Option Investor

Daily Newsletter, Tuesday, 3/6/2012

Table of Contents

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

Market Wrap

Super Tuesday

by Jim Brown

Click here to email Jim Brown
This may be Super Tuesday for Republicans but it was not a super day in the markets.

Market Statistics

The Dow was not super today with a loss of more than 200 points. This was the first triple digit loss since December 28th and the first decline of more than 200 points since November 23rd. This was the longest winning streak without a triple digit loss since 2006.

The drivers for the decline, other than just needing a rest, were worries over Greece, lower growth in Europe and China and a surprise decline in GDP for Brazil.

Greece is back in the headlines on fears the private sector debt swap is not going to be approved. That would kill the second 130 billion euro bailout scheduled for March 20th. Greece needs 75% of the private sector debt to be tendered in the debt swap in order to enact the collective action clauses to force the remainder of debt owners to take the loss.

Greek officials were blanketing the news wires with threats of default should the debt swap not be approved. This is typical of this type of situation. They are trying to scare bond holders into tendering their bonds by threatening to pay them zero if the swap is not approved. The Greek Finance Minister said "Greece does not contemplate the availability of funds to make payments to private sector creditors that decline to participate in the debt swap." In another comment "the official sector (US, ECB, IMF) will not finance Greece's economic program and Greece will need to restructure its debt on different terms to those set out in the current invitation." That was a nuclear threat for a disorderly default if Greece failed to get the second bailout because of a failed debt swap.

European banks and large U.S. banks sold off on the worries over the potential for failure in the debt swap.

The worry over Greece for the last two years and the European sovereign debt problems in general have forced austerity all across Europe. That has forced economic weakness and it is growing. We saw lower than expected numbers from the U.K. and the EU over the last several days. There is a worry Europe will fall back into recession. The EU economy contracted by 0.3% in Q4.

China warned that growth would slow to 7.5% from prior estimates of 8.0%. While that is slow for China it is still above the 7.0% level needed to continue expanding employment and keep China's economic growth surge intact. This would be the lowest growth target since 2004.

Brazil reported GDP for 2011 at 2.7% that was slightly below estimates of 2.8%. You would have thought they said GPD fell by -2.7% from the impact on the markets. Most analysts expect the central bank to cut rates on Wednesday in order to stimulate growth. That growth is expected to rise to 3.3% to as much as 4.5% before the end of 2012.

U.S. factory orders for January declined -1.0% on Monday but that was better than the consensus estimate of -1.5%. It was the first decline in three months. However, January is not normally a strong month for factory orders. It was a negative headline for the market but it was not unexpected.

This flurry weak economic news finally overwhelmed the global markets and especially those in the USA. Even with the Dow down -1.6% today this was NOT a material event, it has been expected for weeks and it will be beneficial for future gains.

Today's economic news was insignificant. The weekly chain store sales snapshot showed a +1.3% rise in sales last week. This report is normally ignored because of the high volatility from week to week. It had no bearing on today's market.

The calendar for the rest of the week is very busy with employment reports and other events like the Apple announcement and the Greek debt swap.

Economic Calendar

The Apple announcement is scheduled for 10:AM Pacific time, 1:PM ET, and everyone is still expecting it to be an iPad 3 announcement. If the new iPad does have 4G LTE technology then expectations will immediately begin to anticipate LTE to be in the next version of the iPhone. This will be a major announcement. The stock dropped sharply at the open today to trade as low as $516 before rebounding to close at $530. From Thursday's high at $548 to this morning's low of $516 there was a -$32 drop. Does this mean the normal Apple volatility associated with major announcements has now passed? If you knew the answer to that question you could be a millionaire by Wednesday's close. If the answer is no then we could see Apple at $500 before the week is out. If the answer is yes then we could easily see new highs over $550.

