Option Investor

Daily Newsletter, Saturday, 03/31/2007

Printer friendly version

Table of Contents

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

Market Wrap

Indecision Ahead of Earnings

The markets continued their volatility for another week as it endured questionable economics, Bernanspeak, $67 oil, global power plays and a trickle of earnings warnings. Overall the volatility came on low volume and support levels held. End of quarter window dressing may not have been able to push the indexes back to their highs but more importantly it may have kept us from breaking support.

Dow Chart - 90 min

Nasdaq Chart - Daily

We saw mixed economics again take center stage Friday morning with a very strong PMI leading the list. The headline on the PMI jumped to 61.7 for March compared to 47.9 in February. This was far better than the expectations for a modest rise to 49.0. The production component jumped from 51.2 to 64.9 and order backlogs rose to 54.0 from 44.3. The biggest jump came in new orders to 72.2 from 48.7. Prices paid fell and inventories decreased. It was a strong report and completely reversed last months drop to 47.9 and the lowest level since October 2002. The rebound sent the index back to levels not seen since early 2006. As you can see in the chart below the downtrend was completely reversed. The size of the rebound suggests a problem with the data that will likely produce a sizeable revision over the coming months. The responses that make up the index are not weighted by company size and this data could be impacted by some minor players. For instance 3M could have said no change but ACME Mfg and ACE Products, both fictional companies with 20 employees each, could have seen a surge in orders. That surge in orders could have been in dozens of units rather than tens of thousands of units at a larger company like 3M. Those small companies would have reported a strong month but in reality it was barely a drop in the proverbial bucket. These types of data points produce volatility in the index, which is eventually smoothed away.

Chicago Purchasing Managers Index Chart

Monday's ISM Index should give us a better picture of the manufacturing economy. If the components on the ISM reflect the same robust data as the PMI then we can expect the Fed to be hiking rates again very soon. A true rebound of that magnitude would put the Fed on heightened inflation alert even more than they are now. Last month the ISM came in at 52.3 after posting numbers in contraction territory below 50 for 2 of the prior 3 months. It is conceivable we have seen the bottom but we need confirmation with several positive months before making that call.

The NAPM-NY report on Friday dropped slightly by only a fractional amount but it was the first decline since Oct-2005. Given the fractional .3-drop I don't deem the change relative and the New York area continues to be one of the strongest economies in the nation. However, the current conditions component fell the sharpest from 57.6 to contraction territory at 49.3. This component spiked to 82.5 back in November but fell back to the mid 50s the following 3 months. This drop out of the mid 50s could be a cause for concern but with an economic region this strong it will take more than a couple months of declines to convince analysts it is for real. It has not been under 50 since the depression after Hurricane Katrina.


The Most Profitable 4 Letters in Trading

Master them with Hotstix QQQ Trader. We'll show you exactly when to buy and sell the QQQQ and turn you into a master trader who knows how to cut your losses, nail short term gains and rack up some incredible profits.

30-Day FREE Trial:


Personal Income for February rose +0.6%, double consensus expectations and the second fastest rate since Jan-06. Even worse for inflation watchers was the jump in the core PCE deflator of +0.3%. This was the fastest increase since the +0.4% rise in Aug-06. This pushed the 12-month inflation rate to +2.4% and well over the Fed's target rate of 1-2%. This was not a Fed friendly report. However, the Bureau of Economic Analysis (BEA), which produces this data, said they were adding $50 billion (annualized) to each month in the first quarter to account for unusually large bonuses and the exercise of stock options. You got your share, right? Despite this surplus of personal income the savings rate remains negative at -1.2% and real spending grew by only +0.2% and the slowest growth in the last six months. This suggests workers are making more money but enjoying it less and I am sure most of us can relate to that. The final revision to Consumer Sentiment fell to 88.4 from the initial reading of 88.8 and February's reading of 91.3. This is the lowest sentiment reading since Sept-06. Higher gas prices were blamed along with the subprime implosion.

Next week has two critical economic reports. The ISM for March will be released on Monday with expectations for a slightly positive reading just over 50. The second is the Non-Farm Payrolls on Friday. Analysts expect the report to show a gain of 140,000 jobs in March. In February the economy only produced 97,000 jobs and that was the weakest one-month gain in more than two years. We have seen nearly every month revised higher for the last year so the odds are good that 97K will eventually be revised to something in the 120K range. The setup for Friday could be more bearish depending on your view. A second month of sub 100K gains would cast real doubt on the economic rebound, especially if the number was down in the 50K range. This would be Fed friendly but probably not market friendly. The Goldilocks number would be something just over 100K. Just strong enough to suggest the economy is continuing its recovery but not strong enough to put pressure on the Fed to raise rates.

