Option Investor
Newsletter

Daily Newsletter, Thursday, 3/29/2012

Table of Contents

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

Market Wrap

Jobless Claims Weigh On Market

by Thomas Hughes

Click here to email Thomas Hughes
Earnings season is beginning to heat up and so far there has not been much to be excited about. Economic data continues to come in mixed and makes me ask the question, is the economic recovery really expanding or are we reaching a cyclical peak.



Futures had been trading lower before the announcement of today's economic data. The release of today's data and revisions to last week caused an immediate 15 point drop in Dow futures to -45. The index, at opening, traded down around 55 points from yesterday's open in the first minutes.

There is a surprising revision in the initial claims data that shows a different picture than the previously released information.

Initial claims last week, which had been at 4 year lows, was revised upward by 4.6% to 364,000 from 348,000. This week's claims fell from the revised number by 5000 to a seasonally adjusted 359,000 claims for an initial week of unemployment. The four week moving average, a lagging but widely accepted indicator of joblessness continued to decline. It fell by 3,500 claims to a four year low of 365,000.

Today's jobs data gives a little different perspective on the state of joblessness. The market previously thought we were at 4 year lows but we really weren't. Revisions, while near the lows, are lending strength to other signs of economic slowing and the need for more quantitative easing which fed chairman Ben Bernanke alluded to in statements earlier this week.

This weeks initial claims data

Continuing claims data fell as well. The previous weeks data was revised down to 3.381 million and data this week fell another 41,000 to to 3.340 million.


Total claims for all forms of unemployment benefits also fell in today's data. Claims dropped by 131,488 to 7.15 million.


The final data for US fourth quarter GDP was also released today. Fourth quarter GDP held steady at 3% and suggests the slowly strengthening economy will continue making gains in the first quarter of 2012. GDP deflator and PCE Price Index also remained steady from previously released data.


The benchmark 30 year mortgage rate fell below 4% last week. The rate was pegged at 3.99%, down from the previous weeks 4.08%. This is nearly a full percent down from last year's number of 4.86% in the comparable week. The rate cost, on average, 0.7 points in prepaid interest to obtain.

Best Buy (BBY) released disappointing earnings this morning alongside plans to close as many as 50 stores next year. The news does little to support the theory of improving jobs, especially with today's revisions to initial claims. The tech retailer posted a loss of over $1.5 billion in the fourth quarter, citing lower sales of notebooks and TV's. The company announced plans to close stores and cut 400 jobs as part of an effort to reduce costs by $800 million by 2015. The stock dropped as much as 8% in early trading and ended the day down 6.9% at $24.77.

There was not only negative news in Best Buys statements. The chain is planning to switch its focus to smaller outlet type stores in order to be more competitive and maintain costs. The company is planning to open 100 Best Buy Mobile format stores in fiscal 2013. The losses in 2012, while based largely on sales misses, also included substantial one time charges. Best Buy is also planning to target more online shoppers as well as open new stores in China, which has been a successful strategy for other retailers.

Best Buy Chart

Social media game maker Zynga traded up over 2% in today's trading after their secondary stock offering was priced at $12. The stock has been trading over $12 since late January and could be building support at that level. Today's trading is on high volume and left the stock up by 4.74% at $12.82

Zynga, Daily

Telecom giants AT&T (T) and Verizon (VZ) both received downgrades today from outperform to neutral. The downgrades come on lowered growth outlooks and valuation. AT&T traded down today, dropping below the 30 day moving average intraday. The stock opened much lower than yesterday's close, below the 30 day moving average, but managed to regain some of the initial loss to close above the average at $31.21

AT&T, Daily

Verizon also traded lower on the downgrade. The bears are taking a bite out of Verizon this week and are making a run toward support at $37. The stock is trading below its 30 day moving average on high volume. At the current level the stock yields over 5% in dividends. In the long term the stock is looking pretty weak.

Verizon, Daily with volume

Verizon, Weekly with MACD

Under Armor (UA) also received a notable downgrade. The stock was reduced from buy to neutral by brokerage firm Longbow. The stock traded down as much as 3.5% in today's action and closed at $1.84, down 1.92% from yesterday's close. The stock found support at the 30 day moving average.

