Yahoo! Inc. - YHOO - close: 29.03 change: +0.33 stop: n/a
It would seem that market sentiment about the MSFT-YHOO deal is improving. Maybe investors are starting to believe that MSFT is getting closer to raising its bid for YHOO. Shares of YHOO definitely out performed the market this week. We need to see a higher bid from MSFT before March expiration. This remains a very risky, aggressive bet. Our suggested calls were the March $30 or March $32.50 strikes. If you want to speculate now we would choose the April strikes. MSFT's current bid is $31 a share and the street expects that they will raise their bid into the $33-35 zone.
BUY CALL APR 30.00 YHQ-DF open interest=158489 current ask $1.14
Picked on February 17 at $ 29.66
Ambac Fincl. - ABK - cls: 9.50 change: +2.08 stop: n/a
ABK displayed some real volatility on Friday. The company followed through on its stock sales to raise $1.5 billion in capital by offering 171 million shares at $6.75 a share. This diluted prior shareholders by 63%. The reaction to the stock price is a little surprising and we wonder if Friday was just short covering. Many industry experts believe that ABK did not raise enough capital to protect their triple-A rating and that to do so they would need another $1 billion to $2 billion. However, ABK's management claimed on Friday that under no circumstances do they see ABK unable to pay any claims. What is strange is the closing price for ABK on Friday. Most quote services are going to tell you that ABK closed at $9.50, up 28% on the day. However, if you go look at any 1-minute chart we don't see ABK trading over $8.00 on Friday. There was a spike to $9.50 in after hours trading but ABK pulled back to $8.15 in the after hours market. We are not suggesting new positions at this time. This remains a very speculative play. We will definitely hold over the April earnings if we get the chance. Previously we had been suggesting the May out-of-the money puts ($5.00 and $2.50 strikes) and an optional speculative out-of-the money March ($20) call as a hedge should a bailout plan come to pass.
Picked on January 27 at $ 11.54
MBIA Inc. - MBI - close: 11.99 change: +0.39 stop: n/a
Hmm... MBI took an interesting turn on Friday. After the closing bell MBI asked credit rating agency Fitch to "withdraw" its financial strength ratings from six of MBI's business units including the main bond insurance unit (source:Reuters). It is unclear what MBI is trying to do here. One could conceive that if MBI can't maintain its triple-A rating with Fitch why don't they just ask Fitch to stop rating them. That way they won't have to worry about trying to keep Fitch's triple-A rating. Does this mean that Fitch is stricter with their rating guidelines than S&P or Moody's? We did not see any after hours reaction to the news but the press release came out about 35 minutes after the closing bell. ABK and MBI are still in trouble and we remain bearish on the two. We're not suggesting new bearish positions at this time. We had been suggesting the out-of-the-money May puts (7.50, 5.00 and 2.50 strikes) and an optional March $22.50 (or $20.00) call as a hedge in case a bailout plan for the bond insurers does get done. We will definitely hold over the April earnings if we get the chance.
Picked on January 27 at $ 14.20
NII Holdings - NIHD - close: 36.97 change: -1.29 stop: 41.26
NIHD now has a very clear breakdown from its multi-week consolidation pattern. There should be some support near its January low around $35.00. We are setting a secondary, more aggressive target in the $31.00-30.00 zone. Traders should expect a bounce near $35 and potentially back to the $39-40 range. Currently our first target and where we suggest you take most of your profits is in the $35.50-35.00 range. The Point & Figure chart is bearish with a $19 target. FYI: The latest data lists short interest at 3.8% of the 171.7 million-share float, which is only about 1.5 days worth of short interest.
Picked on March 04 at $ 38.95 *triggered
Precision Castparts - PCP - cls: 104.00 chg: -2.25 stop: 110.51*new*
Shares of PCP slipped to a new five-week low of $102.58 on Friday. The stock is quickly approaching our target in the $101.00-100.00 zone although more conservative traders may want to start taking some money off the table right now. We suspect that the $100 level will be support but more aggressive traders could aim for the January low near $95.50. Please note we're inching down our stop loss to $110.51. We're not suggesting new positions at this time. FYI: The Point & Figure chart is forecasting an $88 target.
