None of our positions were triggered on Friday because the qualifications were not met. That was apparently a good thing with all the indexes closing at their lows.

The Thursday afternoon rebound fizzled on worries from overseas and a downgrade of 16 Italian banks on worries over the contagion from Greece. The S&P opened in negative territory and that prevented any of the proposed trades from being officially triggered. That qualification is there to protect us against exactly the kind of day Friday turned out to be.

Two of the three plays ended the day in the green so even if we had entered those positions it would have worked out. Since we can't tell what the future will bring it is better to be safe than sorry.

The futures are down on Sunday night by -6 points and the dollar rising thanks to continued worries out of Greece. Several members of Parliament belonging to the Prime Minister's party have said they will likely vote against the austerity program on Tuesday. Others have said they might vote if some of the terms were changed. The EU/ECB/IMF are not really giving them that option but rather than see the EU implode they might work something out. However, the overnight futures are not suggesting traders are fond of that probability of success.

The S&P closed at 1268 on Friday with the 200-day average at 1263. Some analysts see a break of this level as catastrophic. I think it would be a bad signal but the break of the market closing lows at 1250 would be much worse.

Historically the end of June normally benefits from an end of quarter window dressing rally before declining further after the first week in July. Unless sentiment changes quickly that EOQ rebound may be a no show this year.

I suggest we remain cautious for next week but I am leaving all four plays active with the same qualifications just in case we do get that rebound.

Jim Brown



Current Portfolio


No Open Positions


Current Position Changes


None


New Recommendations


MCP - MolyCorp $55.47 (Short Put)

MolyCorp has had a rocky ride recently. They had a massive share lockup expire and they priced a secondary offering of $230 million in convertibles. The stock was hammered. Those events are now passed and it appears to have found a bottom just over the 200-day average at 46.68. I believe the long-term prospects for rare earths and for MCP in general are good. I am going to recommend it for a short put and a covered call. (See MCP in long term category for call)

Enter this position only if the S&P and MCP are both positive

Sell Short MCP July $47.50 put, currently 85-cents. Stop $51.

Chart of MCP


GMCR - Green Mountain Coffee $83.43 (Short Put)

Green Mountain has sprouted wings and actually closed at a new high on Thursday. Business is booming and so is the stock prices. The intraday decline on Thursday was minimal so it would take a tsunami to crack it. That means a short put $7 OTM should be a decent risk.

Enter this position only if the S&P and GMCR are both positive

Sell GMCR July $77.50 Put, currently $1.20, stop $82.

Chart of GMCR


CLF - Cliffs Natural Resources $86.62 (Short Put)

Cliffs was another gainer on a bad day in the market. The morning dip only knocked it back but it still closed at a new high for the week. Coal has rebounded as a global fuel with the "coal supercycle" theory being spread by the Peabody Energy CEO.

Enter this position only if the S&P and CLF are both positive

Sell CLF July $80.00 Put, currently $1.00, stop $83.

Chart of CLF


New Long Term Recommendations


MCP - MolyCorp $54.02 (Covered Call)

MolyCorp has had a rocky ride recently. They had a massive share lockup expire and they priced a secondary offering of $230 million in convertibles. The stock was hammered. Those events are now passed and it appears to have found a bottom just over the 200-day average at 46.68. I believe the long-term prospects for rare earths and for MCP in general are good. I am going to recommend it for a short put and a covered call.

I am recommending the in the money $55 call at $5.30 if disaster strikes we will be covered by the premium received down to $50. By selling in the money we are guaranteed to be called away unless the stock drops significantly and hits our stop.

The nearly $2 rally on Friday killed the high premiums on the $50 call as it was originally suggested. I moved the strike higher to $55.

Enter this position only if the S&P and MCP are both positive

Sell MCP August $55 Covered Call, currently $5.30, stop $51.25.

Chart of MCP


New Aggressive Recommendations


None until a positive market trend returns