MomentumOptionsTrading.com Weekly Wrap for 2/24/13
11:30pm (EST)
1. Market Summary
2. Tower International (TOWR) – Feel the Power
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 been smooth sailing for 7 weeks now but could be approaching chopping waters. While last week had its good and bad points, the bears seem to be waking up from hibernation although it hasn’t shown up in the overall indexes. February has always been a tricky month to trade because it is usually the weakest link in the historic 6-month bullish runs from December through April to early May. Average losses for the month are around 1%, but so far, the bulls are up 1%.
The Dow has gained over 120 points in February while the S&P 500 and Russell 2000 have hit blackjacks (up 21 points). The Nasdaq is up a Fifty and the S&P Volatility 500 Index is in the low teens. The current closes on the indexes are exactly where we said they could be nearly a month ago.
Here were our thoughts from our January 21, 2012 Weekly Wrap:
“With some of our fluff targets being triggered, we must now focus on the extended targets we gave you last week: Dow 14,000; S&P (500) 1,500-1,525; Nasdaq 3,200-3,250; and Russell (2000) 900-925. There could be a pullback to support or prior resistance levels if Apple, Google and IBM come up lame but we are expecting higher prices for the market through the end of January and possibly into February if we get some more can kicking by the zombies.” (END)
All of these targets were triggered last week and that has us looking for a pullback. There is still a chance the indexes trade higher from here and into March like they did last year, but it’s rare the market does exactly what you expect or want it to do.
This doesn’t mean we know the exact day a pullback could start or how much it will be, but we can start preparing for one as we wait for the clues. We will also have to determine if it will be a short-term pullback and one to buy or if it will be a longer-term pullback and one to load up on by using put options.
If there is a further push higher from here, it could come over the next 2 weeks despite some major headwinds approaching. The S&P 500 made twice the gains last year compared to this year in February so far as the index zoomed 50 points ahead of Presidents Day and added another 1% by the beginning of March. A week later, the S&P fell from 1,374 to 1,340 that was nearly a 3% dip before clearing 1,400 by the end of March. The run from 1,340 to 1,410 was over a 4% gain in 3 weeks.
This is how everyone wants the current market to play out over the next few weeks but we worry any “dip” could become a full-blown correction. The pros (and rookies) are trying to “time” this market but as you can see from all of our aforementioned comments, it is more important to predict where the market will in 2-3 months and not on a daily basis.
The President’s State of the Union address did little to soothe fears on the upcoming sequester cuts that will take place on March 1 which is just 10 days away. Air Force One took the head zombie down to Florida over the 3-day weekend to golf with Tiger as his A-List grows but the President seems unwilling to cut spending the way the Republicans’ would like.
Some of the water-cooler talk is that the sequester cuts aren’t a big deal and that they should happen. To us, it is a big deal that could cost the economy well over a million jobs (that will need to be replaced) and the automatic spending cuts could trim the country’s Gross Domestic Product (GDP) by more than a full percentage point. There is grapevine talk Obama is set to release a $1.5 trillion budget plan but will it gain traction in 10 days is the question.
Our best guess is the Republicans are not going to compromise by March 1 and the question will then be how much pain can they take. Once the sequester cuts begin, at some point they will have to compromise with the Democrats and Obama to come up with a different deficit reduction plan. A week or so of seeing the dominoes start to fall will cause some panic and this is when we would expect a “new deal” or compromise.
If the sequester cuts play out like we have planned then we could continue to see a higher drifting market until the end of February then a pullback into the first or second week of March. There could be a rebound rally to new highs that could last into April but the current budget resolution expires at the end of March and a new one will need to be in place by mid-April. In May, the Debt Ceiling debate will come back into focus.
We talked about the Monday/ Friday closes last week and we mentioned the bulls needed to get off to a good start if there was going to be a break to new highs. The S&P fell both Monday and on Friday which makes Tuesday and this Friday even more important. Although the losses were small, it was the first time in a month the index has fallen on a M/F.
This week, China will be back in the news following a week long layoff and there will be some important economic news here at home we will have to watch for. The G20 comments suggested there is currently not a currency war but currency worries and the Fed’s Minutes from January will hit mid-week.
We wanted to touch on the metals real quick and we will wrap things up.
Gold has been dropping like a rock and could test $1,550 if the dollar continues to rise and the $1,600 level fails as support. There may be a buying opportunity if this level holds. Otherwise, wait for lower prices because it could get another 5%-10% cheaper over the next 6-12 months if $1,550 fails to hold.
As far as Silver, it has dipped below $30 and we would love to see it come back down to $27-$26. A drop to $23 is unlikely but would represent an incredible buying opportunity and a great way to play a rising dollar and inflation.
With some of the indexes still fighting to reach new 52-week highs, the market does feel as though it is topping out but it will be important we remain patient.
The downside targets we gave you from last week and reviewed this week are still in play as well as some of the upside targets we gave you a month ago. This means the market’s upside appears to be more limited over the near-term than does the downside but support is holding and something we must respect.” (from 2/18/2013 Weekly Wrap Update)…
The bulls were able to crack another layer of resistance to start the shortened week but the bears took down 2 levels of support following Tuesday’s short-lived rally. The bears did the bulk of their damage on Wednesday following the FOMC minutes as the market suffered its worst day of the year. The follow through on Thursday gave the bears the weekly lead going into Friday’s session.
The steep losses were a reminder of what could be coming down the road but the bulls were able to rebound after one of the Fed zombies said there was no way they were easing off the QE gas pedal anytime soon. What the Fed head really wanted to say was “don’t fight the Fed” but Wall Street got the message as the indexes recovered much of their losses to finish mixed for the second-straight week.
