Option Investor
Newsletter

Daily Newsletter, Wednesday, 10/21/2009

Table of Contents

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

Market Wrap

Downgrade Triggers Slide, Market Falls

by Judy Alster

Click here to email Judy Alster
The market had a high-flying open for an hour or so, with the Dow gaining over 80 points. But after a volatile day the three major indexes gave up all their gains by late afternoon and continued to plunge.

MARKET INDEX WRAP, WEDNESDAY, OCT. 21:

The Dow closed down 92.12 points or 0.92% to 9949.36, its second decline in a row.

DOW JONES INDUSTRIAL AVERAGE:

The Standard & Poor's 500 closed down 9.66 or 0.89% to 1081.40, with a decline of 1.9% for financials (some downgrades of big banks) and 1.5% for consumer discretionary companies (the Fed reported a soft consumer sector). The S&P 500 was as high as 1,101 intraday, once again dancing near 1100 only to fall back, which encouraged selling.

S&P 500:

The Nasdaq Composite got the gold star, closing down 12.74 or only 0.59% to 2150.73. The index got a small push from Yahoo's earnings report.

NASDAQ:

Stocks actually spent much of Wednesday in the green as Morgan Stanley and Yahoo reported hopeful earnings. Then . . . the market changed course after a banking analyst cut his investment rating on Wells Fargo to sell from hold, saying the quality of its earnings was poor. (We hope he's happy.)

S&P 500 INTRADAY:

The downgrade triggered a broad sell-off that took down a number of other financials. Consumer companies faded too on the Beige Book's report, including Walmart, who in addition happened to announce massive discounts for the Christmas season:

WALMART:

The consensus seems to be: Don't be surprised if there's a pullback or at least a plateau, especially when you consider the relative number of decliners to advancers.

Giant investment banker Morgan Stanley (MS) helped nudge the market up momentarily Wednesday with a better-than expected third-quarter profit. Like its rival JPMorgan Chase last week, its results were helped by strong fixed-income sales and trading revenue; Morgan also pointed to improved results from investment banking underwriting and from the bank's joint wealth management venture with Citigroup's brokerage Smith Barney. The bank ended three straight losing quarters with a profit of $757 million or 38 cents a share on revenue of $8.7 billion, compared with last year's $8.15 billion or $7.38 (that quarter had a large one-time gain), beating analyst expectations by 11 cents. In last year's fourth quarter the bank sustained a loss, causing Morgan to seek a $9 billion transfusion from Mitsubishi UFJ and make the belated decision to sharply reduce excessive risk and stick to its knitting.

It may have overdone the "safety first" response, but now the bank is catching up to rivals. (Highly risk-tolerant Goldman Sachs, for example, had Q3 profit that nearly quadrupled year-over-year; now its quarter-to-quarter revenue is slowing.) Some shareholders probably weren't delirious to learn that Morgan Stanley set aside some $5 billion for year-end bonuses during the third quarter, bringing its total for the year to $10.9 billion. Its shares gained 4.9%, ending just in new territory.

MORGAN STANLEY:

The Fed's Beige Book was released today. The Beige Book comes out about two weeks before Federal Open Market Committee policy meetings and describes conditions in the 12 Fed districts; this one anticipates the meeting on November 3-4. Among other things it told us that since the last report, most districts showed either stabilization or modest improvements in many sectors, "albeit often from depressed levels." Gains in economic activity generally outnumbered declines. Leading the improvement were more positive reports in residential real estate and manufacturing. Consumer spending and nonfinancial services were mixed. Commercial real estate was reported to be one of the weakest sectors, but we were warned about that a long time ago.

COMMERCIAL VS. RESIDENTIAL REAL ESTATE PRICES:

Expectations for holiday sales were mixed. Chicago expects improved sales, Philadelphia and Atlanta don't. Labor market conditions were generally weak or mixed across Fed Districts, which was seconded by the Labor Department's jobs report elsewhere in today's column. While employment activity is soft, some Districts had a slowdown in layoffs and others indicated signs of improvement in contract and temporary employment. Wage and price pressures were generally described as "subdued," as was inflation, except for some commodities.