Under Armor, Daily

Ford Motor Company (F) was added to the Top Picks Live list at Citigroup. The stock traded down marginally throughout the day but gained strength in the afternoon to end at $12.49, up 1.38%. The stock is trading right around its 30 day moving average, between short term support and resistance lines at $12 and $13. The technicals are mildly bearish but in decline. The US auto sector improved in 2011 and is still expected to continue improving in 2012.

Ford, Daily

Transocean (RIG), provider of offshore drilling services to the oil industry, was upgraded to outperform from underperform by CLSA. This is the most recent of several upgrades the company has received over the past two months. The upgrades come on expectations of higher realized profits through increased day rates and pass throughs of maintenance costs. The stock dropped below its 30 day moving average early today on weak volume but found support in afternoon trading. The stock has been in decline recently from three month highs but is expected by many analysts to rebound and continue its bull trend.

Transocean, Daily

The oil industry , as represented by the oil industry ETF (OIH), has been trending sideways for much of the last twelve months. The stock is oversold and could be forming support between $39 and $40.

OIH, Daily

Banking giant Wells Fargo (WFC) was upgraded by Nomura to buy from neutral. The company thinks that consensus estimates of Wells Fargo earnings are too low. The technical outlook on the stock is bullish. The short term trend is up with a recent break above resistance on high volume. The price action could be forming a bullish triangle. The stock traded down to end the day at $33.94 , -1.4%, but is still trading near 12 month highs.

Wells Fargo, Daily

The financial sector Spyder (XLF) holds Wells Fargo in top spot as 9% of invested funds. JP Morgan (JPM), Citigroup (C ) and Bank of America round out the top four with 8.5%, 5.5% and 4.6% of total fund money each. The XLF traded down today, and is just under a major resistance level. The stock has been trading up to this level for about two weeks now and is forming a triangle similar to WFC. The move is on mildly increased volume and bullish technical indicators.

The financial Spyder (XLF), Daily

The IPO market is heating up a little. This week there are 9 scheduled IPO's. Annie's(BNNY), a natural food company based in Berkeley, CA opened yesterday to little fanfare but quickly stunned investors as the stock rose above its price range of $14-$16 and closed the day at $31. Today the stock continued its climbed, doubling from its opening price and closing the today up another 6.25% at $37.92.

Annie's, One Minute Intraday Chart

There were two IPO's today, Millennium Media (MM) and Rexnord (RXN). Millennium was priced between $9-$11 but the actual opening was more than double the expected price. The stock opened the day at $25 per share, traded down a little during the day and closed at $25. Millennium is an independent provider of mobile advertising platforms.

Millennium, One Minute Intraday Chart

Rexnord (RXN) is manufacturer and operator of water management and motion control systems. It operates worldwide. The stock was priced in the middle of the expected range of $18-$19 and was met with approval. The stock traded up throughout the day at $20.28.

Rexnord, One Minute Intraday Chart

Rimm announced earnings after the bell today. This is the first quarterly report since the company was taken over by its new and untested CEO, Thorsten Heins. The company has been struggling against competitors in the smart phone sector and is expected unveil new Blackberry 10 technology later this year. The stock has been trading very quietly for the last few months and today was no exception. Anticipation of the statement had the market waiting all day. The actual report failed to inspire confidence in the company but did spark a short covering rally that was halted briefly. RIMM earned an adjusted $0.80 per share. Actual revenue was $4.2 billion versus an estimated $4.54 billion. Sales were at the low end of guidance. Revenue in Heins first quarter as CEO fell roughly 50% from the same period last year.

Rimm, Daily

Redhat, leader in Linux based open source software, soared more than 18% today to a 12 year high. The company reported earning after the bell yesterday and made investors very happy with the news. Full year revenue increased by 25% to $1.13 billion. The gain is on increased subscription revenue, up 22% for the year, and the results of investments in qualified salespeople around the world. The stock opened sharply higher and continued to trade strongly throughout the day on heavy volume.

Redhat, Daily

The price of oil, gas and natural gas all fell sharply today on talks of opening strategic reserves. The US, England and France have been considering the release in order to drive down high gasoline prices at the pump. An unexpectedly large gain in natural gas inventories also helped the move lower. Natural gas inventories rose by 57 bcf, higher than expected. Lower fuel costs could help prolong the current bull market in equities. Light sweet crude traded down as much as 2.5% today, around $102.75/barrel, with Brent crude in tow with a decline of around 1.5%. Gasoline bucked the sell off and traded up about 0.15% during the afternoon hours.

