Option Investor
Newsletter

Daily Newsletter, Thursday, 4/19/2012

Table of Contents

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

Market Wrap

Market Struggles with Earnings and Economy

by Thomas Hughes

Click here to email Thomas Hughes
Economic data and future outlook outweigh earnings. The major indexes had broad losses spurred on by mixed economic data.


Index futures were flat to positive in early trading as the markets awaited the onslaught of today's economic and earnings data. Today was heavy on both and the markets struggled between the two. Economic data suggests the economy is still growing but that growth is slowing. On the other side of the coin earnings have been good so far this season and today was no exception. There was one big surprise loss in the tech sector but it was quickly brushed away as traders and investors focused on other data.

Initial claims for unemployment benefits were higher than expected for the week ending 4/14. The number of people who filed for the first week of unemployment benefits is 386,000. Analysts had been expecting claims in the range of 375,000. The previous week's data was revised up 8,000. The upward revision continues a trend of upward revisions. Initial claims are at 4 month highs and are on the rise. The four week moving average increased as well and also reached a high for the year.


Continuing claims and total claims for unemployment both fell but lag the report of initial claims. Continuing claims had been expected to to 3.3 million in the week ending 4/7 but were actually a marginally lower 3.297. Total claims fell by the biggest margin this year to a total of 6.77 million from the previous weeks 6.95 million. It'll will be important in the coming weeks to see how this changes in light of the recent spike in initial claims.



The bulk of today's data came around 10 AM and sparked the sell off that took the Dow into negative territory and took the index below 13,000. Though positive, the data shows that growth is slowing.

The index of leading indicators rose by 0.3% in March, a little slower than the 0.7% gain in February. The index is at its highest level since 2008. The modest rise in leading indicators is supported by a coincident gain in manufacturing. The Philadelphia Federal Reserve survey of manufacturing showed an 8.5% expansion in domestic manufacturing. This is a little slower than than previous reading of 12.5% expansion in March. Existing home sales was the big disappointment. The sector, which has been struggling, was expected to increase by 8.4% but actually declined by more than 2.5%. The rate of homes sold was an adjusted 4.48 million units, down from February's 4.6 million.

European shares ended the day in the red. Rising debt concerns, a possible French credit downgrade and the mixed US data sent the shares down. Higher yield rates for Spanish 2 and 10 year bonds started the sell off in today's European trading. There was good demand but the cost of the debt raised the question of future impacts to Spain rising debt. Fears that Spain's troubles were spreading were heightened by speculation of a French credit rating downgrade by Moody's. European banks are estimated to lose over $2.5 trillion dollars from their balance sheets in 2012.

News from Asia had no impact on today's trading. China is reported to be making moves to increase liquidity in order to spur growth. The moves are aimed at increasing the “soft landing” during the current economic slowing. The government is reported to be cutting reserve requirements for banks to free up cash in the system. Neighboring country Japan reported a rise in exports for the first time in 6 months. The gains were offset by rising fuel costs and resulted in losses for businesses. The gains were based on strong sales in the US.

Natural gas inventories rose again today, and the price of natural gas fell to 10 year lows. The storage system received an injection of +25 billion cubic feet, within the expected range but natural gas storage is near capacity and at record high levels. At the current rates of injection it is estimated storage will reach capacity later this year. Natural gas dropped over 2% in today's trading to sell around $1.90.

Apple received a few more downgrades today upon speculation its third quarter earnings would miss expectations. Sales targets for iPhones are in question. Increased competition from Android devices and hold outs for an anticipated iPhone 5 are to blame. Verizon also announced a sharp drop in new activations of iPhones. The stock dropped sharply to trade below $600 and close around $588.

Apple, daily

The earnings report schedule was very full today with over 125 companies on the list. For the most part earnings were positive with some surprises as financials, tech and others posted big gains. One surprisingly big loss was reported by Nokia. The phone maker said that “tougher” than expected conditions were to blame. The company posted a $1.2 billion loss in the first quarter compared to last years profit of $0.4 billion. The company uses the Microsoft operating system in its phones and is facing tough competition from Apple and Android phones.

Nokia, daily

The financial sector performed well in the last quarter and were in the spotlight today. Big name financials Bank of American and Morgan Stanley both reported today as well as a handful of smaller banks. Bank of America beat expectations in the first quarter on increases in business and improvements to its balance sheet. The stock jumped over 3% in pre-market trading but sold off on high volume during the day to fall below its short term moving average.

