MomentumOptionsTrading.com Weekly Wrap for 3/3/13
11:30pm (EST)
1. Market Summary
2. Petróleo Brasileiro S.A. (PBR) at 52-week Lows
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 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 sway 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 $80 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 hit. 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.” (from 2/24/2013 Weekly Wrap Update)…
The elevator came on Monday but it didn’t go all the way down for the bears as support held following an opening pop and drop of 3%. Much of the vicious pullback was blamed on Italy’s circus as their zombie elections yielded no clear “winner” but the bulls defended the 50-day MA’s (moving averages) and had Ben Bernanke as backup.
The Fed head said that there was no immediate end in sight for QE (quantitative easing) ending and that the system was working as planned. We will save the rhetoric of the money-pumping system keeping the market up and it worked magic again as the bulls recovered all of Monday’s losses by Thursday’s close.
Friday was a choppy day as our own zombies failed to reach an agreement on the sequester cuts but Wall Street shrugged off the bickering and shameless politics to end the week on a happy and up note. The Dow was able to reach new highs but the other indexes lagged, suggesting a top is in, and Monday’s have been bearish of late. However, the S&P 500 made a gain for the ninth-straight week and is still looking to challenge its 5-year highs along with the Dow.
The Dow added 35 points, or 0.25%, to end at 14,089 on Friday. The blue-chips came charging out of the gate on Monday and traded to a high of 14,081 but proceeded to give back 300 points in 6 hours to close at 13,784 and below 13,800. We highlighted the 13,600 level and the 50-day MA last week but the bulls regained the 14,000 level by Thursday’s close and push 14,149. Friday’s high was 14,107 and we wanted to see 14,100 hold as a clue for a final push up to 14,200 and all-time highs. A close above this level could get the blue-chips to 14,500 on hysteria but the bears will be gunning for 13,800 again. The Dow came into the week at 14,000 even and popped 89 points higher, or 0.6%, by Friday’s close. The blue-chips are now showing a gain of 985 points, or 7.5%.
The S&P 500 advanced over 3 points, or 0.2%, to settle at 1,518. We said the bears needed to hold 1,525 coming into the week and Monday’s high checked in at 1,525.84. We also said the bulls would need to hold 1,495 or they faced risk down to 1,475-1,450 and Monday’s close was 1,487. The 3% drop from the highs followed into Tuesday’s session as the S&P tested 1,485 but the Bernanke bounce pushed the index back near 1,500 with the close of 1,497. Wednesday’s blast to 1,515 gave the bulls the lead for the week but Thursday’s test to resistance at 1,525 failed after peaking at 1,525.34. We have mentioned a close back above this level gets 1,550-1,575 and the 5-year highs back in the mix and it will be the same deal for this week. Watch 1,510-1,500 for clues of another downside push to 1,475 again. The S&P 500 started Monday’s session at 1,515 and was up nearly 3 points, or 0.2%, in 5 days. The index is working on a triple-digit gain for 2013 and is higher by 92 points, or 6.5%, during its 9-week win streak.
The Nasdaq jumped nearly 10 points, or 0.3%, to close at 3,169. Tech came into the week needing to clear 3,175, first, and then 3,200 before we were going to get bullish again. The index traded up to 3,186 on Monday before falling below 3,150 and closing at 3,116. We said there could be a test to the 50-day MA and 3,100 if this level cracked and the bears pushed 3,105 on Tuesday’s open. The party was over and the rally resumed on Big Ben’s words as the Nasdaq was able to clear 3,150 again by Wednesday’s wrap up. Tech closed at 3,162 and Thursday’s low was 3,159. However, Friday’s dip to 3,129 at the open still keeps our downside targets of 3,100-3,050 in play. The bulls needed to clear and hold 3,175 on Friday to give us a good feeling there would be another push past 3,200 but the chart is ugly. The bears will try for 3,150-3,125 to start the week but if the index ends higher there is a good chance the bulls will make another run at fresh 52-week peaks. The Nasdaq was at 3,161 before Monday’s open and was able to add 8 points, or 0.25%, for the week. For the year, Tech is up 150 points, or 5%.
