Option Investor
Newsletter

Daily Newsletter, Monday, 3/7/2011

Table of Contents

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

Market Wrap

Another Day At Oil's Office

by Todd Shriber

Click here to email Todd Shriber
Oil rules the roost these days and that sentiment was quite clear on Monday as rising oil prices present yet another shock to equity markets. There will be no quick resolution a la Egypt and Tunisia in Libya and on the back of that sentiment, traders are bidding up oil prices while stocks suffer. The S&P lost nearly 1%, the Dow Jones Industrial Average shed two-thirds of a percent and the Nasdaq lost 1.4% as all three wiped out last week's gains.

Stats Table

Per usual these days, rising oil prices grabbed plenty of headlines today as NYMEX-traded crude for April delivery hit another 29-month high before pulling back a bit. The close at $105.44 a barrel was the highest closing price for the most actively-traded contract since September 2008.

Of course, it is Libya that continues to stoke oil market fears. Supporters of embattled dictator Moammar Gadhafi continued to clash with opposition forces over the weekend and multiple press reports said on Monday that Gadhafi's forces began air strikes on rebel positions in Ras Lanuf, a town along the Libyan coast that is home to an export terminal and refinery.

JPMorgan noted the issue may not be so much Libya's total production, which by some estimates has been pared by as much 1 million barrels a day since the onset of the movement to dispose of Gadhafi, but Libya's ability to get the oil it is producing out of the country. ''Frankly, those prospects are not promising,'' the bank said, according to MarketWatch.

On the other hand, some countries are so desperate for oil, they will buy it from anyone. As the Financial Times noted over the weekend, China and India have remained loyal buyers of Libyan crude. Adding fuel to oil's fire was news of protests in Yemen, Iran, Iraq, Bahrain, Jordan, and Oman. For those keeping score at home, Iran, Iraq and Libya make up 25% of OPEC's membership. As Jim and I have noted multiple times over at OilSlick, the proverbial elephant in the room is Saudi Arabia,the world's largest oil exporter. This Friday is supposed to be the ''day of rage'' in the kingdom. The oil chart could make for very interesting weekend reading come Saturday.

Oil Chart

Speaking of political events, there was some interesting political news out today here in the States and it might be enough to give Senate Democrats reason to celebrate, at least internally. Sen John Ensign (R-NV) announced he will not seek re-election in 2012. Trust me, I understand that we are just a few months removed from the 2010 mid-terms, but this how politics in the U.S. works these days, particularly in relation to the financial markets: There is really no break from election news.

Ensign, who was a former chair of the National Republican Senatorial Committee, had been viewed as one of the more vulnerable Senate Republicans in 2012 following news of a marital transgression with a staffer back in 2009. While Ensign had been steadfast in saying that he would run again next year and was even raising money to do so, Republican leadership had been less than supportive of the idea.

This is why news of Ensign's decision is noteworthy: Much has been made of the Republicans' chances for taking control of the Senate in 2012, a goal they fell just short of last year and when you look at the states where vulnerable Democrats reside combined with the states where Dems will have to defends open seats due to retirements, the stars appeared to be aligning for Senate Republicans.

Not so fast. The Republicans now must defend open seats in Arizona and Nevada, two states where demographic shifts have been less than kind to the GOP. President Obama probably would have won Arizona in 2008 had he not been running against John McCain (R-AZ) and he did win Nevada. Not to mention the GOP could not boot Harry Reid (D-NV) last year in what was an otherwise bad year to be a Democrat.

For now, I would say the Republicans do hold Ensign's seat, but it will be close race and it all depends on the nominee. Nominate someone like Harry Reid's opponent and this may become an easy pickup for the Dems.

Senate Chart

In stock-specific news, shares of networking equipment maker Ciena (CIEN) plunged $2.83, or almost 10%, to $25.98 on volume that was more than triple the daily average after the company said its fiscal first-quarter loss widened to $79.1 million, or 84 cents per share, compared with $53.3 million, or 58 cents per share, a year earlier. All that despite the fact that Ciena's revenue more than doubled to $433.3 million.

