Option Investor
Newsletter

Daily Newsletter, Tuesday, 3/27/2012

Table of Contents

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

Market Wrap

Monday Hangover

by Jim Brown

Click here to email Jim Brown
Monday's short squeeze may have fun for those already long but Tuesday was definitely a hangover day where the celebration enthusiasm faded.

Market Statistics

The short squeeze from Monday had no follow through today. Volume was very low and only the large cap tech stocks managed to finish in the green. The Dow flirted with positive territory most of the day but a sell program at 3:15 ended the chance for a positive close.

Dow Chart - 4 min

Weighing on the markets were a pair of less than exciting economic reports. The March Richmond Fed Manufacturing Index fell -13 points to 7.0 from 20.0 in February. This was a three month low and the internals were not good.

New orders declined to 11.0 from 21.0 and shipments fell from 25.0 to 2.0. Employment fell to 6.0 from 13.0 and the average work week fell to 2.0 from 10.0.

The pace of growth slowed dramatically but after two months of robust growth you would expect a pause now that early 2012 capital expenditures are well underway.

Richmond Fed Manufacturing Survey Chart

Also losing some of its luster was the final reading for the March Consumer Confidence. March confidence was revised down to 70.2 from the prior March reading of 70.8 and February level of 71.6.

Rising gasoline prices, actually the talk about the potential for $4 gasoline, were credited for the slight decline in confidence. The present conditions component rose to 51.0 from 46.4 but the expectations component declined to 83.0 from 88.4. It was "expectations" of future gasoline prices that drove confidence lower.

Buying plans improved appreciably. Those planning on buying a new vehicle, probably one with better gas mileage, rose to 12.0% from 10.3% of respondents. Those planning on buying a home rose from 4.2% to 4.9% and plans for buying an appliance rose to 48.1 from 45.4. Inflation expectations also rose nearly a point to 6.3 from 5.5, also driven by the rise in fuel prices.

Consumer Confidence Chart

The economic calendar for the rest of the week is still headlined by the Kansas Fed Survey and the ISM Chicago. The final GDP revision on Thursday will be market neutral unless there is a dramatic change. Probably the most anticipated event on the calendar is the RIMM earnings on Thursday. This previously high flyer at $147 trades at only $14.70 today but there is still a lot of investor interest.

Economic Calendar

Despite the negative economic reports the dollar ended the day flat and then ticked up slightly in afterhours thanks to comments from Bernanke in a late presentation. He said the economy was improving but it was "far too early" to claim victory. Also helping the dollar were comments from Richard Fisher and William Dudley that the Fed had done all it needs to do to insure the economy moves back to sustainable growth. Those comments lessened the potential for QE3 but only barely. Fisher is not a voting member of the FOMC this year but Dudley is a voter.

St Louis Fed President James Bullard also said a third round of QE is not necessary at this time. Bullard said "unless the U.S. economy were to deteriorate further, more QE is unnecessary." He also believes the Fed should return to normal rates as soon as possible. Bullard is not a voting member of the FOMC this year.

It appears Bernanke will have a difficult task ahead if he wants to add further monetary stimulus at the April meeting. Based on his recent comments he appears ready to add some new stimulus to insure the recovery becomes self sustaining. He will need to do it at the April meeting because there is no meeting in May and Operation Twist expires in June. If he is going to make another policy change he has to do it ASAP to avoid charges it is politically motivated. The Fed normally avoids changes in the six months before a presidential election so time is running short.

Dollar Index Chart

If it is an election year and gas prices are rising we should expect a release of oil reserves from the Strategic Petroleum Reserve (SPR). In fact we should just change the name to the Strategic Political Reserve. Crude prices were flat today despite news that South Sudan oil fields were bombed by Sudan and Total (TOT) was forced to shut down some oil and gas rigs in the North Sea because of a blowout. Shell has platforms in the area and was also evacuating workers.

With multiple platforms shut down and production halted on about 180,000 boepd or 8.7% of average U.K. production, you would have expected crude prices to rise. Total shutin 130,000 boepd and Shell 50,000. The key here is the production is mostly gas and natural gas liquids. BOE means barrels of oil equivalent. Only about 60,000 bpd are actually oil but that platform is one of the largest contributors to the North Sea production.