Bank of America, daily

Morgan Stanley posted a net loss for the quarter due to a massive one time charge. On an adjusted basis the financial giant beat expectations. Earnings per share are $0.71, $0.27 over the average estimate. Revenue rose by more than 10% in the quarter, a gain of over $1 billion from the previous year, to $8.9 billion. Analysts had been expecting revenue in the range of $7.6-$7.7 billion. The firm posted big gains in stock and bond sales and trading activities. The stock jumped over 5% from recent support to the short term moving average but traded down from there throughout the day with high volume.

Morgan Stanley, daily

BB&T reported earnings of $0.61 per share, ahead of the expected $0.51. The bank more than doubled its mortgage banking revenue and had broad based loan growth. The company's earnings were helped by lower costs and reduced loan provisions. The stock traded in a tight range today and is just above the short term average. The stock is trending up and has support around $30.

BB&T, daily

Fifth/Third Bancorp increased first quarter earnings per share more than 30% to $0.45. A large portion of the increase is due to the IPO of Vantiv. The bank also saw gains across all its market segments. The company reported decreased costs and no exposure to the European sovereign debt crisis. The stock had been trending up and was near 12 month highs. The stock traded down today on heavy volume but indicators are weak.

Fifth/Third Bancorp, daily

The financial sector Spyder (XLF) traded down today on moderately higher volume. The stock is trading around the 30 day moving average and is beginning to squeeze between resistant and the recent up trend.

XLF, daily

Verizon beat expectations by a penny. The company reported revenue of $28.2 billion, slightly ahead of the estimated $28.17 billion. The quarterly revenue increase is a 5% gain from last year and delivered profits of $1.7 billion to its shareholders. The stock jump more than 2% in early trading and got tied up on the 30 day moving average. Bearish momentum has been declining and is about to turn bullish.

Verizon, daily

Shares of online market place Ebay jumped more than 10% on extremely heavy volume following the announcement of its recent quarter earnings. The company posted strong gains in revenue and earnings based on the success of its Paypal platform. The online financial service is a leading method of payment/purchasing and is being used in areas far outside its original purpose. Net income grew over 20% and resulted in earnings of $0.44 per share. Total revenue grew 29% in the quarter to a total of $3.28 billion. Growth in the Paypal segment of business is expected to continue into the future.

Ebay, daily

America's largest chemical maker, DuPont, increased net income by 4% in the quarter. The warmer than expected winter sparked increased sales in its agriculture unit which. Net sales increased 12% for the business and they restated the previous earnings guidance. The company is expecting adjusted earnings between $4.20 and $4.40 per share. The stock traded down today on average volume. The decline was halted at the 30 day moving average.

DuPont, daily

Chipotle Mexican Grill reported today, one day ahead of its former sponsor, McDonald's. The high profile chain of restaurants reported after the bell and beat expectations. The company earned $1.97 per share, $0.04 higher than expectations. Revenue was also higher than expected. The company brought in $641 million versus the expected $631. The stock has been trending up strongly this year, gaining over 150% in the last 12 months. The stock, which closed down today, is trading near all time highs in after market action. The stock jumped $4 on the news.

Chipotle Mexican Grill, weekly

Microsoft also reported after the bell. The tech giant was another to beat Wall Street estimates. The company earned $0.60 per share compared to a consensus estimate of $0.57. PC shipments world wide are up 2% in recently helping boost Microsoft sales. Enterprise and Windows systems made strong gains. The company was also able to revise its expected costs lower. The stock traded higher today on average volume.


The Blackstone Group reported a significant drop in revenues and earnings. The companies income and earnings both fell around 20%. The stock dropped 4% in today's trading and continues a recent down trend.

Blackstone, daily

Qualcomm reported record revenue but cut short hopes of near term growth. The company says that supply of chips from Taiwan Semiconductor is hurting its ability to meet sales demands. The company guided expectations for the 2nd quarter down based on the short supply. Qualcomm is going to boost its support to other semi-conductor manufacturers but it is uncertain when the supply will increase. The new chips sold by Qualcomm are made using new technology and the number of available machines is limited. The chips are important to 4G technology and are used industry wide. The stock dropped over 6% today on high volume and bearish technicals.

Qualcomm, daily

Another handful of public offerings opened this week. Two highlights today are Tumi (TUMI) and Splunk (SPLNK). Tumi, named for a Peruvian god, is a high end luggage and business accessory manufacturer. The stock was initially thought to be priced at $17 but the stock was in high demand and opened at $26.

