MomentumOptionsTrading.com Weekly Wrap for 4/21/13
1. Market Summary
2. Recent and Near-Future IPOs to Watch
4. Weekly Wrap Portfolio Update
5. Week Ahead
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1. Market Summary
“The bulls triggered 3 of our 4 near-term targets that we gave at the beginning of March and for the talking heads who said April was the new May following the prior week’s slight pullback, they were proven wrong, again. The suit-and-ties that have called for a continued pullback are in continued disbelief and Friday’s drop and pop nearly gave the bulls a clean sweep for the week.
Although trading ranges can be frustrating and cause panic, we said the longer the market stayed in one, the bigger the breakout or breakdown would be. We were glad to see the trading ranges break to the upside as the bulls pushed historic highs on the Dow and S&P 500 while the Nasdaq triggered 3,300.
March 3, 2013:
After giving back 1% at the open, the market started March off with decent quarter-percent gain. With the major indexes near 5-years highs and all-time highs, another 2%-3% gain would have all of the indexes at all-time highs, excluding Tech of course, and would be the blow-off type top that sucks in the last of the quiet money still on the sidelines. As long as support holds, the near-term targets we have given you are Dow 14,750; S&P (500) 1,600; Nasdaq 3,300; and Russell (2000) 975. (END)
The 5-year charts we have shown you for the major indexes are still bullish and this week promising to be exciting as earnings season hits second gear. The Dow will be sending 10 batters to the plate and, collectively, they will decide if the Dow clears 15,000 or tumbles back towards 14,000 over the next few weeks. The lineup includes Coca- Cola, Intel, and Johnson & Johnson on Tuesday followed by American Express and Bank of America midweek. On Thursday: IBM, Microsoft and UnitedHealth Group confess to Wall Street with General Electric and McDonald’s following up on Friday.
The biggest report will be International Business Machines (IBM, $211.38, up $1.97) as it accounts for nearly 11% of the blue-chips weight. Shares made a nice 5% jump back in January after earnings to clear the $200 hurdle and reached a peak of $215.90 in mid-March. There is a good chance shares move another 5% and that would mean a $10 move to new all-time highs or a break back below the $200 level. A print below $198 could cause a selloff down to $190 and the 100-day MA but IBM has been on a roll in beating Wall Street’s estimates quarter-after-quarter and we don’t expect that to change this time out.
McDonald’s makes up 5.4% of the Dow’s weight, American Express 3.4% and J&J, 4.3%. UnitedHealth Group makes up 3.3%. As you can see, the Dow could have a very volatile week depending on what these companies say. GE numbers could give us good or bad clues on how well the global economies are recovering, or not.Tech will also have some influence on the market as Google, Yahoo, Intel, eBay, and Sandisk will announce their numbers as well.
Gold got mugged last week, falling over $100 an ounce, or nearly 7%. We have been warning of the breakdown to $1,525 and we said last week it could do a perfect back test to $1,600 before the bottom fell out. Bingo. The close at $1,480 opens the door for a test to the 200-day MA ($1,433) and possibly a drop to $1,400. At these levels, Gold would be at decade lows and would probably represent a great opportunity to start building positions.
Silver just hit our BUY target again at $26 following Friday’s 5% drop to $25.89 but we mentioned there was a $4 spot on getting American Eagles. We will see if the spot goes down but Silver is likely to outperform gold over the next few years. The spot is high because of supply and demand despite Silver sitting at 2-year lows. Demand is roughly 60% higher than output and silver is used in more than gold. Buying silver under $26 with a $4 spot was unimaginable a few months ago but we believe somewhere down the road silver will be north of $50. However, a continued selloff could lead to $22.50, or even $20. At $20, we might back up the truck and bet the farm.
There are a few economic reports that could cause some stickiness this week and April option expiration is this Friday. Monday is tax deadline day and is usually bullish as the Dow has only fallen 5 times over the past 20 years on April 15. April option expiration day is also bullish as the blue-chips have been up 13-out-of-the-last-16 Friday’s. Some years have shown nice 1%+ pops and would be enough this year to clear 15,000 if current levels hold.
If earnings come in better-than-expected and economic news doesn’t disappoint then the indexes should see a continued rally. If so, the extended targets we could see are: Dow 15,300; S&P 1,625;Nasdaq 3,350. We will keep our target of 975 for the Russell 2000.
We must admit even we are surprised by the GAINS the indexes have made for the year but we are not surprised by the rally as we told you it would have legs from December through April. May might be a different story and there could be some seasonal weakness in late April but until the bottom uptrends lines from the 5-year charts crack, the bulls are in control.” (from 4/14/2013 Weekly Wrap Update)…
The bears came out of hibernation last week after a long winter and made some noise following the market’s pullback back to support. The bulls and Boston came under attack on Monday as our Nation and Wall Street was battered and bruised but both showed what Amercia was made of following the aftermath.
The people of Boston ran towards the bombings to help those in need of care and their acts of courage and humanity were uplifting and amazing to witness. The bulls picked themselves off the ground on Tuesday but the Financial stocks and Tech failed as backups with earnings reports.
The bears used steady pressure on Wednesday and Thursday to crack the first wave of support but the bulls fought back to win Friday’s session and reclaim it. The uptrend lines are still intact for the major averages and while there does appear to be a downside bias, the possibility of another trading range could also be shaping up. (read more…)
The Dow gained 10 points, or 0.1%, to close at 14,547 on Friday. The blue-chips tested the first wave of support after falling below the 14,600 level with Monday’s 266 point drop. The close at 14,599 was a hint the bears could push 14,400 but the bulls reclaimed half of the losses on Tuesday to get the Dow back to 14,756. We were looking for a close above 14,800 for further upside and it was a clue Wednesday’s dip back to 14,618 still favored the bears. Thursday’s test to 14,495 was ahead of IBM’s announcement so we knew there was a good chance 14,400 could trigger if they missed expectations. They did and the index hit a low of 14,444 on Friday’s open before rebounding by the close. We mentioned last week the 50-day MA at 14,200 would suggest a possible trend change if busted and that a break below 14,000 and the 5-year uptrend line at 14,000 would be confirmation. The bulls will try for 14,800 again on their quest to hit 15,000 and anything in between is just noise until one side establishes the next trend. The Dow came into the week at 14,865 and was down 318 points, or 2.1%, by the end of it. For 2013, the blue-chips are up 1,443 points, or 11%.
