MomentumOptionsTrading.com Weekly Wrap for 9/29/13
11:30pm (EST)
1. Market Summary
2. Diamond Foods (DMND) Earnings After Monday’s Close
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 charts from last week showed one last push to the top of the upper channels before a possible pullback. The bulls have had smooth sailing all September but we mentioned on Friday once the zombie talk heated up the close would be important. It was the perfect setup for a pullback following Wednesday’s surge to new all-time highs and Thursday’s mixed range-bound session.
From our 7/22/2013 Weekly Wrap:
“All of the major indexes are rapidly approaching our yearend target of Dow 16,000; S&P 1,700; Nasdaq 3,800; the Russell 2000 has cleared our 1,025 target and has even triggered our 1,050 fluff target. The 2013 gains aren’t unbelievable because we predicted them at the beginning of February. What is body-tingling is how fast the market has climbed in 6+ months and the incredible bounce off the 100-day MA’s.
It feels like the current rally could last through July and our other yearend targets could come into play on continued strength. At that point, it could be time to look at short positions heading into August and September but betting against the bulls or waiting on them to fall out of bed has punished a lot of traders this year.” (END)
From our 7/29/2013 Weekly Wrap:
“We have fluff targets of Dow 15,800-16,000; S&P 1,700-1,725; Nasdaq 3,650-3,700 and Russell 1,075-1,100 on a continued move higher but some of these are our yearend targets so we are a little cautious on how much further the bulls can push before there is a pullback. We have mentioned the rally could last through the end of July but the bulls appear to be stumbling at the finish line as the market experienced lower lows throughout the week after higher highs to start.
We will need to be careful in going long put options or short the market because it is possible a trading range forms if there is a pullback and support holds.” (END)
We mentioned September options would be expiring on Friday and “quadruple-witching” made for a volatile second half of trading. The rebalancing and shuffling of the S&P 500 and the Dow also added fuel to the fire.
The S&P 500 assigns new weightings to each of the stocks in the index depending on share buybacks and other factors so there was heavy action in Apple (AAPL, $467.41, down $4.89) and Google (GOOG, $903.11, up $4.72).
We talked about the upcoming musical chairs on the Dow as old blue-chippers Alcoa (AA, $8.29, down $0.15), Bank of America (BAC, $14.44, down $0.17) and Hewlett Packard (HPQ, $21.22, down $0.09) were booted on Friday’s close.
The new kids on the block will be Nike (NKE, $69.37, down $0.13), Goldman Sachs (GS, $169.75, up $1.97) and Visa (V, $198.83, up $4.12). Nike announces earnings this week and will be a preseason preview of upcoming 3Q earnings.
The debt ceiling, budget, and ObamaCare debates now take center stage and it is going to be an ugly battle. This is perhaps the Republicans last chance to try and do away with ObamaCare by not funding it.
The debt ceiling has been raised 82 times since America has been in the red. The increases have become more common since the 1960’s as the debt ceiling has been raised 73 times with Obama accounting for 3 of them.
On Friday, the House zombies passed a budget bill that would keep the government running through mid-December while defunding Obama’s healthcare law. The Senate zombies will reject it early this week and the hot potato will be back in the Houses’s hands.
The wrangling could continue throughout the week but without a budget deal by the first of October, a government shutdown could become a real possibility.
The US Treasury has indicated that mid-October is when the zombies will run out of “extraordinary measures” and when a default would occur. The Treasury has been helping the zombies pay the bills for more than a month and prioritizing what they pay first and what can wait. This story will gain more traction the longer the bickering lasts as we doubt a solution is reached by next Monday.” (from 9/22/2013 Weekly Wrap…)
The market started the week off with a loss following the run to fresh highs the prior week and continued pulling back thru Wednesday’s session. Thursday’s rebound still had the bulls down for the week but Tech and the small-caps were showing strength as the zombies played hot potato over the budget bill. It was a short-lived rally as the market fell on Friday and braced for a government shutdown that could start at midnight on Monday at midnight if no deal is reached.
The Dow fell 70 points, or 0.5%, to finish at 15,258 on Friday. The blue-chips came into the week needing to hold 15,400-15,350 or faced risk of a drop down to 15,200 and a test of the 100-day MA if they didn’t. The bulls held the first wave of support on Monday’s pullback but the selling pressure continued through Wednesday as the bears cracked the 50-day MA. Thursday’s rebound to resistance (15,400) was right on cue before Friday’s low of 15,211. The 100-day MA held into the close but a break below 15,200 should get 15,000-14,800 in play. A positive Monday and close back above 15,350-15,400 would be bullish for another test to 15,500-15,600. For the week, the Dow was down 193 points, or 1.3%, after starting at 15,451. For the year, the blue-chips have up 2,154 points, or 16.4%.
