Good evening traders. Many of our positions found reprieve on Monday after Friday's sell off, but we were stopped out of FSYS on bad news from April car sales in Italy. We are still waiting to be triggered on HITK (long), MCO (short) and SINA (short).
The wide market swings and volatility is making it difficult to manage swing trades. I wrote in the weekend updates that I anticipated volatility to continue and that we would probably see another bounce early this week before a bigger drop comes later. I just didn't expect the hard reversal that we got today, so I am cautiously bearish on the market. I still suggest tightening stops on long positions, especially with today's strength. Our portfolio has some stocks from defensive sectors on the long side but we are still waiting to be triggered on short trades in MCO and SINA. The balance of longs and shorts will enable you to take profits in both directions. Staying nimble in the name of the game right now.
BULLISH Play Updates
Corning, Inc - GLW - close 19.81 change +0.56 stop 18.80
We got some reprieve today on GLW as it bounced off of its 50-day SMA and closed higher by +2.91%. My only concern is that the volume from today's gains was significantly lighter than the previous 4 days of selling so I urge traders to be cautious. The stock's upward trend line support has remained intact and the GLW has good fundamentals. The recent heavy selling could have been the capitulation that was needed for the stock to move higher from here. I have listed four potential targets traders can use as a guide to exit this position: $19.80 (this stock closed right at this level today, $20.25, $20.90, and $21.70. If the market continues its rally I will look for GLW to at retest its highs near $20.90. Our stop remains at $18.80 and our time frame is several weeks. Readers who have not entered positions can do so at these levels.
Current Position: Long GLW stock at $20.10
Suggested Position: Buy JUNE $20.00 CALL
Entry on April 29 at $20.10
Earnings Date Over two months
Average Daily Volume: 14 million
Listed on April 26, 2010
Enzo Biochem, Inc. - ENZ - close 6.18 change +0.21 stop 5.74
ENZ rebounded nicely today after Friday's sell-off closing +3.52% higher. My comments about how to manage exiting this position remain the same. First, the stock is above a congestion area that lasted about two months from November to January (see shaded rectangle on chart). Second, ENZ still finds itself in a bull flag that has formed since March 2nd. This bull flag is above the aforementioned congestion area. These two facts tell me that ENZ should find support here. However, if the stock breaks below our stop at $5.74 it is my queue that the stock has technically failed and will probably trade down another 40 or 50 cents, so we will step aside if that happens. In addition, overall market weakness will probably cause weakness in ENZ, although the biotechnology sector can be defensive. Our stop remains at $5.74 and I have listed multiple targets which we will be using as a guide to exit the position. The targets are $6.30, $6.40, $6.70 and $6.95. These are areas where ENZ will most likely find resistance. I suggest traders tighten stops at these levels or simply exit the position. Our time frame is a couple of weeks. Readers who haven't initiated positions can do so using $5.74 as a stop and could be nicely rewarded nicely if ENZ can recover from here, however, I would be prepared for a quick trade.
*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
Gold Fields Ltd - GFI - close 13.44 change +0.18 stop 12.25
Gold miners took a breather today and so did GFI closing down -1.64%. I expected the miners momentum to continue today but it just wasn't meant to be. The company reports earnings Thursday before the bell so I suggest readers exit this position prior to Wednesday's close to limit risk and preserve capital. There may not be enough time to reach our target of $13.75 so I would like to lower the target to $13.50 which is just below Friday's high. If GFI can make back up here I will gladly take a small profit on the trade. Gold Miners were one of the strongest sectors on Friday while the market was under severe pressure. This could happen again if the market breaks lower tomorrow. Our stop is $12.79 which is just below the low from April 28th and the 20-day SMA. Our time frame is 1 to 2 days. I am not suggesting new positions at this time. *NOTE: Please use small position size to limit risk as gold stocks tend to be volatile.*
Current Position: Long GFI stock at $13.21
Suggested Position: Buy MAY $13.00 CALL, current ask $0.60
Entry on April 29 at $25.21
Earnings Date May 6, 2010 (unconfirmed)
Average Daily Volume: 5.3 million
Listed on April 28, 2010
Hi-Tech Pharmacal Co. - HITK - close 25.23 change +0.90 stop 22.45
We almost were triggered on HITK at $25.25 but the stock closed just shy. The stock has now closed above the downtrend line that started on January 4th. It also has upward trend line support from August 2009. I suggest readers use one of two triggers to buy HITK stock. If the stock pulls back buy the stock on weakness. However, if HITK breaks out to $25.25 before pulling back buy the stock. There is little resistance up to $26.50 which is our first target. A more aggressive second target is $27.85. Our initial stop is $22.45 which is below the stock's 20-day and 50-day SMA. Our time frame is several weeks.