News from Europe was quiet today as the European markets fell to three week lows. Weak data and Bernanke's statements helped to push the region lower. Home prices in the UK suffered their sharpest monthly decline in over two years, this comes ahead of the end of a major tax exemption. Spain is also being watched as the government is expected to release its new “austerity” budget tomorrow. The budget is likely to stir debate and could cause a knee jerk reaction in the European markets.

Gold prices fell again today as the dollar gained strength. The dollar gained today versus the Euro and the Yen but fell slightly to the pound. Other precious metals, silver and copper gained ground as well.

The major indexes all opened lower and traded lower throughout the day. Late afternoon trading brought the Dow back to regain about 0.10% from yesterday's close. Today's trading brought the Dow down to the 30 day moving average, where it found support and then started the advance to close at the days highs. The price trend remains bullish but is at risk of breaking.

The Dow Jones Index, Daily

A look at the Dow Jones Index tracking stock (DIA) shows the same. Volume is low and momentum is weak.

The DIA, Daily

The broader S&P 500 traded in similar fashion but failed to regain positive territory. The index has weak momentum and is overbought.

S&P 500, daily

The long term trend is still up and bullish

S&P 500, weekly

The Nasdaq retreated today as well. The tech heavy index fell by less than a half percent and is still well above the 30 day moving average. Momentum is weakening and the index is also overbought.

Nasdaq, Daily

Tomorrow marks the end of the first quarter of 2012. There are a few IPO's scheduled tomorrow as well. Economic data tomorrow includes the PCE Core prices, Michigan Sentiment and Chicago PMI. Earnings announcements are light, only about 16 companies expected to report.

Thomas Hughes


New Option Plays

Medical Testing

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Quest Diagnostics Inc. - DGX - close: 61.32 change: +0.87

Stop Loss: 59.45
Target(s): 66.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
DGX is breaking out past short-term resistance near $61.00. Now it's about to breakout to new multi-year highs. I am suggesting a trigger to buy calls at $61.55. If triggered we'll use a tight stop under today's low at $59.45. I do want to point out that the 2006 high near $64.70 could be overhead resistance but we are aiming for $66.50. FYI: The Point & Figure chart for DGX is bullish with an $85 target.

Trigger @ 61.55

- Suggested Positions -

buy the Apr $60 call (DGX1221D60) current ask $2.20

- or -

buy the May $65 call (DGX1219E65) current ask $0.60

Annotated Chart:

Entry on March xx at $ xx.xx
Earnings Date 04/18/12 (unconfirmed)
Average Daily Volume = 821 thousand
Listed on March 29, 2012



In Play Updates and Reviews

Stops Hit on Intraday Weakness

by James Brown

Click here to email James Brown

Editor's Note:

The stock market's major indices bounced off their Thursday lows but the morning drop was enough to trigger some stop losses. COST, HLF, NUS, and WFM were stopped out. I am dropping UA as a candidate. Meanwhile SCHN was triggered.

Current Portfolio:


CALL Play Updates

Allergan Inc. - AGN - close: 94.94 change: +0.89

Stop Loss: 92.25
Target(s): 99.50
Current Option Gain/Loss: Apr92.5c: -12.6% & Apr95c: -21.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/29 update: Positive analyst comments helped AGN rally this morning. The stock closed up +0.9%. We have a stop loss at $92.25. More conservative traders may want to up their stop closer to the $93.00 level.

FYI: The Point & Figure chart for AGN is bullish with a $110 target.

- Suggested Positions -

Long Apr $92.50 call (AGN1221D92.5) Entry $3.55

- or -

Long Apr $95 call (AGN1221D95) Entry $1.85

03/27/12 AGN hit our breakout trigger at $95.25
03/22/12 adjusted entry point strategy to include a buy-the-dip trigger at $90.50 and a breakout trigger at $95.25.
03/15/12 not open yet. New buy-the-dip trigger @ 92.25
03/14/12 not open yet. try again.