Total said it could take six months to control the gas leak on the North Sea Elgin platform. Gas and NGL are bubbling up under the platform like a shaken 2 liter bottle of pop. One spark and you would have another roman candle similar to the Horizon disaster only without the five million barrels of spilled oil.

South Sudan said Sudan bombed their oil installations and that called into question the scheduled meetings by country leaders to resolve border disputes. South Sudan has daily oil production of 350,000 bpd but it has been shutdown until the border dispute is settled. South Sudan has the oil but the pipeline goes through Sudan and South Sudan halted pipeline shipments because Sudan was stealing the oil. (Their claim) South Sudan recently seceded from Sudan.

The halt in production from South Sudan and declines in Nigeria, Yemen and Syria plus the Iranian oil embargo has forced oil prices higher although Saudi Arabia continues to claim the market is oversupplied by more than one million barrels per day.

Gasoline prices rose to $3.90. Against this backdrop it should be no surprise in an election year that the White House is floating the weekly trial balloon of a release of supplies from the SPR. Today it was a Bloomberg report quoting Charles McConnell, assistant secretary for fossil energy for the DOE as saying a SPR release is being considered. He said the administration is looking at all alternatives to lower the price of fuel. That suggests a surprise announcement ahead and that kept oil prices from rising.

WTI Crude Chart

Brent Crude Chart

Natural gas producers wish somebody would bomb their fields and put them out of their misery. Natural gas prices declined to $2.17 intraday and are trading at $2.19 overnight. Prices have not been this low since February 2006. The gas in storage is more than 50% above the five year average at this time of year and it is expected to reach much higher levels before the summer generation cycle begins. Later this year it is expected to reach maximum capacity and require pipelines to shutdown or restrict the amount of gas they accept. Almost everyone expects to see gas under $2 soon.

This is impacting the entire energy sector because most investors don't really know which companies have a material exposure to gas other than the majors like Chesapeake (CHK), Encana (ECA), EOG (EOG), Chevron (CVX), etc. The S&P Energy sector is down -12% for the quarter and the only sector in negative territory.

Natural Gas Futures Chart

The best economic report today was not an economic report. It was the earnings report from Lennar Corp (LEN). The homebuilder reported a better than expected 8-cent profit in earnings for Q4 compared to a loss of 5-cents a year ago. Revenue rose +30% to $721 million. Lennar said new deliveries were up +29% and new orders were up +33%. The CEO said the market had stabilized driven by a combination of low home prices and low interest rates. Shares of LEN rose +5% on the news.

This was a breath of fresh air after the ugly earnings from KB Homes (KBH) on Friday. That earnings report depressed the entire sector but the Lennar news today recovered all that loss for everyone except KBH.

Lennar Chart

Homebuilder ETF Chart

Annie's Inc (BNNY) priced its IPO tonight. The company makes organic foods but it best known for the white and purple boxes of mac and cheese with the bunny on the label. The company is selling five million shares and the initial price range was $14-$16 but they changed it on Monday to $16-$18 because of high demand. It priced tonight at $19 so demand must have been good. You can thank the success in Whole Foods Market (WFM) for the demand for Annie's. The bunny has grown so popular it was a natural for Annie's to use BNNY for their stock symbol. There are 10 additional IPOs expected to price this week and roughly 400 more this year.

Annie's

Nasdaq big caps continued to drive the overall market higher and Apple was the leader today. Tradition Equity raised their price target from $600 to $700 and that is not the high targets on the street. Apple continues to be the most recommended high dollar stock on the planet. Apple shares accounted for 33% of the YTD gain in the Nasdaq 100.

Apple Chart

The S&P 500 does not have the good fortune of being only large cap techs. Declines in the tech and energy sectors caused the S&P to lose some of its gains from Monday. The 1426 level and the May 2008 closing high is the current target and it may be a struggle. The big cap techs are helping but with 500 stocks in the index that means there is a lot of dead weight to drag.

I still believe there will not be a lot of gains for the rest of the week and the indexes will chop around on low volume as fund managers try to keep their windows dressed. Volume today was barely 6.01 billion shares. This is on the low side and about what we have been seeing lately. Volatility has been minimal so fund managers are having a relatively calm week ahead of quarter end. The only worry today is over hedge funds trigging large shorting programs ahead of month end. Fund managers would rather they wait until April.

