Option Investor
Newsletter

Daily Newsletter, Tuesday, 7/17/2012

Table of Contents

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

Market Wrap

Bernanke Teases Markets

by Jim Brown

Click here to email Jim Brown

Ben Bernanke did not specifically say there would be a new version of QE in the near future but he did not say no.

Market Statistics

It was a rocky morning in the markets with earnings and testimony sending the indexes on a roller coaster ride. The Dow gapped open +75 points then declined -150 points before rebounding again +184 points. Morning earnings were mixed as expected but the earnings misses were not as bad as they could have been. The real bout of market volatility was generated by Bernanke's testimony.

Bernanke gave no hint that the Fed is planning a new QE program in the near future. The lack of any clues in his prepared testimony sent the markets to their lows. However, as the testimony drug on some analysts saw a little QE daylight under the carefully phrased answers.

Bernanke painted a grim picture of the U.S. economy and warned that Congress had to act immediately to delay the fiscal cliff. He put the monkey for reviving the economy back on Congress saying "Congress is in charge here, not the Federal Reserve." It is anticipated that not delaying the various fiscal cliff issues could cost two million jobs in 2013.

However, Senators said they had no control over the future. Senator Schumer said, "Given the political realities of this year's election, I believe the Fed is the only game in town. I would urge you, now more than ever, to take whatever actions are warranted. So get to work, Mr. Chairman." Given the somewhat hostile relationship between Congress and Bernanke for senators to say they were powerless and direct the Fed to take further action we have seen a tidal shift in sentiment.

The market rebounded after those comments were made. Bernanke said the recovery was slowing and the Fed would likely reduce its economic outlook in the next update. He indicated Q2 growth could be less than 2% and slowing.

That is another key point. Multiple times he said the Fed was prepared to act IF the economy slowed any further. In other comments he indicated the economy was continuing to slow. Is that Fed doublespeak for we are preparing to take action at the next meeting?

Analysts are split on whether the Fed will do anything when they meet on July 31st but consensus is growing that something will be done at the Sept 11th meeting. Bernanke said if the Fed did take action it would probably be balance sheet related. That means QE in some form. It is unlikely they will change Operation Twist since it is now scheduled to continue through December. The Fed will update its new economic projections at the September meeting and that would be the perfect time to announce new monetary stimulus. The lowered economic outlook would be political cover for the move.

He also said repeatedly that future action could include some form of expanded communication. Translated that means they could extend the expected target date for raising interest rates farther into the future. Currently the Fed statements target 2014 as the period when rate hikes could occur. That communication change could come at the July 31st meeting.

Senators asked Bernanke if he had plenty of bullets left in his gun and he replied yes. However, as Art Cashin pointed out what would you expect him to say? "No, we are out of bullets and the Indians are headed our way." He can't say he is out of bazooka rounds but we have plenty of spitballs.

The Fed Beige book is due out on Wednesday but not until 2:PM. That means Bernanke won't say anything directly about the numbers but he will know what the Beige Book says. He testifies again on Wednesday morning in front of the House.

The Fed does not have to worry about inflation as a hindrance for further action. The Consumer Price Index (CPI) for June showed prices remained unchanged. The headline number has either been flat or down for three consecutive months. That is primarily due to the declines in the energy markets. Energy accounted for a -1.4% decline in June and offset a +0.2% hike in food prices. Energy prices in the CPI are now down -3.9% year over year with food up +2.7%.

The core CPI, excluding food and energy, posted +0.2% increase for the fourth consecutive month with increases in medical care costs leading the gains.

The food component is poised for a major spike thanks to the severe drought across most of the USA. More than 66% of the corn crop has been damaged by the drought and 33% is listed by the USDA as severely impacted. Only 31% of the crop is listed as satisfactory or better. Corn prices have exploded +53% since June 18th and soybeans are next in the crop cycle with a critical period in their growth cycle over the next three weeks.

Corn Chart

Industrial Production for June rose a better than expected +0.4% compared to a decline of -0.1% in May. Analysts were expecting a rise of +0.2%. Unfortunately motor vehicles rose +1.9% while most other sectors were relatively tame. Output in the utility sector declined -1.9% for June. For the entire quarter utility production increased 14.9% thanks to the heat wave.

Overall the headline number may have been better than expected but the internal components pointed to a very slow start for Q3 and expectations are for further declines in production.

