DGX - Quest Diagnostic $99.21 ** Stop loss $95.00 **
Quest announced a +21% increase in earnings in January and soared from $89.50 to just over $96 in a week. Instead of consolidating those gains it just keeps moving higher. We entered DGX on Jan-21st as it was moving lower and touched support at the 100-day average at $90. Three days later the rocket ride began from $89. The trick now is to stay far enough away from the price to keep from getting stopped but not give back all of our gains.
Quest Diagnostics Incorporated is the nation's leading provider of diagnostic testing, information and services, providing insights that enable healthcare professionals to make decisions that improve health. The company offers the broadest access to diagnostic testing services through its national network of laboratories and patient service centers, and provides interpretive consultation through its extensive medical and scientific staff.
Quest Diagnostics is also the leading provider of esoteric testing, including gene-based medical testing, and provides advanced information technology solutions to improve patient care. (Source DGX)
2006 $95 LEAP Call YFK-AS @ $6.40
Entry $91.00 (01/21)
QCOM - Qualcomm $36.89 ** No Stop Loss **
QCOM has made no effort to bounce from the post earnings depression but we are still well protected. There is no stop loss on this position and we will be profitable regardless of the eventual direction.
In our current position with the Put in the money we are very well protected with a total cost of entry only slightly above $5.90. I think this is about as good as it gets with our April put and plenty of time to run. I am going to set a stop on the put at $39 to prevent a complete giveback if QCOM suddenly finds traction. Since our LEAP will also escalate we should not lose much if the put is stopped.
QCOM failed at the 200-day average at $37.80 but still has plenty of support at $35.
Qualcomm is a leading technology provider for wireless communications and pioneered the CDMA standard used in many phones today.
2006 $42.50 LEAP Call WLU-AV @ $3.20
Stop Loss on Put QCOM at $39.00
Entry $38.00 (01/20)
ELN - Elan Pharma $28.08 **Stop loss $25.50**
ELN finally caught fire and has moved nearly +$3 off last leeks lows. $29 is resistance and our next test.
Elan is a neuroscience-based biotechnology company that is focused on discovering, developing, manufacturing, selling and marketing advanced therapies in neurodegenerative diseases, autoimmune diseases and severe pain.
In neurology, Elan is focused on building upon its breakthrough research and extensive experience in the area of neuropathology-based disorders. In addition to Alzheimer's disease, Elan is also studying other neurodegenerative diseases, such as Parkinson's disease.
On December 28, 2004, the U.S. Food and Drug Administration approved Prialt for the management of severe chronic pain.
On November 23, 2004, the U.S. Food and Drug Administration approved TYSABRI, formerly referred to as Antegren, as treatment for relapsing forms of multiple sclerosis (MS) to reduce the frequency of clinical relapses.
2006 $30 LEAP Call WTB-AF @ $5.30
Insurance Put - added Jan-23rd
Stop Loss ELN $25.50
Entry $28.50 (01/11)
IBM - IBM $94.52 ** No Stop **
IBM finally began rising with the market and $92 proved to be the bottom last week. We got a really good entry on IBM and bought it when nobody else wanted it at the end of the month long decline.
If the market did decide to reverse IBM could find buyers as a safe big cap with increasing earnings. I think we are safe from any material loss and have plenty of upside potential if the market turns around.
IBM is moving strongly into even more areas of system and software services and maintains a huge backlog of orders.
IBM is the world's largest information technology company, with 80 years of leadership in helping businesses innovate. IBM Software offers a wide range of middleware and operating systems for all types of computing platforms, allowing customers to take full advantage of the on demand era
2006 $100 LEAP Calls WIB-AT @ $5.00
Entry $94.00 (01/13)
IWM - $126.96 Russell Index Ishares ** STOP LOSS $123.00 **
The Russell Ishares are holding the high ground relative to the rest of the market. The IWM dipped back to test support at $124 on Thursday but then surged to a new high for the month. The 100-day average is at $121.50 and this should continue to be strong support.
The Feb puts are dropping in price as time decays. Instead of a stop loss let's institute a put stop. If the IWM trades at $124.00 buy the Feb-$123 put as insurance. This way we don't spend the money for the insurance unless we need it.
I am not using LEAPS for this play because I do not expect to keep it more than 4-6 weeks and LEAPS are very expensive. We will look to get into LEAPS on a dip later in the summer.
IWM MAY-$125 Call Option DIW-EU @ $5.20
NO STOP LOSS
Entry $123.05 (Jan-18th)
ADBE - Adobe Systems $63.98 Unbelievable!! ** Stop $60 **
ADBE gained over $8 for the week and it threatening to breakout to a new high at $65.50. Earning were very strong and by having put insurance we were able to hold over the event with no risk.
I am adding a stop loss at $60 because our put is so far out of the money.
Adobe is the king of the document and image business and continues to announce new products. The company announced earnings in December that rose +33% and beat estimates. Income for the year rose +69% on a +29% increase in revenue. Adobe affirmed guidance for 2005 and the stock has been beating the Nasdaq in percentage gains. In 2004 the stock rose +60%. Since they have already announced earnings we have very little event risk over the next month.
I recommended the February $55 put as insurance at 80 cents. That gave us six weeks for the Q1 earnings to cycle and for ADBE to pick a direction. If we are not profitable by Feb-18th expiration we will close and take our lumps.
Jan-06 $60 LEAP Call WAE-AL @ $7.50
Stop loss $60.00
Entry $58.78 (01/09)
RIMM - Research in Motion $77.38 ** No Stop **
Finally a new uptrend emerges. RIMM has rocketed off the $65 bottom and at $77 is right at January resistance. A breakout here and we could easily retest the old highs at $95.
The $70 insurance put continues to protect us against a disaster and once buyers return we know from past experience RIMM can move quickly.
The court case will be back in court for a long time and RIMM is still selling and improving the Blackberry. They are escrowing a required portion of the sales to satisfy the judgment should the case eventually go against them.
RIMM is very profitable and should continue to be profitable. Hardly a week goes by that we don't see some new development in their product line.
This is not for those with a low risk profile.
Jan-06 $80 LEAP Call WLJ-AP @ $12.40
Entry $74.30 (01/09)
SYMC $23.42 Symantec - Veritas ** no stop **
SYMC is beginning to see some buyers return but until the VRTS deal is concluded we may not see any monster gains. SYMC is holding above our $22.50 insurance and we have no risk from this level. We have a good position here with support at $22 and an April $22.50 insurance put. Very little risk and plenty of potential.
I believe that the SYMC/VRTS merger is a match made in heaven and analysts will come to that view as more plans are announced. The companies have no overlapping products but all their products are perfect fits for the others. With one company having anti-virus, data security, backup, recovery and storage management it puts the other stand alone companies in a very difficult position. EMC and QLGC both fell in the storage sector and Mcafee was crushed in the anti-virus sector.
There is no stop on this position. With the 2007 LEAP Call any minor dips will not result in a material drop in the leap. The April $22.50 insurance put will protect us from any potential disaster. For me this is a buy and forget play.
2007 $25 LEAP Call OBL-AE @ $6.30
Entry $25.37 (12/19)
XLE - S&P Energy SPDR $39.10 ** No Stop **
The XLE continues to outperform the market and made a new all time high on Friday. We have very little risk here and strong rising support. I do expect oil prices to come down in March so we need to monitor this one closely.
This is a long-term play and we could see some volatility but we have an insurance put to protect us.
The XLE SPDR is composed of 27 energy stocks and represents about 8% of the SPX. This is the 8% that helped push the SPX to the current levels with the rise in oil over the last year. In fact the XLE has far exceeded the SPX in performance over the past year.
I am not putting a stop loss on this play. I am suggesting an insurance put to offset against any material drop. Because I believe oil is in a long term up trend I do not want to get jerked out of this position. If we see that oil is not moving higher by March I will reevaluate the position.
2006 $35 LEAP Call WHA-AI @ $3.60
Drop insurance: March $34 Put XLE-OH @ $1.00
Entry $35.55 on 12/12