Option Investor

Daily Newsletter, Thursday, 3/4/2010

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Very Low Volume Day As the Market Waits

by Keene Little

Click here to email Keene Little
Market Stats

The market rallied today but that's about the most positive thing I can say about it. But so did the US dollar and that pushed gold and oil down so the stock market rally was counter to the usual inverse relationship to the dollar. But in reality, there just wasn't much interest by anyone in today's market and the late-afternoon push up in the stock market is about the only thing that saved it from a flat finish. We await the job numbers report early tomorrow morning.

The Greece news is finally behind us, at least for now. They floated $7B in bonds which was oversubscribed. Good for them. It was probably the EU banks, and perhaps a few of ours, that did the buying to ensure there would be no embarrassing auction failure, but at least it gives Greece a little breathing room before the next credit crunch. The CDS (Credit Default Swap) prices and credit spreads will tell us how well the market thinks it's improving, which lately shows there are significant repayment concerns. Dubai, which was saved a couple of months ago, shows the CDS prices right back up to where they were before they were saved. In other words, there's a lot of fear they're going to face another round of debt restructuring (a polite way of saying loans will be written off).

Besides, I'm sure Goldman Sachs will come up with another clever scheme to hide another loan to Greece. It's interesting to see what's Not happening since the great credit squeeze of 2008 into 2009. Derivatives got the biggest share of the blame for the exponential expansion in credit. This included everything from naked CDS (someone buys and sells CDS contracts having no idea, nor caring to know, what the underlying is) to CDOs (Collateralized Debt Obligations) to the alphabet soup of derivatives that were created over the past decade or more. One would have assumed that the Big Scare in the financial world would have resulted in some unwinding of these derivatives so as to ensure a sounder footing under the financial institutions. We did learn our lesson, right? Anyone?

Well your assumption would be wrong. Since the end of 2007 the notional value of derivative contracts produced by US banks is up nearly $49T (that's a 'T' for trillion). That's nearly a 30% increase to almost $214T since the end of 2007. It makes the government bailout tab for Fannie Mae and Freddie Mac, so far up to $126B, pale by comparison. By the time these trillions in derivatives implode and the government feels forced to bail out the banks again, we'll be flat broke. Greece will nothing over US.

But the big credit unwind continues for consumers (the number for which will be reported tomorrow afternoon). Part of this unwind process is of course paying down our debt. Credit cards are being paid down at a very fast rate and in fact people are protecting their credit card balances more than they're worrying about their mortgage payments. In an era where having a credit card is vital for our everyday lives, keeping the credit card account from being closed has become a priority for many people. Many have walked away from their homes or simply stopped making mortgage payments while waiting for foreclosure to begin. But they're making their credit card payments.

Statistics now show more and more people are less concerned about their FICO score if they default on their home loan (since they figure they're not eligible for a loan anyway) than they are about losing their credit cards. For the first time since records have been kept the default rate is increasing on mortgage loans while it's dropping on credit card accounts.

When you think about this it makes very good financial sense for those who are underwater on their mortgages (which is now the majority who have bought since 2006). After all, if Morgan Stanley can walk away from their mortgages on five San Francisco office buildings because they can no longer afford the payments on the buildings, because it makes "good business sense", then why is it a sin to walk away from your home mortgage? What's good for the goose is good for the gander. People are getting angry about owing banks money so they're feeling like it's just one more reason to skip out on them.

This credit reduction process is probably only in the 2nd or 3rd inning of an expected nine-inning game. The Fed figures consumer credit has declined a little less than $3T. David Rosenberg, Chief Economist at Gluskin, Sheff & Associates, said the current level of nonfederal debt is about $27T, which he figures is about 207% on nonfederal GDP (yikes!). He said if the debt were to be reduced just to the mean level in the 1990s we'd have to get rid of $8T. If we revert back to the more stable period of the 1960s and 1970s then we need to see a credit contraction of about $11T. And so far we've seen a contraction of about $3T. Rosenberg says it's a matter of when, not if, we will see these kinds of credit contractions. Needless to say, the credit contraction has a long way to go and the consumer will not be doing his or her part for the economy, considering consumer spending makes up some 70% of GDP. We will eventually hit a new normal that is much lower than it is now.

