Good evening traders. I'm not sure what exactly happened today in the market but it sure seemed manipulated. Chatter was that there was a bad tick in Procter & Gamble that caused some computer programs to sell, which started the cascade. I also heard that there were human errors in entering trades and that some trades may be cancelled as a result. Who really knows but I am sure we will find out. What I do know for sure is that it is almost impossible to manage swing trades in this environment. The bid/ask spreads on all securities widened to levels I don't think I've ever seen, not even in the fall of 2008.
In any event, SINA performed well for us while we were stopped out of HITK. The recent events have narrowed our portfolio immensely but keeping your powder dry at this juncture is probably not a bad idea. Staying on your toes is an understatement and taking profits off the table when the opportunity presents itself is a must.
NOTE: James will be filling in for me this weekend with new plays and updates. I will be back next week and we will have the portfolio ramped back up in no time.
BULLISH Play Updates
IMAX Corporation - IMAX - close 18.90 change -0.15 stop 16.75
Why We Like It:
IMAX got pushed around today but held its own considering the shenanigans. The stock also created a bottoming tail candlestick on its daily chart which may indicate that sellers of the stock are waning. Buyers have been piling into the stock in recent months and IMAX reported earnings on 4/29 that beat expectations (.53 compared to .37 estimate). The company is experiencing a surge in earnings due to the onslaught of 3-D movies on the horizon. I suggest readers take advantage of the momentum and initiate positions if IMAX pulls back to $18.50. We will place our stop at $16.75 which is just below the 50-day SMA. Our target is $20.95 which is just below the stock's 52 week highs.
Current Position: Long IMAX stock at $18.50.
Suggested Position: Buy JUNE $20.00 CALL
Entry on May 5 at $18.50
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 1.9 million
Listed on May 4, 2010
BEARISH Play Updates
Moody's Corp. - MCO - close 24.46 change -0.77 stop 28.60
MCO just won't cooperate and rally to our trigger. We came within 20 cents today. I still want to take advantage of any bounces in MCO and am keeping the trigger at $25.25. If the stock trades to $25.25 I suggest readers short MCO (previously trigger was $25.45). This is near recent highs and if the stock trades to this level I expect more selling to continue. My comments from the weekend remain the same. I am essentially suggesting short positions on any relief bounce in MCO. There is strong resistance in the $26.00 to $26.50 area which I expect to hold if MCO can even make it back up there. MCO's chart is broken and a lot of damage has been done. The stock is forming bear flags on its daily chart 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) which was broken last week. I am bearish on MCO and if the market starts a significant pullback MCO could be a nice winner for us. Our initial stop is $28.60 but will be adjusted after our entry is triggered. There is plenty of resistance and congestion just overhead. Our target is $23.25, with a more aggressive target of $21.85 which could get hit if things get ugly. Our time frame is a couple of weeks.
Suggested Position: Short MCO at $25.65
Suggested Position: Buy JUNE $25.00 PUT, current ask $1.58
Entry on April xx at $xx.xx
Earnings Date Over two months
Average Daily Volume: 3.5 million
Listed on April 26, 2010
Sina Corporation - SINA - close 33.00 change -1.50 stop 38.80 *NEW*
SINA hit our first target of $33.00 today and closed there as well. The stock has now broken all of its major daily and weekly SMA's except for the 100-week SMA, which it closed just above today. SINA is bound to get a relief bounce from here but I expect the overhead resistance and SMA's to hold. Our new stop is $38.80 but we will adjust it as the trade develops. Our first target is $33.25 which is a point where I would tighten stops to protect profits. A more aggressive 2nd target is $30.50. If the market correction continues I think SINA could easily trade down to this level. Our time frame is several weeks.
Current Position: Short SINA stock at $34.95
Suggested Position: JUNE $35.00 PUT
Entry on May 4th at $34.95
Earnings Date June 9, 2010 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on May 1, 2010
CLOSED BULLISH PLAYS
Hi-Tech Pharmacal Co. - HITK - close 23.09 change -1.51 stop 22.45
HITK got caught up in the nonsense today and we were stopped out. The stock recovered and is now above our stop, but we'll take the loss and look for better opportunities. This stock is still holding an upward trend line from 8/17 and looks poised to move higher. If readers still have positions you can use the same stop and targets listed on the charts potential exits.
Closed Position: Long HITK stock $25.25
Entry on May 4th at $25.25
Earnings Date July 5, 2010 (unconfirmed)
Average Daily Volume: 230,000
Listed on April 29, 2010