The most positive report for the day was the NAHB Housing Market Index. The July headline number rose to 35 from 29 in June. Analysts had expected the number to be flat at 29. This was the highest one-month gain in almost a decade. The internal components were very positive with buyer traffic increasing from 23 to 29. Six month expectations increased from 33 to 44. That is a 35% increase and the highest level since June 2006!

The biggest hindrance to further gains in the housing market is tight loans. Morgan Stanley surveyed the sector recently and found that the average credit score required to get a loan was 762 for a mortgage backed by Fannie or Freddie. The report pointed out that two thirds of U.S. consumers have scores below that level and therefore can't get loans.

NAHB Housing Index Chart

The economic calendar for the rest of the week will be dominated by the Fed with Bernanke getting another chance to roil the markets at 10:AM and the Beige Book possibly depressing the markets at 2:PM.

Economic Calendar

Mattel (MAT) reported earnings of 28 cents compared to 23 cents in the year ago quarter and analyst estimates of 21 cents. The company said price increases had helped margins and allowed the company to offset the coast of raw materials. Margins increased +3.4 points to 51.3%. Income rose +20% to 96.2 million. Shares of Mattel spiked +10% on the news.

Mattel Chart

Wynn Resorts (WYNN) reported earnings of $1.37 compared to analyst estimates of $1.51. The big earnings miss came on a decline in revenue from $1.37 billion to $1.25 billion. Revenue fell -12% in Las Vegas and -7% in Macau. That was the first time in three years that revenue has declined in Macau. The economic slowdown in Asia is finally hitting the high dollar consumer. Shares of WYNN rose +63 cents in afterhours.

Johnson & Johnson (JNJ) reported adjusted earnings of $1.30 compared to estimates of $1.29 but revenue declined slightly to $16.48 billion. JNJ had $2.2 billion in charges compared to income of $3.63 billion. Unfavorable currency exchange rates knocked 4.2% from total revenue. The stronger dollar and weaker euro is killing companies that do business in Europe.

State Street (STT) said its net income fell -4% due to slowdowns in the global markets. Earnings still came in at $1.01 per share and analysts were expecting 98 cents. Revenue fell -3% to $2.42 billion. Trading services revenue declined -18%. The CEO said the economic environment was "challenging" with increasing weakness in international markets. Shares of STT fell -6.4%.

State Street Chart

Goldman Sachs (GS) said net income declined -11% for Q2 to $962 million or $1.78 per share. That is less than the $1.09 billion and $1.85 in the comparison quarter. However, analysts were only expecting $1.17 per share. Goldman said weakness in international debt markets was weighing on earnings and its outlook. Investment banking revenue declined -17%, M&A -26% and underwriting revenue fell -9%. Trading in mortgage backed securities and commodities rose +37%. You would think posting such a big earnings beat would really power the stock higher but Goldman gained only 30 cents for the day. The weak comments on global business and outlook killed the initial spike in the stock.

Goldman Sachs Chart

After the bell Intel (INTC) reported earnings of 54 cents, flat with the comparison quarter and slightly above analyst estimates of 52 cents. Revenue was $13.5 billion, slightly below estimates of $13.56 billion but slightly above the $13.0 billion in the year ago quarter. The big news was a guidance warning. Intel said revenue for the second half would grow 3-5% compared to prior forecasts of high single digits. That translates into revenue of $14.3 billion for Q3, give or take $500 million, and analysts were expecting $14.6 billion. CEO Paul Otellini said "growth will be slower than we anticipated due to a more challenging macroeconomic environment." Intel shares declined slightly in afterhours trading.

Intel Chart

Yahoo (YHOO) posted earnings of 27 cents compared to estimates of 23 cents. Revenue of $1.08 billion was slightly below estimates of $1.1 billion. Yahoo's big earnings per share beat came after Yahoo bought back 30 million shares during the quarter for $456 million. Reducing the outstanding shares increases the earnings per remaining share. This is a common ploy by IBM when earnings are tight. Shares of YHOO declined slightly in afterhours after the report.

Yahoo made news yesterday when they announced Marissa Meyers, age 37, had been named CEO. That is the fifth CEO in the last five years and all prior CEOs have failed to provide the boost necessary to revive Yahoo. Meyer is now the youngest CEO of a S&P 500 company. She also announced to the press last night that she is pregnant and expecting a baby in October. She told the Yahoo board about the pregnancy in June when they made her the job offer. She said she would work through her pregnancy leave then the time came.

