We wanted to provide one last update for our Weekly Wrap as we have action to take on 2 trades. We may add new positions this week, depending on what happens or doesn’t happen with the Fiscal Cliff, so stay on the lookout for new trades if we see something we like. The Head Zombie will be speaking at 1:30pm (EST) and the market is expecting a deal.
As we head to press, the Dow is now up 88 points to 13,026 while the S&P is higher by 13 points to 1,415. The Nasdaq is surging 35 points to 2,996.
Subscribers, check the Members Area for the updates and if you don’t hear from us by 4pm (EST), have a sweet New Year and we will see everyone Wednesday morning!
Bank of America (BAC, $11.44, up $0.08)
Original Entry Price: $9.89 (11/27/12)
Lowered Price from Selling Options: $9.89
Exit Target: $12+
Stop Target: $10.75, raise to $11.00 (Hard Stop)
Action: Last week’s was $11.21 so let’s raise our Hard Stop to $11 in case volatility picks up. This will lock-in an 11% gain if there is a serious pullback in January.
We recommended buying the BAC at $9.89 on 11/27/12.
CubeSmart (CUBE, $14.56, up $0.21)
Original Entry Price: $13.59 (11/27/12)
Lowered Price from Selling Options & Dividends: $13.48
Exit Target: $16+
Stop Target: $14 (Hard Stop)
Action: The company paid an 11 cents dividend last week which lowered our cost basis to $13.48.
We recommended buying CUBE at $13.59 on 11/27/12.
Trades on HOLD: We are closing our Patriot Coal (PCXCQ, $0.08, flat) and OCZ Technology Group (OCZ, $1.93, up $0.02) trades at current levels.
These will be the first two losses for the portfolio since inception. We were wrong on the Coal rebound that never took place when we started nibbling on Patriot. We knew a bottom was still to come but the bottom literally fell out and there is no recovery in site. We only bought a 100 shares and we never got the chance to sell an option.
As far as OCZ, the demise of the PC industry along with a SEC inquiry has been a 1-2 punch that floored the company. Any stock we recommend we plan to hold for 2-3 years, if we aren’t “called-away”, but these red flags are something OCZ may never recover from.
We can use the losses to offset some of the tremendous gains we have made this year and since they were both small positions, they had little impact on the portfolio and we will finish the year at 28-2. The bottom line is we got these 2 stories wrong and will take our lumps and move on.