The Dow jumped 120 points, or 0.9%, to end at 14,000 even. The blue-chips cleared this level to start the week and closed Tuesday at 14,035. Friday was the fourth time the index has held 14K in February but Wednesday’s triple-digit drop gave us a good clue our downside target of 13,800 would be tested. Thursday’s low was 13,834 and a close below this level would get 13,600 and the 50-day MA back in play. The bulls still have a run to 14,200 on their radar and the all-time high of 14,196 but another break below 13,850 would be confirmation that might not be happening. The Dow started Monday at 13,981 and advanced 19, or 0.1%, for the week. Year-to-date, the index is up 896 points, or 6.9%.
The S&P 500 soared 13 points, or 0.9%, to settle at 1,515. The index came into the week looking to clear 1,525 and got it on Tuesday’s close of 1,530. This gave Wall Street hope there would be a run to 1,550-1,575 but the bears easily pushed our 1,510 downside target on Wednesday’s close of 1,511. We said if this level were breeched then there would be a test to 1,500 and that 1,495 needed to hold. Thursday’s low was 1,497 and the close was 1,502. On Friday, the index cleared 1,510 again and will need to hurdle 1,525 this week to keep 1,550 in play. A close below 1,495 will get the bears looking at 1,475-1,450 on another leg lower. The S&P 500 came into the week just under 1,520 and slipped 4 points, or 0.3%, by Friday’s close. For 2013, the S&P 500 is higher by 90 points, or 6.3%.
The Nasdaq surged 30 points, or 1%, to close at 3,161. Tech came into the week struggling to clear 3,200 but was able to on Tuesday’s pop to 3,213. We said there could be a push to 3,225-3250 if this level was cleared on the close but the victory was short-lived. Wednesday’s low was 3,163 and we said if 3,175 failed to hold there would be a test to 3,150. We also said last week if 3,150 failed there could be a further dip to 3,125-3,100 and both of these levels were tested on Thursday’s low of 3,118. Friday’s action was short-covering and the close below 3,175 still favors the bears unless 3,200 is cleared on the close again. The Nasdaq was at 3,192 coming into Tuesday’s session and was down 30 points, or 1%, for the week. YTD, Tech has advanced 143 points, or 4.7%, but is becoming the weakest link for the bulls.
The Russell 2000 popped 11 points higher, or 1.2%, to finish at 916 on Friday. We mentioned last week the small-caps could make a run to 932-933 and Tuesday’s high and close was 932 on the dot. We also warned that a back test to 916 and then 910 was a good possibility following one last possible push before 900 would be back upon us. Wednesday’s low was 913.50 and Thursday’s bottom was 900.48. The bulls were looking to regain 910 on Friday and they did with ease but 925 and 932 will be the real tests. A drop below 900 spells trouble down to 890 and then 870 on panic selling. The Russell 2000 came into the week at 923 and fell 7 points, or 0.8%, before the weekend hit. The index is up 67 points, or 7.9%, so far in 2013.
Here is last week’s chart for the small-caps:
The S&P Volatility Index ($VIX, 14.17, down 1.05) was at 12.46 coming into the week and fell to a low of 12.08 on Tuesday. We started telling you in December the VIX was headed to the low teens and that last week’s chart showed a test to 12 coming. For much of February, we have also said to wait for a close back above 15 before getting bearish and we lowered that target to 14.75 last week. Wednesday’s high was 14.68 and where the VIX closed. Thursday’s close at 15.22 was an eye-opener. The next level we said to watch following the close above 15 was 17.50 but Friday’s close back below 15 needs to be watched. A close below 13.50 this week could be a clue last week was a bear trap.
The circus is back in town and this week will be full of zombie talk not only here at home but from across the pond as well. The Fed zombies, White House zombies, and overseas zombies will play an important role in shaping the market’s direction over the next couple of weeks. Last Wednesday was an “outside day” on the charts and although the S&P continues to ride an 8-week win streak, there could be a rush to the elevators if support is tested again.
There have been a slew of breakdowns in individual stocks and while the indexes held up, last Wednesday and Thursday’s pullbacks were vicious and what we warn about when bull markets go wrong. The Fed said all the right things on Friday and soothed fears they might end “quantitative easing” sooner rather than later and it was game on. One Fed head said he expects the economy to grow by 3% in 2013 but that view is probably 1%, if not 2%, ahead of most expectations.
Bernanke will speak this week and he will need to back up some of the bullish comments made by his buddies. Big Ben can swing the markets and if he looks nervous or shaky it favors the bears. A confident and upbeat Bernanke would be a blessing for the bulls. The overwhelming positive Fed comments from last week should have led to new highs but it didn’t as Tuesday’s peaks were well out of reach.
Another zombie event that will weigh on Monday’s action are the results from Italy’s elections. There are four knuckleheads vying for control of the country and two of them are criminals. Literally. Mario Monti is the current voice for the Italians but he will need to win a majority of the vote to stay in house. If not, he will have to team up with the less of three evils and that could cause some major concerns over Italy’s recovery and its dedication to the euro. Some of the other candidates want to cut the austerity measures that are currently in place and property taxes that would give any zombie a lift in the public polls. The results are expected on Monday and they will weigh on Wall Street.
Of course, the sequester cuts here at home are the main event but the sentiment isn’t as fearful as the “Fiscal Cliff” talks were. There are a lot of investors and Wall Street pros that seem to be shrugging off the March 1 deadline, and in the scheme of things, the $800 billion is insignificant as it is less than 2% of the deficit. However, if the zombies fail to reach an agreement we view it as more political gridlock that will impact the Defense industry and more jobs (and it will be a big deal).