S&P-500 Chart - Daily

The Dow was lackluster today after gaining +161 points on Monday. The sell program at the close knocked off -40 points but otherwise the Dow held its gains and that was bullish. Unfortunately over the last two days it has failed to make a new high and that is slightly bearish since the S&P and Nasdaq have accomplished that feat.

Dow Chart - Daily

The Nasdaq big cap rally continues. That is all I really need to say.

The Nasdaq composite was held up by the big caps and the Nasdaq 100 was the only index to close in positive territory thanks to a $10 gain in Apple to a new high. When this rally eventually fails it could be really ugly. We need the Q1 tech earnings to be very strong if we have any hope of avoiding a summer bloodbath. Analysts have been raising estimates for techs but there is very little conviction.

Nasdaq Chart - Daily

Nasdaq 100 Chart - Daily

The Russell 2000 gave back the most of any index on a percentage basis at -0.7%. It was also a strong gainer on Monday as the short squeeze pushed it above resistance and to a new 52-week high. If the Russell can use that prior resistance at 832 as support and then move higher I will have to rethink the potential for an April swoon.

Russell Chart - Daily

I expect further window dressing for quarter end but the majority of the moves should be over. Managers will try to keep the indexes pinned at the highs but I doubt they have a significant amount of uncommitted funds left. The markets "should" move sideways for the rest of the week. Obviously unexpected headlines could change that EOQ pattern.

Jim Brown

Send Jim an email


New Plays

Medical Device Maker

by James Brown

Click here to email James Brown

Editor's Note:

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

(bullish ideas, many need to breakout past resistance) URBN, LRCX, BID, EVR, QLIK, YNDX, NICE, JDSU, VELT,


NEW BULLISH Plays

St. Jude Medical - STJ - close:

Stop Loss: 42.95
Target(s): 48.50
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
News that STJ's Riata wires, used with implanted heart defibrillators, were associated with 22 deaths did not have an impact on the stock. STJ recalled this product back in 2010. Since these Riata wires remain in nearly 79,000 patients that puts the chances of an issue at less than 0.001%. As a matter of fact shares of STJ have continued to rally. Today saw a breakout past resistance near $44.00 and its 300-dma.

I am suggesting bullish positions at the open tomorrow but only if both STJ and the S&P 500 index open positive. We'll use a stop loss at $42.95. Our multi-week target is $48.50. FYI: The Point & Figure chart for STJ is bullish with a $66.00 target.

Do not enter position unless STJ and the S&P 500 are both positive at the open

Suggested Position: buy STJ stock @ (open)

- or -

buy the May $45 call (STJ1219E45) current ask $1.50

Annotated chart:

Entry on March xx at $ xx.xx
Earnings Date 04/18/12 (unconfirmed)
Average Daily Volume = 3.0 million
Listed on March 27, 2011



In Play Updates and Reviews

Quiet on Wall Street

by James Brown

Click here to email James Brown

Editor's Note:
Lacking any major headlines on Tuesday the market slowly drifted lower. Fund managers could be counting time as they wait for the first quarter to end on Friday.

Current Portfolio:


BULLISH Play Updates

Akamai Technologies - AKAM - close: 37.68 change: -0.09

Stop Loss: 34.95
Target(s): 39.75 & 41.50
Current Gain/Loss: + 2.3%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/27 update: AKAM delivered a quiet session on Tuesday. Shares drifted sideways in a narrow range under the $38.00 level. I remain bullish given the breakout past $37.50 but readers may want to raise their stops closer to the 50-dma.

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: 51.12 change: -0.08

Stop Loss: 49.75
Target(s): 56.50
Current Gain/Loss: - 1.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/27 update: Hmm... the S&P 500 lost -0.28% and ANF only lost -0.15%. I can't call that underperformance but I remain cautious on this stock. The morning bounce failed at the simple 10-dma, which is short-term bearish. More conservative traders will still want to consider an early exit even though the $50.00 level should be support. I am not suggesting new positions at this time. We'll wait to see if ANF can bounce at $50.00.