The S&P 500 added 14 points, or 0.9%, to finish at 1,555. The index was a 12-pack away from clearing 1,600 but Monday’s 36 point freefall brought back the 1,550 level with the close at 1,552. Tuesday’s rebound pushed 1,575 and where we said the S&P needed to close for further upside but the close at 1,574.57 was yet another clue there would be more downside pressure. We said a close below 1,540 would get 1,525-1.500 in play and Wednesday’s low was 1,543. The bulls held 1,550 with the finish at 1,552 but Thursday’s print of 1,536 confirmed our belief the S&P will test 1,500 (or worse) at some point but Thursday’s close was 1,541. The 1 point margin held as the bulls cleared 1,550 again on Friday. A close this week above 1,575 would be bullish for another run at 1,600 while a close below 1,540 still favors the bears. The S&P 500 started Monday at 1,588 and was lower by 33 points, or 2.1%, by Friday’s close. For 2013, the index is higher by 129 points, or 9.1%.
The Nasdaq jumped 40 points, or 1.3%, to close at 3,206. Tech fell a whopping 78 points to start the week and closed Monday at 3,216. Support at 3,250 has been paper thin and we warned a close below this level again would get 3,200 in play, quickly. Tuesday’s pop to 3,265 was expected following the steep selloff but when the bulls couldn’t clear 3,275 we penciled-in a drop below 3,200. Wednesday’s bottom checked in at 3,186 which got 3,150 in play and Thursday’s low was 3,154 before the close at 3,166. Friday’s rebound back above 3,200 was mildly bullish but the bulls will be challenged at 3,250-3,275. If they can get through these levels there is a chance for a ran back above 3,300 but another close below 3,200 and a break below 3,150 would certainly favor the bears. The Nasdaq was at 3,294 before Monday’s open and fell 88 points, or 2.7%, for the week. YTD, the index has advanced 187 points, or 6.2%.
The Russell 2000 advanced 11 points, 1.2%, to close at 912 on Friday. The small-caps were crushed for 35 points, or nearly 4%, after falling through the 920 level and testing 900. The close at 907 was bullish for Tuesday’s pop to back above 920 to 923 but Wednesday’s back draft to 899 was an omen. The bulls held 900 by the close and Thursday low came in 898 with the 901 holding by the bell. This was the one indicator that gave a signal Friday would be bullish as we we were looking for a test to 875. Same deal for this week and a close below 875 would get 850 in the mix. A close back above 920 would favor another run to new highs or a possible trading range if 940 holds as resistance. The Russell 2000 was at 942 to start the week and gave back 30 points, or 3.2%, ahead of the weekend. The small-caps are showing a gain of 63 points, or 7.4%, for the year.
The S&P Volatility Index ($VIX, 14.97, down 2.59) came into the week at 12.06 and was challenging 52-week lows but Monday’s 40% surge past 15 and close at 17.27 was what we have been warning about. However, we said panic wouldn’t hit on Wall Street until 20 trips. Tuesday’s rebound by the bulls pushed the VIX back above 15 with the close at 13.96 but Wednesday’s finish at 16.50 was a clue the S&P could dip further. On Thursday’s pullback in the market, the VIX hit 18.20 and closed at 17.56. We thought Friday was setting up for a run to 20 after the mixed Tech earnings but the rally pushed the VIX back below 15 which was slightly bullish.
The bears made a strong statement last week but Friday’s recovery was slightly bullish. There were a number of sectors and stocks in play and while much of the news was bearish, the bulls held longer-term support despite the short-term breakdown. Earnings and economic news will continue to be the driver of near-term catalysts for April but May is shaping up to be the battleground for a breakout or breakdown, or a continued trading range.
The breakdown in commodities continued with a slight rebound by week’s end. We wanted to update the Copper chart because we have mentioned it gives a good view of the overall global economy. We have been warning of Copper’s impending drop below $3.50 for months and last week’s breakdown may have finally caught Wall Street’s eye. Copper tanked to a low of $3.08 last weekend is at its lowest level since October 2011. A close below $3 would signal a slowdown in the global economy and will be a big story which, in turn, could lead to weakness in the market as the pros lock-in current gains for the year.
Gold fell to a low of $1,321 last Monday but rebounded to clear $1,400. It’s been a dead cat bounce with 4 lives as Gold closed higher the rest of the week. Last week’s chart clearly showed the drop to $1,400 coming but we were a little surprised of the test to $1,300 come so quickly. The short-term charts showed a possible test to $1,325 but we have a feeling Gold could test $1,000 at some point if the selling pressure returns.
Silver tested a low of $22 and we said last week a test to $22.50 was in the cards. We are salivating to see Silver fall to $20, or below, but the spot prices are still incredibly high. We did call around and found some silver for under $3 a spot so we are actively seeking to add to our position, If Silver falls below $20, we wouldn’t mind paying a $2-$3 spot for American Eagles, or open up a coin shop to play the rebound to $50 down the road. Silver is a big component of manufacturing and while it may take 3-5 years for a double, buying silver at these levels is starting to look luscious. For those of you that have never purchased Silver, start buying third positions at current levels in case it does get cheaper. Buy another third at $20 and if we get lucky and Silver drops to the teens, complete the rest of your purchase.
Earnings were a mixed bag with some good, some bad but overall, they were ugly. We were looking at Tech and the Financials, specifically, for clues of a test to news highs or a break below support. The earnings bar is really low for a lot of companies to beat Wall Street’s estimates but it’s the revenue shortfalls that we are noticing. Over 65% of the companies that have reported beat earnings buy only 55% are topping revenue.