Overall, the Beige Book showed us a still-sluggish economy that is sloooowly moving toward recovery: The consumer sector isn't great, but it's stable. Housing is improving from extremely low levels of activity, but commercial real estate is still declining. The biggest positive was the moderate rebound in manufacturing.

With few signs of inflation so far, the Fed will probably keep interest rates in the sub-basement for the time being. Or will try to at any rate, because crude's steep recent rise — crude oil is a keystone manufacturing feedstock, remember — must eventually find its way into the price of many, many producer and especially consumer items. Along with my export obsession I make this point quite frequently, but Ben Bernanke hardly ever returns my calls.

Definitely not a high-flyer, American Airlines's parent, AMR Corp. (AMR) said Wednesday that it lost $359 million in the third quarter, well under Wall Street's expectations. Per-share it came to $1.26 compared with a gain of $31 million or 12 cents in Q3008 that was bolstered by a big one-time sale; without one-off items, it would have been a loss of 93 cents. Either way it fell well short of analyst expectations of an 86-cent loss. Year-over-year operating revenue fell more than 20% to $5.13 billion, and the company's average fare dropped by more than 16%. The wider-than-expected loss occurred despite a nearly-47% drop in AMR's third-quarter fuel bill and the irritating fees on its checked baggage. Traffic stayed down sharply, especially among higher-fare-paying business travelers, on whom American is more dependent than most. It filled many of its planes instead with leisure travelers, the drawback being that vacationers generally sit in coach and pay rather lower fares.

But even for hoi polloi, flying is one of those very discretionary items that are among the first to be jettisoned in a tough economy. Ask yourself how many marginal cousins' weddings and nephews' bar mitzvahs in New Jersey or Los Angeles you've decided to forego in the last 18 months or so? Three? Maybe four? The economy continues to dampen the demand for air travel and AMR expects capacity to decline by 5.5% in the fourth quarter and 7.5% for the year. On the upside, it raised about $5 billion in liquidity during the recent quarter, giving it money to cover operations in the short term and leading analysts to concur that it probably won't go broke this winter. The stock didn't have a good day and is down about 45% since January.

AMR CORP.:

They were much happier over at Wells Fargo & Co. (WFC) with a $2.64 billion third-quarter profit or 56 cents a share after paying preferred dividends. That's up from $1.64 billion or 49 cents in the year-ago quarter and well over expectations of 37 cents. The firm's retail banking operations, including the businesses it acquired when it bought Wachovia, offset heavy and rising loan losses, some $5.1 billion or about 2.5% of its loan portfolio, up from $2 billion a year ago and $4.4 billion in the previous quarter; about one-third came from Wachovia. Past-due but not-written-off-yet loans totaled a scary $23.5 billion, nearly four times higher than in Q32008 and 28% above the previous quarter.

Loan losses were nicely offset by the bank's traditional banking business, which includes the big mortgage operation that Wachovia brought with it last year: The bank reported lending a tidy $96 billion in new residential mortgages. Net interest income, or what the bank makes on loans and other assets, rose 43% percent to $5.57 billion after setting aside $6.1 billion to cover credit losses. Noninterest income, from fees and other charges, more than tripled from a year ago to $10.78 billion with mortgage banking income jumping to $3.07 billion from $892 million. Total revenue more than doubled from the same period last year to $22.47 billion, but was roughly flat with the second quarter. Wells Fargo is practically synonymous with conservative, but investors were still worried about the deteriorating credit quality in the loan portfolio it acquired from Wachovia. Now it looks, so far, like the acquisition is adding solidly to Wells Fargo's growth and earnings. Credit cards make up a very small portion of the bank's loan portfolio, only about 3%; the bank expects those losses to peak in 2010. Wells traded higher for a while but got hit by that downgrade; the stock closed off $1.56 or 5.1%, to 28.90.

WELLS FARGO:

There was no joy at the Bureau of Labor Statistics, whose regional job report saw unemployment rising in 23 states last month. Layoffs have slowed, it's true, but companies remain touchy about hiring. Forty-three states reported job losses in September; seven reported gains.

