Option Investor

Daily Newsletter, Thursday, 7/7/2011

Table of Contents

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

Market Wrap

Nasdaq Eight In A Row

by Jim Brown

Click here to email Jim Brown
A better than expected jobs number from ADP caused yet another gap higher and the markets ended very close to new highs. The bulls are back with the Nasdaq posting an impressive string of eight consecutive gains.

Market Statistics

The economic report powering the market to another big gain was the ADP Employment report for June. The ADP report was expected to show a gain of 60,000 jobs after posting a +38,000 job gain in May. The ADP number for June came in showing a very surprising gain of 157,000 new jobs. This suggests the Non-Farm Payrolls could be substantially higher. The ADP estimates have been consistently lower than non-farm estimates for months by an average of 40,000 jobs a month. This suggests the non-farm numbers on Friday could be as high as 200,000 jobs. That would be a very surprising turn of events for those who were expecting a possible decline to less than 50,000 jobs.

The sudden improvement in the ADP report does NOT mean the non-farm payrolls are going to automatically be significantly higher. After the ADP news the analysts were quick to upgrade estimates from the official consensus of +88,000 to the 110,000-125,000 range. Deutsche Bank raised their estimate to 175,000 jobs. Hopefully this won't end up being a head fake and the non-farm number being a real disappointment. Remember, the non-farm number includes government workers and those have been declining rapidly as stimulus programs end.

One clue for me that the non-farm data could be disappointing is the weekly Jobless Claims. The claims declined to a seven week low at 418,000 but last week's numbers were revised higher from 428,000 to 432,000 and an eight week high. So which is the real trend? The difference between the high and low over the last seven weeks has been 14,000 claims and that would pretty well indicate there is no improvement in hiring and we employment has flat lined. However, those on extended benefits or whose benefits expired could be taking jobs and that would not show up in the weekly numbers.

Jobless Claims Chart

Another factor producing bullish market sentiment was the spike in retail sales for June. Sales rose +6.9% compared to a +5.4% rate in May. If you remove fuel sales the number was still a strong +5.5% increase. After removing the seasonal factors like the late Easter this was the best June since 1999. What happened to our soft patch?

Total chain store sales increased +8.8% including both new and existing stores. This is a phenomenal spike in sales and most of it came before the sharp drop in gasoline prices after the IEA announcement. With gas prices still declining and the stock market in rally mode it should cause consumer sentiment to improve even further. Hot weather in June was also a positive input because it caused consumers to shop for seasonal items. Retailers were also discounting heavily after the soft patch dip in May. Discount stores were especially strong with Costco sales rising +14% overall.

S&P Retail Index Chart

The economic calendar for Friday is headlined by the Non-Farm Payrolls, Wholesale Trade and Consumer Credit.

Economic Calendar

The positive ADP report also helped push crude prices through the roof. Growth in jobs equals growth in oil demand. It helped to have Goldman, Barclay's and Morgan Stanley all reiterating their views for much higher prices later this year and in 2012. Goldman said, "In our view, it is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand, keeping it in line with available supply." Brent crude, the actual price of crude on the world markets spiked +4.83 to $118.45 and punching through resistance at $115. U.S. WTI crude rallied less with only a +1.84 gain due to the technical problems with an abundance of crude inside the USA.

Also pushing the prices higher was a realization the IEA was not actually releasing much oil in Europe and instead only reducing the inventory requirements of member countries. Secondly much of the oil scheduled for release in Europe was actually refined products and not oil and those products are plentiful. Investors need to realize this was a political move not necessarily a needed move.

All three banks believe the global economy will accelerate in the second half and demand will spike accordingly. Goldman expects the S&P GSCI Commodity Index to rally +20% over the next twelve months. Goldman expects Brent crude to average $130 a barrel over the next twelve months. Morgan Stanley believes it will average $120 for the last half of 2011 and then rise to $130 in 2012.

Brent Crude Oil Chart

U.S. WTI Crude Oil Chart

Helped by a drop in the dollar and rate hikes in Europe and China the precious metals were also in rally mode. The rate hike in Europe and China and the potential for more in the future highlighted the rising inflation in those countries. As the global economy accelerates later this year that inflation could also rise making precious metals desirable as inflation hedges. Economic acceleration will also increase demand for the metals for use in technology products. Barclay's reiterated their bullish outlook and said they anticipate a retest of the $1558 highs.

Here is an interesting article from the Silver Institue on the future is industrial demand. It makes a good case why silver is going back to $50 and beyond. Silver Demand

Here is another article from Standard Charter Bank on why gold is going to $5,000 an ounce by 2015. In Gold We Trust

Gold Chart

Silver Chart

This was a quiet day for stock news but Lumber Liquidators (LL) shareholders were screaming in pain. LL was apparently selling into a completely different consumer marketplace in Q2 than those chains I reported on earlier. LL said an unexpected softening of demand hurt Q2 earnings and forced it to lower full year guidance and revenue forecasts. Same store sales declined -8%. The company said, "Value conscious consumers became more price sensitive and cautious in their discretionary spending." The company is now expecting earnings of 18-20 cents compared to analyst estimates of 32-cents. The company operates 250 stores in North America and plans to open up to 44 in 2011. LL shares dropped -29%.

Lumber Liquidators Chart

News Corp (NWS) was in the news about every 15 minutes after the company said it was shutting down its tabloid "News of the World" publication due to the increased revelations related to the hacking attacks several years ago. News Corp announced it was closing the publication due to the obviously illegal activities to gather news details that had been condoned in the past. James Murdoch issued the death notice saying, "The News of the World is in the business of holding others to account but it failed when it came to itself." Sunday's edition will be the last one and will not have any advertising. People working for the publication either hacked into voicemails or contracted with others to hack the numbers and supply the information. Reportedly five people are going to be arrested this weekend for their role in the pattern of illegal activity that has existed for years.

News Corp Chart

The market has been on an amazing buying binge for the last two weeks and to say it was over extended would be an understatement. Take the IBM chart below. Wells Fargo downgraded IBM today to a hold (market perform) saying near term upside is limited. IBM only gave back a dollar but the downgrade could be the start of a new trend.

IBM Chart

Amazon Chart

We have seen such big gains from the major stocks that further downgrades are pretty much guaranteed. For instance since June 17th BIDU is up +24%, FFIV +22%, WYNN +22%, NFLX +20%, BBBY +16%, WFMI +16%, etc. What are the odds of those stocks receiving downgrades in the next couple weeks especially when the earnings cycle may not be exciting. With negative guidance running 2.5 to 1 over positive guidance the recent gains may be at risk.

The 10-day moving average of the Advance/Decline line is at the high end of its historical range. S&P tells us more than 75% of the S&P is over its 50-day average. The market is definitely over extended.

However, the Dow Transports set a new record high on expectations the long awaited recovery will accelerate in the second half.

Dow Transport Chart

I am afraid the rally is built on hope for a rally rather than any real fundamentals. The speed at which markets can go from very oversold to overbought is always surprising. The ability of overbought markets to continue going higher is also a constant source of surprise or should I say dismay.

The first 2-3 days are sharp reversals and while everyone is pleased to see them they rarely want to buy into them. The shorts continue to launch new positions only to be forced to cover almost immediately. The funds chase the markets higher because they can't afford to miss a move. Meanwhile the retail investor is waiting on the sideline with increasing impatience for a pullback so they can join the party. For many that pullback never comes and they eventually capitulate and buy the top only to find out they were the last buyers.

I fear that is where we are today except these markets are right on the verge of breaking out to new multi year highs. Nothing makes traders throw caution to the wind more than new highs. That is why buying breakouts is such a popular strategy. Everyone believes everyone else knows something they don't and they don't want to miss out on the next leg higher. Many times that leg arrives and many times the investor optimism that got us to this level evaporates at the first sign of trouble.

I am not sure the Non-Farm Payrolls on Friday could have a bad number. If it is good the reluctant buyers on the sidelines will throw in the towel and jump on the bus. If the number is bad those same traders may rationalize it as a lagging number where a good dose of ugly has already been priced in.

When you look at the S&P chart the actual level achieved is bullish and it is rapidly closing on the May highs. However, the speed of the rebound that started on the 27th is very unnerving. The minor pause this week ahead of the ADP numbers was barely a pause and more like a stutter step. It was definitely not profit taking.

The debt limit ceiling is now taking center stage. The Non-Farm Payrolls will be the last economic number this week and the debt limit will be the only news next week. When the president is doing impromptu press conferences every 48 hours and opposing congressional leaders are trading daily points in the press there is no way to avoid the event taking control of our future.

A Merrill Lynch analyst said today a deal on the debt limit was worth 100 points on the S&P and those expectations are currently being factored into the gains. No deal and apparent battle right up to the August 2nd date could take us down -100 points. I don't believe we could drop 100 points but that was his expectation. I personally don't believe they will go to the drop dead date based on the increasing urgency to get it done. The point here is the market pricing in a strong jobs number and a debt limit deal. There could be a monster sell the news event if the conditions for the deal are ugly.

The S&P broke over resistance at 1340 to close at 1353. The high close in May was 1363 so the S&P is only 10 points away from a new multiyear closing high. As long as the bad news bulls remain in control and shorts are still trying to short the market we are likely to move higher. Support is well below at 1320 so plenty of room for profit taking.

S&P Chart

The Dow is a carbon copy of the S&P with a close less than 100 points from the May high close at 12,810. That remains the target regardless of what happens on Friday.

When the indexes get this close to prior highs those old highs become a self-fulfilling target. Bears tend to ease up on the shorts until those old resistance highs are hit so they can load up again. Unless the Non-Farm numbers are really bad I can't imagine we won't take at least an intraday run at the highs. There is a sell the news event in our future but until it happens we won't know which event it is.

Dow Chart

The Nasdaq traded at a new 10-year high intraday but could not close there. The high close from May was 2873.54 and the Nasdaq traded up to 2879 before losing traction at the close. With the payrolls due out before the market opens any reasonable trader would have been taking profits at the close. The Nasdaq is up 265 points (10.1%) since June 27th and it has shown no weakness with eight consecutive days of gains. Obviously there will be some profit taking in our near future. Just how near is what keeps the shorts up at night.

Nasdaq Chart

There is nothing to really summarize tonight. The targets are locked in and without a really crummy jobs report they should be tested on Friday. If the report is very good we could easily make new highs. This is the kind of market I thoroughly dislike. We can spend days waiting for a dip to buy that never appears and once we capitulate and jump in that is the signal for the beginning of a new correction. Let your conscience be your guide.

I apologize for the lateness of the newsletter tonight. We had some really bad weather in Denver this evening that knocked out power and flooded much of the city. Tough to write without power. Sometimes we are reminded we are at the mercy of the elements.

Only a three days left to take advantage of our Independence Day special. It will end on Sunday. Readers can subscribe at the cheapest prices of the year using our July 4th package special. This is a significant discount over the monthly prices and we are offering a choice of free instructional videos to those that take advantage of this special. You must act NOW to get this special.

Free video choices include:

Advanced Strategies for Option Trading Success - 90 min - Bitman
Insider Strategies for Profiting with Options - 90 min - Ansbacher
Profiting with Index Options - 74 min - Bitman
Complete Course in Option Fundamentals - 87 min - Fry
Advanced Bull & Bear Spreads - 73 min - Allaire
Exploiting Volatility - 108 min - Lerman
Oil Apocalypse - The Impact of Peak Oil - 58 Min - History Channel

QUANTITIES ARE LIMITED - First come, first served

If you are not an EOY subscriber this is for you. Discount prices and a free DVD video of your choice! Click Here for Info

Jim Brown

Send Jim an email

Register for my OilSlick.com newsletter and receive free daily updates and commentary on the energy sector. Register here

New Plays

Fuel for the Fire?

by James Brown

Click here to email James Brown

Editor's Note:

The U.S. stock market is up big time in the last two weeks. Will the June non-farm payroll data (jobs report) become an excuse to sell and take profits or will it add fuel to the fire and lift the market even higher?

Today's ADP report showed a gain of +157,000 jobs versus estimates for +70,000. Tomorrow economists are expecting the government's job data to show +105,000 in June versus +54,000 in May with the unemployment rate unchanged at 9.1%. This month it seems that estimates for the job report tomorrow are all over the map so it's hard to tell how investors might react.

I am not adding any new candidates tonight. Stocks are short-term overbought and need to correct but we all know the market can always grow more overbought. We'll wait and see how the market reacts to the economic data tomorrow and then add new candidates this weekend.

- James

In Play Updates and Reviews

Targets, Triggers, and Stops

by James Brown

Click here to email James Brown

Editor's Note:
The stock market continues to extend its gains. Meanwhile we're seeing some action on our play list. CAKE hit our first profit target. CPHD hit our trigger to launch bullish positions. AON hit our stop loss.


Current Portfolio:

BULLISH Play Updates

AMBEV - ABV - close: 33.89 change: -0.33

Stop Loss: 31.25
Target(s): 35.75, 37.75
Current Gain/Loss: unopened
Time Frame: 6 to 9 weeks
New Positions: Yes, see trigger

07/07 update: It looks like ABV is starting to correct. Speaking of corrections I need to make one right here. I had this trade listed with two different entry points. We want to launch bullish positions on a dip at $33.25 with a stop loss at $31.25. More conservative traders could wait for a dip closer to the 50-dma instead as their entry point.

My biggest concern is that I can't find an earnings report date for this Brazilian company. If they report earnings and miss or disappoint while we're long the stock it could be very painful.

Trigger @ $33.25

Suggested Position: buy ABV stock @ $33.25

- or -

buy the Aug. $34 call (ABV1120H34)

Entry on July x at $xx.xx
Earnings Date --/--/-- (unconfirmed)
Average Daily Volume: 6.3 million
Listed on July 5, 2011

American Express Co. - AXP - close: 53.59 change: +0.83

Stop Loss: 49.25
Target(s): 54.75
Current Gain/Loss: unopened
Time Frame: up to its earnings report
New Positions: Yes, see trigger

07/07 update: Financial stocks were some of the best performers today. AXP rallied to a new multi-year high. Shares still look overbought given the rally so I wouldn't chase it. There is no change from my weekend comments.

I am suggesting we launch bullish positions on a dip at $51.00. More conservative traders could wait for a dip closer to $50.00 instead. I'm setting our target at $54.90 but that might be a little optimistic since we do not want to hold over the July 20th earnings report.

Trigger @ 51.00

Suggested Position: buy AXP stock @ 51.00

- or -

buy the Aug. $50 call (AXP1120H50)

Entry on July x at $xx.xx
Earnings Date 07/20/11 (unconfirmed)
Average Daily Volume: 7.0 million
Listed on July 2, 2011

Cheesecake Factory Inc. - CAKE - close: 33.83 change: +0.67

Stop Loss: 30.75
Target(s): 33.60, 37.00
Current Gain/Loss: + 7.2%
Time Frame: 8 to 10 weeks
New Positions: see below

07/07 update: Target achieved. CAKE rallied toward resistance at $34.00 and stalled. Our first target to take profits was hit at $33.60. The plan was to exit our July calls completely while only taking some money off the table if you own the stock.

We should expect a pull back soon now that CAKE is at resistance. I am not suggesting new bullish positions at this time.

Current Position: Long CAKE stock @ $31.53

- or -

July $33 call (CAKE1116G33) Entry @ $0.75, exit 0.80 (+6.6%)

07/07 Target hit @ 33.60. CAKE +6.5%, option @ $0.80 (+6.6%)
07/05 adjusted 1st target to $33.60
07/02 new stop loss @ 30.75
06/30 consider the opportunity cost of staying in CAKE. maybe you should exit early
06/28 New stop loss @ 29.65
06/09 CAKE is bouncing from the 200-dma as expected.
06/04 More conservative traders may want to exit early. We are expecting a drop to the 200-dma.


Entry on May 20 at $31.53
Earnings Date 07/20/11 (confirmed)
Average Daily Volume: 1.0 million
Listed on May 19th, 2011

Cepheid - CPHD - close: 33.34 change: -1.77

Stop Loss: 31.85
Target(s): 33.00
Current Gain/Loss: + 1.0%
Time Frame: 3 to 5 weeks
New Positions: see below

07/07 update: Our new play on CPHD is already triggered. The stock was downgraded this morning and shares spiked lower to $32.60. Our trigger to launch bullish positions was hit at $33.00. I would still consider new positions now. Cautious traders may want to wait for a dip closer to support near $32.00 and the 50-dma instead.

Our target is $36.00. Aggressive traders could certainly aim higher but we don't want to hold over earnings in late July (date is unconfirmed).

NOTE: Readers may want to avoid the call options. The spreads are wide.

Current Position: Long CPHD stock @ $33.00

- or -

Long AUG $35 call (CPHD1120H35) entry @ $1.45

Annotated chart:

Entry on July 7 at $33.00
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 484 thousand
Listed on July 6, 2011

Dr. Pepper Snapple - DPS - close: 41.65 change: -1.16

Stop Loss: 39.40
Target(s): 46.00
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

07/07 update: It is a little bit alarming to see DPS off -2.7% with the market in rally mode today. The relative weakness is due to a downgrade from Barclays citing valuation concerns. We have been expecting a pull back so our strategy is unchanged.

Our plan is to buy a dip near support at $41.25. Normally I would avoid holding over earnings but I am tempted to hold over DPS' late July earnings report. Our multi-week target is $46.00.

Trigger @ $41.25

Suggested Position: buy DPS stock @ $41.25

- or -

buy the Aug. $40 call (DPS1120H40)

Entry on July x at $xx.xx
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume: 1.8 million
Listed on June 30, 2011

Ecolab Inc. - ECL - close: 56.64 change: +0.02

Stop Loss: 53.45
Target(s): --.--, 59.90
Current Gain/Loss: + 6.1%
Time Frame: 6 to 8 weeks
New Positions: see below

07/07 update: ECL tagged a new high and then reversed. Shares closed virtually unchanged on the session. This could be a sign of a top. I am suggesting we exit our July calls tomorrow (Friday) at the closing bell (assuming we don't see ECL hit our final target at $59.90). I am not suggesting new positions at current levels.

Current Position: Long ECL stock @ 53.35

- or -

Long July $55 call (ECL1116G55) Entry @ $0.60

07/07 Plan on exiting our July calls tomorrow at the close
07/02 Sell half. ECL @ 56.76 (+6.3%), Option @ $1.75 (+191.6%)
06/30 new stop loss @ 53.45
06/18 new stop loss @ 52.45
06/04 new stop loss @ 51.90

Entry on May 26 at $53.35
Earnings Date 07/26/11 (unconfirmed)
Average Daily Volume: 1.5 million
Listed on May 18th, 2011

Interpublic Group - IPG - close: 12.84 change: +0.25

Stop Loss: 11.49
Target(s): 13.20
Current Gain/Loss: + 5.5%
Time Frame: 4 to 6 weeks
New Positions: see below

07/07 update: IPG quickly rebounded after yesterday's dip and the stock added +1.9%. I am still concerned that IPG looks short-term overbought here. I am not suggesting new positions at this time. More conservative traders may want to use a stop closer to $12.00 instead.

Our plan was to keep our position size small. Our first target is $13.20 near the 2011 highs. FYI: We do not want to hold over the late July earnings report.

- small positions -

Current Position: Long IPG stock @ $12.17

- or -

Long Aug $12.00 call (IPG1120H12) Entry @ $0.85

07/02 new stop loss @ 11.49

Entry on June 29 at $12.17
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume: 7.5 million
Listed on June 28, 2011

Macy's Inc. - M - close: 30.46 change: +1.59

Stop Loss: 27.90
Target(s): 29.90, 32.25
Current Gain/Loss: + 7.6%
Time Frame: 6 to 8 weeks
New Positions: see below

07/07 update: Macy's has soared past resistance at $30.00 on strong June same-store sales. Analysts were expecting +4.9% growth and M delivered +6.7%. This is a very bullish move and paves the way for a run at our final target of $32.25.

Please note that I am suggesting we exit the remainder of our July calls tomorrow at the closing bell.

I am not suggesting new positions at this time. Our plan was to keep positions small to limit our risk.

- small positions -

Current Position: Long M stock @ $28.30

- or -

Long July $29 call (M1116G29) Entry @ $0.56

- or -

(a bit longer-term)
Long Aug. $30 call (M1120H30) Entry @ $0.85

07/07 plan on exiting July calls tomorrow at the close
07/02 new stop loss @ 27.90
07/01 1st Target Hit @ 29.90 (+5.6%), options @ +107.1% (July) & +52.9% (Aug)

Entry on June 28 at $28.30
Earnings Date 08/10/11 (unconfirmed)
Average Daily Volume: 8.6 million
Listed on June 27, 2011

Marsh & McLennan Companies - MMC - close: 31.46 change: +0.36

Stop Loss: 29.75
Target(s): 34.00
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

07/07 update: MMC is still consolidating sideways. Aggressive traders might want to consider launching small positions now or on a dip near $31.00. I am currently suggesting a buy-the-dip trigger at $30.65. If triggered we'll use a stop at $29.75. Our target is $34.00 but that might be a little optimistic. MMC does not move super fast. We do not want to hold over the early August earnings report.

Trigger @ 30.65

Suggested Position: buy MMC stock @ 31.00

- or -

buy the Aug. $31 call (MMC1120H31)

Entry on July x at $xx.xx
Earnings Date 08/03/11 (unconfirmed)
Average Daily Volume: 3.4 million
Listed on July 2, 2011

Nanometrics Inc. - NANO - close: 20.76 change: +0.99

Stop Loss: 17.65
Target(s): 19.25, 22.00
Current Gain/Loss: +23.4%
Time Frame: 6 to 8 weeks or more
New Positions: see below

07/07 update: NANO was one of the market's best performers today. Shares saw an intraday rally to $21.56, a +9.0% move, but the rally faded to just +5.0%. I didn't see any headlines supporting this relative strength. The close over resistance at $20.00 is obviously bullish.

Our final exit target is $22.00. More aggressive traders may want to aim higher. I am not suggesting new positions at this time.

Current Position: Long NANO stock @ $16.82

07/05 new stop loss @ 17.65
07/02 new stop loss @ 17.45. Consider an early exit right here @ $20.00
06/30 new stop loss @ 16.90
06/28 First Target hit @ 19.25 (+14.4%)
06/28 New stop loss @ 16.49

Entry on June 13 at $16.82
Earnings Date 08/04/11 (unconfirmed)
Average Daily Volume: 467 thousand
Listed on June 11th, 2011

UnitedHealth Group Inc. - UNH - close: 52.63 change: -0.50

Stop Loss: 49.85
Target(s): 54.75
Current Gain/Loss: + 2.6%
Time Frame: 3 to 4 weeks
New Positions: see below

07/07 update: Healthcare stocks underperformed today. UNH saw a dip toward short-term support at $52.00 before paring its losses. There is no change from my weekend comments. I would wait for a dip into the $51.00-50.00 area before launching new positions.

We do not want to hold over the July 19th earnings report.

- small positions -

Suggested Position: Long UNH stock @ $51.25

- or -

Long July $50 call (UNH1116G50) Entry @ $2.07

07/02 new stop loss @ 49.85

Entry on June 24 at $51.25
Earnings Date 07/19/11 (confirmed)
Average Daily Volume: 7.9 million
Listed on June 23, 2011

BEARISH Play Updates

St. Jude Medical - STJ - close: 47.82 change: -0.07

Stop Loss: 50.05
Target(s): 47.00, 45.25
Current Gain/Loss: + 6.2%
Time Frame: 6 to 8 weeks
New Positions: see below

07/07 update: Relative weakness in healthcare-related stocks helped contribute to another failed rally in STJ today. Shares are struggling under their 30-dma. More conservative traders may want to lower their stop loss toward $49.00 or even $48.65 just in case the market rallies tomorrow following the jobs report. I'm not suggesting new positions at this time.

Earlier Comments:
We wanted to keep our position size small (about half or less than a normal trade) to limit our risk.

(Small Positions)

Current Position: Short STJ stock @ 51.00

07/01 STJ has filled the gap just as expected
06/25 Adjusted final target to $45.25
06/23 1st target exceeded. Gap down at $46.50 (+8.8%)
06/23 new stop loss @ 50.05
06/16 exit June $50 put @ $1.95 (+95%)
06/15 prepare to exit our June $50 puts on Thursday at the close
06/04 New stop loss @ 51.05, added second target at $45.75
05/23 New stop loss @ 52.26

Entry on May 20 at $51.00
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume: 2.6 million
Listed on May 16th, 2011


Aon Corp. - AON - close: 51.83 change: +0.35

Stop Loss: 52.05
Target(s): 47.00
Current Gain/Loss: - 0.8%
Time Frame: 6 to 8 weeks
New Positions: see below

07/07 update: AON spiked higher this morning and briefly traded above resistance at its 100-dma and the $52.00 level. Our stop loss was hit at $52.05.

(small positions only)

Current Position: short AON stock @ 51.61

07/07 stopped out @ 52.05 (-0.8%)
07/02 Readers may want to exit early with AON @ 51.75
06/18 adjusted exit target to $47.00
06/16 planned exit, June $50 put @ +11.1%
06/16 new stop loss @ 52.05
05/31 New stop loss @ 52.75
05/23 gap down entry @ 51.61


Entry on May 23 at $51.61
Earnings Date 07/29/11 (unconfirmed)
Average Daily Volume: 1.7 million
Listed on May 21st, 2011