On an adjusted basis, Ciena lost 14 cents a share compared with 12 cents a year earlier. Analysts were forecasting a loss of 16 cents on revenue of $422.5 million. Ciena forecast fiscal second-quarter revenue of $415-$435 million, below the consensus estimate of $439 million.

Ciena rival JDS Uniphase (JDSU) was hammered the tune of 7% on volume that was more than double the daily average while Cisco Systems (CSCO), the largest maker of networking gear, slid 1%, extending a slide that has seen the Dow component shed 16% in the past month.

Ciena Chart

It was bad day for tech from the onset as Wells Fargo pared its rating on the semiconductor sector to ''market weight'' from ''overweight'' due mainly to the fact that the Philadelphia Semiconductor Index has more than doubled off its 2009 lows. Parsing through the bank's comments on the sector, it can be said a cautiously optimistic, not bearish, view is in place, but that was not enough to save the group from a 3% slide day, the worst performance in the S&P 500. Intel (INTC), the world's largest semiconductor maker, finished the day lower by more 1.6%.

Intel Chart

Again, it was not a big ''Merger Monday'' but there are are almost $5 billion in deals to note and in both cases, the acquiring companies were among Wall Street's top performers today. Looking at the bigger of the two deals and perhaps the one that is the example of two wrongs trying to make a right, hard-drive maker Western Digital (WDC) shot up almost 16% after announcing it will acquire Hitachi's hard-drive unit for $4.3 billion in cash and stock.

Western Digital is already the largest hard-drive maker in the world while Hitachi is number three, so this deal adds some bulk to Western Digital and the California-based company said it expects the transaction to immediately add to its per share earnings.

That's the good news, but the problem is hard-drive sales are expected to fall because tablet devices such as the iPad have become a real problem for drive makers. Tablets do not use hard-drives, but laptops do and the more customers, business and consumers alike, that opt to replace laptops with iPads and equivalent devices, the more pain will be felt by companies like Western Digital.

Western Digital Chart

In my humble opinion, the smaller of the two deals I am going to highlight could actually prove to be more important going forward. If you are wondering why James River Coal (JRCC) surged almost 16% today, I will argue that is NOT because of the coal miner's fourth-quarter earnings report that consisted of a profit $25.9 million, or 93 cents per share, compared with a net loss of $3.2 million, or 12 cents per share, a year earlier.

Revenue jumped 8% to $162.1 million. Excluding one-time items, James River earned 14 cents a share, but analysts were expecting a profit of 30 cents on revenue of $169.4 million. So how does a company miss estimates by such a wide margin and still manage a 16% intraday jump? In the coal sector, it is actually pretty easy to do. Just say you are boosting exposure to metallurgical coal and the market is apt to reward your firm.

James River is doing just with its $475 million acquisition of privately held International Resource Partners. International Resource reported 2010 consolidated revenue of $490.3 million, Bloomberg News reported. In a statement issued by James River, the company called the deal “transformative” and said it will boost its exposure to metallurgical coal, the stuff that's in high demand by emerging market steelmakers. James River said the transaction should close in the first half of this year.

James River Coal Chart

Looking at the charts, none of the previous support for the S&P 500 in the 1313-1320 area worked today, but the intraday low at the 1303.99 may have been enough to scare buyers to act. I still think 1300 is psychological support and a break of the 50-day moving average at 1297 would be the really alarming event and perhaps a reversal in trend.

S&P 500 Chart

If 12,100 was support for the Dow, it broke today, though not by much. I have been dying to make a Charlie Sheen analogy in today's wrap and I think the Dow is the place for that as the Index is showing signs of volatility that would make even Mr. Sheen blush. In terms of closing prices, the Dow saw two triple digit moves last week, but Friday and Monday were darn close. Only four Dow stocks closed higher today and two of those were 3M (MMM) and McDonald's (MCD) and that probably saved the Dow from a 90-100 point loss.

Dow Chart

The Nasdaq could be a concern for the bulls. A close at 2745 and support at 2775 and 2755 did not hold. One day does not make a trend, but Monday was painful for the big boys of the Nasdaq 100. Forget Ciena, Cisco, and Intel for a minute. AAPL, AMZN, FFIV, FSLR, GOOG and WYNN were all taken to the woodshed today. NFLX and PCLN did little to inspire either.

