Option Investor
Newsletter

Daily Newsletter, Tuesday, 10/20/2009

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Strong Earnings, Mixed Economics

by Jim Brown

Click here to email Jim Brown

Two days into the second heaviest week of earnings and investors are already becoming less interested. Add in a drop in housing and the markets gave up some of its gains.

Market Stats Table

The morning started with the Producer Price Index report for September. Prices at the producer level fell -0.6% in September due mostly to the drop in energy prices. Obviously that will reverse in October given the rise in oil prices to $80. Despite the drop in producer prices the core inflation among intermediate and crude products rose sharply for the second consecutive month. Prices for core intermediate goods rose +0.9% in September after a +0.6% rise in August. September was the fourth consecutive month of price inflation for core goods. Core inflation in September was the highest since the recession began. The rise in the core prices provided little support to those who are worried about deflation. Instead it appears inflation is the real risk.

PPI Chart

The economic news causing investor concern today was the New Residential Construction numbers for September. Housing starts came in at 590,000 on an annualized basis. This compares similar numbers for the prior three months but less than the 610,000 expected. Both permitting and completions are slowing. This is due to the onset of winter and the end of the housing stimulus scheduled for November.

Weighing on builders is the very high inventory levels and the price pressure from the two million foreclosures expected for 2009 and again for 2010. Permits are down -29% year over year. Completions fell -10% from August levels. In September completions were down -40% year over year.

Housing Starts

Economic reports due out on Wednesday include the Mortgage Applications, Regional Employment, Oil Inventories and the Fed Beige Book. The Beige Book is far more important than the other reports on the list. This is the Fed's regional survey of economic conditions. Hopefully it will show expanding growth in all Fed regions.

The big news of the day was earnings and the biggest was the $9 gain in Apple after they posted earnings that rose +46%. Apple reported earnings of $1.82 per share on $9.87 billion in revenue compared to $1.26 per share and $7.9 billion in the comparison quarter. Consensus estimates were $1.42 per share. There is no recession in Apple products. Apple sold 7.4 million iPhones in Q3. That was the first full quarter of sales for the 3GS model. Apple also said they sold 3 million Macs thanks to the back to school season. Mac shipments rose +17%. Analysts were expecting 2.8 million. Apple sold 10.2 million iPods and that was a decline of -8% but still over the analyst consensus for 10 million. Gross margins rose +2% to 36.6%. Steve Jobs said in a statement that Apple had some great new products in the pipeline for 2010 but failed to release any details.

Apple told analysts that earnings for the current quarter would be in the range of $1.70 to $1.78 on revenue of $11.5 billion. Analysts were expecting earnings of $1.91 on revenue of $11.45 billion. Normally that kind of estimate decline would crush a stock but Apple explained that the Financial Accounting Standards Board (FASB) had changed the rules on revenue recognition and iPhones and Apple TV would have to be recognized over the two year expected life of the products. They will still recognize the same profit but some of it will be deferred. Investors did not appear concerned and shorts were crushed with the $9 gain. UBS issued a new price target of $280.

Apple Chart

Dow component Caterpillar (CAT) beat the street with earnings that fell -53% over the comparison quarter. However, that was better than analyst estimates and CAT rose nearly $2 on the news. Most of their profits came from strong cost cutting rather than increased sales. The CAT CEO said they were seeing encouraging signs of a recovery underway. He expects 3% global GDP growth in 2010. CAT narrowed guidance to $1.85-$2.05 from $1.15-$2.25. He expects sales growth of 10-25%. CAT get 70% of its sales from outside the USA and the CEO was one of the first to warn of the impending global recession back in early 2007. Because of their infrastructure focus they typically see trends developing before other indicators begin to reflect it.

CAT Chart

Lexmark (LXK) reported earnings of 65 cents and easily beat the consensus estimate of 46 cents per share. LXK stock jumped +15% or +3.59 on the news. The news was still the same with an announcement of strong cost cutting and layoffs of another 825 people. However, Lexmark said they saw an increase in demand especially in printer supplies. The company also raised guidance for Q4 and shorts were squeezed again.

Lexmark Chart

United Technology (UTX) reported earnings that beat the street but was not rewarded like Apple, CAT or LXK. UTX reported a 17% drop in profits to $1.14 per share compared to estimate of $1.12 per share. UTX said it had cut 15,000 jobs since the slump in business began. They tightened their guidance for the full year and said sales would improve but only slightly. UTX might be a candidate for a short position given their lukewarm guidance.

