Monthly Cash Machine Newsletter, Tuesday, 02/08/2005 06:55:47 PM ET
HAVING TROUBLE PRINTING?
Stocks drifted in a small range Tuesday amid relatively light volume as traders took profits and investors awaited the next catalyst for buying. The Dow Jones industrial average added 8 points to close at 10,724, while the NASDAQ composite index rose 4 points to 2,086. The broader Standard & Poor's 500 index was nearly unchanged at 1,202.
Our portfolio experienced little notable activity, however a few issues currently have our attention:
We continue to monitor ImClone Systems (NASDAQ:IMCL), which rallied Monday on news that Carl Icahn raised his holdings in the biotechnology firm. According to a filing with the U.S. Securities and Exchange Commission, the billionaire investor upped his stake to more than 6% of the company, and that would certainly explain some of the recent buying interest in the issue. With less than two weeks until expiration, we hope the brief recovery fades into a lateral consolidation between the recent trading-range boundaries of $40-$46.
We are also watching 3M Company (NYSE:MMM) as it moves ever so close to our sold (call) strike at $85. The issue is testing overhead supply near that price for the second time in two weeks and the chart is beginning to show some indications of a positive resolution to the current range-bound pattern. At the same time, the potential upside in the stock ($86-$87?) seems relatively limited so we should have an opportunity to confirm the technical change of character before making an exit or adjustment in the position. One thought I might add, in the event of a bullish move, is the possibility of rolling the short calls up and out to the $90 strike in April, which would put another level of resistance to work and improve the (statistical) probability of a profitable outcome in the overall position.
Last, but not least, is Synaptics (NASDAQ:SYNA), which enjoyed a bit of stability as bargain-hunters boosted its share value nearly 5% during the morning session. Those of you with any concern about the outcome of the bullish spread should have used that opportunity to close the sold puts for a mere $0.20 per contract, thus guaranteeing a profit of $0.25 per contract in the position. Of course, we are hopeful the issue will find renewing buying support near the current price but as the saying goes, "A bird in the hand, etc..."