Option Investor
Newsletter

Daily Newsletter, Thursday, 3/22/2012

Table of Contents

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

Market Wrap

Global Fears Weigh On Markets

by Thomas Hughes

Click here to email Thomas Hughes
Economic data raises new fears of widespread global slowdown. PMI data from China and Europe has sparked fears of increasing global slowdown. The US markets traded down despite our own positive data.


Futures weakened this morning on news from China. Preliminary data from HSBC shows that Chinese PMI fell to 48.1 in February from January's final reading of 49.6. The data shows increased slowing among Chinese manufacturers and is the fifth straight month of declines. The number is due to weakening domestic demand, according to HSBC's chief economist. Employment in China also fell to new lows and marked the weakest data since March, 2009.

Fears of increasing Chinese slowing have eclipsed those of European slowing, at least for today. China has been a key factor among some recent growth stories, especially among food and beverage companies. McDonald's, Yum! Brands, Starbucks, Coca Cola and Pepsi have all been seeing increasing growth in the region. New estimates for Chinese GDP have it in the range of 7.5%-8.5% for 2012, nearly a full point below earlier estimates.

Yum! Brands(YUM) and Starbucks(SBUX) both made new highs today.

Yum! Brands, daily

Starbucks, daily

Asia ended the day basically flat. The Nikkei average gained +0.4%, the Hang Seng index rose +0.22% and the Shanghai Composite lost -0.1%.

US data was light today and failed to inspire any confidence. Initial Jobless claims fell to a seasonally adjusted 348,000. This is the lowest number of new claims since February, 2008. Last weeks data fell 5,000 from the previous weeks revised number of 353,000 claims. Analysts had estimated that claims would hold steady at 353,000. The four week moving average of initial jobless claims fell 1,250 to 355,000.


Continuing claims for unemployment also fell. This number dropped by 9,000 claims to an adjusted 3.35 million.


The total claims for unemployment benefits fell as well to 7.28 million. This is a drop of 142,499 claims from the previous weeks data.


The recent drops in unemployment are good signs for the US economy. This trend is in line with the increases in GDP we have seen over the last three quarters. This is also in line with payroll data, which showed a strong gains in jobs in February (+227,000).


Home prices remained stable in January, according to the FHFA report released this morning. This is seen as a sign of further stabilization in the real estate market.

Conference Board's index of leading economic indicators rose 0.7% in February. This is a big gain from January's revised 0.2%. The reading shows signs of an economy gaining momentum. In the release Conference Board stated that “economic progress may could continue throughout the summer and possibly beyond”.

European markets closed down today on the discouraging news from Asia and its own poor prospects. The FTSE 100 closed down -.79%, the DAX index down -1.21% and the CAC 40 index down -1.14%.

European PMI also fell in March. The Markit Eurozone Composite PMI, which is a broad gauge of European manufacturing, fell to 48.7 in March from February's 49.3 and made a three month low. Citi (C ) Chief Economist Willem Buiter says the “worst is still to come”. Bernanke also made statements this week to the effect that the European crisis is not over.

As Greece fades into the back ground of the crisis other PIIGS countries are coming back into the spotlight. Bond yields in Spain and Italy are rising to new highs, which some have speculated signal lack of confidence in economic recovery. The problem is starting to spread into bonds issued by the more stable European nations like Germany.

Con Agra (CAG) beat earnings estimates, reaffirmed 2012 guidance and traded lower on the day to finish down 0.5%. Profit rose 26% to $0.65 per share from the previous years $0.50 per share. Net sales increased by 7%. Con Agra earned $0.47 in the previous quarter, consensus estimates were $0.49. Commercial food sales,which accounts for 37% of business, rose by 14%. Consumer foods sales rose by 4%. The gains were also helped by favorable pricing actions including adjustments for inflation and commodity increase pass throughs. During the quarter the company acquired Del Monte Canada and repurchased $7 million in shares. There is $775 million left in the company's repurchase program. Con Agra also maintained its 2012 guidance.