UTX Chart

After the bell Yahoo (YHOO) reported earnings that tripled thanks to strong cost cutting. Yahoo posted earnings of 13-cents compared to estimates of 7-cents. There was also a $98 million gain related to the sale of Alibaba.com. Yahoo did say that advertising revenue was stabilizing despite an 8% drop in ad revenue in Q3. Some analysts were expecting a decline of as much as 20%. Yahoo rallied more than a buck in after hours trading.

Yahoo Chart

SanDisk (SNDK) reported blowout earnings of 75-cents compared to estimates of 26 cents. Shares of SNDK rallied more than 10% in after hours trading. Revenue came in at $935.2 million compared to estimates of $787.9 million. That is a serious beat on revenue considering most companies are having trouble just making their revenue estimates. Sandisk said the industry fundamentals were improving suggesting better earnings were ahead.

SanDisk Chart

United Health reported a +13% gain in earnings despite a drop in enrollment. UNH reported earnings of $1.04 compared to estimates of 76-cents. Revenue rose +8% to $21.7 billion but the Healthcare Division saw revenue fall -3% with enrollment down -6%. Consumer budgets are to blame and healthcare is a large expense that sometimes gets pushed off the budget when times are lean. UNH shares rose +4%.

Pfizer (PFE) reported earnings of 51 cents compared to estimates of 48 cents. The better than expected earnings came from - all together now - "COST CUTTING". The cost cutting offset a decline in the sale of drugs and the negative impact of foreign exchange rates. Sales of Lipitor fell -12% in the U.S. and -9% worldwide in Q3. Pfizer closed negative for the day with a minor loss.

Big names on the calendar for Wednesday are EBAY, USB, WFC, MO, NVLS, VMW, AMGN and BA. Wells Fargo and Ebay will probably attract the most attention.

So far this earnings cycle 95 S&P companies have reported. 79% have beaten earnings estimates compared to 71% in Q2 and the historical range of 61-65% that beat. However, only 65% have beaten on revenue numbers this time around compared the average of 50%. The average earnings beat has been by +19% but the average revenue beat is only 0.7%. The majority of earnings gains have been from cost cutting. The cost cuts have provided some huge earnings beats but they are not repeatable. Also, because estimates are relatively low for Q3 it would be hard for somebody to not beat their earnings if they were actively working to manage their business. Investors don't like gains from cost cutting and special tax rates. For the market to really gain momentum we need to see top line revenue growth that signals a rebound in the economy.

Oil prices topped $80 overnight before retreating to $78.05 intraday. Crude closed at $79.09, down 52-cents. This was the last day of trading for the November contract, which expired at the close. The December contract becomes the front month on Wednesday and it closed today at $79.05. Crude oil has posted gains for eight consecutive days until today. Obviously there were some expiration pressures and short covering once the prior resistance at $75-76 was broken last week.

When the weekly oil inventories are reported on Wednesday analysts expect to see a +1.1 million barrel gain. Gasoline is expected to have fallen -1.6 million barrels and distillates by -1.0 million. Mastercard's Spending Pulse report for last week showed that U.S. gasoline demand rose by +3.7% last week. I suspect that was due to drivers filling up to avoid price hikes once oil prices broke over $72. In my local area there are eight service stations within 1.5 miles of my house. There was a 25-cents difference in prices from the low of $2.24 to high of $2.49 on Saturday. The three stations with $2.49 had gone up about 15 cents over the last week. I am acutely aware of oil prices and routinely watch how quickly they translate into higher gasoline prices. Given the roughly $14 rally in crude prices over the last three weeks I would bet that others were filling up last week to get one last tank of relatively cheap gas before the full impact of $80 oil hit the pumps.

Crude Oil Chart

Natural gas rallied strongly today to break over $5 and market reporters were ecstatic. I am glad to see it but the real resistance is $5.50 and that is not likely to break that easily. Storage levels are in record territory at 3,716 BCF. There has never been this much gas in storage before. With the prospect of a cold winter this massive storage level is not depressing gas prices. Frankly I am amazed. Normally when storage levels move close to the highs the pressure in the pipelines keep lower volume producers from pushing gas into the pipeline and indirectly impacts the price of gas. Currently gas in storage is 32.5% above 2008 levels and 29% above the five-year average. This would not normally be conducive to higher gas prices. However, rapid production declines in the newer shale gas plays has begun to worry producers that their reserves are not as solid as previously thought and production levels could decline faster than expected over the next 12-18 months. This is why rigs are being reactivated every week to go back to work exploring for gas.