We wanted to see a breakout in the Financial stocks but when JPMorgan (JPM, $47.23, up $0.59) failed to break $50 on its earnings report, we knew the sector could be in trouble. Bank of America (BAC, $11.66, up $0.22) fell below its 50-day and 100-day moving average (MA) and Goldman Sachs (GS, $138.72, up $0.12) failed to clear $150 when they confessed to the suit-and-ties. The Financial Select Spiders (XLF, $18.08, up $0.25) give a better snapshot of the recent weakness and could be a good tell if they will help or hurt the bulls’ case. The break above $18.50 was bullish the prior week for a possible test to $20 and continued new highs but the close below $18 and back test is worrisome. The XLF looks like it could fall to $17.50 and a close below $17.25 would be bearish. A rebound and close above $18.25 would be bullish.
As far as Tech, we felt there was a chance Google (GOOG, $799.87, up $33.96) would miss Wall Street’s estimates but it would have been a hard bet to make and why we didn’t. Shares recently topped out at $844 and the cat calls for $1,000 were growing louder so you had to respect the upside as the company beat estimates by 92 cents a share. Google came in at $11.58 while the suit-and-ties had penciled in $10.66. However, revenues came in at $13.97 billion versus estimates for $14.09 billion. The big story Wall Street is missing is the huge tax break Google got during the quarter for “Federal research”. If analysts were to back this number out of the equation then Google would have earned $10.36 a share and missed by 30 cents!
We haven’t talked about negative Monday/ Friday closes in a while as Friday’s have been mostly bullish all year long with Monday’s mixed to bearish over the past few months. However, the blue-chips had a lower previous Friday and a lower Monday before Friday’s slightly higher close. We were amazed to see the blue-chips end in positive territory after International Business Machines (IBM, $190.00, down $17.15) rare earnings miss. The 8% drop in the stock accounted for 130 negative Dow points and McDonald’s (MCD, $99.92, down $1.99) added another 15 red points. If the Dow ends higher on Monday it would suggest a continued trading range but a lower finish would suggest further weakness is ahead.
The late April swoon came right on cue last week and this week could be more of a tell if there is further weakness or a snapback rally. Economic news and earnings will once again dominate the week with Apple’s (AAPL, $390.53, down $1.52) numbers as the main event after Tuesday’s close. Shares have been in a freefall for months after topping at $700 in late September. The stock fell below the $400 for the first time in over 2 years last week so this report could be one of the biggest in the company’s history.
If shares rally on better-than-expected earnings AND revenue, the overall market will likely benefit. The same is true if Apple announces worse-than-expected numbers.
Futures are showing a higher open for Monday: Dow futures are up 66 points to 14,536 while the S&P 500 futures are higher by 8 points to 1,555. The Nasdaq 100 futures are advancing 16 points to 2,784.
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2. Recent and Near-Future IPOs to Watch
|Support/Resistance||These predetermined levels are used to predict when prices will reverse.|
Taylor Morrison Home (TMHC) – April 10th (IPO price: $22, current price: $24.05)
On Wednesday April 10th before the bell, Taylor Morrison Home (TMHC, $24.05, up $0.88) raised $629.2 million by offering 28.6 million shares at $22 in its IPO, at the top of the estimated range of $20 – $22. This was 20% more than initially planned. This also valued the homebuilder at $2.7 billion. The builder was majority-owned by private equity firms TPG Capital and Oaktree Capital Management LP. Shares began trading on the New York Stock Exchange on April 10th.
Taylor Woodrow was founded in 1921 by Frank Taylor and Jack Woodrow in Blackpool, England. The company focused on providing low-cost, high quality housing in the Lancashire area. In 1936, Taylor Woodrow entered the Canadian construction market through the acquisition of Monarch Development, one of Canada’s oldest, largest and most diversified real estate companies. In 1951, Taylor Woodrow expanded its operations to Australia.
Meanwhile, Morrison Homes was initially founded in Seattle in 1905 by C.G. Morrison and moved to northern California in 1946. The company built primarily first-time and midmarket home communities in Phoenix, Sacramento, Denver, Fort Myers, Jacksonville, Orlando, Sarasota, Tampa, Austin, and Houston. George Wimpey Plc. acquired Morrison Homes in 1984.
And in 2007, Taylor Woodrow merged with George Wimpey Plc. to form one of the world’s largest home builders. It split operations to form Taylor Wimpey in the United Kingdom and Taylor Morrison in North America.
Only 1 analyst listed by Thomson/First Call rates the stock, giving it a buy with a $30 price target.
SeaWorld (SEAS) – April 18th (IPO price: $27, current price: $33.52)
On Thursday after the bell, private equity firm Blackstone Group (BX) spun-off SeaWorld (SEAS, $33.52, up $6.52), raising $702 million by offering 26 million shares at $27, at the top of the estimated range of $24 – $27. This valued the theme park operator at $2.5 billion. The company sold 10 million shares in the offering, with BX selling the remaining 16 million. Shares began trading on the New York Stock Exchange on April 19th.
In 1989, Anheuser-Busch acquired SeaWorld and became part of Busch Entertainment, which was later renamed SeaWorld Parks & Entertainment. In 2008, Anheuser-Busch was acquired by Brazilian-Belgian brewer InBev to form Anheuser-Busch InBev SA (BUD). And in December 2009, BX acquired SeaWorld Parks & Entertainment from BUD for $2.3 billion. Also that year, SeaWorld’s properties had a combined total of approximately 23.5 million visitors, making it the fifth-largest amusement park operator in the world.
SEAS plans to use the money raised from its IPO to pay down debt and settle a termination fee with BX, which still owns more than 60% of the company. The underwriters, including Goldman Sachs (GS) and JP Morgan (JPM), have a 30-day option to sell an additional 3.9 million shares at $27 per share, a total of $105.3 million.
Blackhawk Network (HAWK) – April 18th (IPO price: $23, current price: $26.01)
On Thursday after the bell, Safeway (SWY), one of the largest supermarket chains in the United States, spun-off Blackhawk Network (HAWK, $26.01, up $3.01), raising $230 million by offering 10 million shares at $23, above the estimated range of $20 – $22. HAWK is one of the largest third-party gift card distributors in the world. SWY still owns about 76% of its Class A shares. Shares began trading on the Nasdaq on April 19th.
The company’s Gift Card Mall offers the industry’s most popular prepaid gift card, telecom, and financial service brands. Gift Card Mall, with access to 160 million customer visits each week, is available through a network of leading grocery, big box, convenience, pharmacy, specialty, internet, and mobile retailers, including GiftCardMall.com. The company makes money by selling cards for over 350 partner brands and charging 3-5% of the value of the gift card for commission. In 2012, it launched distribution centers in Brazil and Korea and plans to expand into China throughout 2013.
For all of 2012, it earned $48.2 million on operating revenue of $959.1 million. Compared to 2011, profits jumped 31.9% and sales climbed 27.6%. During the 4th quarter of 2012, it earned $36.3 million on sales of $452.9 million. Compared to the same quarter a year-ago, profits rose 39.6% and sales increased 27.4%.
New Residential (NRZ) – Expected IPO not long after April 30, 2013
The long awaited spinoff of New Residential (NRZ) from Newcastle Investment (NCT) is expected to happen not long after the April 30th dividend date. Assuming NCT shares rise to $14, it is estimated that NCT’s share price will be $6 after the spin-off, and NRZ will start trading for $8 per share. It is planned to distribute one share of NRZ for each share of NCT. Shares will open trading on the New York Stock Exchange.
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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 4/19/13 close)
By Catherine Tierney
1st Source (SRCE, $23.41, up $0.16), ACE (ACE, $89.03, up $0.69), Aegion (AEGN, $20.44, up $0.20), Allison Transmission (ALSN, $22.25, up $0.15), Ameriprise (AMP, $72.18, up $2.58), Arden (ARDNA, $98.66, down $0.39), B/E Aerospace (BEAV, $58.88, up $1.23), BancorpSouth (BXS, $14.92, up $0.05), Bank of Hawaii (BOH, $48.08, up $0.47), BankUnited (BKU, $), Banner (BANR, $30.25, up $0.58), Bank of Marin Bancorp (BMRC, $38.70, up $0.39), BBCN (BBCN, $13.00, up $0.16), California First National (CFNB, $15.58, down $1.12), Caterpillar (CAT, $80.43, down $0.03 CH Energy (CHG, $64.79, up $0.03), Check Point Software Technologies Ltd. (CHKP, $45.29, down $0.12), Deltic Timber (DEL, $58.64, up $0.64), Duff & Phelps (DUF, $15.54, up $0.01), Eagle (EGBN, $21.13, down $0.05), The Eastern Company (EML, $15.53, up $0.42), Ennis (EBF, $14.29, up $0.23), Equity LifeStyle (ELS, $80.39, up $0.02), Fifth & Pacific (FNP, $20.41, up $0.32), Financial (FISI, $19.11, up $0.39), First Defiance Financial (FDEF, $23.19, up $0.94), First Financial (THFF, $30.30, up $0.54), First Interstate (FIBK, $18.56, up $0.09), Gilead Sciences (GILD, $53.17, up $2.31), Green Plains Renewable Energy (GPRE, $11.08, up $0.46), Halliburton (HAL, $37.21, down $0.50), Hasbro (HAS, $45.02, up $0.68), Hatteras Financial (HTS, $27.29, up $0.04), Headwaters (HW, $9.63, up $0.15), Health Management (HMA, $11.65, up $0.59), Healthstream (HSTM, $20.14, up $0.10), Heidrick & Struggles (HSII, $13.16, down $0.08), Hexcel (HXL, $28.09, up $0.45), Home Federal (HOME, $12.00, down $0.02), Hudson City (HCBK, $8.08, up $0.05), Iconix Brand (ICON, $24.96, up $0.41), IDEX (IEX, $49.97, up $0.04), Illumina (ILMN, $56.09, down $0.24), Independent Bank (IBCP, $8.45, down $0.25), Innovative Solutions (ISSC, $8.00, up $0.11), InterDigital (IDCC, $40.26, up $0.22), JMP (JMP, $6.20, up $0.14), Kansas City Life (KCLI, $36.08, up $1.88), Lennox (LII, $61.83, up $1.74), Life (LIFE, $73.54, down $0.05), MB Financial (MBFI, $23.11, up $0.41), Metro Bancorp (METR, $16.39, up $0.21), MetroPCS (PCS, $11.12, down $0.07), Mueller (MLI, $50.64, up $0.45), National Financial (NFP, $25.10, down $0.06), National Presto (NPK, $76.72, up $1.92), NBT (NBTB, $20.83, up $0.26), Netflix (NFLX, $163.37, down $0.45), NewBridge (NBBC, $5.72, down $0.21), NL (NL, $10.48, down $0.18), Northwest (NWBI, $12.33, up $0.12), NVR (NVR, $1006.13, up $10.16), NXP Semiconductors (NXPI, $25.29, down $0.13), OneBeacon Insurance (OB, $13.13, Flat), Orthofix (OFIX, $33.03, up $0.32), Packaging (PKG, $43.27, up $0.07), P.A.M. Transportation (PTSI, $11.25, Flat), PCTEL (PCTI, $7.04, up $0.31), Pennsylvania Real Estate Investment Trust (PEI, $19.04, up $0.56), Provident New York Bancorp (PBNY, $8.98, up $0.15), Rent-A-Center (RCII, $35.44, up $0.59), SY (SYBT, $21.77, up $0.22), Sanmina (SANM, $10.69, up $0.26), Rurban Financial (RBNF, $8.34, down $0.09), Seacor (CKH, $71.11, down $0.09), Shore Bancshares (SHBI, $6.50, up $0.02), Six Flags (SIX, $71.25, up $1.10), Skechers (SKX, $21.63, up $0.03), Stepan (SCL, $59.28, up $0.82), Stillwater Mining (SWC, $10.73, up $0.36), Swift (SWFT, $13.68, up $0.34), Tennant (TNC, $46.63, up $1.25), Texas (TXN, $34.25, up $0.33), Titan (TWI, $19.53, up $0.50), Tootsie Roll (TR, $31.10, up $0.31), TrustCo (TRST, $5.22, up $0.04), Ultra Clean (UCTT, $5.51, up $0.07), United Stationers (USTR, $37.15, up $0.36), Universal Stainless (USAP, $33.13, up $0.50), Universal Truckload (UACL, $22.76, down $0.02), Veeco (VECO, $32.50, down $0.78), Volterra (VLTR, $13.18, down $0.08), Washington Trust (WASH, $26.90, up $0.33), Werner Enterprises (WERN, $22.99, up $0.07), Woodward (WWD, $34.14, down $0.13), Xoom (XOOM, $19.97, up $0.03), Zions (ZION, $23.71, up $0.27)
AO Smith (AOS, $69.05, up $0.36), Acadia Realty Trust (AKR, $28.00, up $0.45), Air Products & Chemicals (APD, $85.71, up $0.86), Alliance Fiber Optic Products (AFOP, $13.97, down $0.08), Alpha & Omega (AOSL, $8.67, up $0.08), American Campus (ACC, $43.79, down $0.11), Amgen (AMGN, $111.38, up $3.92), AmSurg (AMSG, $32.86, down $0.14), Anaren (ANEN, $23.55, up $0.01), Apple (AAPL, $390.53, down $1.52), Associated Estates Realty (AEC, $17.74, down $0.02), AT&T (T, $38.28, up $0.54), Berry Petroleum (BRY, $47.33, up $0.05), Brinker (EAT, $38.14, up $0.13), Broadcom (BRCM, $31.89, down $0.14), Capella Education (CPLA, $30.34, up $0.34), Centene (CNC, $45.49, up $1.20), CIT (CIT, $41.67, up $0.36), Community Bank (CBU, $28.44, up $0.27), Cree, (CREE, $53.39, up $0.27), Delta Air Lines (DAL, $15.26, up $0.11), DeVry (DV, $32.81, up $0.38), Dice (DHX, $9.19, up $0.14), Discover (DFS, $43.34, up $0.79), E. I. du Pont de Nemours (DD, $49.19, up $0.60), Edwards Lifesciences (EW, $83.12, up $0.37), Ethan Allen (ETH, $30.82, up $0.72), Everest Re (RE, $125.85, up $1.70), F.N.B. (FNB, $11.29, up $0.13), First Commonwealth (FCF, $6.99, up $0.07), FirstMerit (FMER, $15.94, up $0.25), Flushing Financial (FFIC, $16.08, up $0.25), FMC Technologies (FTI, $49.22, down $0.26), Forest (FRX, $35.91, up $0.47), Gannett (GCI, $20.41, up $0.31), Gentex (GNTX, $20.64, up $0.24), Hawaiian (HA, $5.56, up $0.01), Hudson Valley (HVB, $14.79, up $0.01), Illinois Tool Works (ITW, $60.50, Flat), Ingersoll-Rand (IR, $53.90, up $0.36), iRobot (IRBT, $24.34, up $0.29), Ironwood (IRWD, $17.79, up $0.29), Johnson (JCI, $32.64, up $0.47), Juniper Networks (JNPR, $17.10, down $0.22), Kaiser Aluminum (KALU, $58.75, down $0.36), Lexmark (LXK, $25.50, down $0.02), Liberty Property Trust (LRY, $41.41, up $0.54), Lockheed Martin (LMT, $96.28, up $1.26), Manhattan (MANH, $69.52, up $0.24), Molex (MOLX, $27.09, up $0.12), Nabors Industries (NBR, $14.83, down $0.12), Newfield Exploration (NFX, $20.04, down $0.75), Norfolk Southern (NSC, $74.75, up $0.89), Oceaneering (OII, $60.03, up $0.53), Oppenheimer (OPY, $17.26, up $0.32), Owens-Illinois (OI, $24.88, up $0.62), PACCAR (PCAR, $48.20, up $0.82), Peapack-Gladstone (PGC, $14.26, up $0.28), Pentair (PNR, $50.24, down $0.36), Polaris Industries (PII, $85.81, up $1.20), Potlatch (PCH, $45.44, up $0.65), Ramco-Gershenson (RPT, $16.61, up $0.52), Regions (RF, $7.83, up $0.16), Rock-Tenn (RKT, $86.41, down $0.06), Ryder System (R, $57.15, up $1.07, S&T (STBA, $17.92, up $0.39), Sensata (ST, $31.24, up $0.11), Signature (SBNY, $76.86, up $0.68), StanCorp (SFG, $41.02, up $0.52), Tompkins Financial (TMP, $41.28, up $0.33), Torchmark (TMK, $), Total System (TSS, $), The Travelers Companies (TRV, $84.81, up $0.71), Union First Market Bankshares (UBSH, $18.64, up $0.10), US Airways (LCC, $16.02, down $0.08), USANA Health Sciences (USNA, $48.62, up $0.21), Vascular (VASC, $16.06, up $0.19), Vulcan Materials (VMC, $46.05, up $0.02), W.R. Berkley (WRB, $44.25, up $0.49), Waddell & Reed (WDR, $39.57, up $0.46), Waters (WAT, $88.45, up $0.21), Xerox (XRX, $8.46, dow2n $0.17), Yum! Brands (YUM, $65.04, up $0.04)
