Option Investor
Newsletter

Daily Newsletter, Tuesday, 6/21/2016

Table of Contents

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

Market Wrap

Slowly Going Nowhere

by Jim Brown

Click here to email Jim Brown

Traders took a nap during the Yellen testimony as they wait the next round of Brexit polls on Wednesday.

Market Statistics

Yellen said nothing of importance that we have not heard before. Yes, China is facing increased challenges. Yes, a UK vote to exit the EU could have significant economic impact resulting in a risk off move in the markets. She also said the Fed was not relying on forward guidance to direct the markets. Since they have been nearly 100% wrong, that is probably a good thing. She was asked when the Fed would begin to reduce their $4 trillion balance sheet. She said there was no timetable for liquidating those securities.

The market seemed to ignore her comments although there was a minor bout of selling at 11:20 but it just bought the Dow back into the narrow range for the day. The Dow's range for the day was only 78 points and it closed with a minimal 25-point gain.

There were no economic reports of note today. The Risk of Recession for May rose from 17% to 20%. That is the probability of the nation falling into recession over the next six months. Yawn.

On Wednesday we will endure another two hours of Yellen testimony where she tries to avoid giving specific answers that can be held against her in future sessions. However, you never know when she will suffer from foot in mouth disease and it has happened in the past. A stray off the cuff remark can have significant impact if she deviates from the established script.


What is not on the calendar above is the four surveys due out tomorrow on the Brexit vote. There were several surveys out today but they were inconclusive with different results in each. The Survation poll showed the stay camp had lost some momentum but it was still slightly ahead at 44.9% compared to the leave camp at 43.8%. The prior Survation poll published on Sunday had it 45% stay and 42% leave. The leave camp was picking up that momentum the stay camp was losing. The bottom line is that the vote will be very close.

The FT Poll of Polls is showing an average of 44% remain, 45% leave.

Recent Polls

There will not be any preliminary results published as in a general election. The exit polls are normally reported at 10:PM UK time, which is 5:PM ET. According to MarketWatch, here is the general timetable for the results in New York time.

Thursday Morning:
2:00 AM Polling stations open.
5:00 PM Polling stations close. No exit polls.
6:30 PM First announcements on voter turnout.
7:30 PM Results expected from the first counting areas.
11:00 PM Results from half of the counting areas.
Friday Morning:
12:00 AM About 80% of results will be counted.
2:00 AM All vote counting should be completed.
3:00-5:00 AM Official results expected to be reported.

Because there are no exit polls, hedge funds and investment banks have commissioned private exit surveys to give them a head start on trading. That means we should know what the result is by watching the S&P futures on Thursday night.

Stock News

After the close Tesla (TSLA) offered to buy SolarCity (SCTY) for $2.8 billion. Tesla said it offered between $26.50 and $28.50 for SolarCity, which represents a 25-35% premium to Tuesday's close. Elon Musk owns 19% of SolarCity but said he would recuse himself from voting on the deal. Musk said Tesla wanted to expand its clean energy business and the battery business would combine well with the solar business since you only get the real benefit from solar if you have a huge battery pack to store that energy. SCTY shares spiked in afterhours from $21 to $26 but faded back to $25. However, Tesla shares fell -10% from $220 to $195 and shed about $3.7 billion in market cap. Musk was probably not expecting that.



FedEx (FDX) reported adjusted earnings of $3.30 compared to estimates for $3.26. Revenue of $12.98 billion also beat estimates for $12.83 billion. However, the company said it plans to spend $5.1 billion to expand its ground network and buy more aircraft. As a result, they projected earnings of $11.75-$12.25 for the full year and analysts were expecting $12.17. They said the growth in online shopping was straining the existing shipping network. Shares dropped $2 in afterhours.


Adobe Systems (ADBE) reported 71 cents compared to estimates for 68 cents. Record revenue rose 20% to $1.4 billion and matched analyst estimates. Digital media revenue rose 26% to $943 million. Creative revenue rose 37% to a record $755 million. Creative Cloud annualized recurring revenue rose $285 million to $3.41 billion. Adobe Marketing Cloud revenue rose 18% to a record $385 million. Overall operating income rose +78%. Despite the good quarter they guided for Q2 for revenue of $1.42-$1.47 billion and earnings of 69-75 cents. Analysts were expecting $1.47 billion and 71 cents. Shares fell -5% in afterhours.


KB Homes (KBH) reported earnings of 17 cents that beat estimates for 16 cents. Revenue rose 18% to $811 million and beat estimates for $753 million. Deliveries rose 30% to 2,329 homes. The average selling price rose 2% to $346,700. Backorders rose 14% to $1.83 billion. Homes in the backlog rose 10% to 5,205. Net order value in the quarter rose 14% to $1.2 billion. Net orders rose 8% to 3,249. The cancellation rate fell from 25% to 21%. They ended the quarter with $278 million in cash and inventories of $3.53 billion. They controlled 47,283 lots of which 82% were owned. They repurchased 8.4 million shares for $85.9 million. Shares rose about 25 cents.


Hewlett Packard (HPQ) raised guidance for Q2 to 43-46 cents compared to analyst estimates for 39 cents. They reaffirmed full year guidance at $1.59-$1.69 and analysts were expecting $1.59. They see free cash flow of $2.0-$2.3 billion with net capital expenditures of $500 million. The company said it plans to use the gains from the divestiture of HPE to invest in the rapidly changing printer business. They plan to reduce inventory of printers and toner cartridges by $450 million over the next two quarters. Shares lost 40 cents on the news.


Carmax (KMX) fell -5% after reporting earnings of 90 cents on revenue of $4.13 billion. Analysts were expecting 92 cents on $4.19 billion. Sales of cars had slowed and credit was starting to be an issue. However, they did see third-party finance fees rise 30%, as they laid off some weaker credits to other finance plans. Used car prices were flat at $19,858 on average but wholesale prices were down -3% to $5,268. Overhead expenses rose and profit margins declined.


Lennar (LEN) shares spiked at the open after a big earnings beat but collapsed to a 1% loss. The company reported earnings of 95 cents that beat estimates for 87 cents. Revenue rose from $2.38 billion to $2.75 billion. Home deliveries rose 12% to 6,724 homes. One analyst speculated Lennar could be looking to acquire KBH.


Crude oil futures expired at the close at $49.95. The new August contract opened in the afterhours session at $50.29. That is not likely to hold over $50 unless the Brexit vote is to remain in the UK. An exit vote will cause low information traders to expect a decline in demand. The dollar will also rocket higher on an exit vote and that will push commodities lower.


Markets

There is really nothing intelligent to say about market direction other than watch the Brexit polls. The market will react to the polls released on Wednesday and we cannot do anything about it but watch.

However, the market does appear to be pricing in a vote to stay in the EU. If this upward bias continues on Wednesday and Thursday it could actually steal some of the impact of that vote. We could see an immediate rally on a stay vote that is met with a sell the news event.

I know it is impossible to actually predict anything. If we think the market is pricing in a stay vote then smarter institutional investors may have already figured that out and that is how we get a sell the news event. You could carry this to extremes like an old Abbot and Costello skit but since there is no real answer until we get to Friday we just have to go with the flow or wait on the sidelines.

The S&P failed at 2,100 on Monday and crept a little closer today with a 5 point gain to 2,088. However, that 2,100 and 2,116 resistance remains strong. If we did get an exit vote, the support at 2,040 is also strong. Until that range breaks in one direction of the other we are just passing time.


The Dow did not make it back to the 18,000 resistance on Monday despite the +270 gain at the open. It also crept a little higher today to close at 17,829 but the effort was lackluster. The Dow traded in a narrow 78-point range and closed only 29 points off the lows. The leaders were a mixed bag with Microsoft the biggest gainer followed by Apple, Chevron and Goldman. Boeing was the biggest loser despite signing a reported $25 billion order with Iran and a possible $4 billion order to build (10) 747-8 freighters for AirBridgeCargo.



The Nasdaq struggled and traded in negative territory much of the day only to gain 6 points at the close. The biotech sector was again the biggest drag. The Nasdaq is holding over the 4,800 level but just barely. Resistance at 4,968 remains the next target but that is 125 points away.



The weakest major index for the day was the Russell 2000 with a loss of 4 points. This is the early stages of the index rebalance that is coming on Friday as well as the weakness in biotechs. The stocks being deleted from the Russell are being shorted by speculators in hopes of getting ahead of the rebalance decline.


If you do not have to be in the market the rest of the week it would be a good idea to take a trading vacation and come back on Monday when the direction may be known and volatility should be lower. Volume was very low at just over 5 billion shares. All the smart money iw waiting on the sidelines.

At this point the market direction the rest of the week is a daily coin toss unless the Wednesday polls suddenly begin to widen with a clear outcome in sight. Even then, we cannot be sure what the market will do once the event occurs and whether or not the result will be what the polls predicted. I personally believe they will remain in the EU because I do not think there are that many people in the UK that are willing to vote in a recession. However, I cannot believe voters in the U.S. selected the two current candidates so obviously my logic does not reflect reality.

 

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New Plays

No Added Risk

by Jim Brown

Click here to email Jim Brown
Editor's Note

When there is a looming unknown in the market, sometimes the best approach is to not be in the market. I looked long and hard today for a new position that I felt comfortable with ahead of the Thursday Brexit event. I am sorry to say I could not find one. The big short squeeze on Monday threw a lot of charts into disarray. The impending Russell rebalance on Friday is going to result in some volatility in the small cap sector that we play.

I have no problem jumping into traffic if I have a stock I feel needs to be added to the portfolio but I could not find one today given the approaching market risk. As I have said before I want to get out of the mandatory daily play because every day is not a buying opportunity.


NEW BULLISH Plays

No New Bullish Plays


NEW BEARISH Plays

No New Bearish Plays



In Play Updates and Reviews

Storm Clouds Ahead

by Jim Brown

Click here to email Jim Brown

Editors Note:

Traders did nothing today as they endured the Yellen testimony and waited on the Thursday hurricane. The Dow gained a whopping 25 points and the S&P gained +6. There was no enthusiasm as everyone waited patiently for Yellen to say something to fire up the market. Instead she calmed the markets by failing to directly answer any specific questions. She definitely had her political mindset in place.

The Brexit polls showed only a minor gain for the remain camp at 44.9% compared to the leave camp at 43.8%. There are four more polls on Wednesday and then the tempest hits on Thursday.

The market appears to be pricing in a remain win so a Brexit win could be ugly in the short term.




Current Portfolio





Current Position Changes


QURE - Uniqure

The short position on QURE was opened at $8.00


Profit Targets

Check the graphic above for any profit stops in green. We need to always be prepared for a profit exit at resistance.


Stop Loss Updates

Check the graphic above for any new stop losses in bright yellow. We need to always be prepared for an unexpected decline.


BULLISH Play Updates


CSII - Cardiovascular Systems -
Company Profile

Comments:

No specific news. Another support test at the open and CSII passed with a rebound and 11 cent gain.

Original Trade Description: June 13th.

Cardiovascular Systems, a medical technology company, develops, manufactures, and markets devices to treat vascular diseases in the United States. It offers peripheral arterial disease products, including Stealth 360° Peripheral Orbital Atherectomy System (OAS), Diamondback 360 Peripheral OAS, Diamondback 360 60cm Peripheral OAS access device, and the 4 Diamondback 360 French 1.25 Peripheral OAS access device products for treating a range of plaque types, such as calcified plaque, in leg arteries both above and below the knee and address many of the limitations associated with existing surgical, catheter, and pharmacological treatment alternatives, as well as Diamondback 360 Coronary OAS, a catheter-based platform to facilitate stent delivery in patients with coronary artery disease.

In the last quarter revenues rose 7%, gross margin rose from 77.8% to 80.4% and operating expenses decline -5%. They expect to reduce expenses by another 7% in the current quarter. Coronary revenues rose +31%.

With more than 18 million Americans suffering from Peripheral Artery Disease (PAD), which is the accumulation of plaque in the peripheral arteries, their market is booming. Coronary Artery Disease is a leading cause of death in the USA. With more than 40% of the population already diagnosed and probably another 20% undiagnosed the market for their products is also growing rapidly. With the baby boomers retiring and these health problems becoming more life threatening as they age the number of "interventions" as my cardiologist calls them is growing rapidly. Stenting any patient with any symptoms of heart disease is becoming more common than tonsillectomies for children. More than 600,000 Americans die from heart disease annually. That is equivalent to 6 jumbo jet crashes every day.

In Q1, Broadfin Capital added a 1.46 million share stake in CSII or 4.47%. Point72 Asset Management added 102,000 shares. Shares have broken out of resistance at $16 and continue to creep higher.

Earnings are August 3rd.

There was only a minor decline today in a very weak market.

Position 6/14/16:

Long CSII shares @ $18.16, see portfolio graphic for stop loss.

No option recommended because of wide spreads.



HPE - Hewlett Packard Enterprise - Company Profile

Comments:

No specific news. Nice gain to a new high.

Original Trade Description: June 2nd.

Hewlett Packard Enterprise was spun off from Hewlett Packard (HPQ) to be the high growth segment of the company. The remaining HPQ was the slower growing PC and printer company.

HPE reported adjusted Q1 earnings of 42 cents and in line with estimates. Revenue of $12.711 billion would have been up +4% on a constant currency basis. Analysts were expecting $12.419 billion.

For the current quarter, HPE guided to earnings of $1.10 to $1.14. For the full year, they expect $1.85-$1.95 and that was more than analysts expected at $1.89. They increased free cash flow +101% to $1.1 billion for the quarter.

The good news came from their plans for the cash flow. HPE expects to generate $2.0-$2.2 billion in free cash flow in 2016. They are receiving $2 billion from the Tsinghua transaction which closed in early May and the money will be used for share repurchases. In 2016, HPE is increasing its commitment to return 100% of the free cash flow to investors in dividends and buybacks.

This means over the next couple of months we should see significant share activity as funds position themselves to be the beneficiaries of all this buyback/dividend activity that could exceed $4 billion in 2016. $2.5 billion of that is in an "accelerated" buyback program. The board authorized another $3 billion in buybacks to bring the current authorization to $4.8 billion.

They also announced a tax-free spinoff of their services division to Computer Sciences Corporation (CSC), which is expected to close in March 2017. This will produce another $8.5 billion in value to HPE shareholders in the form of $4.5 billion in equity in the combined company and $1.5 billion in a cash dividend and the removal of $2.5 billion in debt from HPE.

Earnings Aug 23rd.

HPE shares have shaken off their May weakness and closed today at a historic high. I am recommending we buy this stock in anticipation of additional fund investors moving in ahead of future dividends, buybacks and the spinoff.

Position 6/3/16:

Long HPE shares @ $18.40, see portfolio graphic for stop loss.

Optional:

Long August $20 call @ 40 cents. No stop loss.



NVAX - Novavax - Company Profile

Comments:

No specific news. Minor decline.

Original Trade Description: June 14th.

Novavax, Inc., a clinical-stage vaccine company, focuses on discovering, developing, and commercializing recombinant nanoparticle vaccines and adjuvants. The company produces its vaccines using its proprietary recombinant nanoparticle vaccine technology. Its product pipeline includes respiratory syncytial virus (RSV) vaccine candidates for elderly and maternal immunization that are in Phase III clinical trials, as well as pediatric RSV candidate, which is in Phase I clinical trial; seasonal quadrivalent influenza and pandemic H7N9 vaccines, which are in Phase II clinical trials; vaccine candidate against Ebola Virus that is Phase I clinical trial, as well as combination respiratory vaccine candidate and seasonal influenza vaccine candidate that is in pre-clinical trial; and rabies G protein vaccine candidate, which is in Phase I/II clinical trial. The company also has pre-clinical stage programs for various infectious diseases, including the Middle East respiratory syndrome coronavirus; and develops technology for the production of immune stimulating saponin-based adjuvants.

Novavax is using a new proprietary model for vaccines that does not require the long incubation time and the annual reformulation. They are far along in their trials compared to other companies and these vaccines can be given to children.

The top line State III data for the RSV F vaccine is due out in Q3 and they already have a fast track designation from the FDA. The drug could be commercially available by mid-2017. This drug could generate $1 billion in sales. While there is always the potential for a trial to fail, this initial drug has already progressed through all the early and mid stage trials. Novovax also has $434 million in cash so plenty of liquidity to continue the process.

Earnings August 9th.

Analysts are predicting a 100% gain for NVAX over the next year and that is attracting new investors today. With their advanced pipeline they could be an acquisition target. Shares only pulled back about 50 cents in the market weakness over the last three days and they posted a gain in today's weak market.

Position 6/15/16:

Long NVAX shares @ $6.65, see portfolio graphic for stop loss.

No options recommended because of price.



UIS - Unisys Corp - Company Profile

Comments:

No specific news. Unisys cannot seem to get any traction. As long as it does not break support the next move should be higher. It looks like it is trying to put in a higher low.

Original Trade Description: June 6th.

Unisys Corporation provides information technology services worldwide. It operates through two segments, Services and Technology. The Services segment provides cloud and infrastructure services, application services, and business process outsourcing services. The Technology segment designs and develops software, servers, and related products. It offers a range of data center, infrastructure management, and cloud computing offerings for clients to virtualize and automate data-center environments. This segments product offerings include enterprise-class servers, such as the ClearPath Forward family of fabric servers; the Unisys Stealth family of security software; and operating system software and middleware. The company serves commercial, financial services, public sector, and the U.S. federal government through direct sales force, distributors, resellers, and alliance partners.

Unisys has morphed in its 143 years of operation into a global cloud, IT and infrastructure services company. That is a long way from the original company that produced the first commercially viable typewriters and adding machines under the name Burroughs, Sperry and Remington Rand.

Today one of their main products is Unisys Stealth for protection of digital and physical assets. Stealth Mobile protects secur emobile applications and Stealth Cloud expands that protection to the cloud.

Just before their recent earnings they announced a deal with Mitel to provide the Unisys stealth technology to protect their 60 million mobile and enterprise customers. Business is booming but it has been a long time coming. In Q1 revenue declined -3% and services declined -2%. However, the company said its "lumpy" quarter-to-quarter strategy was changing with a stronger focus on the Stealth products and their rapid wide scale adoption. They expect the amount of money spent on cybersecurity to more than double from the $75 billion in 2015 to more than $170 billion in 2020. The cost of data breaches will rise to $2.1 trillion annually by 2019 and more than four times the cost in 2015.

Unisys has been a stealth company for the last year with shares declining from $30 to $7. With their new products and the rapid acceptance of those products their stock is rebounding off the three month consolidation pattern.

Earnings July 28th.

Shares moved over resistance at $8.25 last week and are preparing to move higher. The big decline in March was a $190 million offering of convertible senior notes due 2021 with a conversion price of $9.76. That was a 20% premium to the stock price post announcement.

If the current rebound continues the next material resistance is $12.

Position 6/7/16:

Long UIS shares @ $8.47, no initial stop loss.

Optional:

Long October $9 call @ 80 cents. No stop loss.




BEARISH Play Updates

GOGO - Gogo Inc - Company Profile

Comments:

No specific news. Still trying to avoid a new historic low.

Original Trade Description: June 11th.

Gogo provided communication services to the commercial and business aviation markets in the U.S. and internationally. They provide in-flight connectivity and wireless digital entertainment solutions to commercial airline passengers to and from North America.

Gogo has had a rough few months as airlines complained about the service and some removed the Gogo service and replaced it with a competitor.

On May 23rd Gogo announced the pricing of $525 million in senior secured notes. On May 26th the stock spiked 20% after the company filed a notice with the SEC saying an unspecified airline had requested a proposal for service to cover its large domestic fleet. Under the proposal Gogo would provide Wi-Fi to a "meaningful" portion of the domestic fleet that is is currently serving. Gogo cancels the $525 million debt sale.

On June 3rd shares plunge as the unspecified airline turns out to be American Airlines and the proposal is far less than expected. American picked ViaSat (VSAT) to provide internet access on 100 new Boeing jets. Gogo updates its SEC filing to say it would provide service on 140 American planes and continue service on 400 others. However, American retained the option to remove Gogo equipment on any American planes at any time. Gogo said it now expects American to remove its equipment on the "mainline" planes over the next several years. American said it was planning on upgrading the service on its planes but had not picked a successor. That means the 100 ViaSat planes will be a live test and will likely replace Gogo. ViaSat provides 12 mbps of bandwidth to each seat while Gogo provides 70 mbps for the entire plane and that bandwidth has to be shared by all passengers. There is a significant difference.

On June 9th Gogo reinstates the $525 million debt offering and priced it at 12.5% after Moody's rated it a B3-PD (Probability of Default) credit.

Earnings Aug 4th.

The future is not bright for Gogo. They are trying to produce a faster service through satellite connections rather than ground based systems but the testing and roll out is not going smoothly. Several years of hostility between passengers and carrier over the slow bandwidth has poisoned the relationships and ViaSat appears poised to take over the market.

Shares closed at a historic low on Friday at $8.97 and the downward trend is likely to continue.

Position 6/13/16:

Short GOGO shares @ $8.99, see portfolio graphic for stop loss.

I am not recommending an option but the August $8 put is $75 cents.



INSY - Insys Therapeutics - Company Profile

Comments:

No specific news. Opening gap gave us a better fill and then it was erased to close with a loss.

Original Trade Description: June 18th.

Insys Therapeutics, Inc is a specialty pharmaceutical company that develops and commercializes supportive care products. The company markets Subsys, a sublingual fentanyl spray for breakthrough cancer pain in opioid-tolerant cancer patients in the United States. Its lead product candidate is Syndros, an orally administered liquid formulation of dronabinol. The company is also developing Cannabidiol Oral Solution, a synthetic cannabidiol for childhood catastrophic epilepsy syndromes; and other product candidates, including other dronabinol line extensions and sublingual spray product candidates.

Two former employees were arrested on June 9th for allegedly participating in kickback schemes involving doctors who prescribed the company's main drug, Subsys, a pain medication containing fentanyl. This is the drug that killed Prince, Joan Rivers and Michael Jackson. The two employees paid doctors thousands of dollars to participate in sham educational programs in order to induce the doctors to prescribe millions of dollars worth of the Subsys product. In 2014 alone the employees paid one doctor $147,000 and another $112,000 in speaker fees to give a talk at one of their "educational" programs. Those doctors were two of the largest prescribers of the drug in the USA. The scheme was discovered in November 2015. Subsys revenue in 2015 was $330 million. In 2014 a record 28,000 people died from subscription opioid addiction.

Earnings August 4th.

Clearly, this will have a long-term impact on Insys since there will be liabilities associated with the revenue generated from the scheme. The company is under attack by Preet Bharara, U.S. Attorney for New York. He has brought down dozens of other companies over the last several years for various types of misdealing.

Position 6/20/16:

Short INSY shares @ $13.06, see portfolio graphic for stop loss.

No options recommended because of wide spreads and high prices.



JBLU - JetBlue - Company Profile

Comments:

No specific news. Opening gap higher erased to close back near the 17-month low.

Original Trade Description: June 15th.

JetBlue Airways Corporation, a passenger carrier company, provides air transportation services. As of December 31, 2014, the company operated a fleet of 25 Airbus A321 aircrafts, 130 Airbus A320 aircrafts, and 60 Embraer E190 aircrafts. It also served 93 destinations in 28 states in the United States, the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, and 19 countries in the Caribbean and Latin America.

Business was good until all the airlines began adding capacity at the same time. The discount airlines were particularly aggressive. In order to fill that extra capacity they increased the number of discount seats and overall pricing went down. Now they have plenty of passengers but their revenue per mile has declined. They are still making money but with rising fuel prices they are going to have to raise ticket prices and that will dampen demand.

Last week JetBlue said May traffic measured in revenue passenger miles of (RPMs) rose +10.7% from 3.47 billion to 3.84 billion. Over the prior 12 months available seat miles (ASMs) rose 12.1% to 4.54 billion. The load factor or the percentage of seats filled by passengers declined from 85.7% to 84.6% because the rapid expansion of capacity outweighed the traffic growth generated by the discount tickets. That means the revenue per available seat mile (RASM) declined -7%.

The airline lowered guidance for RASM to decline 7.5% to 8.5% for Q2 compared to prior guidance for a 7% decline. They also lowered ASM growth from 8.5%-10.5% to 8.0% to 9.5%. They do not need to add additional capacity if they cannot fill the seats they already have.

Factor in the strong dollar, rising fuel prices and the increased terrorist activity and the outlook for profits is declining. Since the Belgium airport attack airline traffic has slowed. People do not want to be blown up while waiting in a security line. Add in the Zika virus that has disrupted traffic to Latin America and the Caribbean and that is another reason seats are empty. On the positive side JetBlue was accepted by the DOT to operate scheduled flights to Cuba. However, compared to their total capacity those few weekly flights will not move the needle.

Earnings July 26th.

JBLU shares have already declined significantly. They fell sharply in early May when they reported April traffic numbers. When the numbers did not improve in May they declined again starting on June 10th. JBLU was a rocket ship when it rallied from $5 to $24 in 2015 but we are headed for a round trip with shares back at $16.66 today. It has been a series of disappointing events one after another. I think we will see single digits again soon because of all the events impacting traffic and earnings I discussed above.

Position 6/16/16 with a JBLU trade at $16.50

Short JBLU shares @ $16.49, see portfolio graphic for stop loss.

Optional

Long September $16 put @ $1.15, no initial stop loss.



QURE - UniQure - Company Profile

Comments:

No specific news. Closed at a new low.

Original Trade Description: June 20th.

UniQure is a biopharmaceutical company, engages in the discovery, development, and commercialization of gene therapies in the Netherlands. The company offers Glybera, a gene therapy product for the treatment of patients with lipoprotein lipase deficiency. They have multiple drugs in development for a variety of illnesses.

In their recent earnings they reported a loss of 92 cents that missed estimates for a loss of 82 cents. Revenue of $4.3 million did beat estimates for $2.9 million. This is a very small company and since the ASCO conference their shares have been in crash mode.

Losses appear to be accelerating and they lost $22.69 million in Q1. Their market cap is only $204 million.

There was no gap open today despite the major gap higher in the market. They closed at a historic low at $8.20. They have only been public for 2 years and from the chart today it looks like they are going significantly lower. Normally when a stock hits the prior historic low there is a rebound or at least a pause. Neither occurred and that suggests it will go lower.

Position 6/21/16 with a QURE trade at $8.00

Short QURE shares @ $8, initial stop loss $9.25.

No options recommended.





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