Con Agra, daily

Dollar General (DG) impressed investors with its release today. Following the announcement the stock gained over 3% on heavy volume to close at $45.96. Fiscal fourth quarter profits for the discount retailer grew by 31% to $0.85 per share from $0.64 in the year ago period. Total sales in the period increased by 20%. The consensus estimate was $0.82 per share. Dollar General earned $0.50 in the third quarter.

Dollar General, daily

FedEx Corporation (FDX) dropped over 2% in premarket trading and fell over 4% for the day. The stock closed down by $3.32 at $92.50. The move came on high volume, over 300% of average. The company's earnings of $1.55 per share beat analysts expectations of $1.36 per share. Lowered expectations of global economic growth and expectations of fourth quarter profits were the cause of today's decline. FedEx issued fourth quarter guidance of $1.75-$2.00 per share, below analysts expectations of $2.00 per share. In the statement the company said that it expects “solid performance” in the fourth quarter following the gains seen in the third. Analysts expectations were based on $10.6 billion in revenue. FedEx revenue was inline with expectations. Increases in profits are due to improvements in operations.

FedEx, daily

Lululemon (LULU) gained about 2.5% in today's trading after its earnings announcement. This move also came with a big spike in volume, over 300% of average. Net revenue for the fourth quarter increased over 50% with same store sales increasing 26% on an adjusted basis. Full year revenue increased to $1.0, a milestone for the company. Comp store sales rose by 20% for the year and gross profit increased by 44%. Updated guidance for 2012 includes continued expectations for growth. The company expects revenue to grow by around 30% for the year. Share were down in early trading because the guidance did not meet with some expectations. However, as the day progressed the stock traded up and closed at $75.83.

Lululemon, daily

Strategic American Oil Corp (SGCA) is a micro cap oil and gas exploration company making headlines today with its earnings statement. Revenue is up 18% in the second quarter vs the first quarter. Assets increased to $24.3 million and debt has been reduced to zero. Cash flow is up significantly, reversing from ($83,710) in the first quarter to $816,805 in the second. The oil and gas driller is in initial operational phases of its two main projects, one in the Gulf of Mexico and one in Illinois. They have begun production and sales at one site and is nearing that stage with the other. The stock dropped over 7% today.

Strategic American Oil Corp, daily

Expectations of Micron Technologies (MU) earnings release caused the stock to drop 0.34% . The company, which suffered an unexpected change in leadership earlier in the year, reported a deeper than expected loss for the quarter. The stock lost 2.5% in after market trading.

Micron Technologies, daily

Shoe and apparel giant Nike (NKE) traded relatively flat today in anticipation of its announcement after the bell. Nike earned $1.00 per share in the previous quarter and was expected to post an increase of 16%. The stock has had a nice run up, gaining over 46% in the last twelve months. Today's trading kept the stock above the 30 day moving average. The announcement, which reported earnings of $1.20 per share versus $1.08 a year ago, beat expectations and sent the stock higher by close to 1% in after market trading.

Nike, daily

The recent wave of IPO's continued this week. There were three today and two more are expected tomorrow. Today Caesar Stone (CSTE), Exact Target (ET) and Vantiv (VNTV) made their Wall Street debut.

Caesarstone (CSTE)is a California based manufacturer of engineered quartz surfaces. They are a leader in the industry of manufactured counter tops and surfaces. Caeserstone was expected to price 6.7 million shares between $14-$16 per share. Actual opening , $11, was significantly below expectations. The stock traded steady throughout the day and closed slightly up at $11.11.

Caesarstone, today

ExactTarget (ET), makes SaaS applications that deliver marketing campaigns and customer communications tools to clients. The somewhat anticipated IPO priced 8.5 million shares at $20.00, well above the expected range of $15-$17. The actual opening price, $23.40, was another big gain for the stock. Since then the stock traded up to around $25 throughout the day and closed at $25.11, a 32% gain.

ExactTarget, today

Vantiv Inc, (VNTV) is an integrated payment processor. The company has solutions for merchants and financial institutions. The stock opened today at $17.00, in the middle of its expected range of $16-$18. the stock climbed steadily up throughout the day and broke through the upper end of its expected opening range to close $2.50 higher than opening at $19.50.