AFLAC (AFL, $49.39, up $0.49), Akamai (AKAM, $33.55, down $0.19), Allied World Assurance (AWH, $93.59, up $0.94), American National (ANAT, $87.24, down $0.51), Angie’s List (ANGI, $20.74, up $0.39), Arris (ARRS, $16.39, up $0.10), Asbury Automotive (ABG, $34.18, up $0.62), Aspen Insurance (AHL, $38.04, up $0.26), Assurant (AIZ, $46.66, up $0.55), Avery Dennison (AVY, $40.81, up $0.68), The Boeing Company (BA, $87.96, up $1.84), Bolt (BOLT, $15.97, up $0.39), Brandywine Realty Trust (BDN, $14.93, up $0.34), Brookline Bancorp (BRKL, $8.95, $0.19), Cabot Oil & Gas (COG, $64.60, down $1.12), Cadence Design (CDNS, $12.40, down $0.14), Carlisle (CSL, $63.82, up $0.51), Clearwater Paper (CLW, $48.96, up $0.91), Cliffs (CLF, $17.63, up $0.10), CNO Financial (CNO, $10.72, up $0.20), Columbia Banking (COLB, $20.27, up $0.19), Commercial Vehicle (CVGI, $5.49, down $0.01), Corning (GLW, $12.84, down $0.22), CoStar (CSGP, $107.31, up $1.58), Dr Pepper Snapple (DPS, $48.07, up $0.96), Duke Realty (DRE, $17.53, up $0.33), Eli Lilly (LLY, $57.42, up $1.13), EMC (EMC, $21.50, down $0.84), Encore Wire (WIRE, $32.06, up $0.21), Equinix (EQIX, $210.15, up $0.99), F5 Networks (FFIV, $71.38, down $1.16), Famous Dave’s of America (DAVE, $10.86, up $0.16), FBR (FBRC, $18.09, up $0.37), Federal-Mogul (FDML, $5.10, down $0.03), Ferro (FOE, $6.82, up $0.19), First Community (FCBC, $15.19, up $0.26), Forrester (FORR, $35.17, up $0.04), General Dynamics (GD, $67.00, up $1.01), Glimcher Realty Trust (GRT, $11.79, up $0.21), Graco (GGG, $54.57, up $0.26), Heritage (HFWA, $13.94, up $0.39), Hill-Rom (HRC, $34.61, up $0.38), Horace Mann Educators (HMN, $22.18, up $0.38), Infinera (INFN, $6.26, up $0.09), Inphi (IPHI, $), Lender Processing (LPS, $24.45, down $0.12), LSI (LSI, $6.10, up $0.01), MarketAxess (MKTX, $39.62, up $0.62), Mellanox (MLNX, $59.56, up $1.69), Meritage Homes (MTH, $41.56, up $1.79), Mine Safety Appliances (MSA, $49.21, up $0.57), Montpelier (MRH, $25.67, up $0.45), Morningstar (MORN, $63.58, down $0.31), New Oriental Education (EDU, $18.24, up $0.41), New York Community (NYCB, $13.39, up $0.19), NewMarket (NEU, $257.50, up $0.62), Northrop Grumman (NOC, $70.98, up $1.11), NuStar (NS, $54.35, up $0.47), NuStar (NSH, $33.25, up $0.43), O’Reilly Automotive (ORLY, $99.36, up $0.52), Omnicare (OCR, $41.32, up $0.22), Orchids Paper (TIS, $22.61, up $0.52), OSI (OSIS, $54.50, down $0.50), Owens Corning (OC, $39.24, up $0.74), Pacific Continental (PCBK, $10.49, up $0.20), Praxair (PX, $109.75, down $0.03), Procter & Gamble (PG, $81.43, up $1.56), Prologis (PLD, $41.59, up $0.97), Prosperity (PB, $45.42, up $0.68), QUALCOMM (QCOM, $63.93, up $0.29), Raymond James (RJF, $44.13, up $0.58), Rockwell Automation (ROK, $83.18, up $0.31), RPC (RES, $14.00, down $0.18), Ryland (RYL, $37.65, up $1.79), Selective Insurance (SIGI, $23.65, up $0.39), ServiceNow (NOW, $36.29, up $0.22), Silgan (SLGN, $48.52, up $0.47), Sprint Nextel (S, $7.17, down $0.02), Stericycle (SRCL, $107.67, up $0.79), Stryker (SYK, $64.68, up $0.98), Symetra Financial (SYA, $13.33, up $0.28), T. Rowe Price (TROW, $74.53, up $1.04), TE Connectivity (TEL, $39.38, up $0.27), Thermo Fisher Scientific (TMO, $80.03, down $0.05), Tractor Supply (TSCO, $108.06, up $1.85), Tupperware Brands (TUP, $81.50, up $0.32), Tyler (TYL, $58.50, up $1.01), USG (USG, $24.55, up $0.68), Valley National (VLY, $9.77, up $0.13), Varian Medical (VAR, $67.29, up $0.72), Virgin Media (VMED, $49.14, up $0.21), W.R. Grace & (GRA, $74.97, up $1.21), Waste Connections (WCN, $35.64, down $0.07), Waste Management (WM, $38.70, up $0.56), WellPoint (WLP, $68.71, up $1.53), Western Digital (WDC, $49.93, up $0.68), Westinghouse Air Brake (WAB, $101.01, up $1.59), Whiting Petroleum (WLL, $43.99, down $0.58), Wyndham Worldwide (WYN, $63.33, up $0.51), Xilinx (XLNX, $35.51, down $0.09)
3M Company (MMM, $105.71, up $0.73), Altera (ALTR, $31.07, down $0.35), Altria (MO, $35.02, up $0.34), Applied Micro Circuits (AMCC, $6.83, up $0.11), AptarGroup (ATR, $55.08, up $0.51), Avnet (AVT, $31.54, down $0.39), AXIS Capital (AXS, $41.80, up $0.46), Ball (BLL, $46.43, up $0.48), Bemis (BMS, $39.95, up $0.45), BorgWarner (BWA, $72.69, up $1.85), Bristol-Myers Squibb (BMY, $41.15, up $0.60), BorgWarner (BWA, $72.69, up $1.85), Bunge (BG, $68.26, up $1.01), Cabot Microelectronics (CCMP, $32.54, up $0.29), CalAmp (CAMP, $9.52, up $0.17), Callaway Golf (ELY, $6.35, up $0.11), Cameron (CAM, $59.19, up $0.51), CARBO Ceramics (CRR, $81.68, down $1.75), Carter’s (CRI, $59.22, up $0.27), Cash America (CSH, $45.32, up $0.21), Celgene (CELG, $122.36, up $3.28), Cerner (CERN, $91.80, up $0.60), The Chubb Corporation (CB, $87.89, up $0.98), CMS Energy (CMS, $29.09, up $0.43), Coca-Cola Enterprises (CCE, $37.00, up $0.43), Coinstar (CSTR, $53.69, down $0.57), Colgate-Palmolive (CL, $119.72, up $1.83), Colonial Properties Trust (CLP, $23.13, up $0.36), Columbia Sportswear (COLM, $58.50, up $0.80), CONMED (CNMD, $32.73, up $0.57), CRA (CRAI, $20.04, up $0.71), Crocs (CROX, $15.27, up $0.32), Deluxe (DLX, $38.97, up $0.96), Digi (DGII, $8.92, down $0.01), The Dow Chemical Company (DOW, $30.55, up $0.37), Entergy (ETR, $69.71, down $0.58), EQT (EQT, $66.66, down $0.29), EQT Midstream (EQM, $37.08, down $0.52), Expedia (EXPE, $61.67, up $1.17), Exxon Mobil (XOM, $87.45, up $0.83), GrafTech (GTI, $7.07, Flat), Greatbatch (GB, $28.98, up $0.59), Harley-Davidson (HOG, $51.83, up $0.78), Harte-Hanks (HHS, $7.27, up $0.14), HEALTHSOUTH (HLS, $25.66, up $0.28), Hittite Microwave (HITT, $55.47, up $0.38), ICON Public (ICLR, $29.63, up $0.30), ITT Educational (ESI, $15.09, up $0.17), KBR (KBR, $28.01, Flat), Key (KTEC, $12.65, Flat), Landstar (LSTR, $54.45, up $0.62), Las Vegas Sands (LVS, $53.06, up $1.10), Lear (LEA, $51.97, up $0.99), Level 3 Communications (LVLT, $20.15, Flat), Life Time Fitness (LTM, $43.65, up $0.13), LKQ (LKQ, $20.71, up $0.17), LogMeIn (LOGM, $17.17, up $0.11), LSI (LYTS, $6.95, up $0.09), Marinemax (HZO, $12.19, up $0.08), Marriott Vacations Worldwide (VAC, $43.57, up $0.74), The New York Times (NYT, $8.93, down $0.08), Newpark Resources (NR, $8.35, down $0.04), Nielsen (NLSN, $34.95, up $0.23), Noble Energy (NBL, $107.21, down $0.40), Olin (OLN, $24.82, up $0.62), Parker-Hannifin (PH, $85.55, down $0.38), Patterson-UTI (PTEN, $22.48, up $0.08), PMC-Sierra (PMCS, $6.15, down $0.01), Principal (PFG, $34.34, up $0.76), PulteGroup (PHM, $17.99, up $0.45), Realty Income (O, $), Reinsurance Group of America (RGA, $), Republic (RSG, $), ResMed (RMD, $44.02, down $0.02), Rochester Medical (ROCM, $13.99, up $0.66), Safeguard Scientifics (SFE, $15.95, up $0.16), Safeway (SWY, $26.55, down $0.07), ScanSource (SCSC, $26.45, up $0.26), Silicon Motion (SIMO, $10.55, down $0.01), Simpson (SSD, $30.89, up $0.54), Southwest Airlines (LUV, $13.34, up $0.36), Starbucks (SBUX, $58.40, up $0.68), Stewart (STC, $25.39, up $0.24), STRATTEC Security (STRT, $37.45, up $0.54), Taubman (TCO, $81.60, up $1.15), Time Warner Cable (TWC, $91.28, up $0.64), United Parcel (UPS, $82.99, up $0.62), US Ecology (ECOL, $26.69, up $0.68), Validus (VR, $37.88, up $0.45), VASCO Data (VDSI, $8.31, up $0.13), Vistaprint (VPRT, $38.82, up $0.91), WABCO (WBC, $65.83, up $0.86), Washington Real Estate Investment Trust (WRE, $28.37, up $0.38), West Bancorp (WTBA, $10.51, up $0.13), West Marine (WMAR, $11.96, down $0.03), Zimmer (ZMH, $73.93, up $0.96)
Aaron’s (AAN, $28.53, up $0.63), AbbVie (ABBV, $42.39, up $0.07), Acadia (ACHC, $31.41, up $0.46), ACCO (ACCO, $6.84, up $0.34), Alliance (AHGP, $52.50, up $0.33), Alliance (ARLP, $66.01, down $0.17), AMCOL (ACO, $29.03, up $1.06), Aon (AON, $60.15, up $0.48), Autoliv (ALV, $67.27, up $0.80), Barnes (B, $27.14, up $0.51), Bridgford Foods (BRID, $8.47, Flat), Bryn Mawr (BMTC, $23.00, up $0.22), Central Pacific (CPF, $15.49, up $0.52), Chevron (CVX, $115.90, up $0.31), Corporate Office Properties Trust (OFC, $28.62, up $0.37), Covidien (COV, $66.55, up $0.55), Cray (CRAY, $20.70, up $0.54), DR Horton (DHI, $21.98, up $0.50), Digimarc (DMRC, $19.89, down $0.01), Digital Realty Trust (DLR, $73.77, up $1.80), DTE (DTE, $72.26, up $0.21), FLIR (FLIR, $23.53, down $0.20), Forum Energy (FET, $26.23, up $0.02), Gardner Denver (GDI, $74.98, down $0.02), HMS (HMSY, $23.68, down $1.45), ImmunoGen (IMGN, $15.00, up $0.75), Itron (ITRI, $42.82, down $0.38), KVH (KVHI, $12.69, up $0.31), Lazard (LAZ, $32.22, up $0.60), Lifepoint Hospitals (LPNT, $44.64, up $0.31), LyondellBasell (LYB, $57.86, up $2.05), National Oilwell Varco (NOV, $64.31, down $0.30), Natus Medical (BABY, $13.16, up $0.25), Navios Maritime (NMM, $14.39, up $0.05), Provident Financial (PFS, $14.82, up $0.25), Saia (SAIA, $36.19, up $0.56), SCBT (SCBT, $48.79, up $1.18), Simon Property (SPG, $176.11, up $3.20), Spectrum (SPPI, $7.16, up $0.16), Superior (SUP, $17.34, up $0.23), Goodyear Tire & Rubber (GT, $12.14, up $0.16), Tyco (TYC, $31.32, up $0.44), Ventas (VTR, $79.05, up $1.33), Viad (VVI, $24.15, up $0.25), Westmoreland Coal (WLB, $11.33, down $0.07), Weyerhaeuser (WY, $29.84, up $0.55), Zebra (ZBRA, $44.52, up $0.40)
= = = = = = = = = = = = =
4. Weekly Wrap Covered Call Portfolio Update (Closing prices as of 4/19/13)
Our Weekly Wrap Closed Trade Track Record for 2013 is 12-1 (56-3, overall since late 2010).