The Russell 2000 chipped-in with a 3-point pop, or 0.4%, to finish at 914 on Friday. The bears were planning for a drop below 900 and last week we said 890 could come into play if there was a pullback. Monday’s low was 895 and Tuesday dip to 894 was all the damage that was done as the bulls reclaimed 900 by the close, albeit by 0.05 points. Wednesday dip to 899 was a teaser as the index pushed 910 into the close. Thursday’s high was 915.89 and we said the bulls needed to clear 920 for another possible run at all-time highs north of 932. Friday’s top was 915.72 so we are back in the same boat again the week. Watch for a break below 900-890 for another breakdown and 920 for another run to blue-sky territory. The Russell 2000 started the week 916, and surprisingly, slipped a point-and-a-half for the week. The index is still up 65 points, or 7.7%, for 2013 but didn’t act like it wanted to take out new highs last week.
The S&P Volatility Index ($VIX, 14.17, down 1.05) was at 14.17 to start the week and zoomed 34% on Monday to close at 18.99. The VIX traded down to 13.57 but easily took out our 14.75 and 15 targets on the way up. We mentioned if these levels were pushed that 17.50 would resurface and even we were surprised on how high the VIX got. A close above 20 would have suggested all hell was breaking lose but after Tuesday’s spike to 19.28, the VIX was able to close back below 17.50 to 16.87. Wednesday’s rally had the VIX back below 15 although it closed above 15 on Thursday and Friday. A move back towards 13.50 is possible on a continued rally but watch 17.50 again as 20 could trip on another move above this level.
The bulls continue to defy the laws of gravity as they turned a normally bearish February into a bullish month. With its 9th positive Friday, the Dow gained 229 points, or 2%, for the month and is just 107 points from clearing its intraday all-time high of 14,196. The S&P 500 gained 20 points, or just over 1%, and is working on a 9-week win streak. The Nasdaq advanced 27 points, or 1%, while the Russell 2000 was up a dozen pints, or 1%, as well for February.
The indexes’ gains show that while the market went up, it appears as though the “defensive” or blue-chips stocks were the go to group. Monday’s pullback to the lows would have easily given the bears the victory for the week and the slight test towards the 50-day MA’s was either a warning sign or one of the nicest bear traps in recent memory.
March is an interesting month because it favors both the bulls and bears with the market moving higher throughout the first 2 weeks while struggling with the last 2 weeks of the month. We mentioned last week the first day of March had been bearish in recent years and the opening dip on Friday looked as though the bears would continue that streak as the Dow dropped triple-digits on negative news from across the pond. China’s Purchasing Managers Index (PMI) came in at 50.1 for February, down from 50.4 the previous month, and close to contraction (a reading below 50). The United Kingdom also posted lower PMI numbers while Italy’s came in at 45-and change. Good things economic news here at home came in better than expected as Consumer Confidence and vehicle sales were up which helped with Friday’s turnaround.
The Dow fell to 13,937 while the S&P 500 tested 1,501 on Friday. The Nasdaq dropped to a low of 3,129 while the Russell 2000 kissed 899. 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.
If this were to happen over the next few weeks, it would be the perfect setup for a pullback going into triple-witching week and the back half of March. Triple witching is when all index, stock, and future options expire and this event will take place on March 15. The past couple of years have been bullish on March triple-witching expiration day as well as the rest of the month but over the past decade there has been heavy losses in certain years so it will something the bulls will have to guard against.
The panic selling on Monday, and to a degree on Friday, shows how the market is at the mercy of negative headlines and that the drops can come hard and swift in a matter of hours. The sequester budget cuts kicked in on Friday and none of the zombies were working overtime before the midnight deadline or this weekend to come up with something for the coming week.
The head zombie blamed the Republicans for the failure to reach a compromise, as usual, but the wide-ranging spending cuts could come back to haunt those who don’t believe this is a big deal. The total cuts of $80 billion really are a drop in the bucket but it could slow economic growth by at least 0.5%-1% on an already struggling economy recovery.