Nasdaq Chart

Usually, I am not a big fan of overreacting one way or the other on the back of one day of market action. That said, there were two ugly days last week and Monday was not pretty either. Yes, markets like to have excuses to sell off, but sometimes they need reasons to go higher as well. Right now, Libya and oil, and maybe Saudi Arabia later this week are the excuses to sell. I would like to see at least a few more points shaved off the S&P 500 to test the strength of the bulls before I say buy anything and everything.


New Plays

Another Crucial Test

by James Brown

Click here to email James Brown

Editor's Note:

The market's attention remains hostage to the price of oil and crude is fluctuating with each headline out of Libya, the Mideast and especially Saudi Arabia. The civil war in Libya could end up cutting oil production from that country for several months. Meanwhile analysts are starting to worry about what happens if the upcoming elections in Nigeria turn violent. Nigeria is a crucial producer of light, sweet crude oil. Of course the big event this week, outside of open warfare in Libya, is the upcoming "day of rage" protests on Friday in Saudi. Oil will likely remain elevated (or at least volatile) until this event passes.

Thus far the market's trend is still up with the S&P 500 bouncing off its intraday low but this is a crucial test (again) for the index. If the S&P 500 breaks the up trend the sell-off could be brutally fast and sharp. The best scenario might be a sideways consolidation until after Friday passes. We should expect stocks to see a lot of volatility up and down. With so much indecision in the market sometimes the best trade is no trade at all. I am not adding any new candidates tonight. If you feel compelled to buy something I might consider some puts on the major market indices as a hedge against your bullish trades.

Be careful and double check your stop losses and position size. Make sure you are comfortable with the level of risk you are taking.

- James


In Play Updates and Reviews

Tech Underperforms

by James Brown

Click here to email James Brown

Editor's Note:
Technology stocks underperformed on Monday, led by a -2.7% sell-off in the semiconductor sector. Outside of the chip sector losses were generally mild but if the market continues to decline tomorrow we could see several candidates hit our stop losses.

-James

Current Portfolio:


BULLISH Play Updates

Alcoa Inc - AA - close: 16.25 change: -0.33

Stop Loss: 15.95
Target(s): 18.50, 19.75
Current Gain/Loss: - 7.9%
2nd Position Current Gain/Loss: - 3.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/07 update: The situation is not shaping up well for our AA play. The consolidation is narrowing with a slightly bearish trend of lower highs. AA looks like it wants to breakdown under support near $16.00. If the market does move lower tomorrow odds are very good we will get stopped out at $15.95. I am not suggesting new positions at this time.

Current Position: Long AA stock @ $17.65

- or -

Long the March $17.00 calls (AA1119C17) Entry @ $0.98

-2nd position, Entry Feb. 25th -

New Position: Buy AA stock @ 16.84

- or -

Buy the March $17.00 calls (AA1119C17) Entry @ $0.39

02/25 AA opened at $16.84. March $17 calls opened @ $0.39
02/24 Open new positions on the bounce.
02/23 use the bounce as a new entry point.
02/22 Adjust the stop loss to $15.95
02/18 AA provides another entry point
02/14 AA hits our breakout trigger @ 17.65, Stop @ 16.25

Entry on February 14 at $17.65
Earnings Date 04/11/11 (unconfirmed)
Average Daily Volume: 41 million
Listed on February 2nd, 2010


Arch Coal Inc. - ACI - close: 35.13 change: -0.86

Stop Loss: 31.95
Target(s): 39.50, 42.50
Current Gain/Loss: + 1.0%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
03/07 update: Hmm... the action in ACI was not that encouraging. Shares rallied toward Friday's high but failed. At the end of the day shares had created a bearish engulfing candlestick pattern, which is normally seen as a potential bearish reversal but usually needs to see confirmation. I would still be tempted to buy ACI (or calls) on a dip or bounce near $34.00. More conservative traders might want to consider a stop loss closer to $34.00. Our multi-week targets are $39.50 and $42.50.
FYI: The Point & Figure chart for ACI is bullish with a $40 target.