Natural Gas Futures Chart

I think analysts are making too big a deal about the intraday relationship of the dollar and the equity markets. I understand it for the commodity markets but the equity markets should not have an intraday relationship. However, for whatever reason that relationship has increased in recent weeks. Today the dollar traded sharply lower at a new 52-week low of 75.10 overnight only to rally once the equity markets opened to trade as high as $75.76 intraday. In relative terms this kind of move on the dollar index is huge. The rebound exactly corresponded with the decline in the equity markets. When the dollar began to fade late in the day the equity markets rebounded off their lows. I cannot remember any time in my trading life that this relationship was so evident. This probably is a reflection of the global concern that the dollar is going to fall considerably lower and we are seeing higher volatility as a result.

Dollar Index Chart

Another reason we may have been seeing some weakness in the markets was the flight of cash from the Galleon Group. Galleon manages $3.7 billion and investors have already requested a return of more than 25% of those funds after the firm's founder Raj Rajaratnam was arrested last Friday for insider trading. Raj was released on $100 million bail over the weekend and was back at work on Monday and trying to assure investors there was no problem. Still over $1 billion has been already been requested to be returned by investors. The Galleon funds own/control large stakes in quite a few Nasdaq stocks. In order to recover the money depositors are requesting Galleon would have to sell major stakes in numerous tech companies. Their top tech holdings have already declined by -12% to -16% this week alone. This is probably follow me trades being unwound as well as traders trying to short the stocks ahead of the withdrawal.

According to Galleon they have until early 2010 to exit positions and return the cash. I question this since the Galleon technology fund has a monthly withdrawal schedule while some of the other Galleon funds have quarterly withdrawal dates. The monthly withdrawal deadlines are the 15th of the month with a 45-day window so October had already passed before Raj was arrested. That means any withdrawal requests made by Nov-15th will have to be returned by Jan 1st. Given the recent fund problems like Bernie Madoff and others it s not surprising that Galleon investors are suddenly demanding their money back.

The equity markets a slowly moving higher over the backs of shorts in denial. The three steps forward, two steps back is agonizing to watch because every dip could be the first day of a major decline. Instead buyers are picking up the bargains and we mark a new high the next day. This is eventually going to end but nobody knows when. Analysts are split on direction and that is what makes a market. However, the declines have been on rising volume while the advances are on smaller volume. Friday's decline came on 9 billion shares. Monday's rally on 7.7 billion. Tuesday's decline on 9+ billion shares. I would much prefer the advances were on heavier volume.

The major indexes hit new highs on Monday but new individual new highs for stocks fell to 543 from the 1136 level last Wednesday. The decline in new individual highs is also troubling. Sure you have stocks like Apple hitting new highs but for every stock hitting a new high on Tuesday there were 9 stocks trading lower. The breadth of the market is shrinking.

I know I have a bias towards market weakness for the rest of October but I am trying not to let it color my writing. As long as I continue to warn you I have it then you can make your own decision about my views.

The Dow rallied to 10100 on Monday but it was exactly to uptrend resistance and the failure today was not unexpected. Breaking out over 10100 with a big gain would have been the real surprise. The Dow can continue to creep higher and it appears it is now using 10,000 as support. That is a highly visible level and a move much below 10K would be cause for concern. Overhead resistance stiffens at 10300 and the downtrend from 2008 highs.

Dow Chart

Dow Table

The S&P-500 has already reached that downtrend resistance convergence at 1100 and has respected that resistance for the last couple days. Support on the S&P should be around 1080. With 95 of the S&P-500 already reported and most of those the major big cap stocks the quality of earnings should decline from here. That could hamper further gains.

S&P Chart

You would think that a $9 gain on Apple would have been enough to keep the Nasdaq in positive territory today. Unfortunately the Nasdaq is having a tough time moving over that long-term resistance at 2160. It moves over briefly but then is immediately pulled back. Now that all the tech titans with the exception of EBAY, AMZN and Microsoft have already reported earnings there is little spark to kindle a tech rally. If the Galleon traders are in fact dumping their portfolio of tech stocks that could also hamper further gains. Despite the decline today the bullish trend is still intact but it does appear to be losing steam. Support appears to be 2155-2160 but the recent trend has been so choppy there is no clear-cut support until about 2100.