Meyer has been at Google for the last 13 years. She was the 20th employee hired at Google and the founders have nothing but positive things to say about her. She oversaw the development of Google Maps and Google Earth while at Google. Meyer may find it frustrating to move from working at a company with unlimited funds to a company with no funds. Getting innovation installed and operating on a shoestring budget may cause her to reconsider her decision in the months ahead. Yahoo's cash flow declined -17% in Q2.

Yahoo Chart

The Q2 earnings cycle is off and running and so far there are two clear trends. Companies are for the most part beating the drastically lowered estimates. Unfortunately they are also warning that Europe and the dollar are depressing earnings and the slowing global economy, specifically Asia is expected to produce further problems in the second half of the year.

The earnings beats coupled with the guidance warnings prevented most stocks from gaining ground on their earnings news. Traders don't know which way to move. The better than expected earnings are really just "less bad" since the estimates have been cut so far. Everyone also knew the global economy was weakening so that is also not a new development.

Should traders buy today on the less bad earnings or stay away because of the guidance warnings? I suspect traders will remain uncommitted until the next two days of earnings are known. There are still some big guns to report and traders always hold out hope for improving news.

The market rebound today was not really earnings related. The rebound came on hopes for some Fed action at month end and the sharp decline in the dollar when Bernanke left the door open on future QE action.

The dollar spiked on the initial Bernanke comments and no mention of QE but then crashed once traders realized he was leaving the door open for action in the weeks ahead.

In the charts below you can easily see how the dollar spike and crash was mirrored in the S&P for the same period.

Dollar Index Chart

S&P Chart - 15 Min

Crude Oil Chart

For Wednesday Bernanke will be the headliner but AXP, BAC, IBM, USB, EBAY and YUM will be the supporting cast. IBM should be the key. They have a great business but they are definitely going to be impacted by events in Europe and Asia. If they warn about the rest of the year most traders would believe them. Conversely, if they downplay the impact of Europe and Asia the buyers may come back to the market.

Earnings Calendar

The S&P rebounded back over the 100-day average at 1360 but the gains came to a dead stop at 1:PM once the Senate circus ended. If the S&P were to continue forward it is going to face strong resistance in the 1370-1375 range. That should be our line in the sand. As long as the S&P does not move over 1375 the market will be setting up for a sell the news event on Friday.

The S&P has dipped to 1350 twice over the last two days and was immediately bought. However, today's dip made a lower low at 1345 but it also made a higher high so technically we have an outside day and anything is possible for the rest of the week.

S&P Chart

The Dow failed to reach its 100-day average at 12,840 and the 184 point range was amazing. Volume was slightly higher at 6.2 billion shares but still light. The higher volume undoubtedly because of the shorts that loaded up in the morning and then were forced to cover on the Bernanke bounce. Even stronger resistance at 12,900 was not even touched. The Dow will be reactive to IBM, AXP, MSFT and BAC earnings. Intel was down only about a dime in afterhours so they should not be a factor.

The Dow is still in still in wait and see mode despite the broad range today. Until it powers over the 12,900 level I am still bearish.

Dow Chart

The Nasdaq also had a big range of 45 points but only ended with a gain of +13. The rebound screeched to a dead stop at resistance of 2910 and futures are slightly negative after the Intel and Yahoo earnings tonight. Traders are not likely to commit any big money until IBM and MSFT report and then they will turn in the direction of the skid.

The Nasdaq chart is the least bullish of the big three with a clear lower high compared to the left shoulder of the chart in mid June. It would take a continued rally to 2935 to exceed that level and a major move over 2980 to make a new relative high.

Nasdaq Chart - 15 min

Nasdaq Chart - Daily

The Dow Transports are not confirming the Dow move. The Transports lost -38 points when the Dow gained +78. The low oil prices should be bullish for the transports even though fuel prices have ticked up slightly over the last week. The transports are weak because shipping is weakening. FedEx and UPS have both said package volume is declining. If the transports don't begin to move higher the Dow rally is doomed.

Dow Transport Chart

I am not yet convinced the market rebound today means my bearish outlook is wrong. This was a Bernanke induced rebound when he left the door open for additional QE3. Shorts that piled on when the initial text of his comments was released were them forced to cover when the Q&A session suggested there could be actions soon. The Schumer directive that Bernanke should act and act now was a powerful image on TV. That command could keep a floor under the market regardless of how negative earnings become.

However, we are seeing the "less bad" earnings fail to push the markets lower. The better than expected results even with guidance warnings could be building confidence among investors and keeping a bid under the market.