Tumi, one day

Splunk provides real time data to software enabling companies. The firms software tracks business and user click data on multiple levels and transforms the number into more useful data. The stock opened at $32, well above its original range of $8-$10. The stock traded steadily throughout the day on thin volume.

Splunk, one day

The yields on US 30 year bonds fell today and closed at new one month lows.

30 year bond yields

The markets tried to make gains today but the weight of worries over economic data kept the major indexes in negative territory. After a positive start to the morning the Dow Jones index tried to remain positive but the economic releases sent the market plunging around 10 am. The Dow fell below 13,000 and soon turned lower, losing as much as 130 points during afternoon trading. The market rebounded from its lows before closing to end the day down only 69 points. Today's decline brings the Dow below its 30 day moving average and the important 13,000 level. Momentum is bearish but very weak in the short term and has just turned bearish in the long term.

Dow Jones Industrial Average, daily

Dow Jones Industrial Average, weekly

The S&P 500 performed the same as the Dow but traded in a tighter range. Momentum in the broader S&P 500 has not turned bearish yet but is very close.

S&P 500, weekly

The Nasdaq fell today as well and is also under its short term moving average. However, it has not yet broken trend. It appears to have support at 3,000. Bearish momentum has peaked and is receding. Microsoft's earnings beat after the bell could help boost the index in tomorrows trading.

Nasdaq, daily

Things to look out for tomorrow is more earnings. There are no scheduled economic releases tomorrow. Europe will continue to be a mess but that news wont lead the US market. Our own earnings, economy and year end forecasts will be the determining factors. Tomorrows earnings calendar is lighter than today's but includes names like McDonald's, General Electric, Honeywell, Ingersoll Rand and Under Armor.

Thomas Hughes


New Plays

High-Volume Decline

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:

(bearish ideas) NAV, EXP, PFCB, NILE, QSII, STLD


NEW BEARISH Plays

Consolidated Graphics - CGX - close: 41.31 change: -0.93

Stop Loss: 43.05
Target(s): 36.50
Current Gain/Loss: unopened
Time Frame: up to its early May earnings report
New Positions: Yes, see below

Company Description

Why We Like It:
CGX is a commercial printer. News out this morning that the company was launching a joint venture with a partner in Japan did not have a positive reaction. The stock underperformed the market with a -2.2% decline and volume was more than double the norm.

The intraday low today was $41.00. I am suggesting a trigger to launch small bearish positions at $40.85. We'll start with a stop at $43.05. Our downside target is $36.50 but we may have to exit early ahead of the early May earnings report. FYI: The Point & Figure chart for CGX is bearish with a $28.00 target.

Trigger @ 40.85 (small positions)

Suggested Position: short CGX stock @ (trigger)

Annotated chart:

Entry on April xx at $ xx.xx
Earnings Date 05/01/12 (unconfirmed)
Average Daily Volume = 45 thousand
Listed on April 19, 2011



In Play Updates and Reviews

Where is the volatility?

by James Brown

Click here to email James Brown

Editor's Note:
The VIX volatility index didn't see that much movement today but we're definitely seeing more volatility in individual stocks. SKUL, COG, and IPGP were stopped out and UTIW and APEI were triggered.

Current Portfolio:


BULLISH Play Updates

Hain Celestial Group - HAIN - close: 45.19 change: +0.18

Stop Loss: 42.75
Target(s): 49.00
Current Gain/Loss: + 0.3%
Time Frame: up to its early May earnings report
New Positions: see below

Comments:
04/19 update: HAIN is slowly churning higher but odds are the stock will close near $45.00 with tomorrow being an options expiration Friday. I am not suggesting new positions at this time but a rally past $45.50 might change my mind.

current Position: long HAIN stock @ $45.05

- or -

Long May$45 call (HAIN1219E45) Entry $1.85

04/03/12 triggered @ 45.05

Entry on April 03 at $45.05
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 279 thousand
Listed on April 02, 2011


rue21, Inc. - RUE - close: 29.90 change: -0.60

Stop Loss: 28.45
Target(s): 33.50
Current Gain/Loss: - 1.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
04/19 update: RUE underperformed today with a -1.9% drop. Shares also filled the gap from the 17th of April. Traders did buy the dip twice today near $29.45 so I'm not concerned yet. Readers may want to wait for a new rise past $30.25 before considering new bullish positions.