The political gridlock in DC is worse than the traffic on I95 during rush hour and it isn’t going to get better anytime soon. The next zombie rally is slated for Wednesday, March 27 and they will need to pass a new resolution to fund the government by April 15 or there will be more shutdowns. Since the President has been in office, he has rung up $1 trillion in yearly deficits that has pushed America $17 trillion in the hole and he still hasn’t come up with a budget.
And while we are at it, the next time he takes a dig a the millionaires and billionaires (he is a millionaire) or the Wall Street CEO’s and their private jets, Air Force Uno costs $180,000 an hour to fly so the trip he took to play golf with Tiger costs taxpayers well over a $1 million and that’s not including the pit stop to Chicago. We haven’t done the math for the Hawaii bill back in December but you can see why the government needs to slash spending and get a president in there who will work America’s deficit the other way without raising taxes.
When asked if he was a dictator on Friday, the President said no but his actions and antics are dividing the zombies even further apart so the fireworks should be pretty good in a few weeks as they try to come to an agreement on SOMETHING.
Gold rebounded to push $1,619/ ounce midweek but closed at $1,576 on Friday while Silver ended at $28.55 after testing a low of $27.92. We have also been following the action in Copper and it held $3.50 for the week but did test $3.47 on Friday:
The warnings signs are there for a pending market correction but with the Fed in play and Ben Bernanke at the money joystick, the market could continue to see a push to all-time highs over the next few weeks. However, the number of stocks making new highs versus new lows is going the opposite way which is also suggesting a market top and Monday’s have favored the bears in recent weeks.
Some of the oversold indicators have pulled back following Monday’s 3% drop from high to lows and the bulls normally run strong through April. As long at the bottom uptrend lines continue to hold the market will move higher but once they are snapped (and we do have one index struggling), the bulls wall of worry will come crumbling down.
As we head to press, futures are showing a lower open for Monday. Dow futures are down 58 points to 14,016 while the S&P 500 futures are lower by 7 points to 1,509. The Nasdaq 100 futures are declining a 12-pack to 2,736.
Special Note: Our Weekly Wrap portfolio should continue to do well if the market advances and we will be looking to sell additional call options later this month and in April on our current positions. We may add a new trade or two for the Weekly Wrap on Monday/ Tuesday as well but we want to watch to see how the week starts off.
Our Daily recommendations are a mixture of calls and puts and while some of them are down, and a few are out (APA, VVUS), we still like all of the trades. We are 23-7 for both publications for 2013 for a 77% win rate for all of our trades. Our portfolio is still light as there is room for up to 5 more trades. We have opened a few put positions just in case we get a curveball and we are being cautious by keeping our current positions smaller. While they could take a short-term hit, we are looking to get out of the puts for a profit on any pullbacks. The put options are for April but like we mentioned, March is tricky and we feel better having some puts in our portfolio than none at all.
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Key of Technicals Used In Following Articles
2. Petróleo Brasileiro S.A. (PBR) at 52-week Lows
By Michael Bryant
We love oil companies lately and there could be an opportunity in oil giant Petróleo Brasileiro S.A. or Petrobras (PBR, $14.77, up $0.10), as the stock has hit a new all-time low.
The company is a world leader in development of advanced technology from deep-water and ultra-deep water oil production, where over 90% of its reserves are located. It applies for the most oil patents of any other company in the world.
Founded in 1953 by Brazilian president Getúlio Vargas to develop the country’s oil industry and help lead to Brazil’s energy independence, it had a monopoly until 1997, when the government allowed competitors to develop the country’s oil fields. On August 10, 2000, it raised $4.3 billion in its IPO. In 2003, it acquired Argentina’s largest oil company Perez Companc Energía and its operational bases in Bolivia, Peru, and Paraguay. The Brazilian government directly owns 54% of the company’s common shares, while the Brazilian Development Bank and Brazil’s Sovereign Wealth Fund each control 5%, bringing the State’s direct and indirect ownership to 64%.
