Good evening. I have brief updates for you tonight which are listed below the updated model portfolio snapshot below. All of my comments remain valid from yesterday so please refer to those updates for more details.
We used the strength in V today to close the position for a +98% gain. All of our short positions suffered setbacks (except PNC) and I would use the strength as opportunities to consider opening new positions. Our stops are just overhead if there happens to not be a correction.
Today's breakout higher has exhaustion written all over it. I caution readers to keep bullish positions on a tight leash, while still remaining nimble on bearish positions. Trailing stops on both side of the market is probably the right move as I expect volatility to really pick up steam in the coming days/weeks. Finally, James will be filling in for me the remainder of the week and weekend. I look forward to catching up with you all on Monday.
CALL Play Updates
GNK - The stock is consolidating near multi-week highs. I anticipate dips getting bought.
TC - The stock gapped higher but drifted lower the entire day. TC could head lower to fill today's gap prior to moving higher.
PUT Play Updates
ATK - The stock remains below its 200-day SMA while the bearish head and shoulders formation still remains. Now we need follow through lower.
ISLN - What can I say? ISLN is defying gravity and gained more than +3% today. We chose deep out of the money puts to limit losses for this very reason. If a correction gets going in earnest I think our targets will be reached which should limit the damages.
NTAP - We are long puts at $1.90 as of today's open. This play was released based on the overbought market conditions and a bearish head and shoulders pattern on its daily and hourly chart. I still like new positions and would consider them at current levels.
PNC - The stock continues to trade terrible and lost 3 cents today while the broader market surged higher. If we get a correction in the coming days our targets should easily be reached. I suggest using those to exit positions or tighten stops to protect profits/capital. $50.35 and $49.50 are the primary targets.
WFMI - I obviously didn't think WFMI would retrace this much of its losses but a reversal from here is easily in the cards. The stock is near its primary downtrend line and volume was much lower than recent distribution days. If we get a correction WFMI should fall hard. Considering today's rip our puts have only lost 22% so trying new positions at these levels makes a lot of sense to me.
CLOSED BULLISH PLAYS
Visa, Inc. - V - close 74.25 change -0.04 stop 67.40
Target(s): 74.90 (hit), 76.90 (hit), 79.40
Key Support/Resistance Areas: 79.80, 77.50, 75.00, 72.50, 70.50, 68.00
Final Gain/Loss: +97.9%
Time Frame: 3 to 5 weeks
New Positions: Yes
10/13: V surged higher with the market today and we used the opportunity to exit positions into the strength, per last night's updates. Our target of $76.90 was hit and we have booked a much needed +98% gain. I suggest readers protect profits up here, especially considering the overbought conditions.
10/12: I was somewhat disappointed in V's performance today as the stock closed flat on the day, while other financial stocks fared better. V is consolidating above its 100-day SMA. The stock has support at $72.50 which is also near its rising 20-day SMA. A move to our first target should produce a +30% to +40% gain, while a move to our 2nd target should produce a +80% to +90% gain. These are the primary targets and I suggest using moves into these areas as opportunities to exit positions or tighten stops.
10/9: V traded right down to our entry Friday morning and bounced. We are long November $75 calls at $1.92. I do not see V trading much lower than its rising 20-day SMA which is currently $71.55 and increasing about 30 cents per day. This puts the 20-day SMA in the $72.50 to $73.00 range later this week. Any pullback to this area will provide another good entry point. The stock also has support at $72.50 if there is bigger pullback earlier in the week. I like V to go higher as they have worked through the issues that caused the stock to sell-off over the past few months. Even a small move up to out 1st target should produce a +40% gain, while a move to our 2nd target should produce a +85% gain. I plan to tighten the stop in the coming days.
Closed Position: Long November $75.00 CALL at $3.80, entry was at $1.92
Entry on October 7, 2010
Earnings 10/27/2010 (unconfirmed)
Average Daily Volume: 6.8 million
Listed on October 4, 2010