Option Investor
Newsletter

Daily Newsletter, Tuesday, 11/23/2010

Table of Contents

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

Market Wrap

Fast Forward to Next Monday

by Jim Brown

Click here to email Jim Brown
It would sure be nice if we could just step away from the markets for the rest of the week and start over again on Monday with Korea, Ireland, Portugal and the Fed only a bad dream in our past.

Market Statistics

It is hard to decide which entity caused the most trouble today and there was a lot to choose from. Overnight events in Korea and Ireland sent futures spiraling into the red overnight and conditions never got better.

North Korea attacked a South Korean island by firing scores of artillery shells that destroyed house, killed two and wounded more than 20 people. This was one of the biggest attacks by Korea since the war ended in 1953. South Korea fired back and scrambled jets to target the guns.

The island is just across the border from North Korea. The leader of South Korea warned of an immediate and devastating response if the North attacked again. The U.S. administration promised to defend South Korea if needed. The U.S. has 28,000 troops in the south as a peace-keeping force.

Korean Island Under Attack

Most analysts believe this is just a cry for attention from Kim Jong-il as he fades from relevancy. He is in ill health and is passing the leadership to his 20-year-old son. This could have been a teaching exercise as well on how to deal with the south and gain concessions from the world powers. He has made a practice for decades of creating an event to get everyone all excited and worried about war and then he promises to be good if the major powers will give him something in return. Kim is an expert in political blackmail using brinksmanship as a tool. You may remember the north sunk a South Korean naval destroyer and killed 46 sailors about a year ago in an unprovoked attack by submarine.

North Korea created a fuss last week when they took a noted scientist to see their previously undisclosed uranium processing plant with 2,000 active centrifuges. This was another "in your face" effort to attract attention.

The exchange of fire of about 100 artillery rounds each crushed the won and sent the dollar higher. South Korean stocks declined sharply. However, in past attacks by North Korea the impact on the equity markets was fleeting with a recovery almost immediately. Everyone knows it is just a game with the North and neither country wants to go to war. The North has overwhelming military force positioned on the border and could inflict significant damage on South Korea in any conflict. They know they would eventually lose but they are prepared to play the mutually assured destruction card if the U.S. and allies attacked.

Problems in Ireland flared up again as citizens protested the austerity budget the country was going to have to enact in order to get the bailout. The prime minister defied calls to resign saying the national interest required he press on to unveil a four year austerity package on Wednesday. There were riots in the street and analysts expect them to increase once the plan is announced. The government is expected to cut the minimum wage, social and welfare spending. They will also cut the number of government workers, add a new property tax and raise income taxes.

The banking sector in Ireland is under serious pressure despite the promise of a major bailout by the IMF. Some major Irish banks have reported that deposits have declined from 15-17% since the first of the year. Analysts believe a multi notch downgraded of Ireland's debt could occur at any time.

Portugal is now expected to be the next target by speculators once the Irish bailout is completed. Lawmakers in Portugal are bracing for what they know will be the required budget cuts and austerity measures. Portugal's deficit is not 9.3% of the GDP and well above the 3% limit for EU countries. The official debt is claimed by the government to be a whopping 86% of GDP but most analysts believe it is actually much higher and well over 100%. The most recent estimate is 112%. It seems public accounting standards in the EU countries is mostly smoke and mirrors and we saw in Greece their official numbers were well below the real numbers discovered by Eurostat.

Portugal still operates under the post revolution labor laws where unions rule. Laying off workers is nearly impossible and requires large compensation payments. Workers can refuse changes in their duties and hours. Civil servants can't be fired except in cases of extreme misconduct, which leads to bloating of the government rolls. Productivity is less than two thirds of Spain and educational levels are among the lowest in Europe. The minimum wage is 475 euros per month and the government has legislated prices and rates on almost everything in order to keep costs low and affordable on that wage. That means there is no incentive to build or manufacture anything since companies can't sell or rent for a profit. Even the Portuguese don't like their own country. A Canadian researcher claims nearly one million citizens have left Portugal in the last ten years.

I described the problems in Portugal in depth so once Ireland's fiasco is over you will understand why the focus is shifting to Portugal. Next up after Portugal is Spain.