President Obama was the one who agreed to the sequester cuts back in August 2011 and we remember how the market reacted up until there was an agreement. It tanked. The market also took a big dip in December on the Fiscal Cliff worries but rebounded strongly when the can was kicked into May at the beginning of the year. There could be a replay of a pullback and then a rebound on any positive news or actual cuts but buying any dips this week seems risky.
Our chart work for gold has been money over the past 6 months and last week we told you there could be a test to $1,550. Bingo.
Copper also took a hit and could be the story to watch going forward. The strength or weakness in Copper often gives an overall snapshot on the global economy and it too is breaking down. The metal has been in a solid multiyear uptrend but a close below $3.50 could have a nasty impact on the market.
Silver is below $30 and we are ready to buy more when and if it falls to $26. For those of you who have followed us for a few years know we like to buy Silver at these levels and we cannot stress that you should too. While silver is relatively easy to buy, we still believe the metal is undervalued and there is a shortage. The U.S. mint ran out of silver eagles in January and while they now have them in stock, the spot is still $2-$3 higher depending on when you buy. It still means you can get silver for under $30 an ounce but most people don’t realize there is a silver shortage and that it will be at $50 in 5 years.
We have been super bullish since December but last week we started to take a few short positions. For the Weekly Wrap, we sold some call options into strength and we exited a few positions after our Hard Stops were triggered. With all of the indexes triggering our short to intermediate targets FROM DECEMBER, we said there seems to be more risk to the downside than the upside over the next few weeks. This doesn’t mean the market can’t go higher as we did get higher highs to start the week but we also saw lower lows and lower highs to end the week.
As we head to press, futures are showing a slightly higher open for Monday. Dow futures are up 4 points to 13,985 while the S&P 500 futures are higher by a point to 1,515. The Nasdaq 100 futures are advancing 2 points to 2,737.
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Key of Technicals Used In Following Articles
2. Tower International (TOWR) – Feel the Power
By Michael Bryant
As the automotive industry comes back, suppliers of parts will benefit. One supplier, Tower International (TOWR, $11.94, up $0.01), however has not rallied much since its IPO.
Founded in 1993 as R.J. Tower Corporation and later renamed Tower International, the company grew quickly in the 1990s through acquisitions in North America, South America, Europe, and Asia. In February 2005, lower production volumes, rising steel prices, and an unsustainable debt caused it to reorganize under Chapter 11 bankruptcy.
The company closed 16 plants and consolidated production into existing facilities to improve productivity. It also negotiated settlements with its U.S.-based labor unions, sold non-core businesses, and broadened its customer base with international automakers. In July 2007, it emerged from bankruptcy. It filed to go public in March 2010, intending to raise up to $122 million to pay off some of its debt. However, it could only raise $81.25 million by selling more than 6.25 million shares in its October 16, 2010 IPO.
Detroit 3 OEMs = Ford, General Motors, and Chrysler
This is good news since Ford, VW, and Hyundai/Kia are doing well. In January, Ford reported a 21.8% increase in sales, while GM and Chrysler reported a 15.9% and 16.4% increase in sales, respectively. Ford’s sales of 166,051 vehicles were its best January since 2006. Hyundai Motor America said it had January sales of 43,713, up 2.4%, setting an all-time record for the month. Kia Motors America also reported a record January, as its 36,302 sales were up 2.2% from a year ago. Volkswagen Group of America said its 29,018 sales in January was up 6.7% over the same month a year ago, as the German automaker had its best January since 1974.
Tower International reported 4th quarter earnings on Friday, February 15th. For the quarter ending December 31st, it reported revenue of $508.1 million, beating analysts’ estimates of $502.4 million, but down from $614.7 million a year ago. Earnings came in at $0.05 per share, beating estimates of -$0.10 per share, but down from $0.33 per share a year ago. Free cash flow in the 4th quarter was $29 million. Liquidity at year-end was $207 million.
From the revenue graph, it seems that revenue is at a trough. This is a good sign for the stock. Analysts estimate that both earnings and revenue will pick up.
At $11.94, the stock is below its low target of $12.00 made by the 3 analysts recorded by Thomson/First Call. Mean target is $13.67, median target is $14.00, and high target is $15.00. Using a scale of 1.0 as a strong buy and 5.0 as a sell, the average rating of the stock was 1.8, up from 2.0 a week ago.
|
|
Current Month |
Last Month |
Two Months Ago |
Three Months Ago |
|
Strong Buy |
3 |
3 |
2 |
3 |
|
Buy |
0 |
0 |
0 |
1 |
|
Hold |
1 |
1 |
2 |
2 |
|
Underperform |
1 |
1 |
1 |
1 |
|
Sell |
0 |
0 |
0 |
0 |
Although the stock could fall some more in the next month, we think the stock will be higher over the next 6-12 months.