The Federal government knows this, or certainly fears this. So they've done what every self-serving government will do--they're spending our money for us. While we consumers have been drastically reducing our borrowing since 2006, the government has significantly increased their borrowing:

Consumer vs. government borrowing, 1968-2009, chart courtesy Ned Davis Research

The Fed desperately wants us to borrow more. Without the loan demand the banks are not lending as much. Without the banks lending their money the velocity of money (how quickly the money supply grows) actually begins to slow instead of increase. This causes a decrease in the money supply which results in a deflationary period, which we're in. Inflation is good for the government and borrowers but bad for the people and savers. Deflation is actually a healthy cycle to go through and we should welcome it with open arms and do our part to help it along--stop borrowing and save more.

So that's part of the battle we’re in and you should understand why the Fed is desperately trying to stoke the economy back into an inflationary cycle. They'll fail but it will take a while for everyone to recognize what a miserable failure the whole Central Bank system is. In the meantime we'll simply do the best we can as traders and try to pull a little out of the market no matter what the longer-term trends will be. And if the next big trend will be down, as I think it will, then we can make some money in a down market. It's not as easy but it can certainly be done. So let's move onto the charts.

I'm going to start with the RUT's charts tonight because it has made a new high above January's and that changes a few things. First let's look at its weekly chart to see what the pattern looks like now. Basically the move up from the March 2009 low is a corrective pattern-- it counts best as a triple zigzag, which basically means three separate a-b-c moves to the upside with a pullback correction (an x-wave) between them. There are no quadruple zigzags which means the current leg up from February 5th has to be the last one. What this means is that we have an a-b-c move up from November which means the bounce off the February 5th low is a c-wave. This may be potentially important for the other indexes too, even though they have not made a new high above January's.

Russell-2000, RUT, Weekly chart

A trend line along the highs from September and January is currently near 660, only marginally above the 62% retracement of the 2007-2009 decline at 657.44. With the continuation of the negative divergences on the oscillators, it supports the bearish rising wedge pattern shown on the chart. It's possible we'll see a small throw-over above the top of the wedge, perhaps on a news-related event.

Moving in closer, the daily chart below shows the A-B-C move up from November 2nd. It has achieved the minimum expected for the c-wave (the leg up from February 5th) by hitting the 62% projection at 640.32. This projection is important as we'll see for the other indexes. A higher projection at 676.93 is where the RUT would have two equal legs up but as already mentioned, the top of its rising wedge near 660 could turn into formidable resistance if reached. Basically the message here is that there could be a little more upside left to the rally but I think it's on borrowed time.

Russell-2000, RUT, Daily chart

Key Levels for RUT:
- cautiously bullish above 660
- bearish below 620

Sticking with the arithmetic price scale on this week's SPX weekly chart, it shows one reason why it may have found support where it did in early February. The long-term uptrend line from 1990-2002 and the broken downtrend line from October 2007 crossed near 1058 and while there was an intraday break down to 1044.50 on February 5th it closed above those two lines. That's bullish. So far the bounce has been struggling with the 50% retracement of the 2007-2009 decline and unless it can close the week above 1121.44 it remains potentially bearish. Also, the volume in the decline from January was strong whereas the volume in the bounce in February was relatively weak, and each rally attempt continues to be on lower volume. That's bearish. But we'll have to let price tell us which way it goes from here.

S&P 500, SPX, Weekly chart

As a reminder of what the vertical dotted lines are on the above chart, they are time projections based off the 2007-2009 decline. If that decline was the 1st wave down, as it's labeled, a typical 2nd wave bounce correction (the rally from March 2009) will retrace about 50% of the decline and take about 62% of the time that the decline took. The 50% price retracement was achieved (slightly more) and it did it at the 62% time projection. So it fits for the completion of the correction and it was one of the reasons I liked the topping signal in January. I'm depicting a decline into May and then a bounce back up into July for another smaller 2nd wave correction before a harder decline into October. That's speculation of course--we still need confirmation that the next leg down has started from the January high (with a drop below the February 5th low).

As discussed with the RUT's charts, the daily chart below shows the price projections based on a possible a-b-c bounce off the November low. On the weekly chart above I show a basic A-B-C bounce off the March 2009 low but it's actually a little more complex than that, as discussed for the RUT. If SPX is in the same wave count as the RUT then we should be looking for the same upside price projections as the RUT. The first projection is at 1119.32 where the c-wave (the leg up from February 5th) has achieved 62% of the a-wave (the leg up from November to January).

S&P 500, SPX, Daily chart

So in addition to the 50% retracement level at 1121.44 shown on the weekly chart, the daily chart has the 62% price projection at 1119.32, and this is the area SPX has been struggling. The bears will see this week's price action as a topping pattern (same kind of patter at the highs we've seen at previous highs during the past year) while the bulls will see this as consolidation in preparation for another run higher. If there was higher volume in the rallies I'd be more inclined to agree with the bulls but I'm having my doubts. Price will be the final arbiter, as it always is. Both sides should exercise caution in the meantime. If the market pushes a little higher at least, a good upside target is near 1131 (where there are some short term Fib projections and the lows of the brief consolidation in January before it let go to the downside). That would enable the RUT to tag potential resistance near 660.

Key Levels for SPX:
- cautiously bullish above 1131
- bearish below 1086

On the 60-min chart below you can see how price had stalled at the downtrend line from January through the February 19th high and then sailed above it. Next it will face the downtrend line from October 2007 through its January high. This is an untested trend line so I do not if it will offer any resistance but watch price action around 1127 if tagged. Near the same level, at 1127.78, is the 78.6% retracement of the January decline. If this Fibonacci retracement level is exceeded it often leads to a complete retracement (so new highs above the January high). Also at the same level, at 1127.99, is a 62% Fib projection based on the move up from February 5th (2nd leg = 62% of the 1st leg, similar to the a-b-c move up from November). So 1128-1131 is a critical area for the bears to defend--any higher than on a closing basis will be bullish.

S&P 500, SPX, 60-min chart

As discussed with the SPX daily chart above, a similar a-b-c bounce off the November low for the DOW shows the 62% price projection for the c-wave (the leg up from February 5th) at 10472. Wednesday's high was just shy of 10470. Therefore the bounce fits as either a 2nd wave correction to the 1st wave down from January or as a truncated c-wave to complete the final a-b-c move up from March 2009. The difference will affect how quickly the next leg down moves and until we see how it develops we will not know for sure which wave count is correct. In the meantime, I'm simply watching for where the current bounce might end. The Fib level at 10472, the broken uptrend line from August-October and the downtrend line from October 2007 has stopped the rally so far but it might try to at least push marginally higher underneath its broken uptrend line. The longer it does that, without climbing above it, the more bearish it will become.

Dow Industrials, INDU, Daily chart

Key Levels for DOW:
- cautiously bullish above 10475
- bearish below 10185

On the NDX chart below I placed the same projection off the November low for an a-b-c move up and like the DOW and SPX, NDX has also achieved the 62% projection at 1864.33 (it missed it slightly with a high on Tuesday of 1862.64). If it can push a little higher it will hit its downtrend line from October 2007 through the January high, currently near 1875 (an untested trend line). A break below 1781 will be important for the bears to accomplish since it would be a break of support at its February 25th low and the 62% retracement of the 2007-2009 decline.

Nasdaq-100, NDX, Daily chart

Key Levels for NDX:
- cautiously bullish above 1875
- bearish below 1781

The semiconductors were projecting weakness this week, ahead of any of the other tech indexes. Bullishly, today's candlestick is a hammer at its 20 and 50-dma's. It could be good for another rally attempt in which case watch to see if it makes it again up to its broken uptrend line from March-November, which is where this week's rally attempts failed (also at its broken uptrend line from the February 5th low). The March-November uptrend line is currently near 355. The SOX is hardly alone in sporting a H&S topping pattern (left shoulder in October, right shoulder being formed here) and that makes the February lows extremely important for the bulls to defend if and when prices drop to that level.

Semiconductor index, SOX, Daily chart

Depending on which banking index I look at I get a slightly different short-term picture. The BIX looks more bullish than BKX and XLF looks more bullish than both of them. Goldman Sachs and Morgan Stanley must have been buying each other's stock today because both were up more than other banks (+3.6% and +3.2%, resp.). XLF was up more than BIX and BKX but still only managed +1.0% for the day. So we'll look at XLF to see what the pattern looks like.

XLF has been in a down-channel since the October high and is currently working its way up towards the top of it, near 15.15. Watch for resistance if it gets there since the next big move should be down. But obviously any rally above 15.15 would be bullish.

Financial Sector ETF, XLF, Daily chart

The job numbers that will be released early Friday morning obviously have the potential to move the market. Earlier today Larry Summers, the White House economic advisor, said we could see distorted February jobless numbers because (you already know what's coming) of the bad weather. This is the new the-dog-ate-my-homework excuse. He said, "The blizzards that affected much of the country during the last month are likely to distort the statistics. So it's going to be very important...to look past whatever the next figures are to gauge the underlying trends." My first thought was that he would only come out with that kind of statement if he had advance knowledge of the report and is doing some early damage control.

The bond market may also be predicting a bad jobs number. If the numbers are bad, showing continued economic weakness, it will take the pressure off Bernanke to start raising rates. Not that he was, or even said, he's in a position to start raising rates, but that's what the market fears. So a bad number would likely spark some buying in the bonds, knowing that a rate increase is further off in the future (higher rates depress bond prices). Could the stock market rally on the same hope that there won't be a rate increase in the near future? A stock market rally on a bad economic number is not logical but we all know "logical market" is a good example of an oxymoron.

Looking at TLT, the 20+ Year Treasury ETF, it's one that would be more affected by worry over longer-term rate changes than the shorter-term bond market. TLT is looking potentially bullish here, even if only for the short term. Today's buying has it breaking its downtrend line from last October, which it tried to do last Friday but couldn't hold it. The bounce off its 20 and 50-dma's looks bullish as well. If it drops back below 90.50 it will be another failed breakout, in which case look for lower lows from here (and higher yields). Otherwise a continuation higher, perhaps on a bad jobs number, should target at least the 200-dma near 93.

20+ Year Treasury ETF, TLT, Daily chart

The Transports have a pattern very similar to the broader market averages. Earlier this week it ran into its broken uptrend line from July-November as well as its 62% projection for an a-b-c move up from November. Whether or not the market rolls over from here, it's rather remarkable how similar these charts look, especially since the moves between the highs and lows oftentimes look very different. If the market pushes a little higher the TRAN will run into its broken uptrend line again near 4230. Otherwise a decline below 4000 would tell us the rally is finished.

Transportation Index, TRAN, Daily chart

At the same time the stock market was running into resistance, shown on the charts above, the dollar had worked its way sideways from its February 5th high (coinciding with the low for the stock market on that date) over to its uptrend line from early December. Its wave count calls for another rally leg, potentially the 5th wave for the rally from November. If the dollar rallies I suspect it will put downward pressure on the stock and commodity markets.

U.S. Dollar contract, DX, Daily chart

Just like the stock market, but with a different uptrend line, this week gold ran into resistance at its broken uptrend line from October 2008 and its 62% projection for an a-b-c move up from February 5th. If it presses higher there is upside potential to 1174.40 for two equal legs up from February 5th but if it stays in synch with the stock market and counter to the dollar then watch for a dollar rally to push the price of gold down from here.

Gold continuous contract, GC, Daily chart

The other shiny metal, silver, doesn't have a broken uptrend line to deal with, but it did manage to tag its price projection for two equal legs up from February 5th (showing right here its relative strength to gold). That level, at 17.29, matches the 62% retracement of the January-February decline, similar to what the stock market has done. If the dollar rallies, it's a perfect setup to sell silver. And if the wave count is correct on silver, showing the completion of a smaller degree 2nd wave correction, the next move down will be a 3rd of a 3rd wave down and it should be a screamer.

Silver continuous contract, SI, Daily chart

Oil, like many of the stock indexes, is dealing with a broken uptrend line, this one from February-December 2009. If oil pushes higher into next week it will get closer to its projection at 84.86 where the a-b-c move up from December would have two equal legs up. A little lower, near 84, is where the top of a rising wedge pattern for price action since February 3rd crosses the February-December uptrend line. But not shown is the 78.6% retracement of the January-February decline at 80.86, which is where the oil rally has stalled. It's threatening to break its uptrend line from February 5th and again, if the dollar rallies then oil's rally may already be finished. And as mentioned with the SOX chart, there are many charts sporting H&S patterns, including oil, so a break of the February lows would be significant.

Oil continuous contract, CL, Daily chart

One of this morning's economic reports, as usual on Thursday, was the unemployment claims number. The number of new claims, at 469K, was 29K better than last week's upwardly revised 498K. "Less bad" is good but is it good enough? Looking at a graph of initial claims since 1992 it shows it has pulled back quite a bit since last year's high but the pullback is only to where previous unemployment claims peaked. Will that red horizontal line on the chart below act as "support"? It shows we've got a long way to go yet before we're even back to "normal" times of unemployment. When you consider that some 40% have now been unemployed for more than six months, the first time since the Great Depression, it's sobering what kind of a problem we have. An improving economy would be difficult even if this was the only problem but of course we have many other factors, credit contraction being the biggest, that will make a recovery long and painful.

Initial Unemployment Claims, 1992-2010, chart courtesy of briefing.com

Other than the job numbers tomorrow morning, the only other report on the list is the Consumer Credit report, which is expected to show a steep decline from December, which showed only a small negative change as consumers did some Christmas shopping. The decline would put it at a level that was seen for most of 2009, which continues the sharpest contraction in consumer credit on record. So the big debt destruction continues for consumers but our government has decided to pick up the baton and run with it. That debt of course is public debt so we will be exchanging private debt for a whole lot more public debt.

Economic reports, summary and Key Trading Levels

The common picture I get from tonight's charts is that there's the potential for a little more upside before turning down. There is of course potential for a lot more upside but each chart has its own trend-line, price-level or Fibonacci resistance and they're all in synch in showing what may potentially be strong resistance if the market rallies a little further.

By the same token, each chart is in a position for an immediate reversal back down from here and if the day starts off with a gap down and keeps selling off we'll have confirmation of the more immediate bearish wave counts. Expect some volatility in the pre-market futures and then after the cash market opens. Once it settles on a direction then it might be tradable. But with what I see as limited upside potential, unless the nearby resistance levels are overrun, I would continue to be very cautious about trading the long side.

This week we've seen a familiar pattern that we've seen at previous highs in the past year--distribution. Why do I think distribution? Because the morning buying turns into afternoon selling (not so much today but today's rally was on pitiful volume). Big money likes to get some buying started and get the market to provide some liquidity to mask their selling. In other words they use rallies to sell into and offload their inventory to the retail crowd who remains quite convinced we're heading much higher. This price action results in what I've referred to as "fuzzy" tops with wicks sticking out of the daily candles. And we see alternating red and white candles as they try to hold the market up for as long as they can while they continue to sell into rallies. That's the pattern I'm seeing this week. Only time will tell whether or not it's a topping pattern like the previous ones, including January's.

Because the sideways consolidation looks bullish it tends to get a lot of people buying the dips. Then if and when it breaks down it tends to break quickly. All the new buyers who were anticipating a breakout are instead forced to sell quickly--the opposite of a short squeeze. Then big money adds to the selling to further liquidate their inventory, knowing they did the best they could getting the highest prices possible. That's why you should treat any hard selling out of sideways consolidations as the bearish pattern it is.

Bottom line is that the market is bullish until it's not so be careful on the short side until the market tips its hand. The tough part is trying to short the market into the hole after it starts down hard, which is why probing tops is a technique that many use. Good luck tomorrow and next week. I'll be back with you next Thursday.

Key Levels for SPX:
- cautiously bullish above 1131
- bearish below 1086

Key Levels for DOW:
- cautiously bullish above 10475
- bearish below 10185

Key Levels for NDX:
- cautiously bullish above 1875
- bearish below 1781

Key Levels for RUT:
- cautiously bullish above 660
- bearish below 620

Keene H. Little, CMT

New Option Plays

Volatility Expected

by Jim Brown

Click here to email Jim Brown

Editor's Note:

With the markets trading sideways for the last three days and the payroll report on Friday I am not adding any new plays tonight. The Jobless Claims were slightly better than expected and the ADP and Challenger reports this week seemed to point to a better nonfarm payroll number than most expected when the week began. Improving expectations can produce negative surprises. There is a good chance there could be a sell the news event regardless of what number is released.

Once we get past Friday the calendar is pretty clear for next week so I am planning on adding several plays over the weekend.

James is traveling this week and will be back next week.

In Play Updates and Reviews

Rough Day But Ended Well

by Jim Brown

Click here to email Jim Brown
After a drop at the open the indexes returned to positive territory and ended up closing at the high for the day. It was not the high for the week but with the nonfarm payroll report due out tomorrow morning I am very pleased with today's gains.

Unfortunately that monster drop at the open stopped us out of a couple plays.

CALL Play Updates

CSCO - Cisco Systems - $24.95, change +.11, stop $24.25

No specific news on Cisco today as we await the major announcement next week. Ciena (CIEN) posted a steeper than loss and dropped -9% but Cisco did not fall into that pit. The lure of next week's announcement helped push Cisco a little closer to that breakout over $25.

Why We Like It:
Cisco is on the verge of breakout out to a new high on the rebound in the tech sector. Next week, March 9th, Cisco is going to make an announcement that "will change the Internet forever." Their words, not mine. Analysts believe it will be some form of super fast broadband or ultra high-speed system for Internet traffic.

Google recently unveiled plans for its own ultra fast network but my money is on Cisco. Google promised to deliver Internet service at up to 100 times faster than most users have today. I doubt Cisco will let Google beat them and Google does have a nasty habit of announcing products that never appear.

The FCC is presenting a plan to Congress on March 17th that calls for 100 million homes to have access to 100-Megabit per second speeds by 2020. Most cable broadband uses have 2-Megabit speeds today so that would be a major upgrade.

Verizon already offers 50-Megabits on its FiOS wireline network and has tested 100-Megabit speeds.

All of these offerings and tests provide a threshold that Cisco will have to beat if they are going to "forever change the Internet." Let's hope they really pull a fast rabbit out of their announcement hat.

Suggested Options:

Position: CALL APR 25.00 (CSCO 10D25.00) @ $0.65

Entry  on  March 4th at $ 24.84 
Change since picked:       + 0.00
Earnings Date            N/A
Average Daily Volume =      50.0  million  
Listed on  March 03, 2010         

BUCY - Bucyrus International - $64.49, Stop $62.50

After a higher open BUCY declined with the market but recovered to close fractionally positive for the day. Maintain the stop just in case the payroll report is ugly.

BUCY reported earnings on Feb 18th and reported a 24% jump in profits.

Exit Target = $68.00

Position: CALL APR 65.00 (BUCY 10D6500) @ $3.82

Entry  on  March 1st at $ 62.56 
Change since picked:       + 1.93
Earnings Date            02/18/10 
Average Daily Volume =  1.75   million  
Listed on  February 28, 2010         

VMW - VMWare - $51.78 *Not Triggered*

Why We Like It:
VM Ware is taking over computing. The rush to virtualize to obtain maximum use of all your servers is revolutionizing the data center. IDC believes only 20% of datacenters are fully converted leaving a whopping 80% as a growing market. As corporations enter the Windows 7 upgrade cycle they will be building out their server farms with the newer software to support all those Windows 7 desktops and that means large numbers of virtualized servers. VMW does not own the market and there are other competitors but they are the strongest and the lead dog in the harness. For those competitors following in their tracks the view is always the same.

Despite the morning drop VMW did not penetrate support that has formed at $50.50. If we don't get a sell off on the payroll report I will modify the trigger this weekend. No change in play. We are still untriggered.

We have a $49.50 trigger on entering this trade.

Suggested Options:
I am recommending the July $55 Calls because VMW has just edged over $50 and even if we buy it on a dip the premiums are going to be high for the $50 options.

BUY CALL JUL 55.00 (VMW 10G55) open interest= 198 current ask $3.30

Entry  on  March 2nd at $ xx.xx <-- TRIGGER @ $49.50
Change since picked:       + 0.00
Earnings Date            04/26/10 (unconfirmed)
Average Daily Volume =       1.75    million  
Listed on  March 1st, 2010         

Colgate Palmolive - CL - close: 84.07 change: +.30 stop: 82.50

No news, decent action on a rocky day, no change in play.

Our target to exit is $85.00.

Entry  on  February 20 at $ 81.75 
Change since picked:       + 2.32
Earnings Date            04/29/10 (unconfirmed)
Average Daily Volume =        2.8 million  
Listed on  February 20, 2010         

TEVA Pharmaceuticals - TEVA - close: 61.18 change: +0.96 stop: 59.50

Outstanding rebound from the MDVN inspired sell off on Wednesday. No specific news.

Our target to exit is $64.00.

Entry  on  February 20 at $ 58.74 
Change since picked:       + 2.54
Earnings Date            05/05/10 (unconfirmed)
Average Daily Volume =        5.1 million  
Listed on  February 20, 2010         

PUT Play Updates

*Currently we do not have any put play updates*


MYGN - Myriad Genetics - $22.95, stopped @ $22.50

Myriad gapped down at the open along with the rest of the market and quickly rebounded but the gap was enough to stop us out at $22.50 by 3-cents. The low for the morning candle was $22.47.

Position: CALL MAY 25.00 (MYGN 10E2500) @ $1.05, exit .80, -$.25


Entry  on  March 1st at $ 23.01 
Change since picked:     - 0.06     
Earnings Date            02/3/10 
Average Daily Volume =  1.62   million  
Listed on  February 28, 2010         


SWI - Solar Winds - $19.34, change +.92, stopped @ $19.25

Whoever was sitting on SWI with a sell order at $18.50 must have run out of stock. SWI rebounded today on no news to stop us out at $19.25.

Position: PUT JUN 17.50 (SWI 10R1750) @ $1.50, exit $1.05, -.45


Entry  on  March 3rd at $ 18.42 
Change since picked:     + 0.83
Earnings Date           02/8/10 
Average Daily Volume =  600K  
Listed on  March 2nd, 2010