The 90 billion euro bailout for Ireland was good for about 48 hours of calm. EU lawmakers don't seem to be getting much bang for their buck these days. It turns out the Irish government had been secretly negotiating with the EU for weeks over a bailout despite their constant public statements to the contrary. The continued country-by-country bailout process is producing increased worry that the euro is toast and the Eurozone is doomed. As the countries in need of help become larger and more costly there is a real fear that the rescuers will be in need of a rescue themselves. If Spain, the fourth largest EU economy, does require a bailout it would wipe out the rest of the 750 billion euro bailout fund and leave the union in dire straits.

This chain of bailouts, severe budget cuts and the associated civil disturbances are causing investor flight from the EU. This is pushing up the U.S. dollar at a time when the Fed would like it to be falling. OR, at least that is what the public Fed was saying. In the FOMC minutes from the November meeting there was some serious opposition to the QE2 program. Several members worried that it would negatively impact the dollar and raise risks of inflation. Others did not believe any further QE programs would have any impact on the economy.

The Fed went ahead with the QE2 program because many on the Fed were worried that slow growth and high unemployment could lead the country back into recession. The Fed was so concerned that they held a secret meeting in October where they discussed things like fixing an inflation target, fixing a price on 10-year notes and having Bernanke hold routine press conferences to counter rumors and update analysts on the current conditions.

The Fed cut its estimates again for economic growth. They cut GDP estimates for 2010 to 2.45% a decline of -0.9% and raised unemployment estimates by +0.25% to 9.6%. They cut 2011 estimates to 3.3% a decline of -0.55% and raised unemployment by +0.5% to 9.0%. They raised GDP estimates slightly for 2012 to 4.05% but added +0.65% to unemployment and pushing it to 7.95%.

The Fed disclosed it was aware their message to the markets and to consumers was being lost in the translation. Few consumers understand Fedspeak. For this reason having Bernanke hold regular press conferences would probably not be beneficial. However, the Fed needs to improve its communication skills. That is harder to accomplish than you would imagine because a lot of what the Fed does it does in secret. Too much information could be harmful to our health. What did come out of the FOMC minutes is a Fed that may be contemplating some even more drastic measures to build a fire under the economy. One thing mentioned continually now is charging banks a fee to deposit money at the Fed. Currently the Fed pays the banks interest on money on deposit. This would force the banks to lend money or face a decline in profits.

Nobody was watching the economic reports today but there were several key releases. The GDP estimate for Q3 jumped to +2.5% from 2.0% in the last update. This was up from a +1.7% rate in Q2. The increase came from upward revisions to consumer spending, exports and state and local government activity. Corporate profits rose by $44 billion in Q3. Import growth slowed as the dollar declined and that added to GDP.

The Core PCE Price Index rose by only +0.8% on an annualized basis in Q3. This is the Fed's preferred inflation measure and the miniscule gain continues to suggest deflation is still more of a threat than inflation. Q4 GDP is expected to suffer from a decline in stimulus spending but be helped by a surge in hiring in Oct/Nov.

GDP Chart

The Richmond Fed Manufacturing Survey rebounded for the second consecutive month with a headline number of 9.0. This is the highest level since August and a gain of +4 points over October's 5.0 reading. The new orders component rose from 8 to 10 and the employment component surged from 4.0 to 10.0. CapEx spending plans jumped from 16.0 to 24.0 indicating manufacturers were starting to feel more comfortable about expanding. This was a very strong report.

Richmond Fed Chart

The regional and state employment numbers for October showed that employment rose in 41 states and DC. Only six states posted a decline in hiring. The states with the most hiring were Texas at +47,000, New York +40,600 and California +38,900. Nevada still had the highest unemployment at 14.2% followed by California at 12.4%.

Unfortunately existing home sales for October posted a -2.2% decline to 4,453,000 units on an annualized basis. That was still slightly higher than the consensus estimates but not a material improvement. All four regions posted declines with the South falling the most at -3.4%. Compared with year ago numbers sales are down -26%. That is distorted because of the tax credit sales in 2009. Sales normally decline in the fall as colder weather the holidays discourages house shopping. Strict mortgage credit requirements are still blamed for the lack of sales. The pendulum has swung too far in the opposite direction from the pre recession credit bubble.