Apple Chart

In stock news today Consol Energy (CNX) announced it will idle the Virginia Buchanan mine until demand increases and existing supplies decline. The problem is the warm winter weather that failed to deplete the thermal coal supplies stockpiled for the winter months. The same problem exists in natural gas supplies which could reach new highs ahead of the summer usage period.

Consol will reduce production by 295,000 tons per month as it reduces continuous mining operations to five days a week. Last month Consol said it would idle another unit in northern West Virginia.

Consol Chart

Online streaming music provider Pandora Media (P) said it experienced a surge in listeners but will continue posting losses the rest of the year. Earnings for the current quarter are expected to be a loss of 18 to 21-cents. Analysts were expecting a loss of only 2-cents. For the full year Pandora expects to lose 11 to 16-cents.

Pandora said Q4 revenue rose +71% and estimated revenue for all of 2012 at $410 to $420 million. That was in line with estimates of $418 million. Pandora shares fell about -15% after the news.

Pandora Chart

Cypress Semiconductor (CY) warned on Q1 earnings saying it now expects revenue of $180-$190 million, down from the $200-$210 million estimate in January. It now expects earnings of 8-11 cents compared to analyst estimates of 16 cents and $205.6 million. Despite the warning Cypress said bookings stabilized in January and improved over the last six months. "We continue to believe the current quarter will be the bottom for revenue and bookings." Shares dipped to $15 in afterhours trading but rebounded to unchanged.

Cypress Chart

Monster Worldwide (MWW) extended its gains another +11% after it confirmed it was hiring financial advisers to help it improve operations. On Monday Monster said it hired Stone Key Partners LLC and BofA Merrill Lynch to explore strategic alternatives. In plain language that means to hunt for a buyer. Monster missed earnings estimates for Q4 and said it was laying off 400 people.

Monster Chart

The dollar spiked again on the GDP announcement from Brazil and the worries over Greece. The dollar is always the safe port in a storm but once the Greek bailout is behind us I expect the Euro to recover. The strong spike in the dollar depressed commodities again.

Dollar Index Chart - 30 Min

Crude oil declined on the lower growth worries and the spike in the dollar. Lower growth equals lower demand. However, despite some heavy selling the bears were unable to push it much below the $105 support level. Overnight tonight it is holding right at $105.

Also pushing oil prices lower was news Iran has agreed to let IAEA inspectors visit the Parchin military complex, which was denied on the last visit. Iran is suspected of conducting tests on creating a housing and trigger for a nuclear weapon at Parchin. Conspiracy theorists would say Iran has now had time to clean up any evidence of those tests. Will the IAEA be allowed unrestricted access or only be allowed to see what Iran wants to show them in order to win a public relations victory? It will be interesting to see what the IAEA reports after it visits Parchin.

Gasoline prices declined for the first time in a month. Prices declined a penny to $3.76 per gallon. Enjoy it while it lasts. The EIA expects gas prices to average $3.92 this summer and they are normally low because they don't want to become a political pawn.

WTI Crude Chart

Brent Crude Chart

Gold also declined on the spike in the dollar and the expectations for industrial demand to decline thanks to the slowing global economy. This is temporary and it came to rest on the 200-day average. In theory it could return to the 300-day at $1600 and still retain its longer term uptrend.

Gold Chart

Silver Chart

In the weekend commentary I showed a Russell 2000 chart with the tag line, "Turn out the lights, the party is over." The Russell breakdown from the month long consolidation pattern was clearly a signal that fund manager sentiment had changed. It was the leading indicator for a potential decline in the broader markets. Obviously traders did not have the news events of this week but that just illustrates another point. "The market will always find an excuse when it is time to take profits."

I have said that many times. When the market can no longer make upward progress it will sometimes linger at lofty levels until traders find an excuse to sell. Those excuses this week were Greece, Europe, China, Brazil, payrolls, etc. All of those existed as problems the prior week but once the market began to decline the market reporters played pin the tail on the excuse and those were the ones that popped up.