Current Position: Long ACI stock @ 34.76

- or -

Long the April $35 calls (ACI1116D35) Entry @ $1.75

03/03 ACI gapped open at $34.76 (trigger was $34.75)

Entry on March 3 at $34.76
Earnings Date 04/19/11 (unconfirmed)
Average Daily Volume: 3.4 million
Listed on March 2nd, 2010


ACI Worldwide Inc. - ACIW - close: 30.46 change: -1.10

Stop Loss: 27.80
Target(s): 33.00, 34.75
Current Gain/Loss: + 2.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/07 update: Ouch! ACIW was a big underperformer with a -3.4% loss. Shares did bounce at round-number support near $30 intraday. Technically this could be used as a new bullish entry point but I'd wait to see if the major averages breakdown or not. It's certainly possible that ACIW pulls back toward $28.00 instead. Our bullish targets are $33.00 and $34.75.

FYI: ACIW does have options but the spreads are very wide, which puts us at a significant disadvantage.

SMALL bullish positions

Current Position: Long ACIW stock @ $29.63

Entry on February 25 at $29.63
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume: 122 thousand
Listed on February 24th, 2010


AnnTaylor Stores - ANN - close: 23.73 change: -0.62

Stop Loss: 22.85
Target(s): 25.90, 27.85
Current Gain/Loss: - 0.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/07 update: There was no follow through on ANN's breakout above technical resistance. I remain very cautious here. No new positions at this time.

Small Positions

Current Position: Long ANN stock @ $23.86

- or -

Long the March $22.50 calls (ANN1119C22.5) Entry @ $2.35

02/23 New stop loss @ 22.85
02/22 New stop loss @ 22.40

Entry on February 14 at $23.86
Earnings Date 03/11/11 (confirmed)
Average Daily Volume: 3.0 million
Listed on February 8th, 2010


Baxter Intl. - BAX - close: 53.11 change: -0.69

Stop Loss: 50.90
Target(s): 54.90, 57.50
Current Gain/Loss: + 2.1%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/07 update: BAX dipped to short-term support near $53 on Monday. I would still consider new positions on a dip in the $52.50-52.00 zone but readers may want to inch up their stops a little bit more. The plan was to keep our position size small to limit our risk.

FYI: The Point & Figure chart for BAX is bullish with a $73 target.

(small positions only)

Current Position: Long BAX stock @ 52.00

- or -

Long the May $55 call (BAX1121E55) Entry @ $1.05

03/05 New stop loss @ 50.90

Entry on February 22 at $52.00
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume: 5.8 million
Listed on February 19th, 2010


Boston Scientific Corp. - BSX - close: 7.47 change: -0.06

Stop Loss: 6.85
Target(s): 7.80, 8.90
Current Gain/Loss: + 3.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/07 update: BSX delivered a quiet session with shares trading in a 20-cent range. I would wait for another dip or bounce from its 50-dma around $7.30 before initiating new positions. The plan is to keep our position size small to limit our risk.

- (Small Positions to Limit our Risk)

Current Position: Long BSX stock @ 7.22

- or -

Long the April $7.00 calls (BSX1116D7) Entry @ $0.44

Entry on February 28 at $ 7.22
Earnings Date 04/26/11 (unconfirmed)
Average Daily Volume: 16 million
Listed on February 26th, 2010


Cabot Microelectronics - CCMP - close: 48.30 change: -1.56

Stop Loss: 47.95
Target(s): 54.75
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
03/07 update: Semiconductor stocks underperformed on Monday thanks to an industry downgrade. Shares of CCMP plunged toward the bottom of its $48-50 trading range. The stock is sitting on short-term support and aggressive traders may want to take advantage of this move and buy CCMP or calls right here. Officially the newsletter is waiting for a breakout over resistance a $50.00 with a trigger to open positions at $50.25. Our target is $54.75.

FYI: The most recent data listed short interest at 13% of CCMP's small 22.75 million share float. That raises the chances for a short squeeze.

Trigger @ 50.25

Suggested Position: Buy CCMP stock @ $50.25

- or -

Buy the April $50 calls (CCMP1116D50) current ask $2.10

- or -

Buy the April $55 calls (CCMP1116D55) current ask $0.40

Entry on March x at $xx.xx
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume: 211 thousand
Listed on March 5th, 2010


Gildan Activewear - GIL - close: 30.80 change: -0.18

Stop Loss: 28.99
Target(s): 34.85, 38.00
Current Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
03/07 update: GIL is not seeing a lot of movement yet. Shares still look poised for a dip toward $30.00. I am suggesting we wait and use a trigger to buy a dip at $30.35 with a stop loss at $28.99. Alternatively readers could wait for a breakout past $32.50.