Corporate profits hit a record in Q3 and that is positive for the market in the future. Total adjusted profits rose +2.8% on a quarterly rate. This represented a seventh consecutive quarterly increase and a +67% gain over that period. Wage growth also rose. Total compensation in the second quarter, the latest complete numbers, showed that salaries and wages rose +6% on an annual basis and more than twice the initial estimate. The Q3 estimate is now over 3%. Higher income increases spending and promotes higher corporate profits. Despite the current weakness in the market it appears conditions are improving and should produce a rally once all this geopolitical mess passes.

With Thursday and Friday government holidays the rest of the week's economics will be squeezed into Wednesday. The only material report is the Kansas Fed Manufacturing Survey. If the geopolitical fires are still burning all these reports will be ignored.

Economic Calendar

About the only news in the stock world was the gain in Hewlett Packard after their earnings on Monday. HPQ shares rose +94-cents on a really ugly day. Other gainers on the NYSE were CF, CRM, PPD, BIG, DG, AGP and CMG. Leaders on the Nasdaq were SODA, JOBS, OPEN, SQQQ, MDAS and TSLA.

I heard somewhere that Tesla Motors has a short interest in the stock of more than 64%. Those shorts just keep pushing it higher even on the bad days. Tesla is up nearly 100% from its IPO price despite having sold only 1200 roadsters.

The SEC and FBI are expanding their probe in what could be the biggest insider trading case ever. Hedge funds MFS, Citadel, SAC Capital, Wellington Management, Level Global Investors, Diamondback Capital Management and mutual fund company Janus have all admitted to receiving information requests and/or visits from the FBI. The general complaint seems to revolve around paying for what could be considered inside information. Things like paying farmers near a plant in China to count the number of trucks leaving the plant. Another fund paid people to stand outside a casino and count the number of people entering. That fund multiplied the number of visitors by the known average loss to get an idea on how much the casino was taking in on a daily basis. Is that wrong or just some smart private research. We have no idea where this probe will end or when but many are saying it would be tough to get a conviction on those kinds of research.

The Dollar Index spiked almost a full point today as the flight to safety from the Eurozone debt debacle and the Korean attacks had investors moving money in large amounts. The spike in the dollar put it at two-month highs. This would be a likely place for it to fail if there were not some many problems in Europe. With Ireland unveiling the new austerity plan on Wednesday there is no telling what will happen.

Dollar Index Chart

Obviously South Korean stocks were hit hard and the EWI ETF declined -5.4%. If you want to play the rebound you could use SKM, KEP, SHG, PKX or LPL.

In the U.S. markets the S&P fell back to support from last week at 1175-1180 and could be poised to rebound. However, traders don't like this daily dose of geopolitical surprises. I am worried that trading for Thanksgiving week has come to a screeching halt. Actually I am hoping it will be a halt and not a serious breakdown. If support at 1175 breaks we could be in for a complete change in market sentiment.

S&P-500 Chart

Like the S&P the Dow has respected its current range for the last week. We are however right on the verge of a serious breakdown if the geopolitical events don't begin to fade soon. The flash crash killed investor confidence and it was just starting to really solidify in late October but China, Ireland and Korea have now put a serious dent in that confidence.

If the Dow breaks support at 11,000 it could start a chain reaction of profit taking now instead of waiting until year-end or the first couple weeks of January. Individual investors have a lot of profits stored up in the market and now we are right back where we were a week ago with the rally erased.

Dow Chart

The Nasdaq closed below 2500 once again and that is a key sentiment threshold. The damage was slight but it is still a worry. The -25% retracement level held last week and I would like to hope it would hold again but the S&P and Dow are leading the market down. It may not be up to the tech stocks to rescue the market once again.

Nasdaq Chart

I have been a dip buyer to S&P 1175. I am still going to buy it tonight but with a lot more caution. Sentiment has been damaged and this normally bullish week is struggling. I had a reader email me today asking if this was the year of opposites where normal trends were all reversing. I am not at that point yet and I think we are just in the grip of a lot of bad news. Unfortunately I don't see that news ending soon. Ireland is going to have more problems on Wednesday when they release the new austerity budget. Korea is a wild card and China has been very quiet this week. Who knows what new problem could suddenly show up to cause trouble? When the bulls are charging this kind of news is ignored. This week the bulls are obviously confused and for good reason. Buy the dip but do it cautiously!

Jim Brown

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New Plays

Consumer Electronics

by James Brown

Click here to email James Brown
Editor's Note:
We've found a momentum trade that isn't outrageously overbought. Look for a dip toward support as an entry point.