On May 1, 2006, Bolivia’s president Evo Morales announced the nationalization of all gas and oil fields in the country and all fields were occupied by the Bolivian Army. On October 28th, after long negotiations, the company and Bolivia signed an agreement where the company would take 18% of the profits and the Bolivian government would take the remainder. Nearly six years later, Argentina nationalized its biggest oil company, YPF, on May 4, 2012. Will Argentina seize Petrobras’ operations in the country?
In 2007, the company stated that it had found the largest oil field in the world located offshore in southern Brazil and shares skyrocketed 106% from February to December. After reaching a peak in May of 2008, shares plunged during the credit crisis. It recovered some until December of 2009. Part of the reason why the stock has been falling since then is that Brazil has been experiencing high inflation over the past few years. Inflation hit 6.15% in February of this year, but a peak might be near due to government efforts to slow its climb. Another part of it is probably due to nationalization scare as mentioned above. But the biggest contributors to the stock’s decline likely are the company’s high and increasing debt and the government’s cap on oil prices to fight inflation. Some good news is that 62% of the debt matures after 2018, and only 5% matures in 2014.
As of December 31, 2012, the company had proved reserves of 12.88 billion barrels of oil equivalent (bboe). The reserves-to-production ratio (R/P) was 14.6 years, meaning it expects to produce about 882 million barrels of oil equivalent (mmboe) per year. If we use WTI (West Texas Intermediate) oil price of $90.68, that translates into $80.0 billion in revenue per year, or a price/revenue of 1.20. If we use Brent crude (international) price of $110.40, that translates into $97.4 billion in revenue per year, or a price/revenue of 0.99. Daily production is now 2,621,000 barrels per day or $86.8 billion per year (price/revenue of 1.11) using WTI or $105.6 billion per year (price/revenue of 0.91) using Brent. Reserves have now reached 16.44 bboe or 17.2 years at current production. Current price/revenue is 0.70, thus the company must have additional sources of revenue.
Petrobras operates in five segments: exploration and production, refining and transport, petrochemicals, Gas and Power, and distribution. The company’s Gas and Power segment engages in the transportation and trade of natural gas and LNG, generation of electric power, and production of fertilizer. The distribution segment distributes oil products, ethanol, and compressed natural gas in Brazil. Out of all five segments, the distribution segment was the only segment that made less in 2012 than 2011. The company says it foresees a slight decrease in total production over the next five years: about 2.5 million barrels per day in 2016, compared to the estimated 3 million barrels per day by 2015.
On February 4th, the company released 4th quarter earnings where it beat on revenues, and net profit rose 53% from a year ago. But gross margins have been shrinking over the past three years. Analysts estimate the company will earn $0.61 per share on $35.39 billion. As shown in the graphs above, analysts’ revenue target seems easily attainable from 1st quarter revenue. And as long as earnings do not plunge, it should be able to meet estimates, too. This and the fact that analysts see revenue rising in the 2nd quarter should cause the stock to rise.
On March 1st, Chevron (CVX) announced that it had an oil flow rate reported to be over 13,000 barrels per day at its St. Malo PS003 well located in the deepwater Gulf of Mexico. Chevron has 51% ownership in the St. Malo field, while Petrobras, Statoil ASA (STO), Exxon Mobil (XOM) and ENI own 25%, 21.5%, 1.25% and 1.25%, respectively.
Other good news is that the current ratio is higher than that of its top competitors. Such a current ratio means that the company has more current assets to current liabilities than its top competitors. Thus, issuing more stock, or dilution, which puts downward pressure on the stock does not seem likely. The company also was the only one listed in the table with positive sales growth and has more cash to market cap than its top competitors. Its low EV/EBITDA means it is within possible takeover territory. But with a $96 billion market cap, a buyout seems unlikely.
The only big red flags are that debt is about equal to market cap, and all margins and returns on assets and equity are below the average of its top competitors.