The U.S. jobless rate rose to 9.8% in September — a 26-year high — from 9%. The Midwest, though, saw its unemployment rate drop for the second straight month, to 9.8% from 10% in August. It was the only region where the unemployment rate declined as Indiana and Ohio benefited from a rebound in the auto industry.

It's a very choppy recovery, evidently. The unemployment rate dropped in some Midwestern states as the manufacturing sector improved; but Florida and Nevada, two states hit hardest by the housing slump, reported record-high jobless rates. Complicating matters, people who are out of work but no longer looking for jobs aren't counted as officially unemployed. So some of the states that lost jobs still saw their unemployment rates improve because discouraged workers are giving up looking (not a good sign). That trend was evident nationwide in September, as nearly 600,000 people dropped out of the work force, as was reported earlier this month.

U.S. NONFARM EMPLOYMENT, 2007-2009:

A few weeks ago I ventured that we weren't going to see oil under $68 a barrel any time soon. The following week I was briefly wrong as oil fell under $67 for a couple of hours. Then crude took off and hasn't looked back. As witness Wednesday, when crude-oil futures rose to a one-year high on data from the Energy Information Administration showing a smaller-than-expected buildup in U.S. crude inventories last week, with imports falling to the lowest level in two months. Crude inventories rose 1.3 million barrels, less than the 2.2 million barrel gain expected by analysts. Imports fell to 8.7 million barrels a day, the lowest level in over two months. U.S. refiners lowered their output, with the utilization rate at 81%, near six month lows. Also in its inventories update, the EIA reported weekly declines of 2.3 million barrels for gasoline and 800,000 barrels for distillates, including heating oil and diesel.

On the New York Mercantile Exchange, crude for December delivery (the new front-month contract), rose $2.25 or 2.8% to settle at $81.37 a barrel, the highest settlement for a front-month contract since last October. On its way it hit an intraday high of $82.

NYMEX CRUDE FOR OCTOBER DELIVERY:

However, the EIA reported that petroleum demand remained weak, with gasoline use falling to the lowest level in more than five months. Gasoline supplied, an implied gauge of demand, fell to 8.95 million barrels a day, the lowest level since early May. Demand, shemand, as your mother-in-law might say. The main force lately behind the crude-oil run up is the continued weakness in the U.S. dollar against most major currencies, highlighting the appeal of dollar-denominated oil as a hedge against the weaker dollar. Such is almost always the way with commodities:

IPATH DOW JONES-AIG COMMODITY INDEX:

Oil has risen in nine of the 10 since Oct. 8 and gained 17%.

In the boost-earnings-by-cutting-costs department, we heard from Yahoo (YHOO), who did well largely by laying off employees. It also culled unpopular Internet services, not a bad move. Earnings for the third quarter more than tripled from the previous year, but revenue slipped for the third straight quarter. The Internet pioneer earned $186 million or 13 cents a share compared with $54 million or 4 cents a share last year, beating estimates by six cents. Revenue for the period fell 12% to $1.58 billion, not much better than the first-half's revenue drop of 13%, even with cash from the sale of a Chinese division. Yahoo makes most of its money in online billboards and other visual messages — campaigns that need long-term commitments, and those won't be made until advertisers are convinced the economy is strengthening. To make up slack, Yahoo is turning to Microsoft to power its search engine in the U.S. If regulators approve, Yahoo will transfer 400-odd workers to Microsoft and lay off some more.

Yahoo's stock price remains well below a $33-per-share takeover offer that Microsoft made in May 2008, only to withdraw the bid after Yang haughtily demanded more money, approximately five minutes before the market fell down the stairs. Perhaps you remember that episode with pain; I know I do, and the fact that Yang will languish forever in a dank corner of the CEO Hall of Shame is cold comfort. Investors now seem to think the company's current CEO Carol Bartz can turn things around; the stock soared at the open and although it fell after that, it still gained a few cents and closed near a 52-week high.