Nasdaq Chart

I would be thrilled to see buyers hit the dip at Wednesday's open and I would be surprised to see it happen on decent volume. I am not predicting any specific decline but I feel earnings are now priced into the market and with the generals heading back to the rear to toss back a few and celebrate their cost cutting earnings, the troops appear to be in disarray. Something needs to happen to spark a continued rally and I don't know what that might be today. We had great earnings from Apple, Google, Intel, etc and now that is old news. I doubt Microsoft will follow the same trend since Windows 7 is not yet on sale. Keep your stops tight in case the rats start fleeing the ship.

Jim Brown


New Option Plays

Something To Consider

by James Brown

Click here to email James Brown

Editor's Note:

No new plays tonight. Most of the candidates that look attractive all have earnings coming up in a few days, which wouldn't give us much time.

Something readers may want to consider are more market neutral strategies like straddles and strangles. With the Volatility index down toward 20 the cost of buying options (generally speaking) is cheaper. This is the time of year to try a straddle or strangle strategy with earnings as a catalyst for a sudden move. The trick is finding the right stock that will give us a post-earnings move!

FYI: The low VIX also makes buying protective puts a lot cheaper if you have a long-term portfolio of stocks you'd like to protect.



In Play Updates and Reviews

Don't Hold It

by James Brown

Click here to email James Brown

We have several candidates that are about to report earnings in the next few days. We do not want to hold over the earnings report.


CALL Play Updates

Apollo Group - APOL - close: 75.52 change: +1.61 stop: 71.90

APOL dipped toward its 20-dma again this morning and managed a strong rebound. Shares ended up out performing the market with a 2.1% gain. This looks like a new bullish entry point. More conservative traders could up their stops toward today's low near $72.50.

Our first target is $79.90. This should be a short-term play as we plan to exit ahead of the October 27th earnings report. FYI: The Point & Figure chart is bullish with a $95 target.

Picked on   October 14 at $ 75.25
Change since picked:       + 0.27
Earnings Date            10/27/09 (unconfirmed)
Average Daily Volume =        2.6 million  
Listed on   October 13, 2009         


AvalonBay - AVB - close: 72.25 change: -2.03 stop: 69.95

AVB has been bouncing around this $3.00 range for days. It's back to testing support near $72.00 again. A breakdown from here would be bearish but AVB should have additional support near $70.00. I'd use a bounce from here as a new entry point.

Our first target is $77.75. More aggressive traders could aim higher but we don't want to hold over the early November earnings report.

Picked on   October 08 at $ 72.60
Change since picked:       - 0.35
Earnings Date            11/04/09 (unconfirmed)
Average Daily Volume =        1.8 million  
Listed on   October 07, 2009         


Core Labs - CLB - close: 109.15 change: +0.11 stop: 106.49 *new*

CLB recovered from its intraday lows near $106.60 and closed in positive territory. Tomorrow is our last day for this play. I'm inching our stop loss to $106.49. The plan is to exit at the close on Wednesday to avoid holding over earnings. I am adjusting our second target down to $113.00.

Entered on  October 08 at $105.25
Change since picked:       + 3.90
                             /1st target hit @ 109.90 (+4.4%)
Earnings Date            10/21/09 (confirmed)
Average Daily Volume =        175 thousand 
Listed on September 23, 2009         


Consol Energy - CNX - close: 50.76 change: -0.32 stop: 48.49 *new*

CNX is still trading sideways near $50.00. I am not suggesting new positions at this time. Our second target is $54.00.

More conservative traders may want to exit completely right now. Tomorrow is our last day. We plan to exit on Wednesday at the closing bell to avoid holding over earnings. Given our remaining time I'm raising the stop loss to $48.49.

Picked on September 25 at $ 43.77 /gap down entry
Change since picked:       + 6.99
                                /1st target hit @ 48.50 (+10.8%)
Earnings Date            10/22/09 (confirmed)
Average Daily Volume =        3.0 million  
Listed on September 19, 2009         


Dril-Quip, Inc. - DRQ - close: 54.33 change: -0.79 stop: 49.45

DRQ remains overbought and looks vulnerable to profit taking but as long as oil remains strong the trend is up. I'm not suggesting new positions at this time.

DRQ has already hit our first target at $53.00. Our second target is $57.00.