At $14.77, the stock is way below its low target of $19.00 made by the 14 analysts recorded by Thomson/First Call. Mean target is $25.58, median target is $23.50, and high target is $38.50. Using a scale of 1.0 as a strong buy and 5.0 as a sell, the average rating of the stock was 2.6, down from 2.5 a week ago.
|
|
Current Month |
Last Month |
Two Months Ago |
Three Months Ago |
|
Strong Buy |
1 |
1 |
1 |
1 |
|
Buy |
5 |
6 |
6 |
7 |
|
Hold |
9 |
10 |
10 |
9 |
|
Underperform |
0 |
0 |
0 |
0 |
|
Sell |
0 |
0 |
0 |
0 |
Certainly the stock is not a clear buy, but we may start to nibble as shares may have bottomed. We want to look at how shares open and some options before adding the stock to our Weekly Wrap portfolio and if we do, we will send out a Trade Alert as usual.
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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 3/1/13 close)
By Catherine Tierney
Monday
ABM (ABM, $22.73, up $0.03), Arena (ARNA, $8.34, down $0.05), Asset Acceptance (AACC, $5.21, down $0.06), Assisted Living Concepts (ALC, $11.85, up $0.01), Boyd Gaming (BYD, $6.46, down $0.11), Brown Shoe (BWS, $16.45, up $0.05), ChinaEdu (CEDU, $7.71, down $0.65), Cninsure (CISG, $5.94, up $0.01), Ducommun (DCO, $15.20, down $0.30), Dynegy (DYN, $19.76, up $0.19), EPIQ (EPIQ, $12.50, up $0.06), Hi Tech Pharmacal (HITK, $37.65, up $0.64), Icahn (IEP, $60.05, down $11.44), Jinpan (JST, $5.53, down $0.10), Nature’s Sunshine (NATR, $14.43, down $0.03), Nautilus (NLS, $5.78, up $0.06), Navistar (NAV, $24.11, down $0.72), Oxford (OXM, $48.81, up $0.20), Phoenix (PNX, $24.80, down $0.30), Quad/Graphics (QUAD, $22.11, up $0.36), Quaker Chemical (KWR, $58.83, up $1.42), Renewable Energy (REGI, $7.44, up $0.05), Resource Capital (RSO, $6.82, up $0.02), Santarus (SNTS, $13.46, up $0.17), Schawk (SGK, $10.98, up $0.22), SHFL (SHFL, $15.84, down $0.02), Stratasys (SSYS, $64.26, up $1.15), Sun Hydraulics (SNHY, $28.12, up $0.23), Tech Data (TECD, $52.23, down $0.83), Tejon Ranch (TRC, $29.01, down $0.29), THL Credit (TCRD, $15.45, up $0.09), Thor (THO, $37.72, up $0.13), Transocean (RIG, $52.15, down $0.15), Veeco (VECO, $31.22, down $0.69), Walter Investment (WAC, $46.42, up $0.50)
Tuesday
21Vianet (VNET, $9.69, Flat), AG Mortgage Investment (MITT, $26.18, down $0.05), Checkpoint (CKP, $11.86, Flat), Delek Logistics (DKL, $28.10, down $0.08), Ferro (FOE, $5.20, up $0.07), Furmanite (FRM, $5.86, down $0.11), H&E Equipment (HEES, $19.40, down $0.06), Hickory (HTCO, $9.46, up $0.07), Homeowners (HCI, $20.57, up $0.41), Infinity (INFI, $43.65, up $2.36), JinkoSolar (JKS, $7.84, down $0.30), Kronos (KRO, $16.79, down $0.32), Memorial Production (MEMP, $18.47, down $0.31), Michael Baker (BKR, $24.24, Flat), Mid-Con Energy (MCEP, $22.00, up $0.01), MGC Diagnostics (MGCD, $6.83, up $0.21), Midstates Petroleum (MPO, $7.34, down $0.12), NCI Building (NCS, $16.81, up $0.46), Nutrisystem (NTRI, $8.20, down $0.03), Omega Protein (OME, $8.14, down $0.14), Park-Ohio (PKOH, $20.73, up $0.39), Qihoo 360 Technology (QIHU, $32.04, up $1.24), Reis (REIS, $15.35, up $0.10), Seaspan (SSW, $19.30, Flat), Smith & Wesson (SWHC, $9.82, up $0.28), Trinity Biotech (TRIB, $17.04, up $0.13), VeriFone (PAY, $19.05, up $0.08)