The S&P 500 slipped 7 points, or 0.4%, to settle at 1,691. The bulls had hoped of clearing 1,725 but needed to hold 1,700 on any pullback. The bears pushed 1,697 on Monday but the bulls held 1,700. Tuesday’s low of 1,694 and close at 1,697 suggested further weakness that lasted through Wednesday’s low of 1,691. Thursday’s rebound reached 1,703 but the close at 1,698 still favored the bears. Friday’ low of 1,687 and close suggest a short-term double bottom could be in but a print below 1,680-1,675 and the 50-day MA could spell trouble down to the 100-day MA, or 1,650-1,600. The S&P 500 came into Monday’s session at 1,709 and declined 18 points, or 1.1%, for the week. Year-to-date, the index is higher by 266 points, or 18.6%.
The Nasdaq dropped a 6-pack, or 0.2%, to close at 3,781. Tech came into the week just below 3,775 and we mentioned last week a close above this level should trigger 3,800. There was still downside risk to 3,750 and this level was tested on Monday’s drop to 3,745 but the close of 3,765 by the bell was bullish. There was another test to support on Tuesday and Wednesday’s test of 3,753 and 3,754, respectively, but 3,750 held both days. There is further risk down to 3,700-3,650 and the 50-day MA if the bears can get under support but Thursday’s surge to 3,795 and close at 3,787 still suggests the bulls will ring the 3,800 bell as long as support holds up. Friday’s low was 3,762 but the bulls held 3,775. Same deal for this week. The Nasdaq began the week at 3,774 and dropped 7 points, or 0.2%, by Friday’s close. For 2013, Tech has advanced 748 points, or 25.2%.
The Russell 2000 gave back 4 points, 0.4%, to end at 1,074. The small-caps needed to clear 1,075 from the jump to get 1,100 in the mix but Monday’s low of 1,063 kept support at 1,050 in play. The bulls battled back before the close, however, and kept the losses to under a point. Tuesday and Wednesday’s lows of 1,066 and 1,072 were higher lows and we mentioned midweek this was bullish. Thursday’s pop to 1,081 and close at 1,078 kept out fluff target of 1,100 on the board but Friday’s close was a bummer. The mini-trading range gave the bulls a gain for the week but the tricky close needs to be watched. We could use index options on the Russell to play a close above 1,080 or put options on a drop below 1,060-1,050 for our Daily newsletter. The Russell 2000 was at 1,072 before Monday’s open and was gained a point, or 0.1%, for the week. YTD, the small-caps are higher by 224 points, or 26.5%.
The S&P 500 Volatility Index ($VIX, 15.46, up 1.40) spiked 10% on Friday and we have been warning of a close above 15 for a couple of weeks now. After a failed push to get the VIX below 13.50 (Thursday’s low was 13.58 on the rally), we figured a close above 15 ahead of the weekend and Monday’s zombie deadline would be a nice Hollywood ending. There is risk up to 17.50 and a close above this level would be confirmation a test to 20 could come and an opportunity to go short for a few days (maybe longer). A close back below 15 on Monday would be bullish and would keep the bears at bay.
Despite all the drama, the market finished mixed for the week but you wouldn’t know it by the headlines. The Dow and S&P 500 are the most widely followed indexes and are close to breaking down while the Nasdaq and Russell 2000 are on the verge of possible breakouts.
Monday is the last day of the month and it has been a September to Remember for the bulls. The Dow is up 448 points or 3% while the S&P 500 is higher by 58 points, or 4%. The Nasdaq has advanced 192 points, or 5%, and the Russell 2000 has jumped 63 points, or 6%.
Tuesday is the start of October and a month known for steep selloffs. Much of the worry last week was over the budget battle that will come down to the wire as the zombies have until midnight Monday to come to an agreement or face a government shutdown.
The House has been working overtime this weekend and voted on Sunday in favor to attach a repeal of the tax on medical devices and to delay the implementation of Obamacare for 1 year. The taxes on medical devices are designed to help pay for Obamacare and the revised legislation also includes a provision that would allow employers and health care providers to opt out of mandatory contraception coverage. The Senate will send the revised bill right back to them on Monday.