Our multi-week target is $33.50. We want to exit prior to the late May earnings report. FYI: The Point & Figure chart for RUE is bullish with a long-term $48.00 target.

(small positions)

Suggested Position: Long RUE stock @ $30.25

- or -

Long May $30 call (RUE1219E30) Entry $1.70

04/17/12 triggered at $30.25

Entry on April 17 at $30.25
Earnings Date 05/24/12 (unconfirmed)
Average Daily Volume = 304 thousand
Listed on April 164, 2011


ProShares UltraPro Short QQQ - SQQQ - close: 11.48 change: +0.35

Stop Loss: 10.60
Target(s): 13.25
Current Gain/Loss: - 1.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
04/19 update: The SQQQ was showing some volatility this morning and shares traded under short-term technical support at its 10 and 20-dma before reversing higher. By the closing bell shares were up +3.1%.

Remember, this is the triple inverse ETF on the QQQ so expect volatility.

current Position: Long SQQQ @ $11.60

- or -

Long May $12.00 call (SQQQ1219E12) Entry $0.73

04/16/12 triggered at $11.60

Entry on April 16 at $11.60
Earnings Date --/--/--
Average Daily Volume = 2.3 million
Listed on April 10, 2011


TIBCO Software - TIBX - close: 33.71 change: -0.49

Stop Loss: 31.40
Target(s): 35.75
Current Gain/Loss: + 0.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
04/19 update: TIBX retreated with a -1.4% decline. The overall trend is still up but I am cautious here with the major averages looking vulnerable to more selling pressure. No new positions at this time.

FYI: The Point & Figure chart for TIBX is bullish with a $58.00 target.

Current Position: Long TIBX stock @ $33.50

- or -

Long May $34 call (TIBX1219E34) Entry $1.30

04/13/12 triggered at $33.50

Entry on April 13 at $33.50
Earnings Date 03/29/12 (already announced)
Average Daily Volume = 3.1 million
Listed on April 12, 2011


UTi Worldwide Inc. - UTIW - close: 17.30 change: -0.23

Stop Loss: 16.65
Target(s): 19.50
Current Gain/Loss: - 2.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
04/19 update: Warning! Today's action in UTIW is bearish. The stock saw a spike higher to $17.91 and then an immediate reversal. Shares closed with a -1.3% decline. UTIW looks poised to drop toward $17.00 soon. Unfortunately our trigger to launch positions was hit at $17.75.

I am not suggesting new positions at this time. Bears could argue that today looks like the second half to a bearish double top pattern.

We want to keep our position size small. FYI: The Point & Figure chart for UTIW is bullish with a $22.00 target.

(small positions)

current Position: Long UTIW stock @ $17.75

04/19/12 triggered at $17.75

Entry on April 19 at $17.75
Earnings Date 06/07/12 (unconfirmed)
Average Daily Volume = 443 thousand
Listed on April 17, 2011


BEARISH Play Updates

American Public Education - APEI - close: 35.09 change: -0.06

Stop Loss: 37.05
Target(s): 31.00
Current Gain/Loss: - 1.0%
Time Frame: up to its May 10th earnings report
New Positions: see below

Comments:
04/19 update: Our new play on APEI has been triggered at $34.75. the intraday rebound is a little bit worrisome. More conservative traders could wait for a bounce near $36.00 or the 10-dma as an alternative entry point.

Earlier Comments:
The plan was to limit our risk with small positions. Our exit target is $31.00 but we do not want to hold over the May 10th earnings report. This is a higher-risk trade. Lots of investors think APEI is going lower and the most recent data listed short interest at 20% of the very small 16.8 million share float. That does raise the risk of a short squeeze. You may want to limit your exposure by trading options.

(small positions)

Suggested Position: short APEI stock @ $34.75

- or -

Long May $35 PUT (APEI1219Q35) Entry $2.10

04/19/12 triggered at $34.75

Entry on April 19 at $34.75
Earnings Date 05/10/12 (unconfirmed)
Average Daily Volume = 202 thousand
Listed on April 18, 2011


Barrick Gold - ABX - close: 40.95 change: -0.14

Stop Loss: 42.55
Target(s): 37.50
Current Gain/Loss: + 0.2%
Time Frame: up to the May 2nd earnings report
New Positions: Yes, see below

Comments:
04/19 update: ABX is not moving very much. I am not expecting any big moves tomorrow since it's option expiration Friday. Readers may want to wait for a new drop under $40.65 before initiating positions.