Wednesday
ACADIA (ACAD, $6.36, up $0.29), Alon USA (ALJ, $19.86, up $0.37), Alon USA (ALDW, $27.32, up $0.03), American Eagle (AEO, $20.78, up $0.10), American Safety Insurance (ASI, $23.45, up $0.42), Apollo Residential (AMTG, $22.38, Flat), Big Lots (BIG, $33.10, down $0.20), Capital Senior Living (CSU, $23.29, up $0.29), China Lodging (HTHT, $18.76, up $0.35), Coca-Cola Consolidated (COKE, $65.33, down $0.10), Colony (CLNY, $22.00, down $0.15), Compass Diversified (CODI, $15.74, up $0.24), Country Style Cooking Restaurant Chain (CCSC, $8.00, Flat), Cross Country (CCRN, $5.71, up $0.02), CTC (CTCM, $9.70, Flat), Delek US (DK, $38.76, up $1.40), Fairpoint (FRP, $8.46, up $0.11), The Fresh Market (TFM, $44.95, down $1.67), Furiex (FURX, $37.89, up $0.83), General (GNCMA, $8.50, up $0.05), Gentherm (THRM, $15.87, up $0.47), HFF (HF, $18.83, up $0.02), Hudson Pacific (HPP, $22.72, up $0.15), ID (IDSY, $6.08, down $0.23), John Bean (JBT, $18.35, down $0.08), LHC (LHCG, $21.01, up $0.69), Lincoln Educational (LINC, $6.59, up $0.28), Maidenform Brands (MFB, $19.33, up $0.14), Middlesex Water (MSEX, $19.60, up $0.14), MYR (MYRG, $23.17, down $0.04), Nacco (NC, $57.87, down $0.22), New Mountain Finance (NMFC, $15.23, Flat), NQ Mobile (NQ, $6.90, down $0.02), Oiltanking (OILT, $44.37, up $0.47), Osiris (OSIR, $7.09, up $0.51), PDI (PDII, $7.43, up $0.13), PetSmart (PETM, $64.68, down $0.43), POZEN (POZN, $6.13, down $0.06), QR (QRE, $17.30, down $0.11), Rigel (RIGL, $6.74, up $0.02), Sanchez Energy (SN, $18.49, down $0.02), Semtech (SMTC, $30.19, down $0.38), SolarCity (SCTY, $18.16, up $0.05), SP Bancorp (SPBC, $17.45, down $0.16), Speedway Motorsports (TRK, $16.64, up $0.38), Staples (SPLS, $12.99, down $0.18), Steinway Musical Instruments (LVB, $22.21, down $0.25), TransAct (TACT, $7.89, down $0.01), Vail Resorts (MTN, $56.20, up $0.96), VimpelCom (VIP, $11.95, up $0.01), Walker & Dunlop (WD, $21.15, down $0.05), Western Asset Mortgage (WMC, $21.31, down $0.18), Williams-Sonoma (WSM, $45.26, down $0.14)
Thursday
Advocat (AVCA, $5.50, down $0.01), Ambarella (AMBA, $10.58, up $0.62), Arabian American Development (ARSD, $7.36, Flat), Bitauto (BITA, $8.88, up $0.33), BlackRock Kelso (BKCC, $10.44, up $0.01), Blount (BLT, $15.37, up $0.30), Cadence (CADX, $5.00, up $0.10), Cantel Medical (CMN, $31.70, up $0.57), CECO Environmental (CECE, $11.00, up $.20), Cedar Realty (CDR, $5.67, down $0.07), Celldex Therapeutics (CLDX, $10.26, up $0.74), Chembio Diagnostics (CEMI, $5.48, Flat), Chesapeake Utilities (CPK, $48.52, up $0.49), Ciena (CIEN, $14.83, down $0.41), Coleman Cable (CCIX, $9.84, down $0.07), Comtech Telecommunications (CMTL, $27.20, up $0.42), Consolidated Communications (CNSL, $16.37, down $0.43), The Cooper (COO, $105.08, down $0.98), Edac (EDAC, $15.48, up $0.18), Emergent BioSolutions (EBS, $15.60, up $0.11), EPL Oil & Gas (EPL, $26.05, up $0.32), Ferrellgas (FGP, $20.88, up $0.29), Fidus Investment (FDUS, $18.39, up $0.39), Finisar (FNSR, $14.28, down $0.37), FLY Leasing (FLY, $14.00, up $0.30), Global Power Equipment (GLPW, $16.99, up $0.21), H&R Block (HRB, $24.78, down $0.08), IDT (IDT, $10.18, up $0.07), Journal (JRN, $5.60, up $0.13), The Kroger (KR, $29.53, up $0.32), LRR Energy (LRE, $17.53, Flat), Mac-Gray (TUC, $12.50, up $0.08), Main Street Capital (MAIN, $32.24, up $0.31), Medifast (MED, $23.92, up $0.74), Nationstar Mortgage (NSM, $39.18, up $0.65), Nexstar Broadcasting (NXST, $15.37, up $0.51), NGP Capital (NGPC, $7.09, up $0.03), OncoGenex (OGXI, $12.32, up $0.43), Optibase (OBAS, $5.70, Flat), Pacira (PCRX, $23.42, up $1.56), Pandora Media (P, $12.30, up $0.10), Perficient (PRFT, $11.92, up $0.34), Piedmont Natural Gas (PNY, $32.65, up $0.41), PowerSecure (POWR, $9.11, up $0.66), QAD (QADB, $11.94, down $0.09), Quiksilver (ZQK, $6.28, up $0.03), Repligen (RGEN, $6.28, up $0.05), Resolute Energy (REN, $10.06, down $0.12), Rouse (RSE, $16.50, down $0.11), Safeguard Scientifics (SFE, $15.26, up $0.12), Sarepta Therapeutics (SRPT, $29.59, up $0.30), Saul Centers (BFS, $44.34, up $0.58), Simcere (SCR, $8.05, up $0.12), Skullcandy (SKUL, $6.22, up $0.12), Smithfield Foods (SFD, $22.54, up $0.30), Spark Networks (LOV, $7.26, up $0.04), Standard Parking (STAN, $20.42, down $0.33), Tecumseh Products (TECUA, $9.11, up $0.05), Triangle Capital (TCAP, $29.71, down $0.49), US Physical Therapy (USPH, $24.65, up $0.03), U.S. Concrete (USCR, $10.25, up $0.45), Winthrop Realty (FUR, $12.70, up $0.15), Workday (WDAY, $57.62, up $2.33), WuXi PharmaTech (WX, $16.88, up $0.54)
Friday
ANN (ANN, $28.42, up $0.13), Arcos Dorados (ARCO, $12.72, up $0.05), Foot Locker (FL, $34.55, up $0.36), Fuel Systems (FSYS, $13.75, down $0.14), Genesco (GCO, $58.75, up $0.07), GenMark (GNMK, $), (KMG, $20.00, up $0.24), Korn/Ferry (KFY, $18.09, down $0.42), Orexigen (OREX, $6.04, up $0.09), ShangPharma (SHP, $8.90, Flat), Buckle (BKE, $44.55, down $0.26), Zumiez (ZUMZ, $22.73, down $0.17)
= = = = = = = = = = = = =
4. Weekly Wrap Covered Call Portfolio Update (Closing prices as of 3/1/13)
Our Weekly Wrap Closed Trade Track Record for 2013 is 6-1 (50-3, overall since 2011).
Tower International (TOWR, $12.21, up $0.17)
Original Entry Price: $12.15 (2/19/13)
Lowered Price from Selling Options: No options available
Exit Target: $15+
Return: 1%
Stop Target: $9.50
Action: Shares traded down to $11.10 last week and short-term support is at $11, followed by $10. The 52-week high for Tower International is at $13.73 and a close above $12.50 should lead to a test to new highs.