Vantiv, today

Tomorrow look out for BATS Global Markets (BATS). BATS develops and operates online markets for trading securities and options. The company is expected to price 6.3 million shares between $16-$18 per share.

Also on the horizon tomorrow in IPO's is VipShop Holdings (VIPS). This is a China based online discount retailer. 11.2 million shares are expected to price between $8.50 and $10.50.

In other news Research in Motion fell from the top spot among Canada's smart phone manufacturers. This is another sign of the difficulties the Blackberry maker has been facing. Competition from Apple's iPhone and iPad lines as well as Google's Android operating system have been pressuring the stock. The stock lost 1.85% today and closed near 12 month lows.

Research in Motion, daily

McDonald's CEO Jim Skinner announced his retirement today after 41 years with the company. Current president, Don Thompson, will take over. The stock traded down today after the news and made a new four month low. The stock has been trading in a tight range over the last three months and appears to be building support between $95 and $100.

McDonald's, daily

Apple (AAPL) faces some criticism over its iPad 4. Heat issues have sparked an investigation by a consumer watchdog agency. Heat produced by the units is reported to be 116f and capable of burning users. The cost of data is being viewed by some as a trap for users. The device burns up data when streaming high quality video and costs an additional fee per gigabyte once the standard plans are used up. The stock declined by around a half percent in today's trading to close just under $600 at $599.65.


Oil traded down sharply today, as much as $2.50 a barrel at barrel at some points in the morning. Weakening global outlook in China and Europe drove prices to the low levels. Natural gas inventories rose today, which helped pressure the energy market. Oil and gas prices remain at elevated prices despite today's declines. Lingering fears of supply disruption from Iran are keeping prices up.

Gold and the other precious metals fell on the economic news as well. Gold fell as much as 1% in intra-day trading but has recovered some since then, regaining more than half the early decline. The dollar index gained on the news but ended the day basically flat. The index is up over 5% on the year and look like it is gaining strength.

Rates on the 30 year bond fell today to a close of 3.362%.

30 year bond rates, daily

Expectations for growth are diminishing even though our own economy is heating up. The global economy is performing a little worse than previously estimated. The real extent of the European crisis and China's economic slowdown wont be know for some time. Futures on all three of the major US indexes were down sharply following the news from China and Europe. The Dow opened in negative territory and traded lower throughout the day. Volume was weak and the decline was halted near the days lows but above the 30 day moving average. This is the third day of losses in the broad market and brings the Dow less than .4% away from the critical 13,000 level. The trend remains up but is losing technical momentum.

Dow Jones Index, daily with MACD

Advancing and declining stocks leaned heavily to the declining side in early trading with a ratio of 1:5.3, advancers to decliners. By late afternoon the ratio declined by nearly half to 1:2.8.

The days declines brought the S&P below the 1,400 level. A look at the index tracking stock, SPY, shows weak volume here as well. The trend in this index is also still up. Momentum is weakening but is still bullish in the long term.

S&P 500 daily with MACD

S&P 500 Index Tracking Stock SPY, daily with volume
,

The Nasdaq closed down by 12 points but found short term support at 3050. The index is down from the weeks high but still above the high of last week. The trend is still up but also shows signs of weakening.

Nasdaq, daily with MACD

Nasdaq, daily with support

Economic data will persist as a weight on the markets. It is unclear just how much slowing the world economy is going through. Earnings will also be important, as well as any forward looking statements released. It is also nearing time for the bulk of traded companies to start announcing there earnings. This will provide a lot of much needed data.

