Good evening traders. Our ENZ position is at least starting to move in our direction after the sell-off on Tuesday. We are still waiting to be triggered on our short MCO position which I expect to be opened tomorrow. FSYS appeared ready to break higher today but couldn't gather enough steam. I've released two long plays tonight, one of which is on a gold miner that I expect to be a quick trade.
The FOMC meeting was an absolute dud. This may be the excuse the market is looking for to continue this rally. It will be interesting to see how it all plays out and I would not be surprised to see an attempt at new highs. If nothing else the extended low rates seems to be causing inflationary fears which is why I like our new gold miner play. Good luck trading to you all!
BULLISH Play Updates
Enzo Biochem, Inc. - ENZ - close 6.18 change +0.15 stop 5.74 *NEW*
ENZ had a decent recovery today closing higher by +2.49%, however, the rally was stopped in its tracks at the 20-day SMA. I am looking for ENZ to close above the 20-day SMA in the coming days and we will re-asses our targets and stops. For now I am keeping our stop at $5.74 to prevent from getting shaken out of the trade if there is more volatility in the coming days. I am optimistic ENZ can continue higher from here and like the story behind the stock (see new play release). Our target remains $7.20 and our time frame is a couple of weeks. Readers who haven't initiated positions can do so using the above stop.
*NOTE: Please use small position size to limit risk as I consider this to be an aggressive trade. 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
Fuel Systems, Inc. â€“ FSYS â€“ close 31.50 change +0.09 stop 29.39
FSYS surged higher this morning but then retraced its gains, and pulled a repeat in the afternoon. The good news is that FSYS is still above its uptrend line from March 4th and it remains above its 50-day SMA today. 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. I still like our chances of FSYS rallying into its earnings report on May 6th, especially if we get a bounce in the market from here. But I will feel more comfortable if FSYS can close above today's high of $32.16. Our target is $34.65 with a second target of $37.00, but there is probably not enough time to reach this level prior to the earnings report. If 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 new positions now but please be prepared for a quick exit as FSYS tends to be volatile. Our time frame is about one to 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: $25.10 change -0.09 stop: $24.29
MRX continued to sell-off this morning but buyers showed up at the $24.90 level which is acting as decent support. This is the near the low from April 22 so it appears to be a double bottom on the intraday charts, but it needs to follow through tomorrow morning. My concern is the stock may get stuck between $25.00 and $26.00. I have been suggesting that traders consider tightening stops if MRX rallies into to the $25.80 area to protect profits. The touch of this level yesterday made the 7th time the stock had tested the area since April 12 before being knocked back down. The stock is also forming a symmetrical triangle on its daily chart. This simply means that prices are compressing and should break out soon. Obviously we are hoping for a break to the upside but we will need cooperation from the overall market. A positive sign is that MRX has been in a bull flag for about a month. But the longer price sits here without breaking out, the greater the chance the bull flag resolves itself to the downside. I think it is best to start thinking about an exit to this position to preserve capital and potentially book a small gain. I would like to keep our target at $25.75 and will gladly take a small +3% profit at this level. MRX has support down to $24.88 which is where it bounced today. Our stop is $24.29 which is below the 50-day SMA. 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
Moody's Corp. - MCO - close 25.61 change +0.76 stop 28.60
MCO rallied today +3.06% and almost made it to our trigger to enter short positions at $25.90. There is strong resistance in the $26.00 to $26.50 area which I expect to hold if MCO makes back up here. My comments the past few nights remain the same. MCO's chart is broken and a lot of damage has been done. The stock is forming a bear flag on its daily chart and I believe conditions are ripe for the decline to continue. The stock was hanging on to a recent support level and its 200-day SMA (both in the $26.00 area) which was broken on Monday. I am bearish on MCO and if the market starts to pullback MCO could be a nice winner for us. I would like to place an initial wide stop at $28.60 just in case there is a spike in the stock from short covering or a news event. If that happens I am confident MCO will be sold by many who may still be holding long shares creating additional pressure. There is plenty of resistance and congestion just overhead as well. Our target is $23.25 and our time frame is a couple of weeks.
Suggested Position: Short MCO at $26.25
Suggested Position: Buy JUNE $25.00 PUT, current ask $1.23
Entry on April xx at $xx.xx
Earnings Date Over two months
Average Daily Volume: 3.5 million
Listed on April 26, 2010