-James


NEW BULLISH Plays

Sony Corp. - SNE - close: 34.45 change: -0.92

Stop Loss: 32.90
Target(s): 35.75, 39.00
Current Option Gain/Loss: unopened
Time Frame: 10 to 12 weeks
New Positions: Yes, see trigger

Company Description:
The Sony Group is primarily focused on the Electronics (such as AV/IT products & components), Game (such as PlayStation), Entertainment (such as motion pictures and music), and Financial Services (such as insurance and banking) sectors. Not only do we represent a wide range of businesses, but we remain globally unique. Our aim is to fully leverage this uniqueness in aggressively carrying out our convergence strategy so that we can continue to emotionally touch and excite our customers. (source: company press release or website)

Why We Like It:
Investor sentiment on SNE has been bullish and shares were hitting new seven-month highs just a few days ago. Broken resistance near $34.00 should offer some support and a chance for us to jump on SNE's up trend. I am suggesting a trigger to buy SNE stock (or call options) at $34.00. If triggered our first target is $35.75 with a stop loss t $32.90.

Trigger @ $34.00

Suggested Position: Buy SNE stock
- or -
Buy the 2011 APRIL $35 calls (SNE1116D35) current ask $2.45

Annotated chart:

Entry on November xx at $xx.xx
Earnings Date 02/03/11 (unconfirmed)
Average Daily Volume: 888 thousand
Listed on November 23rd, 2010


In Play Updates and Reviews

Widespread Declines

by James Brown

Click here to email James Brown

Editor's Note:
Stocks soured on Tuesday morning with constant worries over Ireland's financial troubles and violence in Korea. Most of our candidates found support intraday but given the outside forces at work in Korea and Europe I'm leaning towards a wait-and-see approach before launching new bullish positions.

-James

Current Portfolio:


BULLISH Play Updates

Alcoa Inc - AA - close: 13.29 change: -0.09

Stop Loss: 12.45
Target(s): 14.95, 15.95
Current Option Gain/Loss: - 0.3%
Time Frame: 6 to 8 weeks
New Positions: Yes, but see below

Comments:
11/23 update: Shots fired along the disputed Korean border and worries over European debt woes had investors looking for safety in the U.S. dollar. This dollar strength weighed on commodities. Shares of AA fell-1.2% on the session but managed to find support near $13.00 and its rising 40-dma. This dip looks like a new bullish entry point to me but it would probably be safer to wait for a close over $13.40 before launching new bullish positions.

Current Position: Long AA stock @ 13.18

Entry on November 16 at $13.18
Earnings Date 01/10/11 (unconfirmed)
Average Daily Volume: 26.1 million
Listed on November 6th, 2010


Alaska Air Group - ALK - close: 54.63 change: -0.82

Stop Loss: 59.50
Target(s): 51.90
Current Option Gain/Loss: - 0.5%
Time Frame: 8 to 9 weeks
New Positions: Yes

Comments:
11/23 update: ALK's mild pull back on Tuesday looks like another entry point but rising tensions in Korea may continue to undermine the markets. You could wait for a bounce near the $54.00 level but essentially I would consider bullish positions in the $53-55 zone. Our first target is $59.50. FYI: The Point & Figure chart is bullish with a $79 target.

Current Position: Long ALK stock @ $54.91

- or -

Long the 2011 January $60 calls (symbol: ALK1122A60) entry @ $1.60

Entry on November 22 at $54.91
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 331 thousand
Listed on November 20th, 2010


Abercrombie & Fitch - ANF - close: 48.44 change: +0.92

Stop Loss: 43.95
Target(s): 49.95
Current Option Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Comments:
11/23 update: Yesterday we discussed ANF potentially breaking out past resistance near $48.00. Shares of ANF spiked higher apparently in reaction to news that JCG was being taken private. I didn't see any other catalyst that made sense. Aggressive traders may want to consider buying ANF here. I would rather wait for a dip.

Trigger to buy ANF @ $46.10

Suggested Position: Buy ANF stock @ $46.10
- or -
Buy the 2011 January $50 call (symbol: ANF1122A50)

Entry on November xx at $xx.xx
Earnings Date 02/15/11 (unconfirmed)
Average Daily Volume: 3.1 million
Listed on November 17th, 2010


Citigroup Inc - C - close 4.10 change -0.08

Stop Loss: 4.08
Target(s): 4.60, 4.75, 4.95
Current Option Gain/Loss: - 0.6%
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
11/23 update: Financials continue to underperform and Citigroup lost -1.9% on Tuesday. The stock has now broken support at its rising trendline of higher lows and broken down under its 50-dma. Citigroup spent the day hovering near support at $4.10. Any further weakness will stop us out at $4.08. I am not suggesting new positions at this time.

Current Position: Long C stock, entry was at $4.16
Options Traders: Long December $4.00 CALL

Entry on October 27, 2010
Earnings Date 01/19/11 (unconfirmed)
Average Daily Volume: 523 million
Listed on October 25, 2010


Companhia Brasileira de Distribuicao - CBD - close: 39.61 change: -2.10

Stop Loss: 36.75
Target(s): 44.95, 49.00
Current Option Gain/Loss: - 1.5%
Time Frame: 10 to 12 weeks
New Positions: Yes, see below

Comments:
11/23 update: Stocks saw widespread global declines on Tuesday. The Brazilian market fell -2.4%. Shares of CBD, which had been soaring to new highs, gave up -5%. Our trigger to launch bullish positions was hit at $40.25. Traders bought the dip twice near $39.50 and I would still consider new positions now at current levels. Of course you could wait and see if there is any follow through on this decline and look to buy CBD on a dip near $38.00.

Current Position: Long CBD stock @ $40.25

chart:

Entry on November 23 at $40.25
Earnings Date 03/02/11 (unconfirmed)
Average Daily Volume: 608 thousand
Listed on November 20th, 2010


Hansen Natural Corp. - HANS - close: 52.47 change: -0.43

Stop Loss: 48.95
Target(s): 54.90, 57.45
Current Option Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
11/23 update: HANS still looks strong as profit taking this morning was minimal with a drop toward $52.00. There is no change from my prior comments. Currently the plan is to launch bullish positions on a dip at $51.50 but readers could wait for a dip into the $51-50 zone instead.

Trigger @ 51.50

Suggested Position: BUY the stock

- or -

BUY the January $55.00 calls (symbol:HANS1122A55)

Entry on November xx
Earnings Date 11/04/10 (confirmed)
Average Daily Volume: 750 thousand
Listed on October 16, 2010


Kroger Co. - KR - close 23.01 change -0.12

Stop Loss: 21.95
Target(s): 23.70, 24.75
Current Option Gain/Loss: + 2.0%
Time Frame: 8 to 10 weeks
New Positions: Yes, but see below

Comments:
11/23 update: There is no change from my prior comments. KR held up pretty well today with only a minor loss. If the market continues to slip we can look for new entry points on a pull back into the $22.75-22.50 zone.

FYI: KR is due to report earnings in early December.

Current Position: Long KR stock @ 22.55

Entry on November 9th @ 22.55
Earnings Date 12/2/2010 (unconfirmed)
Average Daily Volume: 6 million
Listed on November 3, 2010


Lam Research - LRCX - close: 46.01 change: -0.86

Stop Loss: 42.75
Target(s): 48.50, 52.50
Current Option Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Comments:
11/23 update: LRCX dipped to $45.48 before paring its losses. While it would be tempting to buy the intraday bounce I'm suggesting we wait. Use our trigger at $45.25. More conservative traders could wait for a dip into the $45.00-44.00 zone instead as their entry point.

Trigger @ $45.25

Suggested Position: Buy LRCX stock @ 45.25
- or -
Suggested Position: Buy the 2011 January $45 calls (LRCX1122A45)

Entry on November xx at $xx.xx
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 4.5 million
Listed on November 18th, 2010


Microsoft Corp. - MSFT - close: 25.12 change: -0.61

Stop Loss: 24.90
Target(s): 27.45, 29.00
Current Option Gain/Loss: - 1.6%
Time Frame: 8 to 10 weeks
New Positions: Yes

Comments:
11/23 update: Uh-oh! MSFT has taken a turn for the worse with a -2.3% decline and a breakdown under support near $25.50 and its 50-dma. Shares closed near their low for the day, which doesn't bode well for Wednesday. Now the $25.00 level should offer some round-number, psychological support but it's up to you whether you want to buy MSFT on a dip near $25.00 or wait for a bounce from $25.00. Alternatively more conservative traders could wait for a close over $26.10 instead.