We all know where the President stands on the Affordable Care Act, otherwise known as Obamacare. Since he firmly believes this is the best plan for America and with his fingerprints and name all over it, he said on Friday “undoing Obamacare is not going to happen.”
As the House and Senate play musical chairs, the House must remember Obama has to sign any bill passed by them and the Senate. The Republicans have the weaker hand as any bill without Obamacare is going to be vetoed by the President. The Democrats in the Senate only need 51 votes to block the bills and they control 54 tickets in the chamber. Our best guess is there will be a last minute agreement if the zombies work until the deadline but chances are they won’t.
The start of the week could be volatile depending on the headlines but the back half of the week is just as important with Nonfarm Payrolls due out on Friday. The suit-and-ties are looking for a gain of 180,000 jobs compared to the 169,000 jobs added in August. We correctly predicted there would not be a taper cut in September but believe it or not, there is already talk of “Octaper” when the Fed meets in a month.
If the Nonfarm Payrolls come in above expectations the taper talk will once again heat up but until the Fed sees sustained job growth above 200,000 a month, they will not consider changing policy.
One sector that will sway direction in the coming weeks, along with upcoming 3Q earnings, are the Financial stocks. The sector has been in a downtrend and the bulls will need them to hold support and rebound. The bears are looking for a continued breakdown.
The Financials Select Sector Spiders (XLF, $20.05, down $0.08) came close to topping their July high of $20.93 but have fallen below the 50-day and 20-day MA’s since the mid-September peak of $20.82. There is risk down to $19.75 and the 100-day MA and as long as the uptrend holds there could be a bullish trade going forward. If there is a breakdown below $19.75 would suggest a shorting opportunity to $18.75 and the 200-day MA.
We often talk about the Monday/ Friday closes and after positive closes in early September, the past 3 M/F finishes have been nasty for the Dow. The bulls will need to get off to a good start this Monday or there could be a further weakness ahead.
We doubt the zombies come to an agreement before Wall Street closes so the chance for a lower start to the week is there. It will also be the last day of the month so expect some “window dressing” from the fund managers that will want to lock-in winners. Friday is Nonfarm Payrolls and the news could have a major impact on the market. Good or bad.
As we head to press, the bulls have a lot of work to do as futures look like this: Dow futures are down 107 points to 15,088 while the S&P 500 futures are lower by 12 points to 1,674. The Nasdaq 100 futures are declining 16 points to 3,206.
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2. Diamond Foods (DMND) Earnings After Monday’s Close
By Michael Bryant
Diamond Foods (DMND, $24.17, down $0.31) has earnings due out on Monday and could be turning the corner after an accounting scandal a few years ago.
Founded in 1912, the company started as the California Walnut Marketing Association, a federation of local walnut packing growers. It provided economic stability during the chaotic market conditions of the early 1900s. Walnut trees are native to California, and until 1920 it produced 95% of the state’s commercial crop. Joseph Sexton, who settled in the Santa Barbara area in 1867, started selectively breeding ‘soft-shelled’ walnuts. His superior breeds became popular with other growers throughout the state.
The association sold their nuts under the Diamonds brand. In 1919, it was the first nut producer to launch a national advertising campaign, and in 1950 it became the first nut brand to advertise on TV. To expand its production of shelled walnuts, it became a centralized cooperative in 1956, changed its name to Diamond Walnut Growers, and built processing facilities in Stockton, California. In 1960, it expanded its processing facility to 550,000 square feet, the largest and most modern walnut processing facility in the world at the time.
In the late 1990s, the company became a more competitive supplier to American grocery chains by broadening its product line of culinary and in-shell nuts. Culinary nuts are dry, edible nuts and include acorns, chestnuts, hickory, hazelnuts, cashew nuts, Brazil nuts, coconut, walnuts, pecans, almond, pistachios, peanuts, Macadamia nuts, and pine nuts. In 1997, Japan became the top export market for its shelled nuts. And in 1998 the company became the #1 global marketer of in-shell nuts. In 1999, it changed its name to Diamond of California.
In 2004, it merged with packaging company J Stone & Son, the leading supplier of cones, toppings, and ingredients in New England. That year, the Emerald Nuts line of snack nuts was also launched. Then in June of 2005, the company sold 6 million shares in its IPO, raising $102 million. Shares rose nearly 24% above the IPO price of $17 to close at $21.05 per share.