Entry on March 27 at $95.25
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on March 13, 2012


Check Point Software - CHKP - close: 63.90 change: +0.64

Stop Loss: 59.75
Target(s): 68.50
Current Option Gain/Loss: Apr62.5c: +51.6% & May65c: +45.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/29 update: CHKP was also showing relative strength today with a +1% gain. The next obstacle the bulls need to overcome is resistance in the $64.60-64.70 area.

More conservative traders may want to use a stop under last Thursday's low at $60.77 instead. FYI: The Point & Figure chart for CHKP is bullish with an $88 target.

- Suggested Positions -

Long Apr $62.50 call (CHKP1221D62.5) Entry $1.55

- or -

Long May $65 call (CHKP1219E65) Entry $1.20

03/23/12 CHKP hit our entry trigger @ 62.25

Entry on March 23 at $62.25
Earnings Date 04/17/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on March 22, 2012


Cognizant Technology - CTSH - close: 76.30 change: -0.10

Stop Loss: 74.75
Target(s): 82.00
Current Option Gain/Loss: Apr77.5c: -42.8% & May$80c: -30.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/29 update: CTSH dipped to $75.41 intraday before bouncing back and trimming its loss to just 10 cents. I would hesitate to launch new positions here.

FYI: The Point & Figure chart for CTSH is bullish with a $97 target.

- Suggested Positions -

Long Apr $77.50 call (CTSH1221D77.5) Entry $1.75

- or -

Long May $80 call (CTSH1219E80) Entry $1.95

03/26/12 CTSH hit our entry trigger at $77.55

Entry on March 26 at $77.55
Earnings Date 05/04/12 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on March 21, 2012


Dollar Tree, Inc. - DLTR - close: 94.40 change: -0.20

Stop Loss: 92.25
Target(s): 98.50
Current Option Gain/Loss: Apr$95c: -27.2% & May95C: -10.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/29 update: DLTR spent Thursday churning sideways on either side of the $94.00 level. I am not suggesting new positions at this time. The Point & Figure chart for DLTR is bullish with a $122 target.

- Suggested Positions -

Long Apr $95 call (DLTR1221D95) Entry $1.65

- or -

Long May $95 call (DLTR1219E95) Entry $3.00

03/21/12 DLTR hit our entry trigger at $94.55

Entry on March 21 at $94.55
Earnings Date 05/17/12 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on March 20, 2012


Chart Industries - GTLS - close: 73.54 change: -0.04

Stop Loss: 70.90
Target(s): 79.75
Current Option Gain/Loss: -42.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/29 update: GTLS found support near $72.00 for the second day in a row. Overall it was a relatively quiet session. I don't see any changes from my prior comments. Currently we have a stop loss at $70.90. More aggressive traders may want to place their stop under $70.00, which should be round-number, psychological support. However, if GTLS trades under $71.00 it will look like a bearish H&S pattern has formed over the last three weeks. I am not suggesting new positions at this time.

Earlier Comments:
Our exit target is $79.75. More aggressive traders could aim higher. The Point & Figure chart for GTLS is bullish with an $82 target.

- Suggested Positions -

Long Apr $75 call (GTLS1221D75) Entry $3.50

03/26/12 new stop loss @ 70.90
03/16/12 triggered at $74.25

Entry on March 16 at $74.25
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 712 thousand
Listed on March 15, 2012


J.B.Hunt Transport - JBHT - close: 54.92 change: +0.05

Stop Loss: 53.75
Target(s): 59.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
03/29 update: Traders bought the dip in JBHT near $54 this morning but shares remain under resistance near $55.00.

I am suggesting a trigger to buy calls at $55.25 with a stop at $53.75. Our multi-week target is $59.50. FYI: The Point & Figure chart for JBHT is bullish with a $69 target.

Trigger @ $55.25

- Suggested Positions -

buy the Apr $55 call (JBHT1221D55)

- or -

buy the May $55 call (JBHT1219E55)

Entry on March xx at $ xx.xx
Earnings Date 04/12/12 (unconfirmed)
Average Daily Volume = 729 thousand
Listed on March 28, 2012


NetEase.com - NTES - close: 58.34 change: -1.05

Stop Loss: 54.45
Target(s): 64.00
Current Option Gain/Loss: Apr55c: +42.8% & Apr60c: + 71.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/29 update: NTES was hit with some profit taking this morning. Shares fell to $57.03 but dip buying pared its losses to -1.7%. I don't see any changes from my prior comments. More conservative traders may want to exit immediately. If NTES corrects it could easily drop toward the $56-55 area. I am not suggesting new positions at this time.