YAHOO:

Tomorrow the earnings torrent continues, including AT&T, McDonald's, Merck, 3M, Travelers, Amazon.com, American Express, Black & Decker, Raytheon, Schering-Plough, Bristol Myers-Squibb, Broadcom, Burlington Northern, Capital One, Celgene, Chubb, Goodrich Corp., Hershey's, Juniper Networks, Laboratory Corp. of America, Legg Mason, Philip Morris and Nucor. In economic reports, jobless claims and the EIA natural gas report should be market movers; leading indicators are also announced, and expect no fewer than six U.S. bill and note announcements.


New Plays

Losing Its Charge

by James Brown

Click here to email James Brown


NEW BEARISH Plays

Exide Tech - XIDE - close: 7.21 change: -0.10 stop: 8.05

Why We Like It:
XIDE is an industrial battery company. The larger trend is still bullish but short-term the stock is correcting and breaking support. I suspect the correction continues. We can open bearish positions now with a target at $6.10. I'm considering a second target at $5.55. The stock can be a little volatile so we'll use a stop loss above resistance at $8.00. The set up makes this an aggressive, higher-risk trade. We want to exit ahead of the early November earnings report.

Annotated chart:

Entry on   October 21 at $ 7.21 
Change since picked:     + 0.00   			
Earnings Date          11/05/09 (unconfirmed)    
Average Daily Volume:       545 thousand
Listed on   October 21, 2009    



In Play Updates and Reviews

At The Closing Bell

by James Brown

Click here to email James Brown

We had several plays that were set to expire tonight at the closing bell.


BULLISH Play Updates

Apartment Investment & Mgmt - AIV - cls: 14.63 chg: -0.19 stop: 13.95

This is it. AIV is testing its trendline of support near the 30-dma. More conservative traders might want to consider inching up their stop loss. Wait for a bounce before considering new positions.

Our first target to take profits is at $16.50. Our second target is $18.50 but we may not have time. The plan is to exit ahead of the October 30th earnings report.

Entry on   October 07 at $14.72 /gap open higher
                            /originally listed at $14.52
Change since picked:     - 0.09   			
Earnings Date          10/30/09 (confirmed)    
Average Daily Volume:       3.6 million 
Listed on   October 07, 2009    


Airgas Inc. - ARG - close: 49.45 change: -0.82 stop: 46.90

Profit taking in ARG shaved off 1.6%. The stock should find some support near $49.00 and again near its 50-dma (about 47.30).

Our first target is $52.45. Our second target is $54.85. More aggressive traders could aim higher. The Point & Figure chart is bullish and predicting a $77 target.

Entry on September 25 at $47.25
Change since picked:     + 2.20  			
Earnings Date          10/29/09 (confirmed)    
Average Daily Volume:       1.5 million 
Listed on September 19, 2009    


BE Aerospace - BEAV - close: 20.04 change: -0.36 stop: 19.25

BEAV is breaking down from its recent trading range but the stock should still find support near the rising 50-dma. I don't see any changes from my prior comments. More conservative traders may want to exit early anyway. I'm not suggesting new positions at this time.

Our first target is $22.25 and I'd exit about 75% of our position there. We'll put a second target at $24.00. Keep in mind that we'll exit ahead of the October 27th earnings report.

Entry on September 12 at $19.19 
Change since picked:     + 0.85   			
Earnings Date          10/27/09 (confirmed)    
Average Daily Volume:       834 thousand
Listed on September 12, 2009    


Sotheby's - BID - close: 17.70 change: -0.22 stop: 16.80

Shares of BID continue to correct but they've not yet tested what should be support near $17.50 and again near $17.00. Wait for a bounce before considering new positions.

I would use small positions (about 1/2 to 1/4 your normal trade size) to limit risk. Our first target is $19.95 since the $20.00 mark could be round-number resistance. Our second target is $22.00. Currently the Point & Figure chart is bullish with a $30 target. We do not want to hold over the early November earnings report.