The company then went on an acquisition spree to fuel more growth. In 2006, the company acquired Harmony Foods’ product lines and facilities including a strategically important Indiana production facility, for $18 million in cash. Then in 2008, it acquired Pop Secret popcorn from General Mills (GIS). In 2009, the Emerald brand hit 10% market share of the snack nut market in the U.S. That year, the company was #1 with a 30% market share, ahead of #2 Planters nuts, who had a 6% market share. In 2010, it acquired potato chip company Kettle Foods, which had operations in the U.S. and the U.K.
The company planned to buy chip maker Pringles from Procter & Gamble (PG) for $2.35 billion in 2011, but an accounting scandal caused the company to cancel the deal in February 2012. Pringles would have made Diamonds Foods the largest producer of snacks in the world, ahead of #1 snack producer Frito Lays of PepsiCo (PEP). Due to the cancelation, Pringles was instead sold to Kellogg (K) for $2.7 billion, joining Kellogg’s Cheez-It crackers, Keebler cookies, and Special K crackers. Thus, Frito Lays remained the #1 snack producer in the world, while Kellogg became the #2 snack producer.
Diamonds’ accounting irregularities included issues of the debt covenant with its bankers and improperly recorded payments to walnut growers. Following an investigation, the company’s audit committee found payments of $20 million to walnut growers in August 2010 and $60 million in September 2011 that were not booked in the correct periods. The unusual payments to growers was a big red flag. The company’s growers are paid in installments, with final payment for the prior fall’s crop coming late the following year. But it turned out that growers were underpaid for their 2010 produce.
The investigations forced the company to restate earnings for fiscal 2011 and 2012 and led to the ouster of CEO Michael J. Mendes and the CFO. Board member Rick Wolford has served as acting CEO. Michael Murphy, managing director at Alix Partners LLP, has served as acting CFO. Both the Securities and Exchange Commission and the Justice Department are looking into its accounting procedures.
Another red flag was that net income, boosted in part by acquisitions of two high-margin snack brands, rose to more than 5% of net sales in fiscal 2011 from 1.5% in fiscal 2006. No other competitors were improving that rapidly. Only B&G Foods (BGS), which made multiple acquisitions that added to earnings during the period, had a similar run. Another red flag was that cash generation was sluggish in fiscal 2010 when earnings were strong. Cash flow should generally rise with net income. So, let’s check out how each is doing.
Free cash flow seems to be at a trough and could rise in the near future. This will likely cause net income and revenue to rise, aligned with analysts estimates. But earnings could come out stronger than expected. The company reports 4th quarter earnings on Monday, September 30th after the bell. Analysts estimate the company will earn -$0.04 per share on $192.53 million.
September 30th is also the deadline for government shutdown. If Congress waits till the last minute to agree on the debt ceiling, stocks may jump Tuesday morning.
The reduced price of the stock also raises speculation that the company might now be an acquisition target itself. And the likely buyer could be Kellogg. Diamonds’ more upscale Kettle and Pop Secret brands, which are both doing well, would be especially attractive to Kellogg.
The snack food industry is large and highly competitive and is dominated by large food companies, including Frito-Lays, a subsidiary of PepsiCo (PEP), Procter & Gamble (PG), Kellogg’s (K), ConAgra (CAG), Diamond Foods (DMND) and General Mills (GIS). The company’s top competitors based on similar business are Frito-Lays, Hain Celestial Group (HAIN), and Inventure Foods (SNAK). Since Frito-Lays is a division of PepsiCo (PEP), we will focus on Hain and Inventure Foods.
Hain offers natural and organic grocery products, including non-dairy beverages and frozen desserts, granolas, granola bars, cereal bars, chocolate, nut butters and nutritional oils, juices, popcorn cakes, cookies, crackers and gluten-free frozen entrees, and cereal bars. It also provides snack products, such as potato and vegetable chips, organic tortilla style chips, whole grain chips, and popcorn. Hain competes directly with Diamond’s chips and popcorn as well as offering healthier substitutes. Inventure competes heavily with Kettle Chips in the premium chip market and is a strong threat because of its use of well-known international brands such as Jamba, T.G.I Friday’s and Burger King brands to sell its products.
