Good evening traders. EXM hit our target this morning and we are flat for a +8.4% gain. QQQQ also gave us what we were looking for today by trading down to its 20-day SMA. We closed this position for a small loss. The question now is what will happen after the FOMC announcement tomorrow. If the language changes it could spark some serious selling, but if the language remains consistent it may give the markets an excuse to continue this rally. I am not releasing new plays tonight ahead of the announcement. Please stay nimble with any positions tomorrow as there is bound to be some volatility in the afternoon beginning at about 2:15 PM sharp. Our new long positions struggled today but I don't want to panic out of the positions just yet. I am expecting rebounds in both of them. Good luck.
BULLISH Play Updates
Enzo Biochem, Inc. - ENZ - close 6.03 change -0.46 stop 5.74 *NEW*
ENZ sold off today closing lower -7%. The stock blew right through its 20-day SMA and ended up closing right on its 50-day SMA, putting the stock right back in the bull flag that has been intact since early March. The Accumulation/Distribution studies on ENZ remain bullish. The volume on declining days is still not as high as the volume on advancing days which tends to be a more bullish sign. After looking more closely at the recent bull flag the lows are $5.79 but our stop is $5.91. I suggest readers move their stops down to $5.74 to prevent from getting shaken out of the trade if there is more volatility in the coming days. Hopefully you have used small position size as we have been suggesting because of the more aggressive trade set-up. I suggest readers not panic out of positions. I want to see if ENZ can reverse from here and at that time we will look for new exit targets and stops, etc.
*NOTE: Please use small position size to limit risk as I consider this to be an aggressive play. The stock's average daily volume is 160,000 shares which can add to volatility.*
Current Position: Long ENZ stock @ $6.52
Entry on April 26 at $6.52
Earnings Date 6/15/10 (unconfirmed)
Average Daily Volume: 160,000
Listed on April 24, 2010
Fuel Systems, Inc. â€“ FSYS â€“ close 31.41 change -1.07 stop 29.39
The retracement in FSYS continued today and our position is struggling. However, I expect FSYS to bounce from here. The stock is still above its uptrend line from March 4th and it bounced nicely off of its 50-day SMA today. The stock closed well of off its lows while the overall market closed on their lows. FSYS is still in an upward trend on its daily chart and is also forming an ascending triangle that has some time to play out. I like our chances of FSYS rallying into its earnings report on May 6th, especially if we get a bounce in the market from here. The company trades at about an 11 PE and its earnings have been steadily increasing over the past year. I believe FSYS will rally to our target of $34.65 prior to its earnings report on May 6. Our second target is $37.00, but there is probably not enough time to reach this level prior to the earnings report. If FSYS reaches our target we will earn +5.8% on the trade. We will use a stop at $29.39 which is below its 50-day SMA and a recent swing low. Traders can initiate new positions now but please be prepared for a quick exit as FSYS tends to be volatile. Our time frame is about two weeks.
Current Position: Long FSYS stock @ $32.75
Entry on April 26 at $32.75
Earnings Date 05/06/10 (unconfirmed)
Average Daily Volume: 720,000
Listed on April 22, 2010
Medicis Pharmaceutical Corp. â€“ MRX â€“ close: $25.19 change -0.34 stop: $24.29
It appeared MRX was breaking out this morning as it traded as high $26.03, but the market got whacked and MRX was not spared. I have been suggesting traders consider tightening stops if MRX rallies into to the $25.80 area to protect profits. This makes the 7th time the stock has tested this area since April 12 before being knocked back down. Maybe the door won't open after all. I am a little concerned as MRX is now back below its uptrend line from February 11 and the candlestick that was formed today looks bearish, especially if the market continues correcting. But the market declines have been short lived recently and I expect at least another bounce prior to a bigger fall. As such, I would like to lower our target to $25.75 and will gladly take a small +3% profit at this level. MRX has support down at $24.88 and its 50-day SMA at $24.68. Our stop is $24.29 which is below the 50-day SMA. Our target is now $25.75 and we are removing our second target at $27.75 because we plan to be out prior to this level. I am not suggesting new positions at this time.
Current Position: MRX stock @ $25.00
Entry on April 14 at $25.00
Earnings Date 5/06/2010 (unconfirmed)
Average Daily Volume: 1.0 million
Listed on April 13th, 2010
BEARISH Play Updates
Moody's Corp. - MCO - close 24.85 change -1.21 stop 28.60
MCO never got close to our entry today and I do not want to chase it down at these levels. The stock closed down -4.64%. However, I would like to take advantage of any bounces so I am going to lower our trigger to enter to $25.90. There is strong resistance in the $26.00 area which I would expect to hold if MCO makes back up here. I suggest readers look to short the stock if it reaches this level. My comments from last night remain mostly the same. MCO's chart is broken and a lot of damage has been done. The stock broke out of a bear flag on its daily chart today and I believe conditions are ripe for the decline to continue. The stock was hanging on to a recent support level and its 200-day SMA, both in the $26.00 area. I think it is only a matter of time before this level is broken. I am bearish on MCO and if the market starts to pullback MCO could be a nice winner for us. I would like to place an initial wide stop at $28.60 just in case there is a spike in the stock from short covering or a news event. If that happens I am confident MCO will be sold by many who may still be holding long shares, creating additional pressure. There is plenty of resistance and congestion just overhead as well. Our target is $23.25 and our time frame is a couple of weeks.
NOTE: The ratings agencies are also under the microscope in Washington as reports have surfaced that they were overly influenced by Wall Street firms and they used outdated models for rating complex securities, i.e. mortgage-backed securities, CDO's, etc. I would be surprised if they are not regulated as part of the financial reform bill which traders will probably view as a negative for the stock.
Suggested Position: Short MCO at $25.90
Suggested Position: Buy JUNE $25.00 PUT, current ask $1.23
Entry on April xx at $xx.xx
Earnings Date Over two months
Average Daily Volume: 3.5 million
Listed on April 26, 2010
CLOSED BULLISH PLAYS
Excel Maritime Carriers Ltd. â€“ EXM â€“ close 6.80 change -0.01 stop 6.06
EXM bucked the trend again today and ended up closing down only 1 penny on the day. However, EXM was up +6% in early trading and our target of $7.10 was hit. So we are now flat on the position for a nice gain of +8.4%. This is a perfect example of sticking with the trade set-up and not trying to squeeze out more gains. The stock reached a high of $7.22 but quickly gave back all of those gains when the market reversed. Readers who may still have positions should protect profits. EXM has support down to about $6.70 which would fill a recent gap up.
Closed Position: Long EXM stock @ $7.10, entry was at $6.55
Entry on April 20 at $6.55
Earnings Date 05/19/10 (unconfirmed)
Average Daily Volume: 1.2 million
Listed on April 19th, 2010
CLOSED BEARISH PLAYS
Powershares QQQQ Trust - QQQQ - close: 49.34 change: -1.07 stop: 50.95
We got the intraday sell-off we anticipated in the market today which allowed us to exit QQQQ for a small loss at the 20-day SMA. We are now flat the position for a small loss of -0.43%. QQQQ trading down to its 20-day SMA was way overdue as I have been expressing in my updates. Where it goes from here is anybody's guess and I would rather not be involved ahead of the FOMC announcement tomorrow. Readers who may still have positions please protect today's gains. There will inevitably be a bounce. A new protective stop could be placed at $49.93 which is just above the level where today's intraday bounce reversed back lower.
Closed Position: Short QQQQ at $49.26, entry was at $49.05
Entry on April 12th, 2010
Earnings Date Not Applicable
Average Daily Volume: 49.4 million
Listed on April 10, 2010