Economic Calendar

The odds are good that after Monday's ISM the market will be more focused on the coming Q1 earnings than economics. Since earnings expectations have fallen from double digits in December to +8.2% in February and then to +5.1% today there is a slight concern that they could go negative. If it were not for the energy sector it would almost be a certainty. That 5.1% growth estimate comes from S&P. Thomson Financial is expecting 3.8% in Q1, 4.0% Q2, 6.8% Q3 and then 12.5% in Q4. Thomson is estimating only +6.7% earnings growth for all of 2007. That has come down from estimates of 9.3% back in January. The earnings warnings have been scattered and fewer than normal. Unfortunately positive guidance has dried up completely and a cloudy haze is settling over earnings expectations. Many analysts are expecting a massive write down by the financial sector as mortgage loan losses mount. Most feel the banks are severely under reserved because loan losses in real estate have been nonexistent for years. As foreclosures rise those banks will have to increase reserves at the expense of profits. Financials account for 21% of the earnings in the S&P so plenty of room for problems.

The 4th quarter is still teetering on the brink of double-digit earnings at +10.05% growth and only a few stragglers left to report. According to S&P that would be the 19th consecutive quarter of double-digit earnings growth but in all likelihood the last for some time. Over those 19 quarters the S&P has rallied +90% off the 2002 lows of 768. The S&P has risen in 13 of the last 15 months and a feat not duplicated in the last 52 years. While 5% earnings growth may not be spectacular it is growth and the market has posted gains through many periods of low growth. Since 1950 there have been 12 periods of earnings growth deceleration. 11 of those 12 periods ended with a profit recession but stocks themselves gained ground in 9 of those periods. On average stocks gained +9.2% during the periods of earnings deceleration.

S&P-500 Chart - Weekly

Just because earnings growth is falling into the low single digits does not mean the market will crater. Investors normally look ahead to the future and try to buy 6-9 months before earnings growth returns. Currently earnings are expected to be single digits in Q1, Q2 and Q3 but return to double digits in Q4 or maybe Q1-07. That suggests true investors would be planning on buying any Q2 dip in prices in hopes of an end of year rebound. That all sounds good on paper but it still sets up the potential for a sell the news event if Q1 earnings beginning on April-9th disappoint. With Q2/Q3 expected to be tough quarters that suggests guidance with Q1 earnings could also be rough. That could produce the market dip needed to give those investors a buying opportunity later this summer. With 90% long term gains on the S&P the odds are good that more than a few funds will be looking to shuffle positions and build up cash for a new entry later this year.

Friday's market started off positive on the heels of the PMI report but geopolitical news tripped it up right out of the gate. Commerce Secretary Carlos Gutierrez announced Friday morning the beginning of trade sanctions against China. American paper producers had sued to block cheap imports of paper from China. For more than two decades the Commerce Dept position had been that China was a "non-market economy" and that prevented them from being sanctioned. Gutierrez said on Friday China has evolved to the point where the U.S. can now use additional tools to protect American producers. The administration announced import tariffs of 11-20% on certain paper products produced in China. Chinese producers sell a roll of a particular paper in the U.S. for $800 while it costs U.S. producers over $1000 to produce the same product. Chinese producers can do this because of subsidies from the government and no/low interest loans from government controlled banks that are frequently forgiven. China needs to subsidize industry to create employment for the two million workers moving from the farmland to the cities each month. The alternative of rising double-digit unemployment is not acceptable because of the increasing crime rate and poverty it produces. Other sectors we can expect to be targeted in the future include steel, chemicals and furniture. These are sectors that China targeted in its five-year plan several years ago to expand into global exports. The problem with this form of protectionism is the potential for dollar dumping. China has more than $1 trillion in currency reserves with the majority of that in U.S. treasuries. If China decided to fight back they could shift some of their dollar denominated investments into Euros and drive the dollar lower. That would raise our interest rates and make imported goods more expensive. It would also make their goods more expensive for the US so there is serious doubt they would take this action. There are mixed ideas about the ramifications of this change in policy but the markets did not wait to see who is right. The Dow dropped -174 points from its high to a -106 loss intraday when the announcement was made. The Dow struggled back to positive territory but only barely.