At $22.01, the stock is between its median target of $20.00 and its high target of $24.00 made by the 5 analysts recorded by Thomson/First Call. Mean target is $18.80, and low target is $14.00. Using a scale of 1.0 as a strong buy and 5.0 as a sell, the average rating of the stock was 3.0, unchanged from a week ago.
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Current Month |
Last Month |
Two Months Ago |
Three Months Ago |
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Strong Buy |
0 |
0 |
0 |
0 |
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Buy |
0 |
0 |
0 |
0 |
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Hold |
7 |
7 |
7 |
8 |
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Underperform |
0 |
0 |
0 |
0 |
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Sell |
0 |
0 |
0 |
0 |
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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 9/27/13 close)
By Catherine Tierney
Monday
ASBI, HRT, Cal-Maine Food (CALM), CIM, Diamond Foods (DMND), GenCorp (GY), IMSC, MAMS, OMNOVA Solutions (OMN), Orthofix International (OFIX) near 52-week lows, PTN, PKE, Paychex (PAYX), PNX,
Tuesday
Actuant (ATU), Acuity Brands (AYI), BGMD, ECT, Global Payments (GPN) possible call options, RECN, RMCF, Sonic Automotive (SAH), SURG, TEAM, Walgreen (WAG) possible call options
Wednesday
CalAmp (CAMP), Monsanto (MON) put/ call options, RLGT, NAUH, Texas Industries (TXI)
Thursday
CMTL, Constellation Brands (STX), IDT, ISCA, XRTX
Friday
None worth mentioning
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4. Weekly Wrap Covered Call Portfolio Update (Closing prices as of 9/27/13)
Our Weekly Wrap Closed Trade Track Record for 2013 is 34-3 (78-5, overall since the start of 2011)
Opko Health (OPK, $8.66, down $0.10) Covered Call
October 9 calls (OPK131019C00009000, $0.30, flat)
Original Entry Price: $8.34 (9/19/13)
Lowered Price from Selling Options/ Dividends: $8.09
Exit Target: $10+
Return: 7%
Stop Target: $6
March 10 calls (OPK140322C00010000, $0.90, flat) LEAP Option Trade
Original Entry Price: $0.75 (9/19/13)
Exit Target: $1.50
Return: 20%
Stop Target: None
Action: We said we wanted to see a run past $8.75 and Tuesday’s surge to $8.85 and close at $8.73 nearly got us there. Shares matched this level on Wednesday and traded up to $8.88 on Thursday before slipping to a low of $8.60 on Friday. A close above $9 should get the upper channel and $9.50 in play. Short-term support is at $8.50 followed by $8.25 and the 50-day MA.
We recommended buying Opko Health at $8.34 on 9/19/13 and selling the October 9 calls for 25 cents which lowered our cost basis to $8.09. If we are called away in mid-October at $9 the trade will make 11%.
Vera Bradley (VRA, $20.15, down $0.20) Strangle Option Trade
October 20 calls (VRA131019C00020000, $0.80, down $0.10)
Original Entry Price: $0.80 (9/10/13)
Exit Target: $1.60 (closed at $1.10 on 9/16/2013)
Return: 38%
Stop Target: None
October 17.50 puts (VRA131019P00017500, $0.10, flat)
Original Entry Price: $0.80 (9/10/13)
Exit Target: $1.60
Return: -88%
Stop Target: None
Action: The losses will be limited to 31% if the put options expire worthless, meaning shares stay above $17.50 by mid-October. Resistance at $20.50 is holding up but a close above $21 and the 50-day MA will likely be the nail in the coffin on the put options/ We are still expecting a drop $17.50 over the next few weeks on a close below $19.50. The trade is down 25% overall.
Kodiak Oil & Gas (KOG $11.94, up $0.16)
Original Entry Price: $10.80 (9/9/13)
Lowered Price from Selling Options/ Dividends: $10.80
Exit Target: $15
Return: 11%
Stop Target: $10.80, raise to $11.25 (STOP LIMIT)
March 11 calls 2014 (KOG140322C00011000, $1.80, up $0.10)
Original Entry Price: $1.20 (9/9/13)
Exit Target: $2.40
Return: 50%
Stop Target: $1.00, raise to $1.40 (STOP LIMIT)
Action: Shares tested resistance at $11.50 and made a fresh 52-week high of $11.44 on Monday. We said a close above $11.50 would be bullish for a run to $12 and Tuesday’s high of $11.58 was a tease as shares closed at $11.43. Thursday’s high was $11.97 before Friday’s surge to $12.22. We have a near-term target of $13 with a chance at shares testing $15 longer-ter.