Picked on September 28 at $ 48.50
Change since picked:       + 5.83
                              /1st target hit @ 53.00 (+9.2%)
Earnings Date            11/10/09 (unconfirmed)
Average Daily Volume =        282 thousand 
Listed on September 26, 2009         


EOG Resources - EOG - close: 94.41 change: +0.06 stop: 87.40

Target achieved. EOG is still showing strength and hit an intraday high of $95.00. Our second target to take profits was at $94.75. I'm not suggesting new positions at this time.

EOG has exceeded both our first and second targets. Our third and final target is $99.00. I'm lowering it from $99.50. We do not want to hold over the early November earnings report.

Chart:

Picked on   October 07 at $ 85.24 /gap higher entry
                               /originally listed at $84.71
Change since picked:       + 9.17
                              /1st target hit @ 89.90 (+5.4%)
                             /2nd target hit @ 94.75 (+11.1%)
Earnings Date            11/03/09 (unconfirmed)
Average Daily Volume =        2.9 million  
Listed on   October 07, 2009         


Express Scripts - ESRX - close: 81.32 change: -0.96 stop: 78.75 *new*

ESRX dipped toward $80 again and bulls bought the dip again. While the trend is up I am growing concerned about the bearish divergence between price and some of ESRX's technical indicators. I am raising our stop loss to $78.75. More conservative traders may want to exit completely or raise your stop toward $80.00. We plan to exit ahead of the October 28th earnings report.

Picked on   October 06 at $ 77.42 /gap down entry
                              /originally listed at $78.04
Change since picked:       + 3.90
                             /1st target hit @ 82.50 (+6.6%)
Earnings Date            10/28/09 (confirmed)
Average Daily Volume =        2.1 million  
Listed on   October 06, 2009         


Flowserve - FLS - close: 106.00 change: -0.78 stop: 101.90

FLS only lost 0.7% and managed a bounce from the $105 level intraday. If the $105 level breaks look for short-term support near $102.50. Our first target is $109.75.

We will plan to exit ahead of the late October earnings report.

Picked on   October 12 at $102.60
Change since picked:       + 3.40
Earnings Date            10/28/09 (unconfirmed)
Average Daily Volume =        1.2 million  
Listed on September 19, 2009         


Gold ETF - GLD - close: 103.42 change: -0.81 stop: 97.40

The dollar produced a bounce from 14-month lows and the commodities reversed lower on the move. It wasn't a big rebound but the dollar is oversold and gold looks a little overbought. These trends could see a short-term reversal.

If you're looking for new positions consider waiting for a dip near $100, which should offer support. Our plan calls for small positions to limit risk.

Our first target is $109.90. We are still contemplating a second, longer-term target.

Picked on   October 06 at $102.28
Change since picked:       + 1.14
Earnings Date            00/00/00
Average Daily Volume =       14.2 million  
Listed on   October 06, 2009         


Intercontinental Exchange - ICE - close: 105.95 chg: -0.08 stop: 94.90

There is no change from my prior comments. We're waiting for a pull back toward what should be support near $100.

Use a trigger at $101.00 to buy calls. We'll use a stop at $94.90. Our first target is $109.75. Our second target is $114.75. More aggressive traders could aim higher but we want to exit ahead of the November 3rd earnings report.

Picked on   October xx at $ xx.xx <-- TRIGGER @ $101.00
Change since picked:       + 0.00
Earnings Date            11/03/09 (confirmed)
Average Daily Volume =        1.3 million  
Listed on   October 17, 2009         


Mobile Telesys - MBT - close: 51.56 change: -2.98 stop: 49.75

Ouch! MBT reaffirmed its 2009 earnings outlook today. It seems that investors took that as an excuse to lock in some gains. The stock fell 5.4%. I would expect a dip toward $50.00.

Our second target is $59.00. We do not want to hold positions over the early November earnings report.

Picked on   October 12 at $ 50.15
Change since picked:       + 1.41
                            /1st target hit @ 54.50 (+8.6%)
Earnings Date            11/05/09 (unconfirmed)
Average Daily Volume =        1.5 million  
Listed on   October 10, 2009         


Martin Marietta - MLM - close: 95.70 change: +0.08 stop: 91.19

MLM provided another entry point today. Shares dipped toward $94.00 and bounced twice at this level. Readers can use this move as a new entry point. More cautious traders might want to inch up their stop losses. Our first target to take profits is at $99.90. More aggressive traders could aim for the September highs.

Picked on   October 19 at $ 95.15
Change since picked:       + 0.55
Earnings Date            11/06/09 (unconfirmed)
Average Daily Volume =        418 thousand 
Listed on   October 15, 2009         


Transocean Ltd. - RIG - close: 91.33 change: -1.37 stop: 86.85

RIG ran into some profit taking but traders bought the dip near $90.00. The late day bounce looks like another entry point but more conservative traders might want to raise their stop loss. Our target is $99.50.

Picked on   October 15 at $ 90.94 /gap down entry
                             /originally listed at $91.48
Change since picked:       + 0.39
Earnings Date            11/04/09 (confirmed)
Average Daily Volume =        4.1 million  
Listed on   October 15, 2009         


Waters Corp. - WAT - close: 58.48 change: -0.34 stop: 54.90

It was a quiet day for WAT. I don't see any changes from my prior comments. Our target to exit is $59.50. More aggressive traders may want to aim higher!

I'm not suggesting new positions at this time. The plan was to use small position sizes (1/2 to 1/4 our normal size) to minimize risk. We do not want to hold over the October 27th earnings report.

Picked on September 28 at $ 55.43 *new entry
Change since picked:       + 3.05
Earnings Date            10/27/09 (confirmed)
Average Daily Volume =        809 thousand 
Listed on September 12, 2009         


Whirlpool Corp. - WHR - close: 73.00 change: -0.76 stop: 68.45

WHR is still flirting with resistance near $74.00. We're down to our last two days. Readers may want to exit now! The plan is to exit on Thursday at the closing bell (Oct. 22nd). More conservative traders may want to take profits now.

Our second target remains at $78.50.

Picked on   October 10 at $ 70.50
Change since picked:       + 2.50
                               /1st target hit @ 73.90 (+4.8%)
Earnings Date            10/23/09 (confirmed)
Average Daily Volume =        1.5 million  
Listed on   October 10, 2009         


PUT Play Updates

BIOGEN IDEC - BIIB - close: 48.06 change: -1.33 stop: 50.65 *new*

I was expecting a bigger move on earnings. BIIB reported this morning with results beating Wall Street's estimates by eight cents. The company delivered a third quarter profit of $1.12 per share. Investors sold the news anyway and the stock spiked down to $47.33. I am lowering our stop loss to $50.65.

Our first target to take profits is at $44.50. Our second target is $40.50. FYI: The P&F chart is bearish with a $36 target.

Picked on   October 03 at $ 48.89
Change since picked:       - 0.83
Earnings Date            10/20/09 (confirmed)
Average Daily Volume =        2.6 million  
Listed on   October 03, 2009         


Netease.com - NTES - close: 38.90 change: -0.46 stop: 41.65

NTES continues to sink and remains under resistance near $40.00. What is interesting is how volume is quickly evaporating. I suspect the stock is coiling for another breakout one way or the other. I would still consider new positions here.

Our first target is $35.25. Our second target is $33.00, just above the simple 200-dma. We want to exit ahead of the mid November earnings report. FYI: The P&F chart is bearish with a $25 target.

Picked on   October 17 at $ 38.47
Change since picked:       + 0.43
Earnings Date            11/12/09 (unconfirmed)
Average Daily Volume =        2.7 million  
Listed on   October 17, 2009         


CLOSED BULLISH PLAYS

Amazon.com - AMZN - close: 94.98 change: +0.30 stop: 92.75

AMZN has been stuck churning sideways near $95.00. Investors could be waiting for the company's earnings report before placing any new bets. Last night I said we would exit early on Tuesday at the closing bell to avoid holding over the earnings report on Thursday.

Chart:

Picked on   October 08 at $ 95.05
Change since picked:       - 0.37
Earnings Date            10/22/09 (confirmed)
Average Daily Volume =        6.2 million  
Listed on   October 07, 2009         


CLOSED BEARISH PLAYS

FUQI Intl. - FUQI - close: 27.82 change: +0.44 stop: 28.75

We knew that shares of FUQI were volatile. That's why I suggested small positions. The stock spiked to $28.92 this morning and quickly reversed lower. Unfortunately that was enough to stop us out at $28.75.

Chart:

Picked on   October 17 at $ 26.05 /gap higher entry
                          /originally listed at $25.30
Change since picked:       + 2.70 <-- stopped @ 28.75 (+10.3%)
Earnings Date            11/12/09 (unconfirmed)
Average Daily Volume =        1.3 million  
Listed on   October 17, 2009