The British hostage problem with Iran escalated to a higher level with the EU demanding an immediate release. The female, who was to have been released on Thursday, was not released and Iran said the group might have to stand trial for crimes against Iran. This prompted the U.S. to make solidarity comments in the press and for Britain to ratchet up demands for their release. Iran raised its bet on oil prices by saying they will no longer sell oil for dollars and all payments must be in Euros. That is about $210 million dollars per day that will need to be converted to Euros to pay for Iranian oil.

Everyone on the western side of the Iran hostage problem keeps asking why Iran would make such a play in full view of the coalition forces in the Persian Gulf. I think the answer is simple. Oil prices were $57 a barrel a little over a week ago and now they are $66 and have traded as high as $68. With just a little effort militarily and almost no risk they have produced nearly a $10 spike in the price of oil. Iran produces 3.5 mbpd so that spike produced an extra $35 million dollars in revenue every day it continues. Since oil accounts for about 50% of the Iranian government budget this is a significant boost to revenues. Secondly the current Iranian administration had been sliding in the polls with civilian unrest rising. By punching Britain in the nose and grabbing 15 hostages this saber rattling has produced a small lift in popularity for Iranian President Mahmoud Ahmadinejad. Don't forget this is a country that has a government sponsored anti U.S. demonstration every weekend. This is a way to save face in the Iranian press instead of focusing on the new UN sanctions and the massive build up of warships in the Gulf. It is not helping our markets because most Americans don't understand the problem and the reasons behind it. Late this week Debka, an Israeli military intelligence website, said Americans in Bahrain had been advised to leave by the US Army on security concerns expected next week. Debka cited "intelligence sources in Moscow as predicting a US strike against Iranian nuclear installations codenamed Operation Bite on April 6th." Debka has reported rumors as truth in the past but this one seems to be gaining traction. It was also reported that Patriot missile batteries have been setup in Bahrain along with new alarm networks and defense systems upgraded to handle chemical, biological and radioactive attacks. The carrier USS Nimitz and its battle group will be leaving San Diego on Monday to join the John C Stennis and Dwight D Eisenhower carrier groups in the Persian Gulf.

In another article in Time there is a story about an attempt to take a squad of US soldiers hostage on the Iraqi side of the Iran/Iraq border. Soldiers from the 5th Squadron, 73rd Cavalry, 82 Airborne were on a routine joint patrol with Iraqi forces when they came upon an Iranian officer standing in the middle of the road in Iraqi territory. When US and Iraqi soldiers approached and began speaking to him a platoon of Iranian soldiers appeared and took up positions on the high ground surrounding the Americans. The Iranian officer said if they tried to leave they would be fired on. Fearing abduction by the Iranians the Americans scattered and began taking fire. A press release by the US said there were no American casualties but sources at the scene said there were Iranian and Iraqi casualties. You can bet the Iranians would like nothing more than to capture an American patrol and claim they were in Iran illegally.

In stock news Dell dropped sharply at the open on Friday after saying that an internal probe had uncovered accounting errors and evidence of misconduct, which may cause them to restate years of results. Dell said an audit committee "has identified a number of accounting errors, evidence of misconduct and deficiencies in the financial control environment." Dell is under fire from all sides with SEC probes, class action lawsuits, insider trading charges and a suit over a $1 billion kickback scheme with Intel. They have lost the CEO and CFO and Michael Dell has had to return to the CEO position to fight the fires. The accounting period covered was during Dell's initial tenure as CEO so he may yet come under fire for inappropriate activities. Dell recovered to close down only slightly but their problems are far from over.

Drug maker Dendreon Corp more than doubled in price on Friday with a +148% gain after the FDA endorsed its prostrate cancer vaccine, Provenge. The committee voted 13-4 to approve saying there is substantial evidence that it works in treating advanced prostrate cancer. The drug extended survival of cancer patients by an average of 4.5 months without any negative side effects. The only side effect mentioned was the expected $45,000 price tag for one month of treatment. How much is 4.5 months of additional life worth to your family and their finances after you are gone? Because of the need for additional trials the drug is not expected to be officially approved until 2009 and that makes the +148% jump in the stock a little questionable for me. It actually traded $5 higher than that at +230% but could not hold the gains. There was a high short interest ahead of the announcement from general skepticism about the drugs approval. Those shorts were killed on the announcement leading to volume of 92 million shares on Friday. DNDN was the 3rd highest volume stock on Friday compared to average daily volume of only five million shares. Nuvelo (NUVO) surged on nine times its daily volume earlier in the week when the FDA granted its colon cancer drug fast track status as both a first and second line treatment.