Now that a long awaited decline has appeared the national pastime will be picking a bottom. The technicians were out in force today calling for a decline in the S&P to 1300, 1285, 1200 and even 1160. Get a life!

The market is down for two days and every bearish analyst is trying to make a name for themselves by guessing a bottom. Everyone has been saying for weeks we needed a -3% to -5% decline to equalize pressures and allow new buyers into the market for the next leg higher. The S&P declines -2.3% from the March 1st highs and suddenly we should expect a new bear market? Talk about jumping to conclusions.

The S&P came to a stop at 1340, which just happens to be decent support. Depending on the ADP Employment report Wednesday morning and the Apple news it could easily be a rebound point.

If the decline does continue I don't think we will see a move below 1300. That would be a -5.7% decline from the 1375 high and well within the realm of reason for a normal bout of profit taking. Personally I don't think we will see a decline that low. It may happen over the next month simply because of the lack of news to overcome the normally slow March period. I believe we will find a bottom well before that simply because so many people have been waiting on the sidelines for a buying opportunity. Most retail traders and quite a few money managers missed the dip in December or they were expecting to buy the normal January dip that never occurred.

Volume was 7.5 billion shares and a decent increase over the last week. More importantly down volume of 6.7 billion shares was roughly 10:1 over advancing volume of 669 million. Decliners beat advancers 5764 to 876. Those numbers normally signify a capitulation day but capitulation normally comes after a string of losing sessions not after only three sessions.

The volume imbalance is a key point. Decliners have been higher than advancers for three sessions and rising. It is possible today was a reversal day but I think there will be a watch and see attitude depending on the ADP report. If Apple's announcement is seen as bullish and the stock rockets higher the Nasdaq will follow and that could drag all the indexes back into the green. We just don't know if that will be enough to drag hesitant buyers off the sidelines before the Nonfarm Payrolls on Friday.

Major support at 1340 and 1310.

S&P Chart

The Dow may have posted its first 200 point loss since November 23rd and first triple digit loss in 2012 but came to a screeching halt at support at 12,750. This is exactly where you would have expected it to stop on a half-hearted bout of profit taking. If traders are not enticed to buy the dip we could easily see a drop to 12,600. I think it would take some additional bad news to break below that support level but the market always seems to over react to every situation. Fortunately the next two support levels are very easy to see and even a novice chart reader should have no trouble picking entry points for a bounce.

Support at 12,750, 12,600, 12,350.

Dow Chart

I jinxed the Nasdaq over the weekend when I pointed out the long unbroken uptrend since December. Fortunately the breakdown had a clear support target at 2900 and that is exactly where the drop stalled at 2900.58.

The Nasdaq direction is up to Apple. Whatever happens to Apple shares after their 1:PM announcement is going to determine the direction of the Nasdaq. This is not going to be a fundamental or technical move. It will be an Apple move as the only $500 billion market cap stock in the index.

Should 2900 break the next target would be 2795.

Nasdaq Chart

The Russell 2000 may have telegraphed the broader market decline but I am not sure it is going to do us the same favor to the upside. I suspect fund managers are going to be nervous about moving back into the small cap sector until they feel the broader market has finished taking profits. A spike by Apple is not likely to suddenly rebuild confidence in the market or the small caps.

The Russell has support at every 20 point level within reach. That is 780, 760 and 740. I would love to see 780 hold but I am not making any predictions. The Russell is already down over -5% from the 830 high on Feb-28th. The Russell is known for overreactions so a continued decline to 780 or lower is entirely possible.

We need to watch the Russell for signs of fund managers returning but I doubt it will be immediately obvious.

Russell 2000 Chart

Tuesday was a solid session of profit taking with a 10:1 volume imbalance. It is too bad there were not a couple more down days in the prior week so we could call it a capitulation day. That is still possible and I would be thrilled to see a solid rebound begin. I think it would be far too easy for a three day dip to erase three months of bullish imbalances but it is possible.

ADP and Apple will be the market movers for Wednesday so grab a cup of coffee and buckle your seatbelt. It could be a wild ride.

Have you tried my new Ultimate Investor newsletter? This publication focuses on "investing" not "trading." The goal is to enter lower volatility positions with strong fundamentals and sleep comfortably at night. Click here for the newsletter description

Jim Brown

Send Jim an email

New Plays

Drug Stores

by James Brown

Click here to email James Brown


Rite Aid Corp. - RAD - close: 1.66 change: +0.00

Stop Loss: 1.54
Target(s): 1.85
Current Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
RAD operates approximately 4,700 drug stores across the U.S. The stock appears to be ignoring the market's decline today. Shares recently broke out from a three-week consolidation and traders bought the dip this morning. The trend is bullish but I would consider this an aggressive trade since we might be going against the grain if the major indices continue to sink.

I am suggesting small bullish positions at the opening bell. We'll try and limit our risk with a stop loss at $1.54. More conservative traders may want to use a stop closer to $1.59 instead.

Small Positions @ the Open

Suggested Position: buy RAD stock @ (the open)

Annotated chart:

Entry on March 07 at $ xx.xx
Earnings Date 04/12/12 (unconfirmed)
Average Daily Volume = 8.7 million
Listed on March 06, 2011

In Play Updates and Reviews

AKS Hits Our Bearish Target

by James Brown

Click here to email James Brown

Editor's Note:
The stock market delivered its worst day for 2012 with a widespread sell-off. This pushed AKS to our bearish target. We also saw DFS, GGG, and NYX get stopped out.

Current Portfolio:

BULLISH Play Updates

Archer-Daniels-Midland Co - ADM - close: 30.39 change: -1.26

Stop Loss: 29.75
Target(s): 34.00
Current Gain/Loss: - 2.6%
Time Frame: 3 to 6 weeks
New Positions: see below

03/06 update: Ouch! ADM really underperformed today with a -3.9% decline. Investors may have been unnerved that ADM said two of its top execs were retiring and that the company was consolidating two smaller divisions into existing larger ones. Shares have fallen below what should have been support near $30.50. The next level of support is $30.00 with the 50-dma. I am not suggesting new positions at this time.

current Position: Long ADM stock @ $31.21

- or -

Long Mar $32 call (ADM1217C32) Entry $0.47

Entry on February 15 at $31.21
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 5.6 million
Listed on February 14, 2011

American Intl. Group - AIG - close: 29.05 change: -1.34

Stop Loss: 28.40
Target(s): 34.50
Current Gain/Loss: - 4.7%
Time Frame: 4 to 8 weeks
New Positions: see below

03/06 update: Financial stocks were hit hard today and AIG was no exception. Shares actually underperformed with a -4.4% plunge toward short-term technical support at the 10-dma. I am concerned because Monday's breakout above resistance at $30.00 now looks like a bull-trap pattern. I am not suggesting new positions at this time.

Earlier Comments:
Our multi-week target is $34.50. FYI: The Point & Figure chart for AIG is bullish with a long-term $42.50 target.

- small positions -

current Position: Long AIG stock @ $30.50

- or -

Long Apr $30 call (AIG1221D30) Entry $1.88

03/06/12 warning! the breakout has reversed!
03/05/12 triggered at $30.50
03/03/12 adjust entry strategy to use a trigger at $30.50, stop loss @ 28.40
03/02/12 trade did not open.

Entry on March 05 at $30.50
Earnings Date 05/07/12 (unconfirmed)
Average Daily Volume = 6.1 million
Listed on March 01, 2011

The Hain Celestial Group - HAIN - close: 40.01 change: -1.10

Stop Loss: 39.75
Target(s): 44.75
Current Gain/Loss: - 2.6%
Time Frame: 6 to 8 weeks
New Positions: see below

03/06 update: HAIN also underperformed today with a sharp -2.6% decline. There was no news to explain the relative weakness. Shares paused at support near $40.00 and its 30-dma. If there is any further weakness tomorrow HAIN will likely hit our stop loss at $39.75.

(small positions)

current Position: Long HAIN stock @ $40.85

03/05/12 new stop loss @ 39.75
03/03/12 new stop loss @ 39.45
02/29/12 triggered at $40.85
02/27/12 trade did not open. Adjusting entry strategy to buy HAIN at $40.85 with a stop loss at $38.95
02/25/12 trade did not open. Try again

Entry on February 29 at $40.85
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 430 thousand
Listed on February 23, 2011

Jos. A. Bank Clothiers - JOSB - close: 51.13 change: -0.58

Stop Loss: 49.75
Target(s): 54.00
Current Gain/Loss: + 0.7%
Time Frame: 6 to 8 weeks
New Positions: see below

03/06 update: JOSB was slowly drifting lower all day long. If the market continues to sink we could see JOSB testing support near $50.00. Readers will want to seriously consider exiting any March call positions now. I am not suggesting new positions at this time.

Earlier Comments:
Further gains could spark a short squeeze. The most recent data listed short interest at 19.8% of the 27.5 million-share float.

current Position: long JOSB stock @ $50.75

- or -

Long Mar $50 call (JOSB1217C50) Entry $1.90

03/06/12 readers may want to cut their losses on any March call positions now.
02/18/12 adjusted exit target to $54.00.
02/14/12 new stop loss @ 49.75

Entry on February 13 at $50.75
Earnings Date 03/29/12 (unconfirmed)
Average Daily Volume = 301 thousand
Listed on February 11, 2011

Charles Schwab - SCHW - close: 13.57 change: -0.27

Stop Loss: 12.90
Target(s): 14.75
Current Gain/Loss: + 2.4%
Time Frame: 4 to 8 weeks
New Positions: see below

03/06 update: SCHW dipped toward short-term support near $13.50 and its 10-dma. There is no change from my prior comments. More conservative traders may want to take profits now.

I am not suggesting new positions at this time.

Earlier Comments:
Our multi-week target is $14.75. FYI: The Point & Figure chart for SCHW is bullish with a $19.00 target.

current Position: Long SCHW stock @ $13.25

- or -

Long Apr $13 call (SCHW1221D13) entry $0.59

03/03/12 new stop loss @ 12.90

Entry on February 27 at $13.25
Earnings Date 04/16/12 (unconfirmed)
Average Daily Volume = 15.9 million
Listed on February 25, 2011

Targa Resources - TRGP - close: 44.21 change: -0.57

Stop Loss: 43.75
Target(s): 48.00
Current Gain/Loss: unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

03/06 update: TRGP held up reasonably well with a -1.2% pull back. Shares essentially churned sideways near $44.00. The overall trend is unchanged.

I am suggesting small bullish positions if TRGP can trade at $45.05 and we'll use a stop loss at 43.75. Our target is $48.00.

Trigger @ $45.05 (small positions)

Suggested Position: buy TRGP stock @ 45.05

Entry on March xx at $ xx.xx
Earnings Date --/--/-- (unconfirmed)
Average Daily Volume = 215 thousand
Listed on March 05, 2011

United States Oil Fund (ETF) - USO - close: 40.13 change: -0.84

Stop Loss: 39.90
Target(s): 43.50
Current Gain/Loss: - 0.3%
Time Frame: 6 to 8 weeks
New Positions: see below

03/06 update: Concerns over a slowdown in China and Europe helped fuel a bounce in the U.S. dollar and a sell-off in commodities. The USO gapped open lower near support at the $40 level. The intraday low was $39.97. If there is any follow through tomorrow the USO will likely hit our stop loss at $39.90.

Earlier Comments:
We do not want to use the USO for long-term positions. This ETF is constantly rolling over its futures positions over time, which can have a negative impact on the share price. FYI: The Point & Figure chart for USO is bullish with a long-term $58.00 target.

(small positions!)

current Position: Long the ETF @ $40.25

- or -

Long April $40 call (USO1221D40) Entry $2.10

03/01/12 new stop loss @ 39.90
02/29/12 new stop loss @ 39.75
02/25/12 new stop loss @ 39.40

Entry on February 21 at $40.25
Earnings Date --/--/--
Average Daily Volume = 8.8 million
Listed on February 18, 2011

Zumiez Inc. - ZUMZ - close: 30.70 change: -0.64

Stop Loss: 29.90
Target(s): 33.00 or 34.50
Current Gain/Loss: + 6.7%
Time Frame: exit ahead of the March 8th earnings
New Positions: see below

03/06 update: Uh-oh! Readers may want to exit early. The pullback in ZUMZ was not that bad (-2.0%) but shares did close outside their rising bullish channel. The stock should still have support near $30.00 and its 50-dma but we have a stop loss at $29.90.

I am suggesting we exit positions tomorrow (March 7th) at the closing bell assuming ZUMZ does not hit our stop (or target) tomorrow.

current Position: Long ZUMZ stock @ 28.75

- or -

Long Mar $30 call (ZUMZ1217C30) Entry $2.35

03/06/12 prepare to exit at the close tomorrow
03/03/12 new stop loss @ 29.90
03/01/12 conservative target hit at $33.00 (+14.7%)
bid on the March $30 call @ $3.30 (+40.4%)
02/29/12 ZUMZ announced better than expected same-store sales growth of +14.2%. We will adjust our conservative exit target to $33.00. Aggressive target is still $34.50. New stop loss @ 29.75
02/28/12 ZUMZ hit our entry point for new positions at $31.05
March $30 calls entered.
02/25/12 new stop loss @ 29.25
02/24/12 ZUMZ did not meet our new entry point conditions.
02/16/12 new stop loss @ 28.90
02/15/12 exited Feb. $30 calls. bid @ $0.55 (-45%)
02/14/12 prepare to exit Feb. $30 calls at the close tomorrow
02/11/12 new stop loss @ 28.45
02/08/12 new stop loss @ 27.90
02/01/12 Trade opened with ZUMZ gapping higher at $28.75

Entry on February 01 at $28.75
Earnings Date 03/08/12 (confirmed)
Average Daily Volume = 627 thousand
Listed on January 31, 2011

BEARISH Play Updates

Arch Coal Inc. - ACI - close: 11.89 change: -0.31

Stop Loss: 13.75
Target(s): 10.10
Current Gain/Loss: + 7.6%
Time Frame: 3 to 6 weeks
New Positions: see below

03/06 update: The sell-off in ACI continues with a -2.5% decline. Shares did pare their losses with a bounce off the intraday low of $11.56. I am not suggesting new positions at this time.

Earlier Comments:
Being short ACI is a popular trade with short interest already at 16.5% of the 210-million share float. That does raise the risk of a short squeeze should the stock (or industry) suddenly find strength.

Our multi-week target is $10.10. The $10.00 level could be psychological support.

(Small positions)

current Position: short ACI stock @ $12.87

- or -

Long Apr $12 PUT (ACI1221P12) Entry $0.49

03/05/12 new stop loss @ 13.75

Entry on March 05 at $12.87
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 9.4 million
Listed on March 03, 2011


Discover Financial Services - DFS - close: 29.93 change: -0.56

Stop Loss: 29.75
Target(s): 31.50
Current Gain/Loss: + 5.6%
Time Frame: 6 to 8 weeks
New Positions: see below

03/06 update: Weakness in the financials set DFS to a -1.8% decline. Shares hit our stop loss at $29.75 intraday.

Current Position: Long DFS stock @ $28.15 exit $29.75 (+5.6%)

- or -

MAR $28 call (DFS1217C28) Entry $1.10 exit $2.65 (+140.9%)

03/06/12 stopped out at $29.75 +5.6%
03/05/12 new stop loss @ 29.75
03/02/12 morning exit for the calls @ $2.65 (+140.9%)
03/01/12 prepare to exit our March $28 calls at the open tomorrow. current bid is at $2.65
02/28/12 new stop loss @ 29.40
02/25/12 new stop loss @ 28.45
02/16/12 new stop loss @ 27.95
02/15/12 new stop loss @ 27.75
02/10/12 triggered at $28.15
02/08/12 new trigger @ 28.15, stop loss 27.25
02/07/12 still not open. Adjust strategy to buy a dip at $28.30, stop loss at $27.40
02/06/12 not open yet. try again.


Entry on February 10 at $28.15
Earnings Date 03/22/12 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on February 04, 2011

Graco Inc. - GGG - close: 48.96 change: -1.59

Stop Loss: 49.75
Target(s): 54.50
Current Option Gain/Loss: - 1.0%
Time Frame: 3 to 4 weeks
New Positions: see below

03/06 update: Ouch! GGG gapped open lower at $49.72, which is underneath our stop loss at $49.75. The play was closed immediately. I could not find any specific news behind today's relative weakness (-3.1% decline). If GGG continues to correct lower the next area of significant support looks like the $45.00 level.

Earlier Comments:
The plan was to keep our position size small to limit our risk.

(small positions)

closed position: Long GGG stock @ $50.25 exit $49.72 (-1.0%)

03/06/12 stopped out at $49.72, a gap down under our stop
03/03/12 new stop loss @ 49.75
02/27/12 triggered at $50.25
02/25/12 trade did not open. Adjust entry to buy a dip at $50.25
02/23/12 trade did not open, try again.
02/22/12 trade did not open, try again.


Entry on February 27 at $50.25
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 414 thousand
Listed on February 21, 2012

NYSE Euronext - NYX - close: 28.45 change: -0.91

Stop Loss: 28.95
Target(s): 34.75
Current Gain/Loss: - 3.6%
Time Frame: 4 to 8 weeks
New Positions: see below

03/06 update: NYX was hammered lower today with a -3.0% declines. Shares saw a big gap down at the open with NYX opening at $29.03. The stock broke down under what should have been support near $29.00 and its simple 200-dma and exponential 200-dma. Our stop loss was hit at $28.95.

Earlier Comments:
We want to keep our position size small.

(small positions)

closed Position: Long NYX stock @ $30.05 exit $28.95 (-3.6%)

- or -

Mar $30 call (NYX1217C30) Entry $0.55 exit $0.15 (-72.7%)

03/06/12 stopped out at $28.95
02/29/12 triggered at $30.05
02/28/12 adjusted trigger to $30.05 and stop to $28.95
02/25/12 adjust entry point strategy to buy a dip at $30.25 and adjust stop loss to $28.75
02/23/12 not open yet, try again.


Entry on February 29 at $30.05
Earnings Date 04/30/12 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on February 22, 2011


AK Steel - AKS - close: 6.91 change: -0.38

Stop Loss: 8.15
Target(s): 7.05
Current Gain/Loss: + 9.2%
Time Frame: 3 to 6 weeks
New Positions: see below

03/06 update: Target achieved. The sell-off in AKS is accelerating. Shares gapped open lower at $7.04. This is actually underneath our planned exit at $7.05. Shares hit an intraday low of $6.80.

(Small positions)

closed Position: short AKS @ $7.76 exit $7.04 (+9.2%)

- or -

Apr $8.00 PUT (AKS1221P8) Entry $0.65 exit $1.19 (+83.0%)

03/06/12 target exceeded. AKS gapped open lower at $7.04


Entry on March 05 at $ 7.76
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 7.6 million
Listed on March 03, 2011