More conservative traders may want to wait for a breakdown below $40.00 before initiating positions instead. Our exit target is $37.50. We do not want to hold over the early May earnings report.
FYI: The Point & Figure chart for ABX is bearish with a $32.00 target.

(small positions)

current Position: short ABX stock @ $41.02

- or -

Long May $40 PUT (ABX1219Q40) Entry $1.13

Entry on April 17 at $41.02
Earnings Date 05/02/12 (unconfirmed)
Average Daily Volume = 7.9 million
Listed on April 164, 2011


Ctrip.com Intl. - CTRP - close: 21.11 change: +0.06

Stop Loss: 22.51
Target(s): 18.00
Current Gain/Loss: + 2.7%
Time Frame: exit prior to the May 16th earnings report
New Positions: see below

Comments:
04/19 update: CTRP saw an intraday spike higher toward the top of its sideways trading range near $22.00. The rebound failed but it reinforces the $20.65-22.00 trading range.

Our plan was to exit our April $21 puts at the close today.

Earlier Comments:
Readers may want to keep their position size small or limit their risk by trading put options. The most recent data listed short interest at about 10% of the 131 million share float. That could raise the risk of a short squeeze.

It's possible the $20.00 level could act as round-number, psychological support but we are aiming for $18.00. The Point & Figure chart for CTRP is bearish with a $15.00 target.

current Position: short CTRP stock @ $21.70

- or -

Apr $21 PUT (CTRP1221P21) Entry $0.65 exit $0.10 (-84.6%)

04/19/12 planned exit for the April puts: 10 cents (-84.6%)
04/18/12 prepare to exit the April $21 puts at the close tomorrow
04/12/12 new stop loss @ 22.51

Entry on April 02 at $21.70
Earnings Date 05/--/12 (unconfirmed)
Average Daily Volume = 3.6 million
Listed on March 31, 2011


DeVry, Inc. - DV - close: 32.33 change: +0.33

Stop Loss: 33.25
Target(s): 30.25
Current Gain/Loss: + 0.6%
Time Frame: up to the April 24th earnings report
New Positions: see below

Comments:
04/19 update: Hmm... DV was showing relative strength today. If the market were to cooperate I would not be surprised to see DV breakout higher. Fortunately the major indices look weak here. I'm not suggesting new positions in DV and more conservative traders may want to tighten their stop loss.

current Position: short DV stock @ $32.54

04/14/12 new stop loss @ 33.25
04/10/12 new stop loss @ 34.05
04/09/12 DV gapped open lower at $32.54

Entry on April 09 at $32.54
Earnings Date 04/24/12 (confirmed)
Average Daily Volume = 670 thousand
Listed on April 07, 2011


Hi Tech Pharmacal - HITK - close: 33.48 change: -0.55

Stop Loss: 35.55
Target(s): 300-dma (moving target)
Current Gain/Loss: + 2.7%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
04/19 update: HITK has produced another failed rally under resistance near its 200-dma. Today's move looks like a new bearish entry point. Our target is the 300-dma (currently at $31.31) but more aggressive traders may want to aim for the $30.00 level.

The plan was to exit our April $35 put at the close today.

current Position: short HITK stock @ $34.40

- or -

Apr $35 PUT (HITK1221P35) Entry $1.50 exit $1.30 (-13.3%)

04/19/12 planned exit for our April put: $1.30 (-13.3%)
04/18/12 prepare to exit our April $35 puts at the close tomorrow
04/14/12 new stop loss @ 35.55
04/10/12 triggered at $34.40

Entry on April 10 at $34.40
Earnings Date 07/05/12 (unconfirmed)
Average Daily Volume = 155 thousand
Listed on April 09, 2011


ICICI Bank Ltd. - IBN - close: 33.62 change: -0.13

Stop Loss: 34.85
Target(s): 30.25
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
04/19 update: IBN slowly drifted lower today. There is no change from my weekend comments. We are waiting for a breakdown.

I am suggesting a trigger to launch bearish positions at $32.75 with a stop loss at $34.85, just above Thursday's high. Our target is $30.25. More aggressive traders could aim lower.

Trigger @ 32.75

Suggested Position: short IBN stock @ (trigger)

- or -

buy the May $32 PUT (IBN1219Q32)

Entry on April xx at $ xx.xx
Earnings Date --/--/-- (unconfirmed)
Average Daily Volume = 1.9 million
Listed on April 14, 2011


Rovi Corp. - ROVI - close: 28.75 change: -0.73

Stop Loss: 30.55
Target(s): 26.25
Current Gain/Loss: + 1.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
04/19 update: The early morning bounce attempt reversed and ROVI fell to a -2.4% decline. I would still consider new bearish positions at current levels.

Earlier Comments:
There is potential support near $28.00 and $26.00. We are setting our exit target at $26.25.

open positions on Monday morning

Suggested Position: short ROVI stock @ $29.27

- or -

Long MAY $30 PUT (ROVI1219Q30) Entry $2.45

Entry on April 16 at $29.27
Earnings Date 05/10/12 (unconfirmed)
Average Daily Volume = 1.2 million
Listed on April 14, 2011


CLOSED BULLISH PLAYS

Skullcandy - SKUL - close: 16.00 change: -0.79

Stop Loss: 15.75
Target(s): 19.70
Current Gain/Loss: - 5.9%
Time Frame: up to its May earnings report
New Positions: see below

Comments:
04/19 update: Ouch! SKUL had been showing a lot of promise. Unfortunate shares have corrected sharply lower the last few days. Today the sell-off accelerated and the stock broke down through potential support at $16.00 and its exponential 200-dma. Our stop loss was hit at $15.75. Oddly I could not find any specific news behind today's relative weakness.

Earlier Comments:
Shares of this headphone and audio accessory maker could see a big short squeeze soon. The most recent data listed short interest at 123% of the very small 8.3 million-share float. Yes. That was 123%.

closed Position: Long SKUL stock @ $16.75 exit $15.75 (-5.9%)

- or -

May $17.50 call (SKUL1219E17.5) Entry $0.85 exit $0.25 (-70.5%)

04/19/12 stopped out at $15.75
04/05/12 triggered at $16.75

chart:

Entry on April 05 at $16.75
Earnings Date 05/09/12 (unconfirmed)
Average Daily Volume = 453 thousand
Listed on April 03, 2011


CLOSED BEARISH PLAYS

Cabot Oil & Gas - COG - close: 30.98 change: +0.46

Stop Loss: 31.25
Target(s): 25.50
Current Gain/Loss: - 6.3%
Time Frame: up to the earnings report on April 25th
New Positions: see below

Comments:
04/19 update: Our aggressive trade on COG did not pan out. The oversold bounce continues and today saw a breakout above some technical resistance. Our stop loss was hit at $31.25.

Earlier Comments:
The trend is down and COG appears to have formed a massive head-and-shoulder pattern (whish is bearish). Yet before you get too enthusiastic here I want to warn you that prior breakdowns under $30.00 have yet to stick. Plus the stock has spiked higher a couple of times on rumors that COG was a takeover target. Therefore we want to keep our positions small to limit our risk.

(small positions)

closed Position: short COG stock @ $29.40 exit $31.25 (-6.3%)

- or -

May $28 PUT (COG1219Q28) Entry $1.15 exit $0.45 (-60.8%)

04/19/12 stopped out at $31.25

chart:

Entry on April 16 at $29.40
Earnings Date 04/25/12 (unconfirmed)
Average Daily Volume = 4.0 million
Listed on April 11, 2011


IPG Photonics - IPGP - close: 50.10 change: +0.82

Stop Loss: 50.75
Target(s): 42.50
Current Gain/Loss: - 4.3%
Time Frame: up to its May 1st earnings report
New Positions: see below

Comments:
04/19 update: I couldn't find any news behind today's +1.6% pop in shares of IPGP today. The stock saw an intraday rise to $51.06, and hit our stop loss at $50.75 along the way. The overall pattern still looks bearish so readers may want to keep an eye on IPGP for new drop under $48.00.

Earlier Comments:
We want to keep our position size small because there is a risk of a short squeeze if the market suddenly bounces. The most recent data listed short interest at 17.5% of the 37.1 million-share float.

(Small Positions)

closed Position: short IPGP stock @ $48.67 exit $50.75 (-4.3%)

- or -

May $45 PUT (IPGP1219Q45) Entry $1.97 exit $0.95 (-51.7%)*

04/19/12 stopped out at $50.75
*option exit is an estimate. option didn't trade at the time our play was stopped out.

chart:

Entry on April 16 at $48.67
Earnings Date 05/01/12 (confirmed)
Average Daily Volume = 400 thousand
Listed on April 14, 2011