We recommended buying TOWR at $12.15 on 2/19/13.
Cypress Semiconductor (CY, $10.29, down $0.24)
Original Entry Price: $9.97 (2/13/13)
Lowered Price from Selling Options: $9.97
Exit Target: $12+
Return: 3%
Stop Target: $8
Action: Shares traded to a high of $10.74 last Wednesday and are holding the 100-day MA at $10.20. A move above $10.50 should get shares testing $11 and where we would like to sell an option to lower our cost basis. Short-term support is at $9.75.
We recommended buying CY at $9.97 on 2/13/13.
Keryx Biopharmaceuticals (KERX, $7.19, up $0.76)
Original Entry Price: $7.22 (2/12/13)
Lowered Price from Selling Options: $7.22
Exit Target: $10+
Return: 0%
Stop Target: None
Action: Shares jumped over 12% last Friday on rumors GlaxoSmithKline (GSK, $44.11, up $0.08) could make a bid for the company. If so, expect a buyout offer north of $10. On a technical level, a close above $7.50 should get $8 in play and from there $9. Support has been solid at $6.50 but there is risk to $5 on any setbacks with its drug, Zerenex which is in Phase 3 trials and could get FDA approval this year.
We recommended buying KERX at $7.22 on 2/12/13.
Yahoo (YHOO, $21.94, up $0.64)
April 22 calls (YHOO130420C00022000, $0.85, up $0.25)
Original Entry Price: $19.81 (2/6/13)
Lowered Price from Selling Options: $19.16
Exit Target: $25
Return: 15%
Stop Target: $14
Action: Shares reached a fresh 52-week peak of $22.28 on Friday. There could be a run to $24-$25 over the near-term and we are on track for solid double-digit gains if current levels hold through April. Shares traded to a low of $20.58 last week and support is at $20.50. We like these calls for the Daily and may use them to play a continued move higher.
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, $8.74, up $0.01)
Original Entry Price: $12.35 (8/9/12)
Lowered Price from Selling Options: $11.55
Exit Target: $15+
Return: -24%
Stop Target: $5
Action: Shares traded down to $8.28 on Tuesday and held support at $8. Resistance at $9 was being tested on Friday and a close above $9.50 would be bullish.
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.
Scientific Games (SGMS, $9.00, flat)
Original Entry Price: $11.10 (3/20/12)
Lowered Price from Selling Options: $11.10
Exit Target: $13
Return: -19%
Stop Target: None
Action: Friday’s low was $8.52 and support is at $8.50. A close above $9.25 over the near-term would be bullish. Earnings are due out in mid-March and shares are poised for a big move on the news.
We recommended buying SGMS at $11.10 on 3/20/12.
Pizza Inn (PZZI, $3.10, down $0.05)
Original Entry Price: $4.50 (2/22/12)
Lowered Price from Selling Options: No options available
Exit Target: $9
Return: -31%
Stop Target: None
Action: 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 $3.20 over the near-term but shares tested $3.10 on Thursday and Friday.
We recommended buying PZZI at $4.50 on 2/22/12.
MGM Resorts International (MGM, $12.43, down $0.06)
March 14 calls (MGM130316C00014000, $0.02, down $0.01)
Original Entry Price: $13.77 (2/2/12)
Lowered Price from Selling Options: $12.35
Exit Target: $15
Return: 1%
Stop Target: None
Action: Last week’s low was $12.01 and there is risk down to $11.50-$11 (100-day and 200-day MA’s) on further weakness. We will need shares to clear $13 again before consider selling another option.
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, $1.80, down $0.13), AKS Steel Holding (AKS, $3.61, down $0.14), Rare Element Resources (REE, $2.13, down $0.05), Rambus (RMBS, $5.49, down $0.15), Bebe Stores (BEBE, $3.94, down $0.02), Vivus (VVUS, $10.34, down $0.37)
= = = = = = = = = = = = = = =
6. Week Ahead