Entry on   October 13 at $18.21 
Change since picked:     - 0.51   			
Earnings Date          11/05/09 (unconfirmed)    
Average Daily Volume:       861 thousand
Listed on   October 13, 2009    


Cracker Barrel - CBRL - close: 34.55 chg: -1.41 stop: 34.40

CBRL really under performed on Wednesday. The stock broke down under the $35.00 level, which should have been stronger support. Shares dipped to $34.41 this afternoon. Odds are pretty good we'll get stopped out tomorrow. The risk now is CBRL gapping open lower. If CBRL surprises us and rallies I'd wait for a new close over $35.00 before considering new bullish positions. Our first target is $39.75. The Point & Figure chart is forecasting a $57 target.

Entry on   October 10 at $36.00 
Change since picked:     - 1.45   			
Earnings Date          11/24/09 (unconfirmed)    
Average Daily Volume:       322 thousand
Listed on   October 10, 2009    


Compania Cervecerias - CCU - close: 36.00 change: +0.12 stop: 34.90

CCU is still consolidating sideways and managed to show a little strength today. Given the market's poor performance this afternoon I would not open new positions at this time. This is going to be a short-term trade as earnings are coming up in a week or two. Our first target is $39.90. The P&F chart is very bullish with a quadruple top bullish breakout buy signal and a $48 target.

Entry on   October 17 at $36.39 
Change since picked:     - 0.39   			
Earnings Date          10/26/09 (unconfirmed)    
Average Daily Volume:        56 thousand
Listed on   October 17, 2009    


Capstone Turbine - CPST - close: 1.38 change: -0.09 stop: 1.24

Uh-oh! CPST has reversed on us after breaking out on Tuesday. The larger trend is still up but readers may want to inch up their stop loss. Our first target is $1.75. We don't want to hold over the November earnings report. FYI: The Point & Figure chart is bullish with a $2.75 target.

Entry on   October 10 at $ 1.40 
Change since picked:     - 0.02   			
Earnings Date          11/09/09 (unconfirmed)    
Average Daily Volume:       3.7 million 
Listed on   October 10, 2009    


Diana Shipping - DSX - close: 14.99 change: +0.00 stop: 13.90

DSX hit our trigger at $15.25 when the stock surged to $15.50 today. Unfortunately DSX gave back all of its gains to close unchanged on the session. The move looks like a short-term bearish reversal and has the potential to be a bull trap. Readers may want to raise their stop loss toward the $14.50 zone. I'm not suggesting new positions at this moment until we see a bounce. Keep an eye open for a bounce near $14.50.

This is a volatile stock so we want to keep our positions small. We'll use a wide stop loss at $13.90. Our exit target is $18.75.

chart:

Entry on   October 21 at $15.25
Change since picked:     - 0.26   			
Earnings Date          11/10/09 (unconfirmed)    
Average Daily Volume:       1.9 million 
Listed on   October 20, 2009    


Gold Fields Ltd - GFI - close: 14.15 change: -0.03 stop: 12.99

A sharp decline in the dollar fueled new gains for gold. Yet the gold miners were unable to maintain their gains thanks to the market's afternoon decline. The action today is short-term bearish. I'm not suggesting new positions at this time. Look for a bounce from its rising 50-dma.

Our first target is $15.75. Our second target is $19.75 but that may be a little optimistic given our time frame. We plan to exit ahead of the late October earnings report. The Point & Figure chart is very bullish with a $21 target.

Entry on September 30 at $13.78 
Change since picked:     + 0.37   			
Earnings Date          10/29/09 (unconfirmed)    
Average Daily Volume:       7.7 million 
Listed on September 30, 2009    


HMS Holdings - HMSY - close: 41.20 change: -0.87 stop: 38.80

It's not surprising to see HMSY contract after testing resistance. Look for support near $40.00 and a bounce near this level as a new entry point. Our target is $44.90. We'll plan to exit ahead of the October 30th earnings report.