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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 2/22/13 close)
By Catherine Tierney
Monday
3D Systems (DDD, $56.95, up $20.6), Aegion (AEGN, $23.47, up $0.21), Allied Nevada Gold (ANV, $19.43, down $1.34), Almost Family (AFAM, $20.82, up $0.21), Amira Nature (ANFI, $7.00, up $0.22 ), AmSurg (AMSG, $31.85, down $0.06), Aqua America (WTR, $28.93, up $0.36), Arbitron (ARB, $46.92, up $0.02), Ariad (ARIA, $21.21, up $0.24), Art’s-Way Manufacturing (ARTW, $6.75, Flat), Autodesk, (ADSK, $37.91, down $0.06), Big Lots (BIG, $33.42, down $0.20), Bravo Brio Restaurant (BBRG, $14.95, up $0.04), Caesars Entertainment (CZR, $11.59, up $0.41), Carriage (CSV, $16.33, up $0.94), Chemtura (CHMT, $22.77, up $0.52), Chuy’s (CHUY, $27.98, up $0.04), CommonWealth REIT (CWH, $18.03, up $0.36), Cooper Tire & Rubber (CTB, $25.39, up $0.30), Copart (CPRT, $34.42, down $0.16), CyberOptics (CYBE, $6.50, Flat), Dealertrack (TRAK, $33.03, up $0.17), Dendreon (DNDN, $5.67, down $0.09), Diamondback (FANG, $20.98, up $0.25), Donaldson (DCI, $36.45, down $0.23), Dresser-Rand (DRC, $60.62, up $0.41), Dril-Quip (DRQ, $81.88, up $0.57), Eagle Rock Energy (EROC, $9.13, up $0.06), Endocyte (ECYT, $9.78, up $0.07), FirstEnergy (FE, $40.54, up $0.64), FXCM (FXCM, $13.32, Flat), General Cable (BGC, $34.17, up $0.88), Global Indemnity (GBLI, $21.33, up $0.50), Great Lakes Dredge & Dock (GLDD, $9.65, up $0.15), Greatbatch, (GB, $26.82, down $0.07), Gulf Island Fabrication (GIFI, $25.06, up $0.88), Gulfmark Offshore (GLF, $39.33, up $0.03), Halozyme Therapeutics (HALO, $5.91, up $0.10), Harvard Bioscience (HBIO, $5.79, up $0.11), Haverty Furniture (HVT, $17.10, up $0.19), Health Care REIT (HCN, $64.60, up $0.55), Hertz Global (HTZ, $18.73, up $0.27), The Howard Hughes (HHC, $76.95, up $0.69), Impax (IPXL, $19.53, down $0.02), International Bancshares (IBOC, $20.58, up $0.35), Kaman (KAMN, $36.03, up $0.40), Kansas City Life Insurance (KCLI, $37.87, up $0.56), Kayak (KYAK, $39.96, up $0.14), Kindred (KND, $11.51, up $0.06), Kosmos (KOS, $10.27, down $0.03), Legacy Reserves (LGCY, $26.18, up $0.43), Loral Space (LORL, $58.91, up $0.87), Lowe’s (LOW, $37.67, Flat), Mercadolibre (MELI, $85.12, up $0.90), Merrimack (MACK, $6.32, down $0.04), Mindray Medical (MR, $36.21, up $0.51), Oasis Petroleum (OAS, $36.12, up $0.40), ONEOK (OKE, $47.41, up $0.55), ONEOK (OKS, $58.43, down $0.50), Phoenix (PNX, $28.84, down $0.97), POZEN (POZN, $6.29, down $0.02), PRGX (PRGX, $6.89, up $0.14), Rosetta (ROSE, $50.62, up $1.20), Sabine Royalty (SBR, $46.60, up $1.60), Salem (SALM, $6.92, up $0.36), Scorpio Tankers (STNG, $8.50, up $0.23), Seacor (CKH, $70.89, up $0.35), Ship Finance (SFL, $16.27, down $0.05), Solar (SLRC, $25.29, up $0.31), Solar Senior (SUNS, $18.61, up $0.06), Stifel Financial (SF, $38.04, up $0.41), Stone (SGY, $21.18, up $0.56), Sykes (SYKE, $15.52, up $0.10), Systemax (SYX, $10.68, up $0.13), TGC (TGE, $9.20, up $0.29), Titan (TWI, $25.81, up $0.30), Tower (TWGP, $20.00, up $0.24), Tumi (TUMI, $23.03, up $0.63), Union (UNB, $20.13, down $0.06), URS (URS, $41.30, down $0.07), USA Compression (USAC, $18.34, up $0.31), USA Mobility (USMO, $11.66, up $0.39), Veeco (VECO, $29.65, up $0.11), VIVUS (VVUS, $12.58, down $0.30)
Tuesday
A. M. Castle (CAS, $17.86, up $0.24), Accelrys (ACCL, $9.84, up $0.25), Akorn (AKRX, $12.77, down $0.11), AMC (AMCX, $59.04, up $0.07), American Tower (AMT, $74.52, up $0.74), American Water Works (AWK, $39.82, up $0.37), Astec (ASTE, $35.15, up $0.41), AutoZone (AZO, $385.20, up $7.64), Auxilium (AUXL, $16.66, up $0.07), Avago (AVGO, $34.09, up $0.42), Avid (AVID, $7.66, up $0.04), Big 5 Sporting Goods (BGFV, $14.80, up $0.86), Bio-Rad (BIO, $116.97, up $0.55), Boise (BZ, $8.62, up $0.47), Campus Crest (CCG, $12.90, up $0.06), Carrizo Oil & Gas (CRZO, $21.41, up $0.95), CDI (CDI, $17.46, up $0.71), Cobalt (CIE, $24.03, up $0.25), Compressco (GSJK, $19.15, up $0.45), Cracker Barrel (CBRL, $67.34, up $0.98), Crestwood Midstream (CMLP, $25.80, Flat), DigitalGlobe (DGI, $26.31, down $0.21), DreamWorks (DWA, $17.07, up $0.07), Dycom (DY, $21.40, up $0.10), Ecolab (ECL, $74.70, up $0.72), Edison (EIX, $46.86, up $0.45), EMCOR (EME, $38.42, up $0.54), Enphase (ENPH, $5.24, Flat), EPR (EPR, $47.39, up $0.18), Erie Indemnity (ERIE, $73.85, up $1.41), The E. W. Scripps (SSP, $11.36, up $0.01), Exactech (EXAC, $18.50, up $0.19), Expeditors (EXPD, $40.81, up $0.06), Exterran (EXH, $23.75, up $0.03), Exterran (EXLP, $23.01, down $0.20), Fairpoint (FRP, $8.50, up $0.16), First Solar (FSLR, $33.81, down $0.60), Giant (GA, $5.91, up $0.16), Golar LNG (GLNG, $38.45, up $0.88), Golar (GMLP, $30.19, up $0.23), GP Strategies (GPX, $21.98, up $0.28), GrafTech (GTI, $8.75, down $0.10), Gran Tierra (GTE, $6.11, up $0.29), Guidewire (GWRE, $31.98, up $0.35), Gulfport (GPOR, $36.91, up $0.08), Healthstream (HSTM, $22.09, down $0.07), Heidrick & Struggles (HSII, $16.84, up $0.19), HollyFrontier (HFC, $55.50, up $1.00), The Home Depot (HD, $65.58, up $1.20), Infinity Property (IPCC, $58.34, up $0.13), iStar Financial (SFI, $10.10, up $0.11), Jazz (JAZZ, $56.50, up $0.86), Kadant (KAI, $27.92, up $0.03), LeMaitre (LMAT, $6.04, up $0.08), Live Nation (LYV, $10.30, up $0.05), Lydall (LDL, $15.60, up $0.36), Macy’s (M, $39.08, down $0.25), MAKO Surgical (MAKO, $11.27, down $0.14), MetroPCS (PCS, $9.95, down $0.13), National Interstate (NATL, $33.66, up $0.26), NuVasive (NUVA, $17.85, up $0.06), Ormat (ORA, $21.64, up $0.71), Papa John’s (PZZA, $56.57, up $0.53), Pennsylvania Real Estate Investment (PEI, $18.93, up $0.74), priceline.com (PCLN, $684.70, up $1.37), Questcor (QCOR, $30.90, down $0.18), R.R. Donnelley & Sons (RRD, $9.82, up $0.15), Range (RRC, $71.71, up $1.56), Rex Energy (REXX, $13.93, up $0.25), Rimage (RIMG, $6.76, down $0.03), Saks (SKS, $11.23, down $0.06), Sempra Energy (SRE, $76.79, up $0.96), Southwest Gas (SWX, $45.25, up $0.79), Spreadtrum (SPRD, $16.07, up $0.07), Steven Madden (SHOO, $45.12, up $0.63), Summit Hotel (INN, $9.27, up $0.05), Superior (SPN, $26.20, down $0.07), Telephone & Data (TDS, $25.80, up $0.19), TeleTech. (TTEC, $18.26, up $0.12), Tenet Healthcare (THC, $39.31, up $0.32), TiVo (TIVO, $12.93, $0.27), TriMas (TRS, $30.54, up $0.61), U.S. Silica (SLCA, $18.28, up $0.47), United Natural (UNFI, $54.65, up $0.73), United States Cellular (USM, $39.20, up $0.06), United Therapeutics (UTHR, $57.75, up $0.80), UNS (UNS, $46.68, up $0.40), Verisk Analytics (VRSK, $54.44, up $0.71), Vicor (VICR, $5.15, down $0.07), Vitamin Shoppe (VSI, $64.43, up $1.67), Vornado Realty (VNO, $85.34, up $1.34), W&T Offshore (WTI, $16.38, up $0.31), Weatherford (WFT, $12.63, up $0.22), ZAGG (ZAGG, $7.44, up $0.23)
Wednesday
Accretive (AH, $12.24, down $0.03), Aegean Marine Petroleum (ANW, $7.13, down $0.22), The AES Corporation (AES, $11.23, up $0.17), AFC (AFCE, $31.35, up $0.09), Agree Realty (ADC, $28.45, up $0.03), American (AMSWA, $8.67, up $0.17), Amerisafe (AMSF, $29.40, up $0.30), Anika (ANIK, $10.70, up $0.11), Apollo Commercial Real Estate (ARI, $17.37, up $0.21), Ares Capital (ARCC, $18.30, up $0.17), Ashford Hospitality (AHT, $11.90, up $0.16), Assured Guaranty (AGO, $18.80, up $0.21), AutoNavi (AMAP, $11.08, up $0.24), BroadSoft (BSFT, $33.11, up $1.19), California Water (CWT, $20.30, up $0.20), Carter’s (CRI, $58.41, down $0.25), Cbeyond (CBEY, $7.78, up $0.01), CenterPoint (CNP, $20.90, up $0.23), Central European Media (CETV, $5.90, up $0.02), Chicago Bridge & Iron (CBI, $54.01, up $1.12), China Yuchai (CYD, $16.79, up $0.12), Churchill Downs (CHDN, $66.37, up $0.68), CombiMatrix (CBMX, $5.27, down $1.48), Continental (CLR, $83.89, up $2.67), CoStar (CSGP, $96.40, up $0.50), CVR (UAN, $25.15, down $0.18), Darling (DAR, $16.94, up $0.27), DCP Midstream (DPM, $44.40, down $0.91), Deltic Timber (DEL, $72.66, up $1.44), DineEquity (DIN, $74.53, up $0.49), Dollar Tree (DLTR, $41.89, up $0.43), DXP (DXPE, $58.40, up $0.76), Dynamic Materials (BOOM, $17.33, up $0.12), Employers (EIG, $21.62, up $0.26), Endologix (ELGX, $15.36, up $0.07), EPAM (EPAM, $21.06, up $0.21), ExamWorks (EXAM, $14.39, down $0.09), Excel (EXL, $12.69, up $0.14), FARO (FARO, $36.48, up $0.38), Federal-Mogul (FDML, $9.12, up $0.28), Fisher (FSCI, $37.46, up $0.19), Fortegra (FRF, $9.11, up $0.04), Fortress (FIG, $6.15, up $0.14), GasLog (GLOG, $12.86, up $0.03), Geeknet (GKNT, $16.40, up $0.69), Globus Medical (GMED, $13.36, up $0.34), Greif (GEF, $51.16, up $1.04), Groupon, (GRPN, $5.72, down $0.08), Heartware (HTWR, $87.86, up $1.13), Hospitality Properties (HPT, $26.75, up $0.11), Huntington Ingalls (HII, $44.95, up $0.32), ICF (ICFI, $24.75, up $0.12), Insulet (PODD, $21.32, up $0.14), Interval Leisure (IILG, $20.70, up $0.18), Interxion (INXN, $22.81, down $0.15), ITC (ITC, $82.11, up $0.96), ITT (ITT, $25.79, up $0.38), J. C. Penney (JCP, $22.47, up $0.92), James Hardie (JHX, $49.73, up $0.90), Jiayuan.com (DATE, $5.47, down $0.02), Joy Global (JOY, $63.02, up $0.25), Keryx (KERX, $6.70, up $0.16), Kraton (KRA, $27.00, up $1.03), Lamar (LAMR, $43.70, down $0.15), Liberty (LINTA, $21.33, up $0.51), Limited (LTD, $43.48, down $0.03), LTX-Credence (LTXC, $6.55, up $0.05), Market Leader (LEDR, $7.62, down $0.27), MarkWest (MWE, $56.69, up $0.24), Martin Midstream (MMLP, $34.32, up $0.42), MBIA (MBI, $10.10, down $0.13), MGC (MGCD, $6.30, Flat), Monster Beverage (MNST, $50.69, up $0.93), Mylan (MYL, $28.98, up $0.17), NRG (NRG, $24.03, up $0.08), OGE (OGE, $59.80, up $0.66), Pacific Drilling (PACD, $9.58, down $0.03), Pall (PLL, $67.70, up $0.49), PDC (PDCE, $43.36, up $0.70), Quaker (KWR, $58.19, up $0.65), Regional Management (RM, $17.48, up $0.01), Republic Airways (RJET, $9.66, down $0.05), Sabra Health (SBRA, $26.59, up $0.18), STAAR (STAA, $5.65, up $0.05), Starwood (STWD, $26.29, up $0.34), Steiner (STNR, $44.77, up $0.65), Stillwater Mining (SWC, $12.99, up $0.28), Strategic Hotels & Resorts (BEE, $7.56, up $0.11), Sturm, Ruger (RGR, $53.67, up $2.02), Susser (SUSS, $43.85, up $0.10), Target (TGT, $63.60, up $0.20), The Babcock & Wilcox (BWC, $26.48, up $0.03), The TJX Companies (TJX, $44.22, up $0.01), Transcept (TSPT, $6.00, down $0.07), United Insurance (UIHC, $5.50, up $0.18), Universal Display (PANL, $32.77, up $1.22), ViroPharma (VPHM, $25.25, down $0.19), Western Gas (WES, $55.40, down $0.68), Whiting (WLL, $49.62, up $1.49), XPO (XPO, $17.30, down $0.02)
Thursday
ACI Worldwide (ACIW, $47.32, up $0.93), Acme United (ACU, $12.15, up $0.04), Air Lease (AL, $26.69, up $0.22), Air Methods (AIRM, $43.77, up $1.16), Amarin (AMRN, $8.24, up $0.05), Amedisys (AMED, $11.30, down $0.39), American Public Education (APEI, $41.20, up $0.68), American Realty (ARCP, $14.50, up $0.35), American States Water (AWR, $52.39, up $0.40), Ansys (ANSS, $76.38, up $0.69), AtriCure (ATRC, $8.54, up $0.29), Barnes & Noble (BKS, $13.51, up $0.32), Berry (BRY, $46.95, up $0.93), Best Buy (BBY, $17.02, down $0.39), Body Central (BODY, $7.83, down $0.07), Boulder Brands (BDBD, $12.28, down $0.21), Breitburn (BBEP, $19.56, up $0.22), Cablevision (CVC, $15.13, up $0.70), Capital Product (CPLP, $7.80, up $0.06), Carrols Restaurant (TAST, $5.88, up $0.07), Catamaran (CTRX, $54.65, up $0.40), Cempra (CEMP, $6.61, up $0.24), Chart (GTLS, $68.46, up $0.26), Chico’s (CHS, $16.75, down $0.02), CIRCOR (CIR, $42.65, up $0.96), Clean Energy (CLNE, $12.35, up $0.03), Clovis Oncology (CLVS, $18.76, up $0.11), Comfort (FIX, $12.77, up $0.22), Copano (CPNO, $38.28, up $0.11), Deckers (DECK, $40.56, down $0.28), Diamondrock (DRH, $8.94, up $0.19), Domino’s (DPZ, $46.07, up $1.45), Einstein Noah (BAGL, $13.32, up $0.19), Emeritus (ESC, $28.26, up $0.46), Endo Health (ENDP, $28.04, up $0.04), Esterline (ESL, $65.75, up $0.20), Ferro (FOE, $5.58, up $0.29), Fiesta (FRGI, $20.13, down $0.33), FTI (FCN, $34.93, up $0.27), Gap (GPS, $31.96, down $0.09), Granite (GVA, $36.25, up $0.44), Great Plains (GXP, $22.14, up $0.13), Halc (HK, $7.45, up $0.18), Hercules (HTGC, $12.51, up $0.20), Immersion (IMMR, $6.96, up $0.12), Integrys (TEG, $56.64, up $0.29), Inventure (SNAK, $7.24, up $0.24), Iridium (IRDM, $6.66, down $0.06), Iron Mountain (IRM, $34.53, up $0.10), Isis (ISIS, $14.61, up $0.48), Kodiak Oil & Gas (KOG, $8.87, up $0.07), Kohl’s (KSS, $46.19, down $0.32), LKQ (LKQ, $22.48, up $0.49), LSB (LXU, $39.38, up $0.67), Lumos (LMOS, $10.77, up $0.20), Magellan Health (MGLN, $50.49, down $0.86), MasTec (MTZ, $30.61, up $0.69), Materion (MTRN, $28.72, up $0.86), McDermott (MDR, $12.94, up $0.13), Medivation (MDVN, $49.51, down $0.32), Mentor Graphics (MENT, $17.48, up $0.13), Methode (MEI, $12.45, up $0.06), MOCON (MOCO, $13.94, up $0.01), Molycorp (MCP, $6.63, up $0.01), Morgans (MHGC, $5.00, up $0.01), Nash Finch (NAFC, $20.23, down $0.31), Natus Medical (BABY, $12.00, down $0.08), Nektar (NKTR, $9.36, up $0.33), Nelnet (NNI, $32.79, up $0.28), Newcastle (NCT, $10.86, up $0.21), NII (NIHD, $5.58, down $0.01), Northern Oil and Gas. (NOG, $14.13, up $0.27), NTELOS (NTLS, $13.56, up $0.39), Nxstage Medical (NXTM, $11.27, Flat), Ocwen (OCN, $37.52, down $0.56), OmniVision (OVTI, $15.36, up $0.31), Optimer (OPTR, $11.01, down $0.18), Orion Marine (ORN, $8.71, up $0.20), Palo Alto (PANW, $57.29, up $2.67), PCM (PCMI, $7.29, up $0.18), Performant (PFMT, $13.02, up $0.07), PICO (PICO, $22.04, up $0.60), Procera (PKT, $17.43, up $0.14), Progressive (PGR, $24.72, up $0.24), Red Lion (RLH, $7.24, down $0.06), Rhino (RNO, $13.93, up $0.09), Rosetta Stone (RST, $12.53, up $0.06), Roundy’s (RNDY, $5.88, up $0.08), Rowan (RDC, $35.17, up $0.18), salesforce.com (CRM, $170.56, up $2.01), Salix (SLXP, $49.37, up $0.57), SandRidge (SD, $5.96, up $0.08), SeaDrill (SDRL, $36.69, up $0.28), Sears (SHLD, $47.19, down $0.17), Seaspan (SSW, $19.33, up $0.36), SemGroup (SEMG, $46.68, up $0.95), Shenandoah (SHEN, $15.14, up $0.93), Silver Bay Realty (SBY, $20.55, up $0.78), Sotheby’s (BID, $37.65, up $0.11), South Jersey (SJI, $55.26, up $0.49), Splunk (SPLK, $35.01, up $0.97), The St. Joe Company (JOE, $22.55, up $0.15), STEC (STEC, $5.05, down $0.16), Tesco (TESO, $12.60, up $0.11), TETRA (TTI, $9.22, up $0.06), The Wendy’s Company (WEN, $5.48, Flat), Universal Health (UHS, $57.99, up $0.96), Visteon (VC, $57.00, up $1.24), Vitacost.com (VITC, $7.26, up $0.04), Westar Energy (WR, $31.11, up $0.12), Western Refining (WNR, $35.09, up $0.99), Weyco (WEYS, $23.13, up $0.16), World Wrestling (WWE, $8.59, up $0.13), WPX Energy (WPX, $14.90, up $0.29), XO (XOXO, $9.05, down $0.01), Youku Tudou (YOKU, $20.67, up $0.07)
Friday
3SBio (SSRX, $14.69, down $0.03), BP Prudhoe Bay Royalty (BPT, $80.12, up $1.00), Crosstex (XTXI, $17.81, up $0.65), Crosstex Energy (XTEX, $17.50, down $0.16), Dominion Resources Black Warrior (DOM, $5.60, Flat), Duff & Phelps (DUF, $15.55, up $0.02), EV Energy (EVEP, $54.63, up $0.76), Exelis (XLS, $10.76, up $0.04), Exlservice (EXLS, $30.22, up $0.13), Foster Wheeler (FWLT, $24.72, down $0.06), Gentherm (THRM, $15.80, up $0.18), Northwest Natural Gas (NWN, $45.85, up $0.25), Pepco (POM, $20.26, up $0.23), PNM (PNM, $22.10, up $0.22), Repligen (RGEN, $6.28, up $0.30), Sandridge Mississippian (SDR, $14.26, down $0.34), Stoneridge (SRI, $6.50, down $0.10), Superior Industries (SUP, $21.66, up $0.55), Tilly’s (TLYS, $13.76, down $0.02), Vanguard Natural (VNR, $27.61, up $0.26), Westmoreland Coal (WLB, $10.06, down $0.04), WPP (WPPGY, $79.37, up $0.53)
= = = = = = = = = = = = =
4. Weekly Wrap Covered Call Portfolio Update (Closing prices as of 2/22/13)
Our Weekly Wrap Closed Trade Track Record for 2013 is 6-1 (50-3, overall since 2011). Our trade in XTXI was stopped out on Thursday.
Tower International (TOWR, $11.94, up $0.01)
Original Entry Price: $12.15 (2/19/13)
Lowered Price from Selling Options: No options available
Exit Target: $15+
Return: -2%
Stop Target: $9.50
Action: The 52-week high for Tower International is at $13.73 and shares traded up to $12.80 last week. Short-term support is at $11 but major support is at $10. A close above $12.80 should lead to a test to new highs.
We recommended buying TOWR at $12.15 on 2/19/13.
