Good evening traders. The markets made more 52-week highs today before retreating at the end of the day. I expect to see some weakness in the markets heading into Wednesday's FOMC announcement but the dips are probably going to be short lived as they have been for the past 3 months. Although the democratic version of the financial reform bill was voted down tonight so that may give a boost to the financials tomorrow. It will be interesting to see what the Fed says on Wednesday. If their language changes it could spark some serious selling so please stay nimble with any long positions. If the language remains consistant we sould get another spike higher. We are looking to exit QQQQ in the coming days. Our long plays on FSYS and ENZ were tiggered today and we also released a short play on MCO.
BULLISH Play Updates
Enzo Biochem, Inc. - ENZ - close 6.49 change -0.18 stop 5.91
ENZ was strong this morning before selling off in the afternoon. The stock sold off and our trigger to buy shares $6.52 was hit. The stock has plenty of support down to its 20-day SMA which is currently at $6.22. I've also been monitoring the Accumulation/Distribution studies on ENZ and they are bullish. This essentially means that institutional money has been flowing into the stock as evidenced by the fact that volume is higher on days when the stock has been increasing, and volume has been lighter on days when the stock has been decreasing. Traders can initiate new positions. I'll repost my comments from the new play release on Saturday: ENZ broke out of horizontal resistance, which should now act as support, in the $6.45 area on Friday. I expect the stock to turn back and retest this area which is where I would like to enter the stock. I consider this to be an aggressive play so please use small position size to limit risk. There are two things to be aware of. First, the average daily volume on this stock is 160,000 but it has been increasing on the breakout which is a bullish sign. Second, there are two areas where traders can place stops: 1) just below the 20-day SMA at $6.10 which will limit risk but could also shake you out of the trade; or 2) just below the 50-day SMA at $5.91 which is a little more aggressive if ENZ reverses. Our official stop will be $5.91. Our first target is $7.20 and our second target is $7.70. Our time frame is a couple of weeks.
From a fundamental perspective, ENZ may benefit from the healthcare reform bill as they provide technology to reduce costs and streamline biotech research and development. If this story becomes more mainstream these types of stocks could see shares spike. These are just my thoughts about some recent articles I've read about who will benefit from the bill.
*NOTE: Please use small position size to limit risk as I consider this to be an aggressive play. The stock's average daily volume is 160,000 shares which can add to volatility.*
Current Position: Long ENZ stock @ $6.52
Entry on April 26 at $6.52
Earnings Date 6/15/10 (unconfirmed)
Average Daily Volume: 160,000
Listed on April 24, 2010
Excel Maritime Carriers Ltd. â€“ EXM â€“ close 6.81 change +0.06 stop 6.06 *NEW*
Overall EXM had a good day considering the markets were mostly lower. The stock has overhead resistance at $6.88 which it hit and backed off of today. EXM closed above its 200-day SMA today and is still in an uptrend on its daily chart. I am looking for EXM to break through the overhead resistance levels near $6.88. I want to place our first target at $7.10 with a more aggressive target at $7.45. The reason I moved our target down to $7.10 on Saturday is because of the price action on January 11 and 12 of this year. The stock lost about -10% in those two trading days (from high to low) and then proceeded to tank -30% in the ensuing weeks. If anyone was caught holding the bag at these levels and still owns the stock, they will most likely be looking to dump shares which could put pressure on EXM. I suggest readers either take profits or tighten stops if EXM trades to this level. We will make a healthy +8.4% on the trade if that happens. Readers who have not entered positions can do so if there is any weakness in the stock. Our stop was moved up on Saturday to just below the 50-day SMA at $6.06. If EXM trades down here it will have broken the upward trend line and broken through all of its SMA's. Our time frame remains a couple of weeks.
Current Position: Long EXM stock @ $6.55
Entry on April 20 at $6.55
Earnings Date 05/19/10 (unconfirmed)
Average Daily Volume: 1.2 million
Listed on April 19th, 2010
Fuel Systems, Inc. â€“ FSYS â€“ close 32.48 change -1.20 stop 29.39
We got our retracement on FSYS and our trigger to buy shares at $32.75 was hit. I see fairly good support down to $31.85 which is also the stock's 20-day SMA. The 50-day SMA at $30.84 is also a support level. FSYS is still in an upward trend on its daily chart and is also forming an ascending triangle that has some time to play out. The company trades at about an 11 PE and its earnings have been steadily increasing over the past year. I believe FSYS will have no issues rallying to $34.65 prior to its earnings report on May 6. Our first target is $34.65 and our second target is $37.00, but there is probably not enough time to reach this level prior to the earnings report. If we get filled and FSYS reaches our target we will earn +5.8% on the trade. We will use a stop at $29.39 which is below its 50-day SMA and a recent swing low. Traders can initiate positions but please be prepared for a quick exit as FSYS tends to be volatile. Our time frame is about two weeks.
Current Position: Long FSYS stock @ $32.75
Entry on April 26 at $32.75
Earnings Date 05/06/10 (unconfirmed)
Average Daily Volume: 720,000
Listed on April 22, 2010
Medicis Pharmaceutical Corp. â€“ MRX â€“ close: $25.53 change -0.03 stop: $24.29
MRX got knocked down again at $25.80 level. If my counting is correct this makes 6 times the stock has tested $25.80 since April 12. If the stock keeps knocking I expect the door to open soon. If it breaks out we should hit our target of $26.45. I suggest traders consider tightening stops if MRX rallies into to $25.80 again to protect profits. MRX continues bouncing back and forth between its SMA's and the price is still compressing. We should know which direction the price will ultimately go in the next day or two. Our stop is $24.29 which is below the 50-day SMA. Our first target is $26.45 and our second target is $27.75, which is just below its 52-week high. I am not suggesting new positions at this time.
Current Position: MRX stock @ $25.00
Entry on April 14 at $25.00
Earnings Date 5/06/2010 (unconfirmed)
Average Daily Volume: 1.0 million
Listed on April 13th, 2010
BEARISH Play Updates
Powershares QQQQ Trust - QQQQ - close: 50.52 change: +0.21 stop: 50.95
QQQQ made another 52-week high today before retreating at the end of the day. I expect to see some weakness in the markets heading into Wednesday's FOMC announcement but the dips are probably going to be short lived as they have been for the past 3 months. My comments from Saturday remain the same on how to exit this position. I expect the markets to continue their volatility this week as the bulls and bears continue the battle. This should give us some good potential exit points on this trade. I have two targets: the first is $49.55 which is just above the lows on Tuesday, and the second is just above QQQQ's 20-day SMA (now at $49.26). I will tighten stops if these levels are approached with the assumption that I will be taken out. QQQQ has not touched to its 20-day SMA since February 5 and it is way overdue. Our aggressive target on this trade is $47.00 but we are looking to exit close to the above mentioned levels. Our time frame is 1 to 5 days.
Current Position: Short QQQQ at $49.05
Suggested Position: Buy PUT May $49.00, Ask at entry, $1.00
Entry on April 12th, 2010
Earnings Date Not Applicable
Average Daily Volume: 49.4 million
Listed on April 10, 2010