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

03/26/12 warning! ANF did not participate in the rally today

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


ANN Inc. - ANN - close: 29.38 change: +0.13

Stop Loss: 27.25
Target(s): 31.75
Current Gain/Loss: + 1.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/27 update: ANN spiked higher this morning but gains faded. Shares ended the session with a +0.4% gain. If you're looking for an entry point now readers might want to wait for ANN to fill the gap, which means a dip toward $28.60.

current Position: Long ANN stock @ 29.25

- or -

Long May $30 call (ANN1219E30) current ask $1.05

03/26/12 ANN gapped open above our trigger (28.75). Trade opened this morning at $28.89

Entry on March 26 at $28.89
Earnings Date 05/18/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on March 24, 2011


Broadcom Corp. - BRCM - close: 38.95 change: +0.02

Stop Loss: 36.45
Target(s): 44.00
Current Gain/Loss: + 0.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/27 update: BRCM managed to post a gain but I find the action today to look bearish. BRCM broke out past short-term resistance at $39.00 but couldn't hold it. Now it has a failed rally pattern. We can expect a dip back toward the 10-dma or the $38.00-37.50 area. 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


ClickSoftware Tech. - CKSW - close: 12.78 change: -0.20

Stop Loss: 12.40
Target(s): 14.90
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
03/27 update: CKSW could not get past resistance at the $13.00 level this morning. We are waiting for a breakout higher.

I am suggesting a trigger to open small bullish positions at $13.15. We will try and limit our risk with a stop at $12.40. Our target is $14.90. More aggressive traders may want to aim higher. FYI: The Point & Figure chart for CKSW is bullish with a $19.25 target.

Trigger @ 13.15

Suggested Position: buy CKSW stock @ (trigger)

- or -

buy the May $12.50 call (CKSW1219e12.5)

Entry on March xx at $ xx.xx
Earnings Date 04/28/12 (unconfirmed)
Average Daily Volume = 184 thousand
Listed on March 26, 2011


eBay Inc. - EBAY - close: 37.87 change: -0.21

Stop Loss: 35.75
Target(s): 39.50
Current Gain/Loss: + 4.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/27 update: Positive analyst comments on EBAY today were not enough to keep the stock above resistance at the $38.00 level. Shares slowly faded to a -0.5% decline. If the market dips again we can look for EBAY to fall toward short-term support near $37.00. I am not suggesting new positions at this time.

current Position: Long EBAY stock @ $36.29

- or -

Long Apr $35 call (EBAY1221D35) entry $2.02

03/26/12 new stop loss @ 35.75
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: 44.27 change: -0.04

Stop Loss: 41.40
Target(s): 44.75
Current Gain/Loss: + 8.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/27 update: HAIN tagged a new relative high at $44.62 today. Our exit target is $44.75. Given this close call more conservative traders may want to just go ahead and exit early now to lock in gains. I am not suggesting new positions at this time. More aggressive traders may want to aim higher.

(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: 26.37 change: -0.76

Stop Loss: 24.70
Target(s): 29.00
Current Gain/Loss: + 0.7%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/27 update: The up trend in LVLT could be in trouble. Shares reversed yesterday's bounce with a -2.8% decline today. Furthermore LVLT has closed under short-term support at the 10-dam. More conservative traders may want to exit early or raise their stop loss. If the market continues to dip I am expecting LVLT to pull back toward the $25.25-25.00 area.

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

03/26/12 today's bounce off the 10-dma could be a new entry point
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


NetApp, Inc. - NTAP - close: 46.06 change: -0.27

Stop Loss: 43.75
Target(s): 49.75
Current Gain/Loss: + 0.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/27 update: NTAP spent Tuesday in a relatively narrow range. Readers may want to wait for a new dip near $45.00 or the simple 10-dma near $44.85 before considering new bullish positions.