Cypress Semiconductor (CY, $10.12, up $0.17)
Original Entry Price: $9.97 (2/13/13)
Lowered Price from Selling Options: $9.97
Exit Target: $12+
Return: 2%
Stop Target: $8
Action: Shares traded to a high of $10.60 midweek but were back below $10 on Thursday’s close of $9.95. The 100-day MA is at $10.20 and that was Monday’s peak. The 50-day MA is at $10.41 and the 200-day is at $11.12. We will need to shares clear these levels before we say they have momentum and where we would like to sell a options against the position. Short-term support is at $9.75 but a break below this level gets $8.75 in play.
We recommended buying CY at $9.97 on 2/13/13.
Keryx Biopharmaceuticals (KERX, $6.70, up $0.16)
Original Entry Price: $7.22 (2/12/13)
Lowered Price from Selling Options: $7.22
Exit Target: $10+
Return: -7%
Stop Target: None
Action: Support is trying to hold at $6.50 but the dip to $6.37 last week was slightly bearish. We are expecting a move up to $8 over the near-term but there is risk down to $4.50. Earnings are due out on Wednesday and will be the next catalyst that takes shares higher or lower.
We recommended buying KERX at $7.22 on 2/12/13.
Crosstex Energy (XTXI, $17.81, up $0.65)
Original Entry Price: $17.20 (2/6/13)
Lowered Price from Selling Options: $17.20
Exit Target: $20-$22 (stopped out at $17.30 on 2/21/13)
Return: 1%
Stop Target: $17.30 (Hard Stop)
Action: Our Hard Stop of $17.30 was triggered on Thursday’s drop to $16.80 as volatility picked up ahead of earnings. Plus, with all of the headwinds the market could face this week, we felt it was also best to trim the position instead of risk the chance of a loss. We will be watching shares this week and we will listen to the earnings call to see how the results were.
We recommended buying XTXI at $17.20 on 2/6/13.
Yahoo (YHOO, $21.22, up $0.39)
April 22 calls (YHOO130420C00022000, $0.50, up $0.11)
Original Entry Price: $19.81 (2/6/13)
Lowered Price from Selling Options: $19.16
Exit Target: $25
Return: 11%
Stop Target: $14
Action: Shares traded up to $21.45 on Wednesday and held up well during the market’s pullback as the low checked in at $20.74 on Thursday. Support is at $20 and the 50-day MA with additional help at $18.50. The 52-week is $21.43 and a close above this level would be breakout territory.
We recommended buying Yahoo at $19.81 on 2/6/13.
On 2/13/13 we sold the April 22 calls for 65 cents which lowered our cost basis to $19.16. If we are called-away at $22 in April, the trade will make 15%.
Solazyme (SZYM, $8.48, up $0.05)
Original Entry Price: $12.35 (8/9/12)
Lowered Price from Selling Options: $11.55
Exit Target: $15+
Return: -27%
Stop Target: $5
Action: Resistance at $9 was tested to start the week but shares dipped to a low of $8.06 on Thursday. Support is at $8 followed by $7.50. A close above $9.50 would be bullish and double-digits will come on a test to the 200-day MA.
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, $12.58, down $0.30)
Original Entry Price: $22.70 (7/27/12)
Lowered Price from Selling Options: $20.90
Exit Target: $30+
Return: -40%
Stop Target: $10
Action: Shares are testing the bottom uptrend channel and a close below $12 would be bearish for a possible trip to the single-digits We would like to see shares make a move back above $13 this week.
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.
Scientific Games (SGMS, $9.17, up $0.15)
Original Entry Price: $11.10 (3/20/12)
Lowered Price from Selling Options: $11.10
Exit Target: $13
Return: -17%
Stop Target: None
Action: Shares tested the 50-day MA and support at $9 after falling to a low of $8.95 last week. There is additional support at $8.50 and the 100-day MA while a close above $9.50 cover the near-term would be bullish. Earnings are due out in mid-March.
We recommended buying SGMS at $11.10 on 3/20/12.
Pizza Inn (PZZI, $3.22, up $0.04)
Original Entry Price: $4.50 (2/22/12)
Lowered Price from Selling Options: No options available
Exit Target: $9
Return: -28%
Stop Target: None
Action: Shares lost a nickel for the week and traded down to $3.11 on Friday. Support is strong at $3 but a close below this level would be bearish and bring back the mid-$2’s. We would like to see a close back above $3.40 and a move above $3.32 could be enough to break shares out of their current range. Last week’s high was $3.30.
We recommended buying PZZI at $4.50 on 2/22/12.
MGM Resorts International (MGM, $12.42, down $0.05)
March 14 calls (MGM130316C00014000, $0.05, flat)
Original Entry Price: $13.77 (2/2/12)
Lowered Price from Selling Options: $12.35
Exit Target: $15
Return: 1%
Stop Target: None
Action: We said if earnings disappointed shares could test $12 and last week’s low was $12.01 after the results. There is risk down to $11.50-$11 on further weakness and we will need shares to clear $13 before we can say they have momentum. The March 14 calls will likely expire worthless and took a big hit and that was the good news. We sold them for 32 cents which helped lower our cost basis and if we aren’t called away in mid-March we can sell another option down the road.
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. If we are called away at $14 in mid-March the trade will make 13%.
Trades on HOLD: DryShips (DRYS, $1.97, down $0.06), AKS Steel Holding (AKS, $3.94, up $0.06), Rare Element Resources (REE, $2.38, up $0.12), Rambus (RMBS, $5.70, down $0.07), Bebe Stores (BEBE, $4.02, down $0.09),
= = = = = = = = = = = = = = =
6. Week Ahead