Earlier Comments:
Our multi-week target is $64.00. FYI: The Point & Figure chart for NTES is bullish with a $68 target.

- Suggested (Small) Positions -

Long Apr $55 call (NTES1221D55) Entry $2.80

- or -

Long Apr $60 call (NTES1221D60) Entry $0.70

03/26/12 sold half at the open.
exit bid on Apr. $55 call @ $0.00 (+67.8%)
exit bid on Apr. $60 call @ $1.95 (+178.5%)
03/24/12 new stop loss @ 54.45.
03/24/12 Prepare to sell half of our positions on Monday to lock in a gain.
Apr $55 call bid currently @ $5.20 (+85.7%)
Apr $60 call bid currently @ $1.95 (+178.5%)
03/22/12 readers may want to go ahead and take profits now
Apr $55 call (+50%), Apr $60 call (+100%)

Entry on March 20 at $56.11
Earnings Date 05/16/12 (unconfirmed)
Average Daily Volume = 584 thousand
Listed on March 19, 2012


O'Reilly Automotive - ORLY - close: 90.56 change: -0.13

Stop Loss: 88.45
Target(s): 98.50
Current Option Gain/Loss: Apr90c: -32.0% & May$90c: -16.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/29 update: ORLY traded under the $90.00 level a few times today but shares managed to bounce back by the closing bell. At this point readers may want to wait for a new rise past $91.00 before considering new bullish positions. FYI: The Point & Figure chart for ORLY is bullish with a $103 target.

- Suggested Positions -

Long Apr $90 call (ORLY1221D90) Entry $2.50

- or -

Long May $90 call (ORLY1219E95) Entry $3.95

03/26/12 triggered at $91.25

Entry on March 26 at $91.25
Earnings Date 04/25/12 (unconfirmed)
Average Daily Volume = 887 thousand
Listed on March 24, 2012


Trimble Navigation - TRMB - close: 54.45 change: +0.12

Stop Loss: 53.40
Target(s): 59.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
03/29 update: It was a relatively quiet day for TRMB. Shares did manage to show some strength with a +0.2% gain. We have a trigger to buy calls at $55.15.

FYI: The Point & Figure chart for TRMB is bullish with a $63 target.

New Trigger to buy calls @ 55.15, stop @ 53.40

- Suggested Positions -

buy the Apr $55 call (TRMB1221D55)

- or -

buy the May $60 call (TRMB1219E60)

03/28/12 adjust entry strategy to use a trigger at $55.15 with a stop loss at $53.40
03/28/12 trade did not open.

Entry on March xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 522 thousand
Listed on March 27, 2012


Ulta Salon, Cosmetics - ULTA - close: 92.83 change: -0.76

Stop Loss: 89.95
Target(s): 97.50
Current Option Gain/Loss: -36.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/29 update: ULTA dipped under its 10-dma this time but once again traders were buying the dip this afternoon. ULTA remains inside its narrow rising channel. I am not suggesting new positions at this time.

Earlier Comments:
More aggressive traders could aim for the $99-100 zone. FYI: The Point & Figure chart for ULTA is bullish with a $110 target.

- Suggested Positions -

Long Apr $95 call (ULTA1221D95) Entry $1.65

03/28/12 new stop loss @ 89.95
03/26/12 new stop loss @ 89.45
03/24/12 adjusted exit target to $97.50
03/21/12 ULTA hit our trigger at $91.25

Entry on March 21 at $91.25
Earnings Date 06/07/12 (unconfirmed)
Average Daily Volume = 759 thousand
Listed on March 20, 2012


PUT Play Updates

Apache Corp. - APA - close: 98.81 change: -0.17

Stop Loss: 102.25
Target(s): 95.25 or 92.00
Current Option Gain/Loss: Apr95.5p: -11.6% & May95p: - 9.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/29 update: APA opened at $98.32 and sank to $97.14 before bouncing near its simple 150-dma. I would expect this little oversold bounce to carry APA back toward the $100 level, which should be new resistance.