Thomas Hughes


New Plays

Biotech & Security Software

by James Brown

Click here to email James Brown

Editor's Note:

In addition to tonight's new candidates, consider these stocks as possible trading ideas and watch list candidates:

(bullish candidates) MSG, TIVO, ARIA, UAN, FRX, M, ANN, FSL, HWD, CPWM, BECN, VLTR, IRIS, OMPI, ZUMZ


NEW BULLISH Plays

Ardea Biosciences - RDEA - close: 22.57 change: +0.24

Stop Loss: 21.40
Target(s): 24.90
Current Gain/Loss: unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of this biotech stock are ignoring recent weakness in the U.S. markets. Shares are instead breaking out past resistance near $22.00 and hitting new multi-month highs. I am suggesting bullish positions if RDEA can trade at $22.65. We'll use a stop at $21.40. Our first target is $24.90.
FYI: The Point & Figure chart for RDEA is bullish with a long-term $31.50 target.

Trigger @ $22.65

Suggested Position: buy RDEA stock @ (trigger)

Annotated chart:

Entry on March xx at $ xx.xx
Earnings Date 03/09/12
Average Daily Volume = 307 thousand
Listed on March 22, 2011


Websense, Inc. - WBSN - close: 20.90 change: +0.14v

Stop Loss: 19.85
Target(s): 23.50
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
A recent IBD article suggested WBSN is a takeover target with M&A activity heating up in the security software industry. This might explain WBSN's relative strength in the face of a market pullback. Shares broke through significant support near $20.00 and its 200-dma. Now WBSN is testing resistance at the $21.00 level.

I am suggesting a trigger to open bullish positions at $21.15 with a stop loss at $19.85. More conservative traders might want to consider a stop closer to today's intraday low (20.38) instead. FYI: The Point & Figure chart for WBSN is bullish with a $26.00 target.

Trigger @ $21.15

Suggested Position: buy WBSN stock @ (trigger)

Annotated chart:

Entry on March xx at $ xx.xx
Earnings Date 04/24/12 (unconfirmed)
Average Daily Volume = 388 thousand
Listed on March 22, 2011



In Play Updates and Reviews

RGR Soars! Oil Stocks Drop.

by James Brown

Click here to email James Brown

Editor's Note:
As expected shares of RGR soared today. Meanwhile oil and energy stocks continue to underperform. Our PETD trade was stopped out. Our new CHKR trade was opened and closed early this morning when it hit our exit target.

Current Portfolio:


BULLISH Play Updates

Akamai Technologies - AKAM - close: 36.46 change: -0.48

Stop Loss: 34.95
Target(s): 39.75 & 41.50
Current Gain/Loss: - 0.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/22 update: AKAM is still consolidating sideways. Readers may want to watch for a dip or a bounce near the 40-dma or 50-dma before considering new bullish positions. More aggressive traders may want to put their stop under the March low near $34.70.

current Position: Long AKAM stock @ $36.82

- or -

Long Apr $36 call (AKAM1217D36) entry $1.92

- or -

Long May $40 call (AKAM1219E40) entry $1.39

03/15/12 new stop loss @ 34.95
03/13/12 trade opened this morning
03/12/12 not open yet. try again.

Entry on March 13 at $36.82
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 2.9 million
Listed on March 10, 2011


Abercrombie & Fitch - ANF - close: 51.97 change: -0.34

Stop Loss: 49.75
Target(s): 56.50
Current Gain/Loss: - 0.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/22 update: ANF spent the day churning sideways but I suspect shares will test support near $50.00 if the market continues to sink. Wait for a dip or a bounce near $50 before considering new bullish positions.

Earlier Comments:
We want to keep our position size small to limit our risk. There is potential resistance at the top of the November gap near $55.00. Plus the exponential 200-dma (near $54.40) and the simple 150-dma (near 55.15) could both be technical resistance. Our exit target is $56.50. FYI: The Point & Figure chart for ANF is bullish with a $69.00 target.

current Position: Long ANF stock @ $52.05

- or -

Long Apr $52.50 call (ANF1221D52.5) Entry $2.25

Entry on March 14 at $52.05
Earnings Date 05/16/12 (unconfirmed)
Average Daily Volume = 3.2 million
Listed on March 13, 2011


Broadcom Corp. - BRCM - close: 38.09 change: -0.53

Stop Loss: 36.45
Target(s): 44.00
Current Gain/Loss: - 1.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/22 update: Profit taking in BRCM pushed the stock down toward its rising 10-dma but it didn't quite make it before paring its losses. If shares close under $38.00 we could see the stock drop toward its rising 50-dma. With the current market decline I am not suggesting new positions at this time.