Trigger to buy HITK on weakness or a breakout above $25.25, whichever happens first.
Suggested Position: Long HITK stock at one of two triggers listed above.
Entry on April xx at $xx.xx
Earnings Date July 5, 2010 (unconfirmed)
Average Daily Volume: 230,000
Listed on April 29, 2010
BEARISH Play Updates
Moody's Corp. - MCO - close 25.23 change +0.51 stop 28.60
MCO is still not cooperating with our entry trigger which is now $25.45. The stock traded up to $25.28 today and closed +2% higher. My comments from the weekend remain the same. I am essentially suggesting short positions on any relief bounce in MCO. There is strong resistance in the $26.00 to $26.50 area which I expect to hold if MCO can even make it back up there. MCO's chart is broken and a lot of damage has been done. The stock is forming bear flags 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 last week. I am bearish on MCO and if the market starts a significant pullback MCO could be a nice winner for us. Our initial stop is $28.60 but will be adjusted after our entry is triggered. There is plenty of resistance and congestion just overhead. Our target is $23.25, with a more aggressive target of $21.85 which could get hit if things get ugly. Our time frame is a couple of weeks.
Suggested Position: Short MCO at $25.65
Suggested Position: Buy JUNE $25.00 PUT, current ask $1.58
Entry on April xx at $xx.xx
Earnings Date Over two months
Average Daily Volume: 3.5 million
Listed on April 26, 2010
Sina Corporation - SINA - close 36.68 change +0.45 stop 42.25
We did not get triggered on SINA today as it traded in a tight range. The stock traded as high $37.31 in the first 15-minutes but was weak the remainder of the day. My comments from the weekend remain the same. SINA is forming a descending triangle on its daily and weekly charts. The stock did find support at $35.25 last week and bounced nicely. However, I feel the conditions are ripe for this stock trade lower in the coming weeks, especially if we get a sustainable market correction. Its 20-day SMA and 20-week SMA are overhead which should provide good resistance. The 50-period and 200-period SMA's are providing some support for the stock right now, but I feel it is only a matter of time before the stock breaks these SMA's. I suggest readers short SINA if it trades up to $37.60 or if the stock trades down to $34.95, whichever occurs first. I am going to place a wide initial stop at $42.50 until we know where the position was entered. Once we are triggered the stop will be adjusted. Our first target is $33.25 which is a point where I would tighten stops to protect profits. A more aggressive 2nd target is $30.50. If a market correction gets going I think SINA could easily trade down to this level.
Suggested Position: Short SINA at $37.60 or $34.95, whichever occurs first.
Suggested Position: JUNE $35.00 PUT, current ask $1.55
Entry on May xx at $xx.xx
Earnings Date June 9, 2010 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on May 1, 2010
CLOSED BULLISH PLAYS
Fuel Systems, Inc. â€“ FSYS â€“ close 29.84 change -1.63 stop 29.39
The rally off of Friday's lows continued in FSYS early Monday morning as the stock traded +3% higher, but that was immediately stopped dead in its tracks when news broke that April new car registrations in Italy fell -15.7%. The stock proceeded to sell off -17% during the next 45 minutes before it found its footing, closing the day down -5.18%. FSYS has a major operation in Italy and traders puked up the stock on the news which triggered our stop at $29.39. So we are flat on the position for a bad loss of -10.26%. Stops that were not taken out on Friday's "whoosh" certainly were today so it will be interesting to see if FSYS can recover from here. For readers who may still have positions I listed 3 targets on the chart to focus on when exiting positions: $30.80, $32.25 and $33.90. These will most likely be areas of resistance. Remember FSYS has earnings on May 6th before the market opens.
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