Near-term support is at $11.50 (prior resistance) and we have a stop to get out of the trade at $11.25 if shares give up their gains. This would also take us out of our LEAP options but we are expecting new support to hold. We could sell a call option this week to lower the cost basis in the stock position if $11.25 holds. If we do, we will send out a Trade Alert.
Sonus Networks (SONS, $3.35, flat)
Original Entry Price: $3.73 (9/9/13)
Lowered Price from Selling Options: $3.73
Exit Target: $5
Return: -10%
Stop Target: $3
Action: Shares continue to struggle at the 50-day MA but traded in another tight 19 range all week. The low checked-in at $3.30 and support is at $3.20 and the 100-day MA. A break below this level could lead to $3 while a close above $3.50 would be bullish.
Annaly Capital Management (NLY, $11.63, down $0.07)
Original Entry Price: $11.70 (9/6/13)
Lowered Price from Selling Options/ Dividends: $11.35
Exit Target: $15
Return: 2%
Stop Target: $10
Action: Annaly cleared resistance at $12 to start the week and reach $12.21 by Tuesday before the close at $12.07. Shares held $12 until Friday’s pullback and price adjustment of the 35 cents dividend. This lowered our cost basis to $11.35. There is risk down to $11.50 and then $11 on a break below the 50-day MA. Resistance is at $12.
Krispy Kreme Doughnuts (KKD, $19.82, up $0.41) Short Position
Original Entry Price: $18.92 (9/4/13)
Lowered Price from Selling Options: None
Exit Target: $16
Return: -5%
Stop Target: $22
Action: Krispy Kreme fell below $19 to $18.91 before recovering to $19.56 on Monday. We wanted to see a close below $19 but $20 is still being tested. There is upside risk up to $21-$22 on a close above this level while a close below $19 should create some selling pressure down to $18- with a gap to fill down to $16-$14.
NPS Pharmaceuticals (NPSP, $32.38, down $0.59) LEAP Option
January 31 calls (NPSP140118C00031000, $5.40, down $0.20)
Original Entry Price: $1.40 (8/29/13)
Exit Target: $2.80 (closed half at $2.90 on 9/10/13)
Return: 161%
Stop Target: $2.50, raise to $4
Action: Shares were up $2 for the week after racing to a high of $33.69 by Thursday. Friday’s low was $32.02 following a pullback off fresh highs as short-term support at $32 will try to hold. There is backup at $30 but we mentioned last week shares could reach $35 following the close above $30. We have raised the Stop Target of $2.50 to $4 in case there is a pullback but we are now looking at a run to $40 if $35 clears.
Galena Biopharma (GALE, $2.08, flat)
Original Entry Price: $2.12 (7/8/13)
Lowered Price from Selling Options: $2.12
Exit Target: $5
Return: -2%
Stop Target: $1
Action: GALE tested $1.90 throughout the week before Thursday’s run to $2.10. Resistance at $2.20 was tested on Friday’s pop to $2.19 and a close above this level would be bullish. If support at $2 doesn’t hold, expect another test to $1.90 this week.
Exact Sciences (EXAS, $12.03, up $0.01)
October 14 calls (EXAS131019C00014000, $0.10, flat)
Original Entry Price: $13.55 (6/11/13)
Lowered Price from Selling Options: $12.40
Exit Target: $16+
Return: -3%
Stop Target: $10.45
Action: Shares are on the verge of a breakdown to $11.50 or are prepping for a test to $12.50-$13 again.
We recommended buying Exact Sciences at $13.55 on 6/11/13. On 7/11/13 we sold the August 15 calls for 55 cents which lowered our cost basis to $13.
On 9/10/13 we sold the October 14 calls for 60 cents which lowered our cost basis to $12.40. If we are called away in mid-October at $14 the trade will make 13%.
Trades on HOLD (7): DryShips (DRYS, $3.64, down $0.22), AKS Steel Holding (AKS, $3.83, down $0.11), Rare Element Resources (REE, $2.61, down $0.10), Rambus (RMBS, $9.17, up $0.11), Bebe Stores (BEBE, $6.03, down $0.01), Vivus (VVUS, $9.45, down $0.32), Dendreon (DNDN, $2.99, up $0.01)
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5. Week Ahead
Here is a chart of the events for the week ahead:
