cents on Thursday.   

The Apple February 600 calls (AAPL130216C00600000, $8.85, down $2.35) dropped over 20% on Friday and could also be used on a run back towards $600.  On a drop below $500, the January 400 puts and the February 400 puts (AAPL130216P00400000, $5.10, up $1.70) can be used to play further weakness.  They gained 50% on the stock’s 4% drop. 

These options have higher premiums than we normally like to trade but we could take “half” positions to limit our exposure and to play the stock’s next major move. 

In review, the game plan is basically the same as last week.  We will be watching Tech and Apple along with the Financial Select Spiders and American Express (and JPMorgan Chase, $42.81, up $0.03).  We are also looking for a miracle by Friday for the zombies to announce a deal.  A higher Monday close would also be a nice start for the bulls. 

As we head to press, futures are showing a slightly higher open for Monday.  Dow futures are up 30 points to 13,117 while the S&P 500 futures are higher by 5 points to 1,414.  The Nasdaq 100 futures are up 8 points to 2,631 

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Key of Technicals Used In Following Articles

 

2 .  Sarepta Therapeutics (SRPT) Betting on a Biotech Run Away   

By Michael Bryant

 

We love biotech, because there are so many chances to make big money.  Further, the sector seems shielded from the circus in Washington, global chaos, and doom and gloom speculation about the economy.  Sarepta Therapeutics (SRPT, $25.26, flat) has seen its shares rise 651% over the last 52 weeks.  Shares might have more room to grow as a  FDA decision is coming up.

The mRNA then travels to ribosomes in the cell, where they specify the amino acid sequence of proteins for gene expression.  The goal is to stop the defective gene (the disease) and replace it with a fully functional gene that produces the correct protein and repairs the cells and tissues.  The company has developed a unique three-dimensional platform to deliver RNA whose shape closely mimics human RNA and are designed to either turn off or turn on target genes.

In 1999, it sold the exclusive negotiating rights of Avicine, its lead cancer vaccine in late-stage clinical testing, in the United States to Astex Pharmaceuticals.  Avicine was an immunotherapy that neutralized the effect of a tumor-associated antigen on cancer cells, while stimulating the body’s immune system to react against the foreign tumor.  In 2003, it successfully blocked the expression of XIAP, one of a family of genes that inhibits programmed cell death in cancer cells, in preclinical studies using its Neugene antisense technology.  It later used its Neugene antisense compounds to combat disease by targeting single–stranded RNA viruses, including West Nile virus, hepatitis C virus, dengue virus, and Ebola virus.  It has strategic alliances with Astex Pharmaceuticals, Medtronic, and Exelixis.  On July 11, 2012, the company completed a one-for-six reverse stock split.

Its lead clinical candidate is Eteplirsen, which is in Phase II trial for the treatment of Duchenne muscular dystrophy (DMD).  DMD occurs in approximately 1 in 6,000 births or 1 in 3,600 boys and causes muscle degeneration due to a recessive X-chromosome mutated or disrupted form of the dystrophin gene.  Life expectancy is approximately 25 years.  Eteplirsen, which expresses exon (sequence coded by gene) 51 of dystrophin, showed 22.5% of dystrophin-positive fibers compared with normal muscle fibers.  This significantly increased the mobility of patients in current tests.  Eteplirsen is now in a supplementary Phase II trial for a longer duration of treatment.  The company plans to request a meeting with FDA before the end of the year to discuss the results and possibility of filing accelerated approval for eteplirsen, which means the meeting will likely be held in March-April.  CEO Chris Garabedian will also speak to investors at the JP Morgan Healthcare Conference on Wednesday January 9th about the future of eteplirsen.

If eteplirsen gains FDA approval, it will be the first effective treatment for DMD.  There is an estimated 1,800 U.S. boys who have the genetic mutation.  Current treatments include corticosteroids such as prednisolone and deflazacort to increase energy and strength.  Prednisolone sells for about $50 for a 10 mL dose at 0.01% strength.  That means sales of eteplirsen could be as high as $90,000 if each U.S. boy bought 10 mL.  Using a low dosage of 10 mL every 20 days, this computes to about $1.6 million in potential sales of eteplirsen for a year.  Taking the maximum dosage of 10 mL every 12 hours, the calculation bumps up to about $65.7 million, which gives a PE ratio of about 10.53.  And that is not including the rest of its pipeline.  Two other RNAs targeting DMD are still in the pre-clinical stage.  RNAs targeting Ebola and Marburg viruses are nearing completion of Phase I trials, and a therapy for influenza virus is just entering Phase I trials.

Based on the 3rd quarter filing, current liabilities were more than its current assets.  To raise cash, it offered 4,950,495 shares to public at a price $25.25 per share on December 13th for $125 million.  This likely played a large part in the current falling share price.  Notice that the current price is only one cent about the offering price.  But demand for the shares from institutional investors was strong.  The company initially planned to only sell $75 million worth of stock. 

All revenue the company makes are from license fees, grants, and research contracts.  As of September 30th, it had completed all of its contracts with the U.S. government except for the July 2010 agreement for the development of therapeutics against Ebola and Marburg viruses and the contract for intramuscular injection (IM contract).  On October 2nd, the U.S. government terminated the Ebola portion of the July 2010 agreement.  The remaining Marburg portion of the contract is divided into four segments and spans approximately four years if the Department of Defense exercises its options for all segments.  After completion of the each segment, the Department of Defense has the option to proceed to the next segment.  Activities under the first segment began in July 2010 and include Phase I studies in healthy volunteers as well as preclinical studies which are scheduled to be completed in 2013.  The remaining funding as of September 30, 2012 for the current Marburg segment is approximately $19.5 million.

Revenue is expected to be flat in the 4th quarter (12/12) and 1st quarter (3/13) of next year.   Good news is that total expense has been falling over the past year.  If expenses continue to fall, the company may be able to become profitable in 2014. 

Two of its competitors that are also in developmental stage are Alnylam Pharmaceuticals (ALNY) and Isis Pharmaceuticals (ISIS).  Alnylam Pharmaceuticals develops therapeutics based on RNA interference, where RNA molecules inhibit gene expression.  Isis Pharmaceuticals develops antisense drugs.

Analysts don’t seem to know where the stock will move.  At $25.26, the stock is below its mean target of $44.20 made by the 5 analysts recorded by Thomson/First Call.  Median target is $50.00, low target of $9.00, and high target is $70.00.  Using a scale of 1.0 as a strong buy and 5.0 as a sell, the average rating of the stock was 2.2, unchanged from a week ago. 

 

Current Month

Last Month

Two Months Ago

Three Months Ago

Strong Buy

1

3

3

2

Buy

3

3

3

3

Hold

0

0

0

1

Underperform

1

1

1

0

Sell

0

0

0

0

Based on analysts’ targets, it is $18.94 below its mean, $24.74 below its median, $44.74 below its high, and $16.26 above its low targets.  Thus, analysts seem to think it has a better chance to head higher than lower.  But the long-term graph below shows that $70 might be hard to attain.  It may see stiff resistance at $50.

 

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3.  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

Biglari (BH, $345.22, up $2.70), BRT Realty Trust (BRT, $6.51, up $0.09), Cms (CMSB, $7.80, Flat), Cubic (CUB, $48.85, down $0.28), Daily Journal (DJCO, $88.93, Flat), Diamond Foods (DMND, $13.83, down $0.17), Meta Financial (CASH, $23.60, Flat), National Healthcare (NHC, $46.66, up $0.42), Park Electrochemical (PKE, $24.23, up $0.07), Piedmont Natural Gas (PNY, $31.42, down $0.13), Prudential of Pennsylvania (PBIP, $6.60, up $0.30), SandRidge Permian Trust (PER, $16.68, up $0.18), Schiff Nutrition (SHF, $42.00, Flat), SHFL (SHFL, $13.07, down $0.07), Stewart Enterprises (STEI, $7.33, down $0.04), United Bancshares (UBOH, $9.85, down $0.02), United Security Bancshares (USBI, $5.10, down $0.01), Value Line (VALU, $9.00, down $0.15), Village Super Market (VLGEA, $33.73, up $0.31), Williams Controls (WMCO, $15.40, down $0.01)

 

Tuesday

AAR (AIR, $15.88, up $0.10), Apogee Enterprises (APOG, $22.43, down $0.61), FactSet Research (FDS, $94.00, down $0.05), HEICO (HEI, $40.79, Flat), Jefferies (JEF, $18.10, down $0.02), Learning Tree (LTRE, $5.48, up $0.03), Oracle (ORCL, $31.96, up $0.35), Sanderson Farms (SAFM, $49.74, down $0.26)

 

Wednesday

Accenture (ACN, $70.21, up $0.65), Actuant (ATU, $28.67, down $0.22), Bed Bath & Beyond (BBBY, $58.22, up $0.06), ChinaEdu (CEDU, $5.75, down $0.05), FedEx (FDX, $90.09, up $0.38), General Mills (GIS, $41.45, down $0.04), Herman Miller (MLHR, $20.87, up $0.10), Jabil Circuit (JBL, $17.51, down $1.02), Luby’s (LUB, $6.66, up $0.12), MGC Diagnostics (MGCD, $5.50, Flat), Navistar (NAV, $21.63, down $0.25), Paychex (PAYX, $33.71, Flat), Saba Software (SABA, $7.94, down $0.05), Steelcase (SCS, $11.41, down $0.08)

 

Thursday

American Greetings (AM, $17.21, up $0.01), CalAmp (CAMP, $8.37, up $0.07), CarMax (KMX, $35.07, down $0.08), Carnival (CCL, $37.72, up $0.01), Cintas (CTAS, $41.58, down $0.06), ConAgra Foods (CAG, $30.15, down $0.02), Darden Restaurants (DRI, $46.46, up $0.54), Discover Financial (DFS, $39.54, down $0.84), KB Home (KBH, $15.65, up $0.17), Micron Technology (MU, $6.85, up $0.19), Neogen (NEOG, $46.53, up $0.42), Nike (NKE, $96.91, down $0.42), Red Hat (RHT, $50.22, up $0.03), Resources (RECN, $11.85, up $0.08), Scholastic (SCHL, $28.82, up $0.30), Shiloh Industries (SHLO, $11.40, up $0.28), Marcus (MCS, $11.71, up $0.09), Shaw Group (SHAW, $45.42, down $0.09), TIBCO (TIBX, $20.58, down $0.20), Winnebago Industries (WGO, $13.94, up $0.27)

 

Friday

Electro Rent (ELRC, $14.60, down $0.07), Ennis (EBF, $14.79, up $0.02), Walgreen (WAG, $36.76, up $0.25)

 

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4.  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, $10.58, up $0.04)

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

Lowered Price from Selling Options:  $9.89

Exit Target:  $12+

Return:  7%

Stop Target:  $8, raise to $10.15

Action:  Shares traded up to $10.71 last week which was a 52-week high.  We may sell the January 11 calls (BAC130119C00011000, $0.25, flat) to lower our cost basis but we don’t want to sell an option until shares reach resistance.  BAC could make a run to $11.50 if the Financial stocks hold up and a pop past this level would be super bullish.  A drop below $10 would be bearish and put shares back in a possible trading range.

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

 

CubeSmart (CUBE, $14.09, up $0.10) 

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

Lowered Price from Selling Options:  $13.59

Exit Target:  $16+

Return:  4%

Stop Target:  $11

Action:  Shares hit a fresh 52-week high of $14.21 last week and we have a near-term target of $15 once the stock when it breaks out of its trading range.  In 2013, shares could push $20.  Support is at $13.60 on a pullback and then 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, $12.20, up $0.02)

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

Lowered Price from Selling Options:  $11.90

Exit Target:  $15+

Return:  3%

Stop Target:  $8

Action:  Shares reached a peak of $12.28 on Friday, a 52-week high, after clearing $12.24 which was set back in mid-October.  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, $8.60, up $0.45)

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

Lowered Price from Selling Options:  $11.55

Exit Target:  $15+

Return:  -26%

Stop Target:  $5

Action:  Shares made a strong move last week, including Friday’s 5% jump.  Solazyme zoomed to a high of nearly $10 on news that its production facilities are ready for commercial production.  Shares easily zoomed past $8 on resistance and a close above $10 would be major for a possible push to $12.  We own some December 12.50 calls for the Daily and we are watching the January 10 calls (SZYM130119C00010000, $0.25, up $0.05) which traded up to 55 cents for a rollover trade.  However, we would like to see a move above $12 before selling an option for this position. 

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, $11.48, down $0.07) 

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

Lowered Price from Selling Options:  $20.90

Exit Target:  $30+

Return:  -45%

Stop Target:  $10

Action:  Vivus was up nearly a buck for the week but is still in a tight trading range.  We would like to see a close back above $12 over the near-term.  Shares could run to $16 if the stock can clear the hurdle at $12 as there is a big gap to fill.  A close below $9.86 and the mid-November low would be a break out of the range and the uptrend line.  

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, $3.75, up $0.01)

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

Lowered Price from Selling Options:  $3.94

Exit Target:  $8+

Return:  -5%

Stop Target: None

Action:  Support is at $3.60 on further weakness and a close below this level could lead to the low $3’s.  We would like to see a close above $4 and where we will look to sell another call option.  A move above $4.20 would signal a breakout.

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, $8.35, down $0.06) 

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

Lowered Price from Selling Options:  $11.10

Exit Target: $13

Return:  -23%

Stop Target:  None 

Action:  A close above $8.75 would be bullish and $8.25 has been serving well as support.  There would be risk back towards $8-$7.75 if there is further weakness on a close below this level.

Pizza Inn (PZZI, $3.40, down $0.01)

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

Lowered Price from Selling Options:  No options available

Exit Target: $9

Return:  -24%

Stop Target:  None

Action:  Pizza Inn continues to trade in a tight range as well.  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. A close below $3.20 could lead to a retest of $3 and where we would add to the position.

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

 

MGM Resorts (MGM, $11.38, down $0.05)

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

Lowered Price from Selling Options:  $12.67

Exit Target:  $15

Return:  -10%

Stop Target:  None

Action:  This is a 2-year chart for MGM and we mentioned last week shares had a good shot at clearing $11.50 that would signal a possible breakout.  Shares traded to a high of $11.53 on Friday which opened the door for a run to $12 and the 100-week MA.

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. 

 

Newpark Resources (NR, $7.74, up $0.09) 

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

Lowered Price from Selling Options:  $7.85

Exit Target: $8 (set limit orders to exit at $8 or better)

Return:  -1%

Stop Target:  None 

Action:  Shares traded to a high of $7.90 last week which has been strong resistance.  We said a close above $8 would be bullish and where we would like to exit the trade.  We could sell another option but there is risk down to $7.60 and this position has been dead money.  We are tired of fighting this trade and would like to move on to better plays so close the trade if shares make a break above $8.  We will send out a Trade Alert if this level is triggered.

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, $1.83, up $0.09), AKS Steel Holding (AKS, $4.40, up $0.26), Rare Element Resources (REE, $3.70, up $0.15), Rambus (RMBS, $5.16, up $0.05), Patriot Coal (PCXCQ, $0.10, down $0.01), OCZ Technology Group (OCZ, $1.65, down $0.09), Bebe Stores (BEBE, $3.90, up $0.19), Antares Pharma February (2013) 7.50 calls

 

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5.  Week Ahead

 (Calendar on website)