Earlier Comments:
The rise past $39.00 has created a brand new Point & Figure chart triple top breakout buy signal that is currently forecasting at $50 target.

current Position: Long BRCM stock @ $38.75

- or -

Long May $40 call (BRCM1219E40) Entry $1.52

Entry on March 19 at $38.75
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 8.8 million
Listed on March 17, 2011


eBay Inc. - EBAY - close: 37.62 change: +0.20

Stop Loss: 34.75
Target(s): 39.50
Current Gain/Loss: + 3.6%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/22 update: EBAY is still consolidating sideways inside the $37-38 range. Shares did outperform the major indices with a +0.5% bounce. I am not suggesting new positions at this time.

I am leaving our stop loss at $34.75 for now but more conservative traders may want to adjust their stop closer to the $36.00 area.

current Position: Long EBAY stock @ $36.29

- or -

Long Apr $35 call (EBAY1221D35) entry $2.02

03/13/12 trade opened this morning
03/12/12 not open yet. try again. added a trigger at $36.85

Entry on March 13 at $36.29
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 10.6 million
Listed on March 10, 2011


The Hain Celestial Group - HAIN - close: 42.74 change: -0.21

Stop Loss: 41.40
Target(s): 44.75
Current Gain/Loss: + 4.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/22 update: Yesterday I warned readers that HAIN could fall toward the $42 level if the market continues to sink. Today the stock traded under its simple 10-dma before paring its losses. More conservative traders may want to go ahead and take profits now. I am not suggesting new positions at this time.

(small positions)

current Position: Long HAIN stock @ $40.85

03/19/12 new stop loss @ 41.40
03/17/12 new stop loss @ 40.85
03/05/12 new stop loss @ 39.75
03/03/12 new stop loss @ 39.45
02/29/12 triggered at $40.85
02/27/12 trade did not open. Adjusting entry strategy to buy HAIN at $40.85 with a stop loss at $38.95
02/25/12 trade did not open. Try again

Entry on February 29 at $40.85
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 430 thousand
Listed on February 23, 2011


Level 3 Communications - LVLT - close: 26.63 change: -0.73

Stop Loss: 24.70
Target(s): 29.00
Current Gain/Loss: + 1.7%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/22 update: Profit taking in LVLT shaved off -2.6%. With shares closing near their low for the session the pullback probably isn't over yet. I don't see any changes from my prior comments. If the market dips LVLT nearest support is probably the $26.00 or $25.00 levels. I am not suggesting new positions at this time.

Earlier Comments:
The stock could see a short squeeze. The most recent data listed short interest at 26% of the 153 million-share float. FYI: The Point & Figure chart for LVLT is bullish with a long-term $41.50 target.

current Position: Long LVLT stock @ $26.17

- or -

Long Apr $25 call (LVLT1221D25) Entry $2.30

03/15/12 new stop loss @ 24.70, adjust exit target to $29.00
03/15/12 trade opened on LVLT's gap higher at $26.17, which is above our trigger to open positions at $25.25.

Entry on March 15 at $26.17
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 2.4 million
Listed on March 14, 2011


NXP Semiconductors - NXPI - close: 26.27 change: +0.22

Stop Loss: 25.35
Target(s): 29.75
Current Gain/Loss: unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Comments:
03/22 update: NXPI displayed some relative strength today. Traders bought the dip off its morning lows near $25.40. NXPI bounced back toward the top of its current trading range. We are waiting for a breakout higher.

I am suggesting a trigger to open small bullish positions at $26.50. If triggered we'll use a stop loss at $25.35. Our upside target is $29.75. FYI: The Point & Figure chart for NXPI is bullish with a $45.00 target.