Trigger @ 30.35

Suggested Position: buy GIL stock @ 30.35

- or -

Buy the April $30 call (GIL1116D30)

03/01 Adjusted buy-the-dip trigger to $30.35
03/01 Adjusted stop loss to $28.99

Entry on March x at $xx.xx
Earnings Date 05/12/11 (unconfirmed)
Average Daily Volume: 634 thousand
Listed on February 28th, 2010


Intuit - INTU - close: 51.93 change: -0.88

Stop Loss: 49.90
Target(s): 54.75, 59.00
Current Gain/Loss: + 0.1%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/07 update: Traders bought the intraday dip near INTU's 20-dma but shares still underperformed with a -1.6% loss. I am growing cautious here. INTU could be headed for the $50 area. Let's hold off on new positions.

Current Position: Long INTU stock @ $51.87

- or -

Long the March $52.50 calls (INTU1119C52.5) Entry @ $1.10

- or -

Long the April $55.00 calls (INTU1116D55) Entry @ $1.05

03/03 New stop loss @ 49.90

Entry on February 25 at $51.87
Earnings Date 05/19/11 (unconfirmed)
Average Daily Volume: 2.8 million
Listed on February 24th, 2010


Jos. A Bank Clothiers Inc. - JOSB - close: 45.34 change: -0.56

Stop Loss: 44.75
Target(s): 49.85, 52.25
Current Gain/Loss: - 1.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/07 update: JOSB opened at $45.99 and then fell toward the bottom of its trading range and support near $45.00. Technically this dip as a new entry point to launch positions but readers may want to wait for a bounce over $46 first. We have a stop loss at $44.75 so if the market breaks down from here we'll probably get stopped out quickly.

The earnings date at the end of March is not yet confirmed but it does put a four to five week time frame on this trade.

FYI: The most recent data listed short interest at almost 25% of JOSB's 27.3 million-share float. There is definitely room for some short covering here. Plus, the Point & Figure chart for JOSB is bullish with a $62 target.

- Small Bullish Positions -

Current Position: Long JOSB stock @ $45.99

- or -

Long the April $50 calls (JOSB1116D50) Entry @ $0.95

Entry on March 7 at $45.99
Earnings Date 03/30/11 (unconfirmed)
Average Daily Volume: 355 thousand
Listed on March 5th, 2010


Lincare Holdings Inc. - LNCR - close: 29.44 change: -0.36

Stop Loss: 28.45
Target(s): 29.90, 31.50
Current Gain/Loss: + 3.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/07 update: LNCR erased most of Friday's gains but volume was pretty light today. I don't see any changes from my weekend comments. Our final target is $31.50. I am not suggesting new bullish positions at this time.

FYI: The Point & Figure chart for LNCR is bullish with a $40 target. Plus, investors will be interested to note that LNCR has relatively high short interest. The most recent data listed short interest at 11.5% of the 86-million share float. With the recent breakout this stock could see a short squeeze.

- Small Bullish Positions -

Current Position: Long LNCR stock @ 28.37

- or -

Long the March $29.00 calls (LNCR1119C29) Entry @ $0.75

03/05 New stop loss @ 28.45, Adjusted target to $31.50
03/01 The exit number below is updated for Tuesday's open
02/28 Sell Half to lock in a gain. LNCR @ $29.52 (+4.0%)
02/28 Sell Half: March $29 calls bid $0.85 (+13.3%)
02/22 New stop loss @ 27.95
02/19 New stop loss @ 27.45
02/12 Adjusted entry point to current levels.

Entry on February 14 at $28.37
Earnings Date 04/19/11 (unconfirmed)
Average Daily Volume: 932 thousand
Listed on February 9th, 2010


Maxim Integrated Products - MXIM - close: 26.74 change: -0.77

Stop Loss: 25.95
Target(s): 29.90, 33.50
Current Gain/Loss: - 3.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/07 update: Chip stocks underperformed after the group was downgraded before the opening bell. MXIM lost -2.79% but did rally off its intraday low near $26.25. More conservative traders might want to inch up their stop loss. I am not suggesting new positions at this time.