More information came public regarding the charges against Beazer Homes. Apparently the company came under investigation after the Charlotte Observer noticed an extremely high rate of foreclosures in Beazer developments. There are allegations that Beazer seduced home shoppers using gimmick loan programs to get unqualified buyers into homes in order to move Beazer inventory. The allegations claim no documentation loans were made with exaggerated income and assets and information negative to the borrower was removed from the applications. Now all those unqualified borrowers are being foreclosed and Beazer is under fire from regulators. A grand jury subpoenaed Beazer's loan records and Beazer said it would comply. BZH volume hit 20 million shares on Wednesday compared to an average of 1.6 million. If even a small bit of what they claim is true it could mean the end of Beazer Homes. I am thinking the Jan-2008 $25 put could be a bargain.

Semiconductor stocks were top performers on Friday after Stifel Nicolaus upgraded the sector to overweight from neutral. Stifel said booking patterns have steadily improved over the last 3 months and the upcoming earnings season may be the first time since early 2006 that companies won't lower guidance. Broadcom (BRCM) and Intersil (ISIL) were their two best picks saying Broadcom was one of the best positioned and Intersil was doing the best job in the analog industry. Nvidia was upgraded to a hold on worries about new competition. PMCS also rose after it narrowed its guidance to the upper end of the prior range and said it was closing two facilities to save $22 million annually. LSI Logic received shareholder approval to acquire Agere Systems for $4 billion.

Corn futures limited down on Friday after the USDA released a report saying corn plantings would jump +15% to 90.5 million acres in 2007. The push to profit from the ethanol move has prompted farmers to press marginal fields into service and to cut back on other crops. Soybean plantings for 2007 are expected to drop by -11%. The sharp increase in the expected corn crop sent futures down by -20 cents and the daily limit. Corn prices had risen sharply in 2006 due to the demand for ethanol. Traders are unsure if that demand can consume the new corn capacity. This is the largest corn planting since 1944. High corn prices have sent food prices higher across the board since corn is also used as feed for nearly all livestock at some point in the lifecycle. Technically they could double the amount of corn planted and not produce enough ethanol but the problem today is insufficient capacity at the ethanol plants. There are 40+ plants under construction but most will not be completed in time to process this crop. Ethanol producers ADM and BG were flat on the day but CAT and DE rose on the prospects for higher tractor sales. The sudden acceleration of income from corn has got a lot of farmers thinking about a new rig. In the city you keep up with your neighbor by purchasing a new Mercedes or BMW. In the farming community your status is measured by the size of your tractor. The USDA says net profits per acre of corn in 2006 were $334 compared to $190 for soybeans.

For a market outlook for next week I am perfectly neutral. The Dow held over support at 12300, Nasdaq did the same at 2400 and the Russell ended the week exactly at my sentiment pivot point of 800. Try as I might I can't develop a compelling bias this weekend. I could see it going either way although there is less reasoning for a continued move higher than a drift lower now that the quarter is over. We have a full two weeks of the earnings warning cycle ahead before actual earnings begin in earnest. The ISM on Monday is a wild card but I believe any impact will be very short lived. I think the earnings picture will be the key and that could take another three weeks to develop completely.

DDow Chart - 30 min

S&P-500 Chart - Daily

Russell-2000 Chart - Daily

With the quarter over fund managers are free to shuffle positions and take profits ahead of earnings. With earnings expectations dwindling so rapidly there is actually the chance for an upside surprise and that could further confuse the directional issue. I think for next week we should continue to key on Dow 12300 and Russell 800. A drop below either or both could signal the beginning of a new move that could last several days. Conversely a rebound above those levels would be bullish but only if it happened on decent volume. Volume over the last week has been only average and the last two days it has been split almost exactly 50:50 with advancing volume only slightly ahead of declining. New 52-week highs are still averaging around 300 per day and that is slightly bullish but it was an end of quarter week and we should have seen more new highs. Next week is a holiday shortened week with the markets closed on Friday. That should slow volume as the week progresses. Bottom line, watch Dow 12300 and Russell 800 and trade accordingly.