Entry on   October 17 at $41.55 /gap open higher 
                           /originally listed at $41.30
Change since picked:     - 0.35   			
Earnings Date          10/30/09 (confirmed)    
Average Daily Volume:       227 thousand
Listed on   October 17, 2009    


Jacobs Engineering - JEC - close: 45.79 change: +0.36 stop: 43.40

JEC did show some relative strength today but I'm concerned about the huge amount of volume on the late-day sell-off. Readers may want to raise their stop losses. I'm not suggesting new positions at this time. Our first target is $49.50. Our second target is $53.00 but we'll plan to exit ahead of the mid November earnings report.

Entry on   October 15 at $45.88 
Change since picked:     - 0.09   			
Earnings Date          11/17/09 (unconfirmed)    
Average Daily Volume:       1.2 million 
Listed on   October 15, 2009    


Microsoft - MSFT - close: 26.58 change: +0.21 stop: 25.49

Right now the plan is to exit tomorrow (Thursday) at the closing bell to avoid MSFT's earnings on Friday. More conservative traders may want to exit early tomorrow morning. Currently our exit target is $27.75.

Entry on      July 27 at $23.00
Change since picked:     + 3.58   			
Earnings Date          10/23/09 (confirmed)    
Average Daily Volume:        58 million 
Listed on  July 23, 2009    


Petrobras - PBR - close: 50.21 change: +0.57 stop: 45.95

Crude oil surged to new highs over $81 but oil stocks struggled with the afternoon market decline. More conservative traders may want to take some money off the table now. I'm not suggesting new positions at this time.

Our first target is $52.50. Our second target is $59.00. The P&F chart is bullish with a $63 target.

Entry on   October 08 at $46.80
Change since picked:     + 3.41  			
Earnings Date          11/13/09 (unconfirmed)    
Average Daily Volume:      12.8 million 
Listed on   October 07, 2009    


Patriot Coal - PCX - close: 12.83 change: -0.05 stop: 10.90

PCX tried to bounce but rolled over under the $13.50 level. I'm still expecting a drop toward $11.00. If you don't want to endure that sort of volatility then exit now and consider re-entering on a bounce near $11.00. I'm not suggesting new positions at this time.

PCX has already hit our first target at $13.90. We're currently aiming for $16.75 but we'll exit ahead of the October 27th earnings report.

Entry on   October 05 at $12.14 /gap open higher
                            /originally listed at $11.78
Change since picked:     + 0.69   	
                          /1st target hit @ 13.90 (+14.5%)
Earnings Date          10/27/09 (confirmed)    
Average Daily Volume:       6.4 million 
Listed on   October 05, 2009    


Pride Intl. Inc. - PDE - close: 33.33 change: +0.22 stop: 29.95

PDE almost hit our target today. Shares rallied to $34.67. Our target to exit is $34.75. The sharp pull back looks like a failed rally pattern and more conservative traders may want to take profits right here anyway. I am not suggesting new positions at this time. We'll plan to exit ahead of the late October earnings report.

Entry on   October 08 at $31.15
Change since picked:     + 2.18   			
Earnings Date          10/29/09 (confirmed)    
Average Daily Volume:       3.7 million 
Listed on September 12, 2009    


Playboy Ent. - PLA - close: 3.66 change: +0.01 stop: 3.35 *new*

PLA rallied to new highs for the year at $3.82. The late-day market sell-off is worrisome and readers may want to go ahead and exit PLA early right here! I am raising our stop loss to $3.35. I am not suggesting new positions at this time.

Our second and final target is $3.95. FYI: The Point & Figure chart is bullish with a long-term $7.50 target.

Entry on September 01 at $ 2.65
Change since picked:     + 1.01 
                            /take profits 09/16/09 (+17.7%)
Earnings Date          11/05/09 (unconfirmed)    
Average Daily Volume:       370 thousand
Listed on  August 29, 2009    


VisionChina Media - VISN - close: 10.01 change: -0.17 stop: 7.85

The market is acting weak here. Readers may want to start taking profits early in VISN. I'm not suggesting new positions at this time. This is a very aggressive trade and we want to keep our positions small.

Our first target is $10.90. Our second target is $13.75. The Point & Figure chart is bullish with a $15.00 target. My time frame is several weeks (maybe year end).