Earlier Comments:
I am setting two different targets. You can choose to aim for $95.25 or $92.00.

- Suggested Positions -

Long Apr $97.50 PUT (APA1221P97.5) Entry $2.40

- or -

Long May $95 PUT (APA1219Q95) Entry $2.90

Entry on March 29 at $98.32
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on March 28, 2012


iShares Russell 2000 ETF - IWM - close: 83.08 change: -0.24

Stop Loss: 87.51
Target(s): 78.50
Current Option Gain/Loss: - 3.8%
Time Frame: several weeks
New Positions: see below

Comments:
03/29 update: IWM dipped to short-term technical support near its 30 and 40-dma (around $82) before bouncing back. The ETF ended the session down -0.2%. I am not suggesting new positions at this time.

Our exit target is $78.50 near the early March lows.

- Suggested Positions -

Long Jun $82 PUT (IWM1216R82) Entry $3.12

03/28/12 triggered at $83.45

Entry on March 28 at $83.45
Earnings Date --/--/--
Average Daily Volume = 54.8 million
Listed on March 27, 2012


OpenTable, Inc. - OPEN - close: 40.43 change: -1.35

Stop Loss: 42.55
Target(s): 33.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
03/29 update: OPEN is slipping closer and closer to support near $40.00. There is no change from my prior comments on OPEN. Currently we're waiting for a breakdown.

Remember, this is a higher-risk trade. Short interest on OPEN is already at 51% of the small 18.3 million share float. The stock could be prone to short squeezes. Plus, there was some speculation last week that OPEN could be a buy-out target for someone looking for exposure to the online restaurant reservation market. Rumors that OPEN could be a takeover target could always spark a short squeeze.

I am suggesting we open small bearish put positions if OPEN trades at $39.65, which would be a new relative low. Our target is $33.00 although readers may want to exit near possible support at the $35.00 level instead. FYI: The Point & Figure chart for OPEN is bearish with a $35 target.

Trigger @ $39.65 (small positions)

- Suggested Positions -

buy the Apr $40 put (OPEN1221P40)

- or -

buy the May $35 PUT (OPEN1219Q35)

Entry on March xx at $ xx.xx
Earnings Date 05/01/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on March 24, 2012


Polypore Intl. Inc. - PPO - close: 35.11 change: -0.80

Stop Loss: 38.05
Target(s): 31.00
Current Option Gain/Loss: - 8.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/29 update: PPO continues to roll over and is now down three days in a row. Shares are nearing potential short-term support at its low two weeks ago near $34.00. I am not suggesting new positions at this time.

Earlier Comments:
We want to use small positions on PPO. Why small positions? We want to limit our risk because being bearish on PPO is a popular trade. The most recent data listed short interest at 34% of the 46.3 million-share float. It is this short interest that produces these brief little short squeezes higher that keep failing (at least they are failing so far). Our target is $31.00 or the dotted trend line of lower lows. FYI: The Point & Figure chart for PPO is bearish with a $16 target.

- Suggested (Small) Positions -

Long Apr $35 PUT (PPO1221P35) Entry $1.75

03/28/12 new stop loss @ 38.05

Entry on March 19 at $36.21
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 2.4 million
Listed on March 17, 2012


Schnitzer Steel Industries - SCHN - close: 40.20 change: -0.38

Stop Loss: 42.25
Target(s): 35.50
Current Option Gain/Loss: - 1.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/29 update: Our SCHN put play is now open. Shares broke down under support at $40.00 on an intraday basis and hit our trigger to buy puts at $39.75. The bounce back and close at $40.00 is a little disappointing if you're bearish but the trend is down.

I am lowering our stop loss down to $42.25. Remember, we don't have a lot of time. SCHN is due to report earnings on April 5th and we do not want to hold over the announcement.

FYI: The P&F chart has turned bearish with a brand new quadruple bottom breakdown sell signal (and a $32 price target).

Earlier Comments:
Traders should note that we want to use small positions. The most recent data already list short interest at 8.1% of the very small 24.8 million-share float. Any unexpected bounces in SCHN could spark a short squeeze so we want to limit our exposure.

(small positions) - Suggested Positions -

Long Apr $40 PUT (SCHN1221P40) Entry $1.58

03/29/12 new stop loss @ 42.25
03/29/12 triggered at $39.75

Entry on March 29 at $42.25
Earnings Date 04/05/12 (confirmed)
Average Daily Volume = 326 thousand
Listed on March 22, 2012


CLOSED BULLISH PLAYS

Costco Wholesale - COST - close: 89.84 change: -0.78

Stop Loss: 89.75
Target(s): 97.50
Current Option Gain/Loss: Apr90c: -53.9% & May$95c: -63.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/29 update: After Tuesday's failed rally COST has continued to sink and shares broke down to new relative lows. The stock hit our stop loss at $89.75.

- Suggested Positions -

Apr $90 call (COST1221D90) Entry $2.28 exit $1.05 (-53.9%)

- or -

May $95 call (COST1221E95) Entry $0.71 exit $0.26 (-63.3%)

03/29/12 stopped out at $89.75
03/27/12 triggered at $91.75

chart:

Entry on March 27 at $91.75
Earnings Date 05/24/12 (unconfirmed)
Average Daily Volume = 2.2 million
Listed on March 26, 2012


Herbalife Ltd. - HLF - close: 69.27 change: -0.90

Stop Loss: 69.40
Target(s): 74.75
Current Option Gain/Loss: -46.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/29 update: It is definitely starting to look like a bearish reversal in HLF. The stock underperformed again. Today saw a -1.2% decline. Shares hit our stop loss at $69.40. If HLF breaks support near $68 then the next level of support is $65.00.

- Suggested Positions -

Apr $70 call (HLF1221D70) Entry $3.10 exit $1.65 (-46.7%)

03/29/12 stopped out at $69.40
03/28/12 new stop loss @ 69.40

chart:

Entry on March 15 at $70.50
Earnings Date 05/02/12 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on March 14, 2012


Nu Skin Enterprises - NUS - close: 58.57 change: -0.89

Stop Loss: 58.45
Target(s): 64.50
Current Option Gain/Loss: Apr60c: -65.2% & May65: -72.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/29 update: It was an ugly day for NUS. Shares gapped open lower at $58.58 and then spiked down toward $56.00 before seeing a sharp bounce back. Shares still lost -1.5% by the closing bell. Oddly enough I could not find any specific news to explain the gap down and spike lower. We have been warning readers the previous two days that the trading action in NUS was turning bearish. Last night we actually decided to exit early but NUS gapped open lower underneath our new stop loss.

- Suggested Positions -

Apr $60 call (NUS1221D60) Entry $2.30 exit $0.80 (-65.2%)

- or -

May $65 call (NUS1219E65) Entry $1.25 exit $0.35 (-72.0%)

03/29/12 stopped out. NUS gapped open lower, under our stop loss.
03/28/12 new stop loss @ 58.65, prepare to exit tomorrow at the closing bell.
03/27/12 NUS created a bearish reversal candlestick. Let's see if there is any confirmation.

chart:

Entry on March 26 at $60.94
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 601 thousand
Listed on March 24, 2012


Under Armour, Inc. - UA - close: 94.06 change: -1.82

Stop Loss: 94.90
Target(s): 104.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
03/29 update: UA continues to underperform. The stock spiked down to $91.65 intraday. It is unlikely that UA will hit our bullish trigger to buy calls at $100.25 any time soon. I am removing UA as a candidate.

Trigger @ $100.25

Our Trade Did Not Open

chart:

Entry on March xx at $ xx.xx
Earnings Date 04/24/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on March 26, 2012


Whole Foods Market - WFM - close: 82.61 change: -2.98

Stop Loss: 82.40
Target(s): 87.50
Current Option Gain/Loss: -63.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/29 update: Yesterday WFM was showing relative strength. Today that strength vanished and shares plunged -3.4%. Our stop loss was hit at $82.40. The move lower was caused by a downgrade to "neutral" by Goldman Sachs.

- Suggested Positions -

Apr $85 call (WFM1221D85) Entry $1.88 exit $0.69 (-63.2%)

03/29/12 downgraded by GS. WFM hits our stop
03/28/12 new stop loss @ 82.40
03/13/12 new stop loss @ 81.75

chart:

Entry on March 02 at $82.55
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on March 01, 2012