New Plays

Most Recent Plays

New Plays
Long Plays
Short Plays

New Long Plays

Kinetic Concepts - KCI - cls: 50.64 chg: +0.92 stop: 48.89

Company Description:
Kinetic Concepts, Inc., is a global medical technology company with leadership positions in advanced wound care and therapeutic surfaces. It designs, manufactures, markets and services a wide range of proprietary products that can improve clinical outcomes while helping to reduce the overall cost of patient care. (source: company press release or website)

Why We Like It:
KCI has been relatively resistant to profit taking after peaking near $52.50 back in early February. Shares have been consolidating sideways and appear to have built a new base from which to launch a new leg higher. Shares recently tested technical support at its rising 50-dma and we're going to stick the stop loss just under that low (from last Tuesday). Technical indicators are turning bullish again. We're suggesting long positions now given Friday's bounce. More conservative traders may want to wait for a breakout past $51.20, the March 23rd high, or wait for a new relative high over $52.55. Bear in mind that our short-term target is the $54.75-55.00 range. FYI: The P&F chart is very bullish with a $99 target. We do not want to hold over the late April earnings report.

Picked on April 01 at $50.64
Change since picked: + 0.00
Earnings Date 04/24/07 (unconfirmed)
Average Daily Volume: 962 thousand

New Short Plays

Hovnanian - HOV - cls: 25.16 chg: -0.36 stop: 26.76

Company Description:
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes. (source: company press release or website)

Why We Like It:
The homebuilders have had a rough several weeks. The sub-prime lender implosion pulled the builders down. Negative comments about earnings and guidance from the builders themselves, like Lennar last week, have pulled them lower. Now just this past week the Federal investigation into Beazer homes (BZH) is cutting into investor confidence for the sector. Many believe that the BZH news is just the tip of the iceberg for this industry. If that's the case, and if sales continue to slow, then the group has further to fall. HOV has dropped toward significant support at the $25.00 level. We're suggesting shorts if HOV hits a new low under $24.79. Our suggested entry point will be $24.69. If triggered our target is the $20.50-20.00 range. FYI: HOV does have a very high amount of short interest at almost 35% of the 31.3 million-share float. That does raise the risk of a short squeeze should the stock suddenly move higher!

Picked on April xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 06/07/07 (unconfirmed)
Average Daily Volume: 1.9 million

Play Updates

Updates On Latest Picks

Long Play Updates

Apria Healthcare - AHG - cls: 32.25 chg: -0.04 stop: 29.99

Unfortunately, we don't have anything new to report on for AHG. The stock continues to trade sideways in a relatively narrow range. On the other hand shares are still in a bullish pattern and look like the path of least resistance is up. We would still consider new positions now but more conservative traders may want to wait for a rally past $32.50 (or even over $33.00) before considering new positions. Our stop loss is under the $30.00 mark but more conservative traders may want to tighten theirs toward the 50-dma. Our target is the $35.75-36.00 range. We do not want to hold over the late April earnings report.

Picked on March 27 at $32.37
Change since picked: - 0.12
Earnings Date 04/24/07 (unconfirmed)
Average Daily Volume: 910 thousand


Bristow Group - BRS - close: 36.45 chg: -0.04 stop: 34.99

Friday proved to be something of a volatile day for BRS. The stock spiked to $36.92 and then dipped to $35.95 before settling almost unchanged on the session. Shares continue to trade inside a wide, rising channel. Yet we are surprised that BRS didn't rally more strongly this week given the strength in oil. The market wrap tonight discusses the conflict with Iran and we think it's only going to get worse, which will drive oil higher. Thus, given BRS' afternoon bounce on Friday readers may want to buy the rebound. More conservative traders might want to tighten their stops toward last week's low. Our target is the February highs in the $38.40-38.50 range. FYI: The P&F chart is bullish and points to a $47 target.

Picked on March 11 at $35.88
Change since picked: + 0.57
Earnings Date 05/07/07 (unconfirmed)
Average Daily Volume: 243 thousand


Canadan Nat.Res. - CNQ - cls: 55.19 chg: -1.23 stop: 51.95

CNQ experienced a strong week with a big surge and breakout higher but gave back 2.1% o Friday. Shares were looking a little short-term overbought so some profit taking is not out of the ordinary. Watch for a dip toward $54.00 and the 10-dma as a good spot to buy the dip. Our target is the $58.00-60.00 range. FYI: The P&F chart is bullish with a $71 target.