Trigger @ 26.50 (small positions)

Suggested Position: buy NXPI stock @ (trigger)

- or -

buy the Apr $25 call (NXPI1221D25)

Entry on March xx at $ xx.xx
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on March 19, 2011


Sturm, Ruger & Co. - RGR - close: 47.93 change: +5.63

Stop Loss: 43.75
Target(s): 49.50
Current Gain/Loss: + 8.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/22 update: As expected shares of RGR surged on yesterday's news for strong order demand. The stock opened at $46.20 and hit $48.24 intraday. RGR settled with a +13.3% gain. More conservative traders may want to exit early right now to lock in a gain. I am not suggesting new positions at this time. Please note our new stop loss at $43.75.

current Position: Long RGR stock @ $44.05

- or -

Long Apr $45 call (RGR1221D45) Entry $1.45

03/22/12 new stop loss @ 43.75
03/21/12 Adjust exit target from $48.50 to $49.50 on news that there is so much demand RGR has stopped accepting new orders.
03/16/12 triggered at $44.05

Entry on March 16 at $44.05
Earnings Date 05/01/12 (confirmed)
Average Daily Volume = 319 thousand
Listed on March 15, 2011


Stamps.com Inc. - STMP - close: 28.36 change: +0.10

Stop Loss: 25.95
Target(s): 32.50
Current Gain/Loss: + 0.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/22 update: STMP traded sideways most of the session but still managed to eke out a gain by the closing bell. I don't see any changes from my prior comments.

Earlier Comments:
More conservative trades may want to wait for STMP to trade over its 5-dma near $28.60 before initiating positions instead. If the rally does continue we could see STMP accelerate due to short covering. The most recent data listed short interest at almost 16% of the very small 13.2 million share float.

This is a volatile stock. I am suggesting we keep our position size small to limit our risk.

(small positions)

Current Position: Long STMP stock @ $28.25

- or -

Long Apr $30 call (STMP1221D30) Entry $0.85

03/21/12 STMP hit our entry trigger at $28.25

Entry on March 21 at $28.25
Earnings Date 04/30/12 (unconfirmed)
Average Daily Volume = 508 thousand
Listed on March 15, 2011


TJX Companies - TJX - close: 38.90 change: -0.01

Stop Loss: 37.40
Target(s): 41.50
Current Gain/Loss: + 0.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/22 update: TJX recovered from its morning lows to bounce back to almost unchanged on the session. The trend is up and TJX still looks strong but I would hesitate to launch new positions given the market's recent weakness. The $40.00 level could offer some short-term resistance but we will set our first target at $41.50.

current Position: Long TJX stock @ $38.60

- or -

Long Apr $37.50 call (TJX1221D37.5) Entry $1.60

03/21/12 TJX hit our entry trigger at $38.60

Entry on March 21 at $38.60
Earnings Date 05/15/12 (unconfirmed)
Average Daily Volume = 4.6 million
Listed on March 20, 2011


The Toro Company - TTC - close: $71.04 change: -0.18

Stop Loss: 67.40
Target(s): 74.75
Current Gain/Loss: + 2.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/22 update: TTC tested short-term support near $70.00 again before bouncing back and trimming its losses for the session. A rally past $71.50 could be a new entry point. Please note that I am adjusting our exit target to $74.75. More conservative traders may want to use a tighter stop.

FYI: The Point & Figure chart for TTC is bullish with a $79.00 target.

current Position: Long TTC stock @ $69.32

03/22/12 adjust exit target to $74.75
03/20/12 new stop loss @ 67.40
03/15/12 new stop loss @ 66.40
03/13/12 Our TTC trade has been opened.
03/12/12 trade did not open. try again.
03/10/12 trade did not open. try again.
03/09/12 trade did not open. TTC opened lower and then bounced

Entry on March 13 at $69.32
Earnings Date 05/21/12 (unconfirmed)
Average Daily Volume = 330 thousand
Listed on March 08, 2011


Wyndham Worldwide - WYN - close: 44.68 change: -0.41

Stop Loss: 43.75
Target(s): 49.50
Current Gain/Loss: - 1.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/22 update: WYN is still correcting lower. Shares can't seem to pull up from this dive with the major indices sinking as well. The stock should find some support near $44.00. If not we'll see WYN hit our stop loss at $43.75. Readers may want to wait for a rebound back above $45.40 before considering new bullish positions.

Our multi-week target is $49.50. FYI: The Point & Figure chart for WYN is bullish with a long-term $82.00 target.

current Position: Long WYN stock @ $45.25

- or -

Long Apr $45 call (WYN1221D45) Entry $1.65

03/13/12 new stop loss @ 43.75
03/13/12 trade triggered at $45.25

Entry on March 13 at $45.25
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on March 12, 2011


BEARISH Play Updates

Greenbrier Companies - GBX - close: 21.07 change: -1.09

Stop Loss: 23.25
Target(s): 18.50
Current Gain/Loss: + 2.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/22 update: GBX is finally starting to work its way lower. The stock underperformed today with a -4.9% decline. Plus the stock has closed below technical support at its exponential 200-dma. Don't forget that the $20 level could be support.

Earlier Comments:
Traders should be aware that the $20.00 level, with the 200-dma, could be short-term support but we are aiming for a drop to $18.50.

current Position: short GBX stock @ $21.50

03/17/12 Friday's intraday pullback from $23.00 can be used as a new bearish entry point.
03/14/12 triggered at $21.50
03/13/12 removed the April $22.50 put as a suggested trade due to a ridiculously wide spread.

Entry on March 14 at $21.50
Earnings Date 04/09/12 (unconfirmed)
Average Daily Volume = 468 thousand
Listed on March 12, 2011


Halcon Resources - HK - close: 10.57 change: -0.03

Stop Loss: 10.70
Target(s): 8.00
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
03/22 update: HK did not see any follow through on yesterday's bounce but shares didn't decline very far either as traders bought the morning dip. If HK does not show additional weakness tomorrow we will likely drop this stock as a candidate in the weekend newsletter.

Earlier Comments:
There is already relatively high short-interest (31%) so I am suggesting small positions. We will use a trigger to open bearish positions at $9.75 with a stop loss at $10.70. Our target is $8.00. More aggressive traders could target the 100-dma instead.

Trigger @ 9.75 (small positions)

Suggested Position: short HK stock @ 9.75

Entry on March xx at $ xx.xx
Earnings Date 03/05/12 (confirmed)
Average Daily Volume = 1.7 million
Listed on March 07, 2011


CLOSED BULLISH PLAYS

Petroleum Development - PETD - close: 36.88 change: -1.77

Stop Loss: 37.40
Target(s): 44.75
Current Gain/Loss: - 7.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/22 update: The oil and energy stocks are getting hammered today. PETD underperformed its peers with a -4.5% decline. Our stop loss was hit at $37.40. If shares closed here for the week it would create a bearish engulfing candlestick reversal pattern on the weekly chart.

closed Position: Long PETD stock @ $40.25 exit $37.40 (-7.0%)

- or -

Apr $40 call (PETD1221D40) Entry $2.00 exit $1.00 (-50.0%)

03/22/12 stopped out at $37.40
03/19/12 triggered at $40.25

chart:

Entry on March 19 at $40.25
Earnings Date 05/10/12 (unconfirmed)
Average Daily Volume = 488 thousand
Listed on March 17, 2011


CLOSED BEARISH PLAYS

Chesapeake Granite Wash Trust - CHKR - close: 27.41 change: -0.75

Stop Loss: 28.70
Target(s): 25.25
Current Gain/Loss: + 7.3%
Time Frame: 1 to 3 weeks
New Positions: see below

Comments:
03/22 update: The speed of CHKR's drop was unexpected. Shares gapped open lower at $27.25, spike down to $25.07, and then rebounded but shares still closed with a -5.8% decline. Our exit target has already been hit at $25.25.

(small positions)

closed Position: short CHKR @ $27.25, exit 25.25 (+7.3%)

03/22/12 Trade opened and closed on the same drop.

chart:

Entry on March 22 at $27.25
Earnings Date --/--/-- (unconfirmed)
Average Daily Volume = 322 thousand
Listed on March 21, 2011