Current Position: Long MXIM stock @ $27.68

- or -

Long the April $30 calls (MXIM1116D30) Entry @ $0.35

Entry on February 28 at $27.68
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume: 3.3 million
Listed on February 26th, 2010


Omnicom Group Inc. - OMC - close: 48.93 change: -0.62

Stop Loss: 47.65
Target(s): 54.00
Current Gain/Loss: -2.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/07 update: I am starting to grow concerned that over the last few days OMC has been showing a similar pattern. Traders are selling into strength each morning and the stock is closing near its lows for the session. Odds are growing that OMC will test support near $48.00. I am not suggesting new positions at this time.

Current Position: Long OMC stock @ $50.04

- or -

Long the April $50 calls (OMC1116D50) Entry @ $1.65

Entry on February 28 at $50.04
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume: 2.8 million
Listed on February 26th, 2010


Signet Jewelers Limited - SIG - close: 43.55 change: -1.06

Stop Loss: 42.65
Target(s): 49.75
Current Gain/Loss: - 3.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/07 update: SIG was showing some volatility today with the stock almost testing both sides of its trading range (approximately $43.00-45.50). I am not suggesting new bullish positions at this time but nimble traders could try and buy this dip near $43.00.

Current Position: Long SIG stock @ $45.25

- or -

Long the March $45 calls (SIG1119C45) Entry @ $1.85

02/28 New stop loss @ 42.65
02/28 Consider scaling back positions here.

Entry on February 18 at $45.25
Earnings Date 03/30/11 (unconfirmed)
Average Daily Volume: 436 thousand
Listed on February 16th, 2010


Sony Corp. - SNE - close: 35.16 change: -0.79

Stop Loss: 34.80
Target(s): 39.90, 43.50
Current Gain/Loss: - 4.2%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
03/07 update: The action in SNE today was definitely bearish. The stock broke down under several short-term moving averages. SNE looks like it will test its 100-dma tomorrow. The question is will it gap open up or down tomorrow. The Japanese market might drop following the weakness in the U.S. on Monday. If the NIKKEI index closes with losses then shares of SNE could gap open lower tomorrow. Let's wait and see where SNE closes tomorrow before we consider new positions.

Current Position: long SNE stock @ $36.72

- or -

Long the April $38 calls (SNE1116D38) Entry @ $0.85

Entry on March 1 at $36.72
Earnings Date 05/12/11 (unconfirmed)
Average Daily Volume: 862 thousand
Listed on February 28th, 2010


Wyndham Worldwide - WYN - close: 31.42 change: -0.28

Stop Loss: 29.90
Target(s): 34.50, 37.50
Current Gain/Loss: - 0.1%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/07 update: Monday was a quiet session for WYN with the stock moving sideways. I don't see any changes from my weekend comments. Readers might want to wait for WYN to breakout past the $32.00 level first.

Current Position: Long WYN stock @ $31.45

- or -

Long the April $32 calls (WYN1116D32) Entry @ $1.15

Entry on February 28 at $31.45
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume: 3.2 million
Listed on February 26th, 2010


ZOLL Medical Corp. - ZOLL - close: 45.94 change: -0.36

Stop Loss: 43.95
Target(s): 49.80, 53.50
Current Gain/Loss: - 1.2%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
03/07 update: ZOLL did not show much volatility today. Shares merely drifted sideways. Considering the action in the stock market odds are growing that ZOLL might provide us an entry point near $45.00 soon. Let's wait for that dip to initiate new positions. Or you could wait for ZOLL to rally past the $47.00 level. More conservative traders might want to use a stop closer to $44.75.

FYI: The Point & Figure chart for ZOLL is bullish with a $55 target. ZOLL does have options but the spreads are too wide. You'll also find it interesting that the most recent data listed short interest in ZOLL at 10% of the very small 21.5 million-share float.

Suggested Position: Long ZOLL stock @ $46.54

Entry on March 4 at $46.54
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume: 180 thousand
Listed on March 3rd, 2010