Picked on March 21 at $53.05
Change since picked: + 2.14
Earnings Date 03/07/07 (confirmed)
Average Daily Volume: 2.0 million


eBay Inc. - EBAY - close: 33.15 chg: +0.11 stop: 29.85

EBAY is still inching higher. If we have patience it looks like shares might hit our conservative target in the $33.85-34.00 range in the next several days. Our aggressive target in the $37-38 zone might be too optimistic given resistance at $34.00 and our plan to exit ahead of EBAY's April earnings. We're not suggesting new positions at this time. More conservative traders may want to tighten their stops.

Picked on March 05 at $30.49
Change since picked: + 2.66
Earnings Date 04/25/07 (unconfirmed)
Average Daily Volume: 18 million


EMC Corp. - EMC - cls: 13.85 chg: +0.19 stop: 12.95 *new*

EMC displayed some relative strength on Friday with a 1.39% gain. The stock managed to close over technical resistance at its 50-dma but failed to breakout over its highs from last week near $13.90. We remain optimistic but we're not suggesting new positions at this time (if you missed today's entry point). Please note that we're tightening our stop loss to $12.95. Our target is the $14.50-15.00 range. FYI: The P&F chart is still bearish from the February-March sell-off.

Picked on March 21 at $13.26
Change since picked: + 0.59
Earnings Date 04/17/07 (unconfirmed)
Average Daily Volume: 29.1 million


Helmerich Payne - HP - cls: 30.34 chg: -0.17 stop: 27.95

HP is still consolidating sideways after failing to breakout over resistance at the $31.00 level. Thus far short-term support at $30.00 is holding but we would not be surprised to see a deeper decline towards $29.00. We remain bullish on oil but hesitate to suggest new positions in HP at this time. More conservative traders may want to lock in a gain now. Our target is the $32.50 mark.

Picked on March 19 at $28.77 *gap higher*
Change since picked: + 1.57
Earnings Date 05/03/07 (unconfirmed)
Average Daily Volume: 1.4 million


KLA-Tencor - KLAC - cls: 53.32 chg: -0.15 stop: 52.75

Some of the semiconductor stocks were upgraded on Friday but KLAC wasn't one of them and stock continued to struggle. Thus far we're still on the sidelines. Our plan is to wait for a breakout over resistance near $55.00 with a trigger to go long at $55.15. However, more nimble traders might want to consider buying a dip. We expect that KLAC is poised to dip towards $52.50-52.00. If you see a convincing bounce above $52.00 aggressive traders might want to buy it after adjusting their stop loss. Our target is the $59.50-60.00 range. Before opening positions consider our time frame. We do not want to hold over the mid-April earnings report. That gives us about two weeks, which may be too optimistic. FYI: The P&F chart is bullish with a $69 target.

Picked on March xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/16/07 (unconfirmed)
Average Daily Volume: 4.9 million


TEPPCO Part. - TPP - close: 44.40 chg: +0.13 stop: 43.45 *new*

TPP climbed to another new 52-week high on Friday. The stock is nearing our target in the $44.90-45.00 range (and resistance dating back to early 2005). We are not suggesting new positions. We are adjusting our stop loss to $43.45. The Point & Figure chart is very bullish with a $67 target.

Picked on March 06 at $42.88
Change since picked: + 1.52
Earnings Date 02/07/07 (confirmed)
Average Daily Volume: 142 thousand

Short Play Updates


Closed Long Plays

Northwest Pipe Co. - NWPX - cls: 39.83 chg: +0.82 stop: 34.95

Target achieved. NWPX continued to rally and hit an intraday high of $40.11 on Friday. Our target was the $39.85-40.00 range. The $40.00 level looks like resistance so if you didn't exit we strongly suggest that you tighten your stop.

Picked on March 25 at $36.85
Change since picked: + 2.98
Earnings Date 03/22/07 (confirmed)
Average Daily Volume: 57 thousand

Closed Short Plays


Today's Newsletter Notes: Market Wrap by Jim Brown and all other plays and content by the Option Investor staff.


Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163
Copyright Option Investor Inc, 2007
All rights reserved

Today's Newsletter Notes: Market Wrap by Jim Brown and all other plays and content by the Option Investor staff.


Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives