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Daily Newsletter, Monday, 4/23/2012

Table of Contents

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

Market Wrap

Jerking on the Puppet Strings

by Linda Piazza

Click here to email Linda Piazza
Market Internals

Introduction

U.S. market participants might have preferred economic releases that would refocus attention away from Asia and Europe. We had none. Instead, events in Asia and Europe jerked the puppet strings, sending U.S. equities lower.

In Asia, the Nikkei 225 had held up fairly well, closing down only 0.20 percent, but the Hang Seng and Straits Times had closed lower by 1.84 and 1.07 percent, respectively. European bourses had lost higher percentages by the time most U.S. market watchers were waking. U.S. futures suffered, pressured lower, too.

Many developments contributed to the decline in Europe. Those who might have hoped for an equity boost from the increased pledges to the International Monetary Fund this weekend were to be disappointed. Spain's central bank announced today that the country had again met the technical qualifications a recession. Its first-quarter economic output decreased by 0.4 percent, the second quarterly decrease in a row.

Sunday's French election added extra tension. Most discussions had focused on incumbent Nicolas Sarkozy and Socialist frontrunner Francois Hollande in this first-run vote. However, a far-right candidate a Reuters article termed "anti-immigration" shook things up. Hollande came in first and President Sarkozy, second, but the far-right candidate turned in an unexpectedly strong performance. Those results rendered the outcome of the May 6th second-round voting even more uncertain.

Hollande's first-place standing, although widely anticipated, adds ambiguity to the Eurozone situation. Hollande wants the ECB's mandate to include a mandate for growth, and he wants that condition included in any EU treaty agreement. As if that weren't enough to heighten uncertainty, a collapse of a coalition government in Netherland added further uncertainty. The coalition had been trying to push the Dutch budget deficit below 3 percent of the GDP.

Also in Europe, both the German and Eurozone Flash Manufacturing PMI's disappointed. Germany's had been expected to climb to 49.0 from the previous 48.4. Instead it dropped to 46.3. The Eurozone had been expected to climb to 46.0 from the previous 47.7, but instead it dropped to 46.0. By their close, the FTSE 100 had lost 1.85 percent; the DAX, 3.36 percent; and the CAC 40, 2.83 percent.

Monday's Developments

Our indices ended the day lower, although well off the day's lows. The Dow put in another triple-digit day, with today's version a triple-digit decline.

Story stocks included Nestle SA, reporting that it will buy Pfizer Inc.'s (PFE) infant nutrition business. The deal requires regulatory approval. PFE ended the day at $22.39, down $0.17 or 0.75 percent.

Wal-Mart Stores, Inc. (WMT, 59.52, -2.93 or 4.69 percent) would have preferred not being among the story stocks today. News all weekend centered on the company's intention to investigate assertions of corruption by employees of a Mexican subsidiary. Worse, when the New York Times broke the story this weekend, it alleged that U.S. executives had previously shut down efforts to investigate charges. Allegedly, WMT wanted the stores built out quickly and systematically paid bribes to meet that goal then later buried the story after a short initial investigation.

Kelloggs (K, 50.69, -3.29 or 6.09 percent) probably would have preferred not numbering among the story stocks, either. The company lowered fiscal year 2012 guidance after the Q1 performance proved weaker than expected. The company also issued lowered Q1 guidance, citing weakness in volume growth in certain U.S. categories and European business. However, the company also attributed the lowered guidance to the company's interest in investing in future growth.

AstraZeneca (AZN, 45.54, -0.68 or 1.47 percent) and Ardea Biosciences (RDEA, 31.62, +10.78 or 51.73 percent) will merge, with AZN acquiring RDEA. RDEA will be acquired for $32 per share, with RDEA having closed at $20.84 on Friday.

Reporting companies included COP (72.33, -0.55 or 0.75 percent). The company reported Q1 earnings of $2.02 per share, excluding non-recurring items. It had been expected to report $2.06 per share. The company reported higher marketing margins. Those higher margins, together with higher commodity prices, offset lower production volumes and refining margins.

Phillips Electronics (PHG, 19.44, +0.65 or 3.46 percent) reported better-than-expected Q1 earnings and announced that it had finalized its TV joint venture with TPV. The company remained cautious due to a slowing growth in the global economy and uncertainties in Europe.

Xerox (XRX, 7.88, +0.01 or 0.13 percent) beat expectations by one cent. The company issued in-line Q2 guidance and guided expectations for the fiscal year to $1.12-1.18 versus a prior consensus of $1.12.

Brinker International (EAT, 30.88, +2.98 or 10.68 percent), the owner of Chili's and Maggiano's restaurants, reported increased traffic at some restaurants. The company earned an adjusted $48 million or $0.60 per share on revenue of $742 million, against expectations of $0.56 per share on revenue of $730.8 million. Revenue on restaurants open at least a year increased 4.2 percent for Chili's and 3.9 percent at Maggiano's locations.

Power Management company Eaton Corp (ETN, 47.40, -0.04 or 0.08 percent) reported adjusted net income of $0.92 a share against expectations of $0.90 per share. Revenue rose to $3.96B, but one source said analysts had predicted $4.01B.

Facebook announced that Q1 revenue climbed to $1.058 billion from the year-ago $731 million, with a leap in average monthly active users to 901 million from the year-go 680 million. That's the headlines, but net income fell to $205 million from $233 million.

In after-hours trading, Illumina (ILMN, 43.90, -0.46 or 1.04 percent) had run up $0.73 or 1.66 from its closing price, to trade at $44.63 in after-hours trading as this report was prepared. The company reported, also announcing a $250M share repurchase program. Revenue was $273 million, down from the year-ago $283 million. GAAP net income was $26 million or $0.20 per diluted share, compared to the year-ago level of $24 million or $0.16 per diluted share. The company mentioned some uncertainty "with respect to academic and research funding in the second half of the year" but said that their "full-year outlook is generally as we anticipated." They reaffirmed 2012 guidance. The conference call had not begun as this report was prepared.

Netflix, Inc. (NFLX) was cascading down and was at $88.00, down $13.84 from the $101.84 close in after-hours trading, as these words were typed. The company reported a loss of $0.08 a share on revenue of $870 million. These reports appeared to be better than anticipated. The company also reported 23.41 million domestic streaming subscribers, near the high end of the 22.8 million to 23.6 million range the company had told investors to expect. The company announced that it might move into the black sooner than expected, and may even turn a profit in Q2 rather than losing money through 2012. Still, investors obviously did not like the report on initial inspection. One market watcher suggested it might be the net adds for the second quarter.

TXN rebounded after its after-the-close earnings report. As this was typed, it was $32.67 or up $0.78 from its $31.89 close. The company emphasized that although "the business cycle bottomed in the first quarter," they had anticipated that happening and were pleased when "early signs of growth began to emerge." They saw a pleasing "breadth of increased orders across geographical regions and markets, including the industrial sector." The company reported profit of $0.32 a share on revenue of $3.12B, with expectations pegged at $0.29 a share and $3.06B. The company gave guidance of $0.36-0.44 a share, about in line with previous expectations of $0.40 a share.

Also in after-hours developments, Big Lots (BIG) warned. Same-store sales would be "slightly negative," the company reported. Previous expectations had been for a rise of 2-4 percent. Sales softened late in the quarter. BIG had ended the day at $45.71, down $0.16 or 0.35 percent, but as this report was prepared, it was at $39.01, down $6.70 or 14.66 percent from the close.

Let's look at charts.

Charts

The SPX still chops out a consolidation zone. It still looks vulnerable to a drop to 1330-1335 but could just as easily jump to 1405-1415.

Annotated Daily Chart of the SPX:

A couple of weeks ago, charts began predicting that the SPX and some other indices could chop around in a noisy congestion zone for two or three weeks before we knew the next direction. The SPX and some other indices have indeed been chopping out a congestion zone. Timing can be nearly impossible to predict, but the SPX could chop around another week or so or could break out any time, and that is true of the other indices, too. The formation, unfortunately, is not a bullish one, but as long as support currently being tested holds, it has not been confirmed.

The SPX has formed one or two daily closes at or above the 9-ema but hasn't been able to form consistent daily closes above it. It has chopped back and forth across nearby upside resistance and nearby downside support, rendering them useless as markers of next direction. A breakout above the 4/17 high of 1392.76 or a breakdown below about 1354.50 that isn't reversed within a few hours sets up potential downside and upside targets at the next green and red ovals. Between those levels, it's all noise.