Just remember it is not over until it is over. Greece said it needed a new emergency loan of 11 billion euros today. The earnings week is not over until the GE reports on Friday morning. That is the last Dow stock to report and market direction should appear shortly thereafter. If I were long I would probably not want to go into the weekend with profits at risk. Friday is also option expiration so anything is possible.

Enter passively, exit aggressively!

Jim Brown

Send Jim an email


New Plays

Pizza & Business Services

by James Brown

Click here to email James Brown


NEW BULLISH Plays

Papa John's Intl. Inc. - PZZA - close: 50.84 change: +1.00

Stop Loss: 48.49
Target(s): 54.75
Current Gain/Loss: unopened
Time Frame: exit prior to the July 31st earnings report (unconfirmed)
New Positions: Yes, see below

Company Description

Why We Like It:
PZZA runs a pizza delivery and carry out chain. After consolidating sideways in the $45-50 zone for over two months the stock is breaking out to record highs. I am suggesting we hop on board the PZZA bandwagon. We'll launch positions at the open tomorrow. Nimble traders can try and wait and buy a dip near $50.00, which should be new short-term support. We're putting our stop loss at $48.49 to start. Our target is $54.75. FYI: The Point & Figure chart for PZZA is bullish with a $63 target.

Suggested Position: buy PZZA stock @ (the open)

- or -

buy the Aug $55 call (PZZA1218H50) current ask $0.60

Annotated chart:

Entry on July xx at $ xx.xx
Earnings Date 07/31/12 (unconfirmed)
Average Daily Volume = 115 thousand
Listed on July 17, 2011


Verisk Analytics - VRSK - close: 50.94 change: +0.93

Stop Loss: 49.75
Target(s): 54.50
Current Gain/Loss: unopened
Time Frame: exit prior to the July 31st earnings report (unconfirmed)
New Positions: Yes, see below

Company Description

Why We Like It:
VRSK is in the business services industry. The stock has been showing relative strength with a steady trend of higher lows. Just recently shares have managed to breakout past resistance near $50.00 and close at record highs.

I am suggesting bullish positions at the open tomorrow. Nimble traders could try and buy a dip near $50.00, which should be new support. Our target is $54.50 but we'll plan to exit prior to the late July/early August earnings report.

Suggested Position: buy VRSK stock @ (the open)

Annotated chart:

Entry on July xx at $ xx.xx
Earnings Date 07/31/12 (unconfirmed)
Average Daily Volume = 874 thousand
Listed on July 17, 2011



In Play Updates and Reviews

Intraday Rebound

by James Brown

Click here to email James Brown

Editor's Note:
Stocks managed an intraday bounce off their midday lows.

Our AET trade was stopped out. FMCN was triggered.

Current Portfolio:


BULLISH Play Updates

ACI Worldwide, Inc. - ACIW - close: 44.97 change: -1.07

Stop Loss: 43.75
Target(s): 49.00
Current Gain/Loss: + 2.1%
Time Frame: exit prior to the late July earnings report.
New Positions: see below

Comments:
07/17/12 update: Our gains in ACIW are fading with today's -2.3% decline. The stock has closed under the 10-dma again and looks poised to retest support near $44.00. My worries that ACIW might be forming a short-term bearish double top are getting bigger. Readers may want to exit early but there is still a chance ACIW bounces at $44 again. I am not suggesting new positions. Don't forget that we want to exit prior to the late July earnings report (the last week of July).

current Position: Long ACIW stock @ $44.05

07/03/12 new stop loss @ 43.75
06/29/12 triggered @ 44.05

Entry on June 29 at $44.05
Earnings Date 07/26/12 (unconfirmed)
Average Daily Volume = 318 thousand
Listed on June 27, 2011


Extra Space Storage - EXR - close: 32.22 change: +0.57

Stop Loss: 29.99
Target(s): 33.50
Current Gain/Loss: + 3.4%
Time Frame: exit prior to the late July earnings report
New Positions: see below

Comments:
07/17/12 update: EXR displayed some relative strength today. Its +1.8% gain pushed the stock to another new high. Cautious traders might want to consider a stop loss closer to the $31 level.

Our target is $33.50 but we'll plan to exit prior to the late July earnings report.

Suggested Position: Long EXR stock @ $31.15

07/09/12 triggered @ 31.15

Entry on July 09 at $31.15
Earnings Date 07/26/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on July 07, 2011


IdaCorp. - IDA - close: 43.18 change: -0.17

Stop Loss: 41.90
Target(s): 45.00
Current Gain/Loss: + 0.1%
Time Frame: exit prior to the early August earnings report
New Positions: see below

Comments:
07/17/12 update: Bingo! Yesterday I suggested looking for a dip near support at $43.00 as a new entry point. IDA provided that dip midday. Actually shares might retest the $43 area again tomorrow. Our multi-week target is $45.00.

current Position: Long IDA stock @ $43.15

07/13/12 triggered @ 43.15

Entry on July 13 at $43.15
Earnings Date 08/02/12 (unconfirmed)
Average Daily Volume = 217 thousand
Listed on July 11, 2011


Lennar Corp. - LEN - close: 31.15 change: -0.24

Stop Loss: 29.49
Target(s): 34.50
Current Gain/Loss: - 0.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
07/17/12 update: LEN seems to be consolidating sideways under recent resistance near $32.00. Readers may want to wait for a breakout past $32.00 before initiating new positions.

Earlier Comments:
The most recent data listed short interest at almost 22% of the 161 million share float. LEN could see a short squeeze if it shows any strength. FYI: The Point & Figure chart for LEN is bullish with a long-term $46 target.

current Position: Long LEN @ $31.40

- or -

Long Aug $32 call (LEN1218H32) Entry $1.57

07/13/12 triggered @ 31.40

Entry on July 13 at $31.40
Earnings Date 09/12/12 (unconfirmed)
Average Daily Volume = 7.2 million
Listed on July 12, 2011


Prudential Financial - PRU - close: 48.65 change: +0.30

Stop Loss: 47.49
Target(s): 53.00
Current Gain/Loss: unopened
Time Frame: exit prior to the Aug. 1st earnings report.
New Positions: Yes, see below

Comments:
07/17/12 update: Shares of PRU were upgraded this morning but the pop on this news didn't last very long. Traders did buy the dip intraday and now PRU looks poised to rally back above the $49.00 level again.

I am suggesting a trigger to launch positions at $49.50. Please note that the $50.00 level could still be round-number resistance so more conservative traders may want to use a trigger above the $50.00 mark. Our target is $53.00 but we'll plan to exit ahead of the August 1st earnings report.

Trigger @ 49.50

Suggested Position: buy PRU stock @ (trigger)

- or -

buy the Aug $50 call (PRU1218H50)

Entry on July xx at $ xx.xx
Earnings Date 08/01/12 (confirmed)
Average Daily Volume = 3.0 million
Listed on July 14, 2011


BEARISH Play Updates

Focus Media Holdings - FMCN - close: 18.01 change: -0.74

Stop Loss: 20.10
Target(s): 15.25
Current Gain/Loss: + 2.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
07/17/12 update: We didn't have to wait very long for FMCN to hit our trigger. Many of the Chinese stocks underperformed today. Shares of FMCN plunged from $19.00 to $16.80 this morning before paring its losses. Our trigger to open bearish positions was hit at $18.40. The big bounce off its lows is a bit concerning. It's worth nothing that the weakness today did indeed create a new P&F chart sell signal that now points to a $10 target. If this bounce continues then look for short-term resistance near $19.00.

Readers will want to consider limiting the size of their positions since FMCN can be such a volatile stock (or just use the options to limit how much capital you have exposed).

current Position: short FMCN stock @ $18.40

- or -

Long Aug $18 PUT (FMCN1218T18) Entry $1.50

Entry on July 17 at $18.40
Earnings Date 05/29/12
Average Daily Volume = 2.2 million
Listed on July 16, 2011


Groupon, Inc. - GRPN - close: 7.21 change: -0.46

Stop Loss: 9.05
Target(s): 6.25
Current Gain/Loss: +14.2%
Time Frame: exit prior to the early August earnings report
New Positions: see below

Comments:
07/17/12 update: GRPN continues to underperform. The stock lost another -5.9% today and set a new closing low. Readers may want to tighten their stop loss and cautious traders might want to just take profits now.

I'm not suggesting new positions.

*Small Positions*

current Position: short GRPN stock @ $8.40

- or -

Long Aug $8.00 PUT (GRPN1218T8) Entry $0.80

07/12/12 new stop loss @ 9.05

Entry on July 09 at $8.40
Earnings Date 08/08/12 (unconfirmed)
Average Daily Volume = 8.1 million
Listed on July 07, 2011


Home Inns & Hotels Management - HMIN - close: 18.28 change: -1.03

Stop Loss: 20.25
Target(s): 18.00 & 15.50
Current Gain/Loss: + 6.7%
Time Frame: exit prior to the Aug. 9th earnings report
New Positions: see below

Comments:
07/17/12 update: The rally attempt in HMIN failed and shares succumbed to the weakness hitting many of the Chinese stocks today. Shares closed down -5.3%. This looks like a new bearish entry point (with our target at $15.50).

HMIN hit our first target at $18.00 on July 12th.

Our second target is $15.50.

Earlier Comments:
Readers may want to keep their position size small or use the options to limit their risk. The most recent data listed short interest at 17% of the 24.2 million share float.

Suggested Position: short HMIN stock @ $19.60

- or -

Long Aug $20 PUT (HMIN1218T20) Entry $1.70

07/12/12 new stop loss @ 20.25
07/12/12 1st target hit @ 18.00 (+8.2%)
1st target hit @ 18.00, option bid @ $2.50 (+47.0%)*
(option exit price is an estimate since the option did not trade at the time our first target was hit)
07/10/12 triggered @ 19.60

Entry on July 10 at $19.60
Earnings Date 08/09/12 (confirmed)
Average Daily Volume = 284 thousand
Listed on July 09, 2011


Harley-Davidson - HOG - close: 43.84 change: +0.04

Stop Loss: 45.25
Target(s): 40.25
Current Gain/Loss: + 0.0%
Time Frame: exit prior to the Aug. 1st earnings
New Positions: see below

Comments:
07/17/12 update: Hmm... HOG is just not cooperating. Shares have been hovering near the $50.00 level for three and a half days. On one hand the fact that shares did not bounce with the market today is bearish. On the other hand HOG is attached to this support near $50 and the 200-dma. Readers may want to wait for confirmation of the down trend and look for a new drop under $42.90 before launching positions.

We do not want to hold over the Aug. 1st earnings report. FYI: The Point & Figure chart for HOG is bearish with a $35.00 target.

current Position: short HOG stock @ $43.86

- or -

Long Aug $42 PUT (HOG1218T42) Entry $1.62

Entry on July 16 at $43.86
Earnings Date 08/01/12 (confirmed)
Average Daily Volume = 2.2 million
Listed on July 14, 2011


Riverbed Tech. - RVBD - close: 13.85 change: -0.16

Stop Loss: 15.10
Target(s): 12.50
Current Gain/Loss: + 4.5%
Time Frame: exit prior to the July 24th earnings report
New Positions: see below

Comments:
07/17/12 update: As expected the bounce in RVBD is losing steam. Shares underperformed the market with a -1.1% decline. I would not launch new positions at this time. The current challenge for the bears is short-term support near $13.30. Keep in mind that we don't have much time left. RVBD is due to report earnings on July 24th.

current Position: short RVBD stock @ $14.50

- or -

Long Aug $14 PUT (RVBD1218T14) Entry $1.16

07/12/12 new stop loss @ 15.10

Entry on July xx at $ xx.xx
Earnings Date 07/24/12 (confirmed)
Average Daily Volume = 3.4 million
Listed on July 09, 2011


TRW Automotive - TRW - close: 35.34 change: +0.30

Stop Loss: 36.35
Target(s): 30.50
Current Gain/Loss: + 1.0%
Time Frame: exit prior to the July 31st earnings report
New Positions: see below

Comments:
07/17/12 update: TRW is little changed for the day with a 30-cent bounce. The larger pattern remains bearish. The key level to watch is resistance at the $36.00 mark.

current Position: short TRW stock @ $35.38

- or -

Long Aug $35 PUT (TRW1218T35) Entry $1.90

07/12/12 new stop loss @ 36.35

Entry on July 11 at $35.38
Earnings Date 07/31/12 (confirmed)
Average Daily Volume = 949 thousand
Listed on July 10, 2011


CLOSED BEARISH PLAYS

 

Aetna Inc. - AET - close: 38.66 change: +0.63

Stop Loss: 38.55
Target(s): 35.10
Current Gain/Loss: - 0.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/17/12 update: AET continues to bounce and shares have broken away from short-term resistance near $38.00. The stock hit our stop loss at $38.55 closing this trade.

closed Position: short AET stock @ $38.45 exit $38.55 (-0.3%)

- or -

Aug $38 PUT (AET1218T38) Entry $1.65 exit $1.05 (-36.3%)

07/17/12 stopped out at $38.55
07/12/12 new stop loss @ 38.55
07/03/12 new stop loss @ 39.55
07/03/12 triggered @ 38.45

chart:

Entry on July 03 at $38.45
Earnings Date 07/31/12 (unconfirmed)
Average Daily Volume = 6.0 million
Listed on June 30, 2011