Special Notice: Sony (SNE, $16.65, up $0.47) made 8% while Yahoo (YHOO, $23.47, up $0.21) made 15% as both stocks were called away on Friday’s close. This gets our 2013 Weekly Wrap Track Record to 12-1. We still like both companies and will look to establish another possible in one or both at discounted prices or on a breakout.
magicJackVocalTec (CALL, $15.57, up $0.31)
May 17.50 calls (CALL130518C00017500, $0.40, up $0.10)
Original Entry Price: $16.65 (4/9/13)
Lowered Price from Selling Options: $15.75
Exit Target: $20+
Stop Target: $15
Action: Shares traded lower throughout the week, bottoming at 14.97 and the 100-day MA on Thursday, before Friday’s rebound. Near-term support is at $15 but there is risk to $14 on further weakness. A close back above $17 would be bullish.
We recommended buying magicJack at $16.65 on 4/9/13. We also sold the May 17.50 calls for 90 cents which lowered our cost basis to $15.75. If we are called away at $17.50 in mid-May the trade will make 11%.
Genworth Financial (GNW, $9.37, up $0.27)
Original Entry Price: $9.88 (4/2/13)
Lowered Price from Selling Options: $9.88
Exit Target: $15+
Stop Target: $8
Action: We said last week there was further downside pressure to $9 and shares kissed a low of $8.98 last week. Shares could test $8.50 on a close below $9 while a close back above $9.50 would be bullish for another run to $10 and where we will look to sell a call option.
We recommended buying Genworth Financial at $9.88 on 4/2/13.
Dendreon (DNDN, $4.57, up $0.24)
August 6 calls (DNDN130817C00006000, $0.45, up $0.05)
Original Entry Price: $4.91 (4/2/13)
Lowered Price from Selling Options: $4.36
Exit Target: $15+
Stop Target: $8
Action: Shares rebounded 5% on Friday to clear $4.50 but the dip to $4.30 opened the door for a test to $4. A close back above $4.75 would be bullish for a run to the MA’s. We believe the company is a buyout candidate in the $8-$10 range over the next 12-24 months.
We recommended buying Dendreon at $4.91 on 4/2/13. We also sold the August 6 calls for 55 cents which lowered our cost basis to $4.36. If we are called-away at $6 in mid-August, the trade will make 38%.
Bank of America (BAC, $11.66, up $0.22)
Original Entry Price: $11.61 (3/5/13)
Lowered Price from Selling Options: $11.16
Exit Target: $15+
Stop Target: $11.20 (Hard Stop)
Action: We didn’t like the drop and close below $11.75 and we had a feeling $11.50 could come into play after the company announced earnings. We would like to see shares clear $12 again this week and we have set a Hard Stop of $11.20 to get out of the position should they continue to pull back. Last week’s low was $11.23. We like the stock for the long haul but if we are stopped out, we may be able to get back in the position at $10.
We recommended buying Bank of America at $11.61 on 3/5/13.
On 3/21/13 we sold the April 12.50 (WEEKLY) calls for $0.45, down which lowered our cost basis to $11.16.
Apollo Group (APOL, $17.38, down $0.01) (Short Position)
Original Entry Price: $16.10 (3/4/13)
Lowered Price from Selling Options: None
Exit Target: $12
Stop Target: $20
Action: Resistance continues to hold at $18 and we like the close below $17.50 midweek. A drop below $17 should get shares moving south towards the 52-week low of 15.98.
We recommended shorting Apollo Group at $16.10 on 3/4/13.
Keryx Biopharmaceuticals (KERX, $8.03, up $0.42)
May 9 calls (KERX130518C00009000, $0.30, up $0.05)
Original Entry Price: $7.22 (2/12/13)
Lowered Price from Selling Options: $6.72
Exit Target: $10+
Stop Target: None
Action: Keryx tested a low of $7.55 last week and has been holding $7 before finishing the week above $8. The current trading range continues but a break above $8.50 would be a good clue a run to $10 is coming.
We recommended buying KERX at $7.22 on 2/12/13.
On 4/9/13 we sold the May 9 calls for 50 cents which lowered our cost basis to $6.72. If we are called away at $9 in mid-May the trade will make us 34%.
Pizza Inn (PZZI, $5.85, up $0.10)
Original Entry Price: $4.50 (2/22/12)
Lowered Price from Selling Options: No options available
Exit Target: $9
Stop Target: None
Action: Shares tested $5 last week despite news a former Applebee’s CEO was planning to open 10 stores in Kansas City. Add that to the 20 we told you about in Florida and the 75 total the company plans to open over the next year and we are halfway there. Longer-term this is going to be a winning concept with hundreds of stores. We would still be aggressive buyers at these levels and on any break below $5 as we have a 6-12 month target of $10+ for the stock.
We recommended buying PZZI at $4.50 on 2/22/12.
MGM ResortsInternational (MGM, $12.23, up $0.17)
Original Entry Price: $13.77 (2/2/12)
Lowered Price from Selling Options: $12.35
Exit Target: $15
Stop Target: None
Action: Shares tested support at $12 after trading to a low of $11.97 last week. There is further risk down to $11.25 and the 200-day MA on a close below $12. We will look to sell an option on a break back above $12.50 because we think longer-term shares will be north of $15 but we may try to get out of the position to look for more favorable trades with higher option premiums if we get back to even.
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.
On 2/13/13 we recommended selling the March 14 calls for $0.32 which lowered the cost basis to $12.35.
Trades on HOLD (8): DryShips (DRYS, $1.75, up $0.03), AKS Steel Holding (AKS, $2.87, up $0.01), Rare Element Resources (REE, $1.84, flat), Rambus (RMBS, $6.06, down $0.69), Scientific Games (SGMS, $7.89, up $0.23), Bebe Stores (BEBE, $4.47, down $0.03), Vivus (VVUS, $11.93, down $0.16), Solazyme (SZYM, $7.78, up $0.27)
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6. Week Ahead