If those resistance or support levels at the ovals are hit, watch for the possibility that they will hold as either support or resistance. Plan your trades accordingly. I don't know whether the SPX will attempt a breakout one direction or the other this week, but it could happen any time now and we have a number of possible triggers this week. Consistent daily closes above the recent high of 1422.38 or below the 1330 level then set up the next potential targets illustrated on the charts. In my own trades, I'm most worried about the possibility of a strong decline, but that doesn't mean I'm leaning my trades too far that way. I make sure that I have them positioned so that they won't be hurt too badly by a strong rally, either.

As with the SPX's chart, the Dow's chart setup hasn't changed much from last week's.

Annotated Daily Chart of the Dow:

Also similar to the SPX, the Dow has chopped back and forth so much across the daily 9-ema and 45-ema's that it's rendered them useless for predicting direction. A breakout above the 4/17 high of 13131.36 that isn't reversed within a few hours sets up potential upside targets at the gray channel boundaries and then at the green oval. A breakdown below the lower gray channel boundary that isn't reversed within a few hours sets up a potential target at the first red oval. Watch for potential resistance or support at each of these levels, if tested, and plan accordingly. My comments about the SPX hold here, too: the chart doesn't promise that a breakout attempt either direction will occur this week, but such an attempt could come at any time now.

Last week, the NDX spent the week producing daily closes beneath the nearest strong resistance and above the nearest strong support in an ever-tightening formation. By week's end, it looked as if time were drawing near for it to break out one direction or the other. Today's gap broke the NDX beneath that support.

Annotated Daily Chart of the NDX:

The NDX's chart formation has somewhat diverged from the SPX's and Dow's, but its breakdown alerts market watchers that the other indices could also break beneath their nearby support levels, too. "Breakdown" should be spoken with tongue in cheek, however, since the NDX promptly started moving back toward a retest of the breakdown level, and a single candle below that level should not be considered firm confirmation. We know, moreover, that AAPL has been the puppeteer pulling the strings of the NDX and some other indices, too, and it's due to report tomorrow. When I talk about consistent daily closes above or below certain key levels, it's because a one-day violation, unless a large one, may not be strongly predictive of next direction.

A disappointment in AAPL could drive the NDX down toward next historical support near 2600 or even deeper, to the red oval on the chart. Cheering news from AAPL could send the NDX back up to retest the 2670-2695 zone, where it's possible that former support might now be converted to resistance on daily closes. If the NDX can make it past the 9-ema on consistent daily closes, then it sets a potential next target near 2755-2775. I wouldn't be surprised to see either 2600 or 2755 sometime over the next two weeks. Those with far more money than I'll ever have will allow or engineer a test one of these days to determine whether weak hands will bail or bulls will jump on any first sign of a bounce and hang on.

The RUT still chops between potentially strongly support and potentially strong resistance.

Annotated Daily Chart of the RUT:

The RUT coils. Anything between the 4/17 high of 816.32 and the 4/10 low of 783.56 is just noise, and I personally would extend that lower boundary down to about 769-773 and the upper boundary up to about 821-822. If the RUT breaks out of either of those chop zones on consistent daily closes, new potential targets are set at the next green and red ovals.

Watch for the potential for the RUT to reverse course near the 769-773 or 816-821 zones if they are hit. If they're instead violated on consistent daily closes, look to the next red or green ovals as the next potential target. Although the Keltner channel system illustrated here sets up a much lower target for the RUT if nearby support is violated, we should also respect historical or Fibonacci potential support zones near 750 and 725 if the RUT should dive hard. Other market participants will certainly be watching those levels and might be willing to step back in if those levels are hit. I include the Keltner boundaries even though they might seem far-fetched because I've been surprised by how accurate they can sometimes be. This isn't a scare tactic or a solemn assertion that the lower boundary will be hit if the RUT drops below 769 on consistent daily closes. It's just a planning tool to prompt you to ask yourself some what-if questions.

In the recent past, our equities and commodity prices have tended to move in opposition to the dollar, but that dollar/equities relationship sometimes shifts. It has shifted a bit the last two weeks with both the dollar and equities trending down toward support. The dollar may be strongly impacted by the outcome of European bond sales as well as by our FOMC's decision.

Relationships that haven't shifted are the relationships in the behaviors of the BIX, a financial index, and the RLX, the retail index, and that of our equity indices. The equities have tended to move in concert with these two. I didn't think we'd see a meaningful pullback in our major equity indices as long as the BIX and RLX were still blazing upward. They were functioning like a wind sock for the other indices. The RLX was one of the last indices to stall, and I'm still watching it as my indicator index.

Annotated Daily Chart of the RLX:

Support at the lower boundary of the price channel now converges with Keltner and round-number support near 600. If the RLX bounces hard from that support, it may carry some indices up with it again or at least serve as confirmation of their short-term bounces. I would watch for rollover potential again at the top of that channel if it's hit. If the RUT breaks down through the channel's support, that would confirm or perhaps predict weakness in other indices.

Tomorrow's Economic and Earnings Releases

The recount of important events for tomorrow would not be complete without mentioning that Spain sells 3- and 6-month bills tomorrow. Yields on Spanish bonds have lately functioned like the strings on a puppet, jerking our equities one direction or another. I could not locate a time for that auction.

Tomorrow begins the two-day FOMC meeting here in the U.S. Market participants will begin positioning their trades ahead of that meeting, their efforts perhaps attended by lower volumes and higher implied volatilities. We've seen chart setups that would fit with continued consolidation into the middle of this week or even next week. However, they've continued long enough now that they might reasonably break one direction or the other at any time. A post-FOMC reaction would be an ideal time to see that happen.

Tomorrow's monthly and year-over-year releases start with the S&P/CS Composition-20 HPI at 9:00 am ET. This number measures the change in the selling price of single-family homes in 20 metropolitan areas. Analysts predict that this number will drop 3.5 percent, with the prior number dropping 3.8 percent.

At 10:00, the Conference Board releases its Consumer Confidence number, with experts chiming in with a 70.1 expectation for this important number. That's down slightly from the prior 70.2. During the same time slot, the Census Bureau releases new home sales. Market watchers expect those to number 321K, up from the prior 313K. Two of the last three releases missed expectations, and those hoping for strength in the markets don't want to see a repeat.

The day's releases won't stop there. During that same 10:00 am ET time slot, the FHFA releases its number measuring the change in the purchase price of homes with mortgages that Fannie Mae and Freddie Mac back. Market watchers expect that number to climb 0.1 percent after a flat number at the prior report. In with all the other releases crowding this time slot, the Federal Reserve Bank of Richmond releases its Manufacturing Index. This is supposed to be pegged at 7 again, the same number as the prior release.

Of course, the normal Weekly Chain Store Sales will be released at 7:45 am.

Companies reporting earnings tomorrow include AMGN (AMC), AAPL, AKS (BMO), CHRW (AMC), FTI (AMC), JNPR (AMC), LXK, MMM (BMO), PNRA (AMC), and UTX (BMO).

What about Tomorrow?

As usual in my Monday articles, I'll show intraday charts for some of the major indices, but I have a caveat for this week. The indices are in congestion zones. In addition, we're moving into that pre-FOMC period. Both conditions render intraday charts less useful for predicting next market direction.

I'm using 60-minute charts in tonight's Wrap to try to filter out at least some of the intraday noise. The SPX overran a lower channel boundary this morning but then reclaimed it and rose to test the 9-ema on the hourly chart.

Annotated 60-Minute Chart of the SPX:

As the chart makes apparent, potential resistance and support has been strung out all across this chart due to the whippy intraday action of the SPX. That action renders it nearly impossible to make judgments about whether support or resistance looks strongest. It is notable that despite a couple of hours of challenging the 9-ema, the SPX still could not breach its resistance on 60-minute closes. We have to presume that the SPX remains vulnerable to another pullback, although the chart setup doesn't allow us to ascertain whether such a pullback is a probability or just a possibility. Potential support may be coalescing near 1361-1364. That's support that could make it easier for the SPX to climb than to decline, but again it's impossible to tell whether that's spongy or strong support. A few more hours' trading may clarify the situation, but for now, a drop to test that 1357.38 low visible on the left-hand side of the chart looks to have about equal probability as a climb toward about 1374-1377.

The Dow's chart shows a little more coherence to the Keltner levels.

Annotated 60-Minute Chart of the Dow:

The Dow fell to potentially strong support on 60-minute closes and bounced from that support. It also tested its 9-ema, but couldn't sustain 60-minute closes above it. It looks vulnerable to a pullback to the day's low, but a rally tomorrow morning that gaps the Dow above that 9-ema and then runs it up to about 12986 in early trading looks about equally possible.

If the nearest targets are met and exceeded on either the upside or downside, the next ones are marked on the chart, too. It's no surprise that the 13000 level looks like potentially strong resistance if it is tested or that 12713 level looks like potentially strong support if it is tested. Both levels coincide with recent highs or lows, trendlines that could be drawn, and other more standard technical analysis tools.

Several checked sources did not include a specific time for AAPL's earnings announcement, but if it's before the market open, that announcement could render everything shown on the NDX chart below useless.

Annotated 60-Minute Chart of the NDX:

Like the Dow, the NDX dipped all the way to the lower target on the nested Keltner channel setup I use. Like the SPX and Dow, the NDX rose to test its 9-ema, but as was true of both, it could not surmount that resistance despite holding there for a couple of hours. The NDX looks vulnerable to a pullback to test today's low, but if AAPL's report or some other propellant gaps the NDX above its 9-ema tomorrow morning at the open, it's more likely to attempt to rise toward the first or even the second of the green oval targets. The next potential upside targets are marked on the chart, but the daily charts will be needed for a potential downside target if today's low is violated on 60-minute closes.

Like the Dow and NDX, the RUT fell to its lower target this morning and then, as did all the indices shown, it charged up to test its 9-ema.

Annotated 60-Minute Chart of the Russell 2000:

The RUT's chart setup looks as if support may be attempting to converge near 788-789, but the convergence isn't yet strong enough that it's possible to assess whether it is spongy or will prevent a retest of today's low. A morning gap tomorrow morning up above the 9-ema might set up a potential retest of the 798-801 zone. There, historical and round-number resistance might converge to prevent a higher drive up toward the bottom of the channel that the RUT fell through this morning. None of these setups is strong enough to attach any strong trustworthiness to them. Violations of the nearest potential target zones on 60-minute closes set up new potential targets, but to find a new target if the lower boundary is violated on 60-minute closes, look back to the daily chart.

Tomorrow may be more about positioning ahead of the FOMC announcement and AAPL's earnings than any predictive market move. If markets coil into ever tighter formations ahead of the FOMC announcement, the zigzags might not mean much. Implied volatilities may hike, rendering options expensive, while volume shrinks. Market participants may find it difficult to predict post-announcement directions, no matter what their chart-reading capabilities.

Markets have begun to look vulnerable to a downdraft. Today's decline across many indices still looks like part of a setup to a potential downdraft, not the downdraft itself. However, any mention of QEIII or a Twist extension could prompt a knee-jerk rally instead. Furthermore, a post-earnings rally reaction to AAPL could also put a wrench in that theory. How do you deal with these possibilities ahead of time? If you're a newbie day or weeklies trader, consider standing aside. This might be the week when you want to test out a simulated trade instead of a live one or cut down the size of your day and weeklies trades. Traders in the longer trades have to decide ahead of time how they'll deal with the likely increased volatility before, during or after the announcement. Hedging may be expensive or require spreads instead of single options. Be aware that it's not always easy to exit any complex trade, including verticals or spreads, in a fast-moving market. Some traders will opt to widen stops if that is appropriate for their trades, planning to let any wide vacillations post-FOMC decision on Wednesday tamp down before they reposition their trade. Others will tighten stops. Decide ahead of time what you'll do. In the frenzy of a big market reaction, if one should occur, it's hard to make such decisions.

And then, if you do all that preparation, the markets are guaranteed to coil another week without any big movement at all. Isn't that the way it always works?


New Plays

Dark Clouds for Solar

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:

MCHP - This tech stock looks weak after breaking support near $35.00 and its simple 200-dma.

AEO - This apparel company is showing strength. A rally past resistance near $18.00 could be an entry point.

TITN - TITN is also showing relative strength. I would be tempted to buy this bounce with a tight stop loss. The big volume on the recent rally is bullish.

HMIN - Shares are breaking down under major support near $25.00. This looks like a bearish entry point.


NEW BEARISH Plays

First Solar, Inc. - FSLR - close: 19.25 change: -1.40

Stop Loss: 22.25
Target(s): 15.25
Current Gain/Loss: unopened
Time Frame: exit prior to earnings in early May
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of solar energy company FSLR have been churning sideways in a wide $20-24 range the last couple of weeks. That changed today when the stock was downgraded to a "sell" before the opening bell. Combine that with a widespread market sell-off and FSLR broke support and hit new record lows.

I am suggesting small bearish positions at the opening bell tomorrow. Broken support at $20.00 should be new resistance but since FSLR can be so volatile we'll use a stop loss at $22.25. Please note that we want to keep our position size small to limit our risk because the most recent data listed short interest at 42% of the 59.8 million share float. That does raise the risk of a short squeeze. Readers might want to use put options to really limit risk.

(small positions)

Suggested Position: short FSLR stock @ (the open)

- or -

buy the May $18 PUT (FSLR1219Q18) current ask $1.37

Annotated chart:

Entry on April xx at $ xx.xx
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 7.1 million
Listed on April 23, 2011



In Play Updates and Reviews

Bearish Trades Triggered

by James Brown

Click here to email James Brown

Editor's Note:
The market's broad-based decline on Monday was enough to hit a couple of bearish triggers. Plus, our UTIW trade was stopped out.

Current Portfolio:


BULLISH Play Updates

Hain Celestial Group - HAIN - close: 45.19 change: -1.20

Stop Loss: 43.90
Target(s): 49.00
Current Gain/Loss: + 0.3%
Time Frame: exit prior to the May 3rd earnings report
New Positions: see below

Comments:
04/23 update: Friday's $1.20 gain was completely reversed. I couldn't find any news on today's weakness in HAIN. The two-day move looks like a bearish reversal. More conservative traders may want to exit early now. I am not suggesting new positions at this time.

current Position: long HAIN stock @ $45.05

- or -

Long May$45 call (HAIN1219E45) Entry $1.85

04/21/12 new stop loss @ 43.90
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: 30.42 change: -0.10

Stop Loss: 28.45
Target(s): 33.50
Current Gain/Loss: + 0.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
04/23 update: Traders bought the dip in RUE this morning near its 10 and 20-dma. If the market would cooperate we could see RUE rally past short-term resistance near $31.00 soon. The trend is still up but I am hesitant to launch new positions given the market's widespread weakness.

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: 11.90 change: +0.28

Stop Loss: 10.60
Target(s): 13.25
Current Gain/Loss: + 2.5%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
04/23 update: The NASDAQ-100 index gapped open lower this morning. That produced a gap higher for the SQQQ. Shares of the SQQQ rallied to $12.24 intraday but pared its gains to settle with a +2.4% gain.

I am not suggesting new positions at this time.

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: 32.90 change: -0.60

Stop Loss: 31.65
Target(s): 35.75
Current Gain/Loss: - 1.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
04/23 update: The stock market's widespread decline today pushed TIBX to an intraday low of $31.87. Traders did buy the dip and shares pared their losses by the close. You can see on the daily chart how TIBX rebounded near its rising 30-dma. I am raising our stop loss up to $31.65.

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

04/23/12 new stop loss @ 31.65
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


BEARISH Play Updates

Barrick Gold - ABX - close: 39.69 change: -0.57

Stop Loss: 42.20
Target(s): 37.50
Current Gain/Loss: + 3.2%
Time Frame: up to the May 2nd earnings report
New Positions: Yes, see below

Comments:
04/23 update: Gold mining stocks underperformed today. ABX gapped open lower under potential support at $40.00 and spiked down to $38.46. Shares did see a big bounce off its intraday lows but still posted a -1.4% decline. I suspect ABX could see a bit of a bounce tomorrow. Traders should be aware that the GLD gold ETF has fallen to technical support at its rising 300-dma. If the GLD rallies off this moving average it could help fuel gains for the gold miners. I am not suggesting new bearish positions at this time.

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

04/21/12 new stop loss @ 42.20

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


American Public Education - APEI - close: 34.49 change: -0.56

Stop Loss: 36.60
Target(s): 31.00
Current Gain/Loss: + 0.7%
Time Frame: up to its May 10th earnings report
New Positions: see below

Comments:
04/23 update: APEI briefly spiked down under $34.00 before bouncing back. Shares ended the day with a -1.59% loss. I am lowering our stop loss down to $36.60. I am not suggesting new positions at this time.

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

04/23/12 new stop loss @ 36.60
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


Consolidated Graphics - CGX - close: 39.65 change: -0.75

Stop Loss: 42.25
Target(s): 36.50
Current Gain/Loss: + 2.9%
Time Frame: up to its early May earnings report
New Positions: see below

Comments:
04/23 update: CGX has broken down to new multi-month lows. More importantly it has closed under possible round-number support at the $40.00 level. This is good news if you're bearish. I am lowering our stop loss down to $42.25.

Bear in mind that 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.

(small positions)

current Position: short CGX stock @ $40.85

04/23/12 new stop loss @ 42.25
04/20/12 triggered at $40.85

Entry on April 20 at $40.85
Earnings Date 05/01/12 (unconfirmed)
Average Daily Volume = 45 thousand
Listed on April 19, 2011


Ctrip.com Intl. - CTRP - close: 20.94 change: -0.23

Stop Loss: 22.26
Target(s): 18.00
Current Gain/Loss: + 3.5%
Time Frame: exit prior to the May 16th earnings report
New Positions: see below

Comments:
04/23 update: CTRP remains inside its trading range but shares did lose -1% today. The stock did hit new multi-year lows on an intraday basis. The stock looks poised to finally breakdown again. Nimble traders could use a drop under $20.50 as a new entry point.

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

04/21/12 new stop loss @ 22.26
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: 31.08 change: -1.18

Stop Loss: 32.70
Target(s): 30.25
Current Gain/Loss: + 4.5%
Time Frame: up to the April 24th earnings report
New Positions: see below

Comments:
04/23 update: DV underperformed the market with a -3.6% drop on Monday. Shares have broken down to new multi-year lows. Readers may want to exit immediately but our plan is to exit positions tomorrow at the closing bell to avoid holding over earnings on Tuesday night. I am lowering our stop loss to $32.70.

current Position: short DV stock @ $32.54

04/23/12 new stop loss @ 32.70, exit tomorrow at the close
04/21/12 prepare to exit on Tuesday at the closing bell
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: 32.74 change: -0.66

Stop Loss: 35.05
Target(s): $30.50
Current Gain/Loss: + 4.8%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
04/23 update: Trading in HITK was a bit boring today. The stock gapped open lower and spent the rest of the day hovering in a narrow range. The trend is down but I am somewhat concerned about potential technical support at the rising 300-dma. I'm not suggesting new positions at this time.

current Position: short HITK stock @ $34.40

04/21/12 new stop loss @ 35.05, adjust exit target to $30.50
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: 32.61 change: -0.38

Stop Loss: 34.85
Target(s): 30.25
Current Gain/Loss: - 1.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
04/23 update: Sometimes the market does not want to cooperate. We have been expecting a breakdown in IBN and wanted to use a trigger to launch bearish positions at $32.75. Unfortunately the stock gapped open lower at $32.05 this morning, which opened our trade. The trend is still bearish and I would still consider new positions now at current levels.

Our target is $30.25. More aggressive traders could aim lower.

Suggested Position: short IBN stock @ 32.05

- or -

Long May $32 PUT (IBN1219Q32) Entry $1.32

04/23/12 triggered on gap down at $32.05, trigger was 32.75

Entry on April 23 at $32.05 (gap down)
Earnings Date --/--/-- (unconfirmed)
Average Daily Volume = 1.9 million
Listed on April 14, 2011


ChipMOS Tech. - IMOS - close: 12.79 change: -0.42

Stop Loss: 14.35
Target(s): 11.50
Current Gain/Loss: + 2.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
04/23 update: Our new IMOS play is off to a good start. The stock opened at $13.08 and dipped to $12.52 intraday. If you don't feel like chasing it here you could wait for a bounce into the $13.50-14.00 zone as a new bearish entry point.

The plan was to keep our position size small to limit our risk. IMOS can be a volatile stock. FYI: The Point & Figure chart for IMOS is bearish with a $8.00 target.

(small positions)

current Position: short IMOS stock @ $13.08

- or -

Long May $12.50 PUT (IMOS1219Q12.5) Entry $0.99

Entry on April 23 at $13.08
Earnings Date 05/14/12 (unconfirmed)
Average Daily Volume = 356 thousand
Listed on April 21, 2011


Blue Nile Inc. - NILE - close: 30.09 change: +0.27

Stop Loss: 32.51
Target(s): 26.00
Current Gain/Loss: - 2.5%
Time Frame: exit prior to the early May earnings report
New Positions: see below

Comments:
04/23 update: Warning! Our new bearish play on NILE has turned against us. Shares opened at $29.35, dipped to $28.56, and then bounced back into positive territory. Today's move, combined with the bounce two weeks ago, suddenly looks like a potential bullish double bottom.

More conservative traders may want to exit immediately or lower their stop loss significantly. I am not suggesting new positions at this time.

Earlier Comments:
The plan was to keep our position size small to limit our risk. The most recent data listed short interest at 31% of the very small 13.7 million share float. That does raise the risk of a short squeeze. You may want to use options to limit your risk. Our exit target is $26.00 but we do not want to hold over the early May earnings report (date not confirmed yet). FYI: The Point & Figure chart for NILE is bearish with a $23.00 target.

(small positions)

current Position: short NILE stock @ $29.35

- or -

Long May $30 PUT (NILE1219Q30) Entry $2.40

04/23/12 Warning! NILE has reversed higher. This could be a bullish double bottom. Readers may want to exit immediately to limit losses.

Entry on April 23 at $29.35
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 246 thousand
Listed on April 21, 2011


Rovi Corp. - ROVI - close: 28.27 change: -0.24

Stop Loss: 30.25
Target(s): 26.25
Current Gain/Loss: + 3.4%
Time Frame: exit prior to the May 3rd earnings report
New Positions: see below

Comments:
04/23 update: ROVI slipped to $27.75 intraday before settling with a -0.8% decline. If the market were to bounce I would expect a rebound in ROVI back to the simple 10-dma. I'm not suggesting new positions at this time. We will lower our stop loss to $30.25.

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

04/23/12 new stop loss @ 30.25

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


St. Jude Medical - STJ - close: 37.83 change: -0.19

Stop Loss: 40.05
Target(s): 34.25
Current Gain/Loss: - 1.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
04/23 update: Our new trade on STJ is open. Shares broke support near $38.00 and hit our trigger at $37.45. I would still consider new positions now. Please note I am adjusting our stop loss to $40.05. More conservative traders may want to use a stop near the simple 150-dma currently at $39.10 instead.

Our target is $34.25. FYI: The Point & Figure chart for STJ is bearish with a $31.00 target.

current Position: short STJ stock @ $37.45

- or -

Long May $37.50 PUT (STJ1219Q37.5) Entry $1.20

04/23/12 new stop loss @ 40.05
04/23/12 triggered at $37.45

Entry on April 23 at $37.45
Earnings Date 04/18/12
Average Daily Volume = 5.1 million
Listed on April 21, 2011


CLOSED BULLISH PLAYS

UTi Worldwide Inc. - UTIW - close: 16.77 change: -0.25

Stop Loss: 16.65
Target(s): 19.50
Current Gain/Loss: - 6.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
04/23 update: Our aggressive trade on UTIW did not pay off. Shares gapped open lower at $16.74 and dipped to $16.50 before trimming its losses. Our stop loss was hit at $16.65. UTIW still has a bullish channel of higher highs and higher lows but the peak last week looks like a potential bearish double top pattern.

Earlier Comments:
The plan was to keep our position size small to limit our risk.

(small positions)

closed Position: Long UTIW stock @ $17.75 exit $16.65 (-6.2%)

04/23/12 stopped out at $16.65
04/19/12 triggered at $17.75

chart:

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