Current Position: Long MSFT stock @ 25.55

- or -

Buy the 2011 January $25.00 calls (symbol: MSFT1122A25) Entry @ $1.39

Entry on November 17 at $25.55
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 68.4 million
Listed on November 15th, 2010


Onyx Pharmaceuticals - ONXX - close: 29.51 change: -0.20

Stop Loss: 26.45
Target(s): 32.00, 34.50
Current Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Comments:
11/23 update: ONXX is inching closer and closer to a breakdown of its trading range. We're looking for the stock to find support near $28.00. Our trigger is at $28.60 but nimble traders could try and jump in on a dip closer to $28.00.

Trigger @ $28.60

Suggested Position: Buy ONXX stock @ 28.60

Entry on November xx at $xx.xx
Earnings Date 02/23/11 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on November 13th, 2010


Overseas Shipholding Group - OSG - close: 37.09 change: +0.09

Stop Loss: 34.75
Target(s): 39.90, 42.00
Current Option Gain/Loss: - 1.2%
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
11/23 update: We are not off to a great start here. Market reaction to rising geopolitical worries had OSG gapping open lower at $36.50 and falling toward the $36.00 level for a -2.7% decline. I am raising our risk on this play by adjusting the stop loss to $34.75. More conservative traders will not want to move their stop and instead keep theirs at $35.75. Wait for a bounce before considering new bullish positions.

Previous Comments:
If OSG can breakout to new relative highs the stock could see a short squeeze. The most recent data listed short interest at 20% of the float. We should consider this trade higher risk. The Baltic Dry Goods index has been falling, which suggest shipping rates are sinking. OSG has managed to trend higher in spite of this decline in the $BDI. Investors should also be worried about the long-term trend of lower highs in OSG. Keep your position size small to limit risk.

Current Position: Long OSG stock @ $36.50

- or -

Long the 2011 January $40 calls (OSG1122A40) Entry @ $0.78

Entry on November 23 at $36.50
Earnings Date 03/01/11 (unconfirmed)
Average Daily Volume: 600 thousand
Listed on November 22nd, 2010


Tractor Supply Co. - TSCO - close: 41.84 change: -0.12

Stop Loss: 39.45
Target(s): 44.95
Current Option Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Comments:
11/23 update: TSCO continues to show strength with traders quickly buying the dip this morning. The stock was slowly climbing higher throughout the session and almost made it back into positive territory. More aggressive traders will want to seriously consider launching bullish positions on a breakout over $42.00. For now our trigger remains at $40.75.

Buy-the-Dip Trigger @ $40.75

Suggested Position: Buy TSCO stock
- or -
Buy the 2011 January $45 calls (symbol:TSCO1122A45)

Entry on November xx at $xx.xx
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 751 thousand
Listed on November 11th, 2010



BEARISH Play Updates

Corporate Office Properties - OFC - close: 33.82 change: -0.39

Stop Loss: 36.65
Target(s): 32.25, 30.25
Current Change: - 3.5%
Time Frame: 6 to 8 weeks
New Positions: No

Comments:
11/23 update: OFC sank to new nine-month lows with today's -1.1% decline. Shares closed under recent support near $34.00. I am not suggesting new bearish positions at current levels. Our first target is $32.25.

Current Position: Short OFC stock @ 35.07

Entry on November 10 at $35.07
Earnings Date 02/09/11 (unconfirmed)
Average Daily Volume: 1.0 million
Listed on November 9th, 2010


CLOSED BULLISH PLAYS

SPDR Financial ETF - XLF - close 14.41 change -0.23

Stop Loss: 14.45
Target(s): 17.25
Current Option Gain/Loss: - 5.2%
Time Frame: 6 to 8 weeks
New Positions: No

Comments:
11/23 update: The market's initial reaction to ongoing worries about Ireland's financial problems and escalating military action on the Korean peninsula sent the financial sector lower. The XLF gapped open lower at $14.48 and quickly hit our stop loss at $14.45 closing this trade.

Closed Position: Long the XLF (etf) @ 15.25, exit @ 14.45 (-5.2%)

- or -

Options Traders: Long the 2011 January $15.00 call, entry @ $0.85, Exit @ $0.33 (-61%)

chart:

Entry on November 9th @ 15.25
Earnings Date N/A (unconfirmed)
Average Daily Volume: 83 million
Listed on November 4, 2010