Entry on   October 07 at $ 8.53 
Change since picked:     + 1.58   			
Earnings Date          10/29/09 (unconfirmed)    
Average Daily Volume:       407 thousand
Listed on   October 07, 2009    


BEARISH Play Updates

Avis Budget Group - CAR - close: 10.94 change: -0.22 stop: 12.60

CAR produced a failed rally near its 50-dma today. The path of least resistance appears to be lower. Our target is $9.25. We'll have to keep an eye on the rising 100-dma as potential support. FYI: The P&F chart is forecasting an $8.50 target.

NOTE: CAR has a high amount of short interest, about 9% of the 101 million-share float. That raises the risk of a short squeeze. Readers may want to consider using put options to limit risk. A stop loss doesn't always work.

Entry on   October 20 at $11.25
Change since picked:     - 0.31   			
Earnings Date          11/02/09 (confirmed)    
Average Daily Volume:       3.8 million 
Listed on   October 17, 2009    


CLOSED BULLISH PLAYS

Check Point Software - CHKP - cls: 30.10 change: -0.05 stop: 28.90

CHKP spiked to $30.75 before giving back all of its gains. Our plan was to exit tonight at the closing bell to avoid holding over earnings.

chart:

Entry on   October 06 at $29.19 
Change since picked:     + 0.91 <-- exit @ 30.10 (+3.1%)
Earnings Date          10/22/09 (confirmed)    
Average Daily Volume:       2.4 million 
Listed on   October 06, 2009    


Carpenter Tech. - CRS - close: 22.88 change: -0.68 stop: 22.45

I think it's time we abandon ship with CRS. The stock lost 2.8% and closed under its 40-dma. Volume was above average on the decline.

chart:

Entry on September 05 at $21.45 /gap higher entry
                             /originally listed at $20.92
Change since picked:     + 1.43 <-- early exit @ 22.88 (+6.6%)
                             /1st target hit @ 24.90 (+16.0%)
Earnings Date          10/27/09 (confirmed)    
Average Daily Volume:       536 thousand
Listed on September 05, 2009    


F5 Networks - FFIV - close: 41.53 change: -0.60 stop: 40.75

It was our plan to exit tonight at the closing bell to avoid holding over earnings.

chart:

Entry on   October 07 at $40.63 
Change since picked:     + 0.90 <-exit @ 41.53 (+2.2%)
Earnings Date          10/21/09 (confirmed)    
Average Daily Volume:       1.2 million 
Listed on   October 07, 2009    


Starwood Hotels - HOT - close: 34.20 change: -0.64 stop: 32.90

The plan was to exit at the closing bell to avoid holding over earnings tomorrow.

chart:

Entry on   October 01 at $31.00
Change since picked:     + 3.20  <- exit @ 34.20 (+10.3%)
                             /1st target hit @ 34.75 (+12%)
Earnings Date          10/22/09 (confirmed)    
Average Daily Volume:       3.4 million 
Listed on September 19, 2009    


NII Holdings - NIHD - close: 32.43 change: +0.40 stop: 30.60

NIHD is yet another play where we planned to exit tonight at the closing bell to avoid earnings. However, unlike the rest of the market NIHD managed to maintain some of its gains today. The plan was to use small position sizes (1/2 to 1/4 normal size) to limit risk.

chart:

Entry on   October 08 at $30.60
Change since picked:     + 1.83<-- exit at $32.43 (+5.9%)
Earnings Date          10/22/09 confirmed    
Average Daily Volume:       3.4 million 
Listed on September 23, 2009    


Tractor Supply Co. - TSCO - close: 50.96 change: -1.71 stop: 51.49

The plan was to exit tonight at the closing bell to avoid holding over earnings. Unfortunately TSCO under performed the market with a 3.2% decline and hit our stop loss at $51.49 ending our play early.

chart:

Entry on   October 06 at $50.56 
Change since picked:     + 0.93<-- stopped @ 51.49 (+1.8%)
Earnings Date          10/21/09 (confirmed)    
Average Daily Volume:       384 thousand
Listed on   October 06, 2009