Picked on March 03 at $109.49 *triggered
Everest Re Group - RE - close: 93.85 chg: +0.19 stop: 100.35
Target surpassed. RE sank to a new five-week low on Friday but actually closed with a minor gain. That gain was fading lower into the closing bell and if the market had been open longer RE probably would have closed in the red. The stock has hit our first target at $93.50. The intraday low on Friday was $92.50. Actually the stock gapped open lower at $92.66, which would have been our exit. Our second, more aggressive target is the $91.00-90.00 zone. FYI: The P&F chart is bearish with a $74 target.
Picked on February 28 at $ 97.93 /1st target surpassed 92.66
Sears Holding - SHLD - close: 92.36 change: -1.13 stop: 100.51
SHLD continues to look very bearish following the breakdown below the $95-94 zone. The target on the P&F chart has dropped from $88 to $82. We would continue to open new put positions here or on a failed rally under $95.00. The stock could bounce near round-number support at $90.00 but we would expect it to be temporary. Our target is the $85.50-85.00 zone. There are a lot of investors who believe SHLD is going lower. The most recent data puts short interest at more than 19% of the 65 million-share float. That is almost 7 days worth of short interest. Naturally that raises our risk of a short squeeze.
Picked on March 06 at $ 94.00 *triggered
Wynn Resorts - WYNN - close: 92.82 chg: -2.18 stop: 100.51*new*
On Thursday night we warned readers that the bounce in WYNN looked like it was in serious trouble. We went on to say that if shares broke down under support at $95.00 we were suggesting a trigger to buy puts at $94.45. The stock actually gapped open lower at $94.27, which would become our new entry point to buy puts. The June 2006 low is near $85.50. We are listing a target in the $86.50-85.00 zone. Traders need to be prepared for a bounce near round-number support at $90 but we would expect it to be temporary. Now that most market participants agree that we're in a recession shares of WYNN could see increased selling pressure. News out on Friday that Nevada gambling revenues dropped more than 4% in January doesn't help the industry. Another failed rally in the $95-97 zone can be used as a new entry point for puts. Note our stop loss, which is a little aggressive, at $100.51. The P&F chart is bearish with a $64 target.
Picked on March 04 at $ 94.27 *gap down
iShares China 25 - FXI - cls: 136.07 chg: -0.43 stop: 149.45
We are switching gears on the FXI. After discussing it we've decided that the better play on the FXI is probably a bearish one on a breakdown to new relative lows. There is still a chance for a bounce near $135 but we can't imagine it lasting very long. This bullish play was suggesting a trigger to buy calls above $161, which was never triggered. The alternative we were considering was a dip near support around $136-135.
Picked on February xx at $ xx.xx <-- see TRIGGER
Potash - POT - close: 155.34 change: -3.81 stop: 147.75
We remain very long-term bullish on POT but short-term there seems to be too much risk. Technical traders could argue that POT is building a bullish flag pattern, which would be fine. The stock has also been trying to find some support near its December and January highs. However, many of the technical indicators have turned bearish. Plus, when the market does see a washout or capitulation day lower POT will mostly likely not be immune to it. We would rather exit early right here and look for a new entry point. Keep an eye on the 50-dma near $144 or the $140 zone as potential entry points to buy calls again. Any dip near the 100-dma could be a great entry point. POT has already hit our early target in the $158-160 zone.
Picked on February 12 at $147.50 *triggered
Smith Intl - SII - close: 61.45 change: -2.34 stop: 59.90
We remain fundamentally bullish on the oil service stocks but that doesn't mean they won't see some gyrations. Shares of SII are succumbing to market weakness. We would rather exit early now and look for a new entry point to buy calls down the road. The stock has already hit our first target in the $64.25-65.00 zone.
Picked on February 17 at $ 60.52
Wynn Resorts - WYNN - close: 92.82 change: -2.18 stop: 94.75
Our technical, buy the bounce from support play in WYNN did not pan out. Shares reversed under $100 on Thursday. The market weakness on Friday combined with news that Nevada's gambling revenues dropped more than 4% in January definitely weighed on shares of WYNN. Our stop loss was at $94.75 but WYNN gapped open lower at $94.27, which would have been our forced exit. We did list a breakdown play to buy puts if WYNN traded at $94.45 so Friday's open would have been our entry point for puts. WYNN is now listed as a put play (see above).
Picked on March 04 at $ 97.28 *stopped 94.27 (gap down)