Our short-term target is $49.75. More aggressive traders may want to aim higher. The Point & Figure chart for NTAP is bullish with a $65.00 target.

current Position: Long NTAP stock @ $45.97

- or -

Long Apr $45 call (NTAP1221D45) Entry $2.05

Entry on March 26 at $45.97
Earnings Date 05/23/12 (unconfirmed)
Average Daily Volume = 5.8 million
Listed on March 24, 2011


NXP Semiconductors - NXPI - close: 26.91 change: +0.04

Stop Loss: 25.35
Target(s): 29.75
Current Gain/Loss: + 1.5%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/27 update: Today's performance is almost identical to yesterday's with an early morning spike higher that reverses and then NXPI spends the rest of the day in a narrow range. More conservative trades may want to wait for another bounce off the 10-dma before considering new positions. FYI: The Point & Figure chart for NXPI is bullish with a $45.00 target.

(small positions)

current Position: Long NXPI stock @ $26.50

- or -

Long Apr $25 call (NXPI1221D25) Entry $2.25

03/23/12 NXPI hit our trigger for small positions at $26.50

Entry on March 23 at $26.50
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on March 19, 2011


Ardea Biosciences - RDEA - close: 23.01 change: -0.04

Stop Loss: 21.40
Target(s): 24.90
Current Gain/Loss: + 1.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/27 update: That's two days in a row that RDEA has failed near the $23.50 level. I strongly suspect this stock is poised to dip back toward $22.00, which should be new support.
FYI: The Point & Figure chart for RDEA is bullish with a long-term $31.50 target.

current Position: Long RDEA stock @ $22.65

03/23/12 RDEA hit our entry trigger @ 22.65

Entry on March 23 at $22.65
Earnings Date 03/09/12
Average Daily Volume = 307 thousand
Listed on March 22, 2011


Stamps.com Inc. - STMP - close: 28.13 change: -0.32

Stop Loss: 25.95
Target(s): 32.50
Current Gain/Loss: - 0.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/27 update: It was a quiet day for shares of STMP until the last 30 minutes of trading when the stock suddenly turned lower. More conservative traders may want to raise their stop loss. I am not suggesting new positions at this time.

Earlier Comments:
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: 39.53 change: +0.17

Stop Loss: 37.40
Target(s): 41.50
Current Gain/Loss: + 2.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/27 update: TJX continues to show relative strength as it inches closer and closer to the $40.00 level. There is no change from my prior comments. More conservative traders may want to take profits early near the $40.00 mark since $40 could prove to be round-number, psychological resistance.

current Position: Long TJX stock @ $38.60

- or -

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

03/26/12 conservative traders may want to take profits near the $40.00 mark
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: $71.34 change: -0.15

Stop Loss: 69.40
Target(s): 74.75
Current Gain/Loss: + 2.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/27 update: TTC spent Tuesday in a very narrow range. Readers could try and launch new bullish positions on a bounce near $70.00 again or a breakout past $72.00. I am turning more cautious here and will raise our stop loss up to $69.40.

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

current Position: Long TTC stock @ $69.32

03/27/12 new stop loss @ 69.40
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


Websense, Inc. - WBSN - close: 21.42 change: -0.01

Stop Loss: 19.85
Target(s): 23.50
Current Gain/Loss: + 0.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/27 update: WBSN hit new relative highs midday but the rally reversed. Shares closed almost unchanged. I view this as a very short-term top. We can look for a dip back toward $21.00 or the 10-dma, either should be short-term support. FYI: The Point & Figure chart for WBSN is bullish with a $26.00 target.

current Position: buy WBSN stock @ $21.24

03/26/12 Trade opened on WBSN's gap higher at $21.24. This is above our trigger of $21.15.

Entry on March 26 at $21.24
Earnings Date 04/24/12 (unconfirmed)
Average Daily Volume = 388 thousand
Listed on March 22, 2011


Wyndham Worldwide - WYN - close: 45.56 change: +0.21

Stop Loss: 43.75
Target(s): 49.50
Current Gain/Loss: + 0.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/27 update: WYN spiked toward its recent highs and reversed. This move is short-term bearish and if the market dips tomorrow we can look for WYN to fall toward the $45.00 level again.

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: 20.85 change: -0.29

Stop Loss: 22.55
Target(s): 18.50
Current Gain/Loss: + 3.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/27 update: GBX dipped again with a -1.3% decline. Shares are nearing potential support at the simple 150-dma (near 20.35) and the $20.00 level again. I am not suggesting new positions at this time.

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

03/26/12 new stop loss @ 22.55
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