Good evening traders. It is almost impossible to manage swing trades in this market environment without getting whipsawed around like a rag doll. After finding some footing on Monday post Friday's sell off, the market ripped lower on Tuesday and made new lows. Our positions in ENZ and GLW suffered immensely and are very close to getting stopped out. If we do we will lick our wounds and find better opportunities. GFI reports earnings on Thursday before the bell so I suggest traders exit positions tomorrow. Please see the play update below for my thoughts on how to manage the exit. We are currently breakeven on the GFI trade. We were also triggered on the following positions today: HITK (long), NBR (long)and SINA (short).
Over the last couple of days I wrote that I anticipated volatility to continue and that we would probably see another bounce early this week before a bigger drop came later. I just didn't expect this much volatility to happen during the first two days of this week. It appears the bears are winning the fight right now. I would expect some sort of relief bounce after today's massive sell off but I suspect the bounce will be sold into before going lower again. So I am still cautiously bearish on the market. It is a good idea to take profits off the table on long or short positions when there are huge moves like today. This is exactly what I did with some short positions and will do the same with long positions on a relief bounce. We must stay nimble here and be prepared for anything.
BULLISH Play Updates
Corning, Inc - GLW - close 18.94 change -0.87 stop 18.80
GLW sold off hard with the rest of the market today closing down -4.39% and almost stopping us out of the position. The stock may have found support at its 20-week SMA but if the market weakness continues we will be taken out of the trade. Volume was higher than yesterday's volume on gains which also concerns me. The stock has upward trend line support from November 2nd but the trend line is below our stop. GLW has good fundamentals but the greater force of the market doesn't seem to care and if GLW can't pick it up from here we need to step aside as a larger market correction may be looming. If GLW can muster bounce from here tomorrow readers may consider exiting at $19.20. This is near its 50-day SMA where the stock convincingly bounced higher yesterday and then proceeded to break through today. Other potential targets traders can use as a guide to exit the position are as follows: $19.50 19.80, and $20.25. Our stop remains at $18.80 and our time frame is several weeks unless we are stopped out. I am not recommending new positions at this time.
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 wasn't spared today and closed down -6.15%. The stock peeked its head below the bull flag (traded down to $5.75) and our key support level at $5.80 but ended up closing at $5.80. So our stop was spared by 1 penny. I expected the biotechs to act more defensive on a broader market sell off but that did not happened. So we have some wounds to heel if ENZ can not find legs and our stop is hit. If ENZ can rally tomorrow it may find resistance at $6.00, which is an area I suggest to tighten stops or exit the position to preserve capital. I'll leave my comments from last night about additional key areas traders should be aware of. First, the stock remains above a congestion area that lasted about two months from November to January 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 $6.00, $6.30, and $6.40. These are areas where ENZ will most likely find resistance. I suggest traders tighten stops at these levels or simply exit the position to conserve capital. Our time frame is a couple of weeks unless we get stopped out. I am not recommending new positions at this time.
*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 13.22 change +0.00 stop 12.25
GFI found support $12.85 and bounced the remainder of the day, closing flat. We are about breakeven on the trade. GFI has earnings before the market opens on Thursday and I do not suggest holding positions, unless you know something that I don't. As such, I suggest readers exit GFI at $13.33 tomorrow, or at the close, whichever occurs first. If the price action is under pressure tomorrow in gold miners and/or gold it is probably wise to exit the position early. I would wait for the first 15-minutes of trading and see where the price goes from there. As the price breaks above or below the first 15 minute high or low it may give you clues as to the direction for the remainder of the day. In other words, if GFI happens to gap down but then overtakes its first 15-minute high the stock may have a good chance of recovering, and vice-versa. If any readers have questions on this please feel free to email me. Gold miners were one of the stronger sectors today so if there is weakness in the market GFI could do well. Our stop is $12.79 and we plan to exit the position tomorrow. 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 -0.01 stop 22.45
Finally a bright spot! We were triggered on HITK and are now long the stock. The stock ended up closing down 1 penny and exhibited overall relative strength as the markets tanked. The stock closed above the downtrend line that started on January 4th again today. It also has upward trend line support from August 2009. 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.
Current Position: Long HITK stock $25.25
Entry on May 4th at $25.25
Earnings Date July 5, 2010 (unconfirmed)
Average Daily Volume: 230,000
Listed on April 29, 2010
Nabors Industries Ltd - NBR - close 21.89 change -0.68 stop 20.40
We took advantage of the gap lower today to get long NBR stock at $21.00. NBR traded as low as $20.67 and bounced from there closing at $20.89. This is also the same intraday low as April 27th so this could be a double bottom formation. Our stop is just below this level at $20.40 and if it gets hit we will be gone as it will signal that NBR is probably headed to the $19 area. NBR's business is concentrated in land drilling and services as opposed to offshore drilling. I believe this could bode well for companies like NBR as the oil disaster in the Gulf unfolds. We need NBR to get back above $21.00 to get this trade moving towards our target. Considering the bearish tone in the overall market I would like to also list a lower target at $21.90 that traders may consider as a possible exit area. This is near the highs from last week. If NBR trades to this level it will represent a +4.2% gain. Our second more aggressive targets are $22.75 and then $23.45. Our time frame is a couple of weeks.
Current Position: Long NBR stock at $21.00.
Suggested Position: Buy JUNE $22.00 CALL
Entry on May 4th at $21.00
Earnings Date July 21, 2010 (unconfirmed)
Average Daily Volume: 7.5 million
Listed on April 29, 2010
BEARISH Play Updates
Moody's Corp. - MCO - close 24.46 change -0.77 stop 28.60
MCO is still not cooperating with our entry trigger to short the stock. After today's sell off I expect there to be a relief rally and still want to take advantage of any bounces in MCO. If the stock trades to $25.25 I suggest readers short MCO (previously trigger was $25.45). This is near yesterday's highs and if the stock trades to this level I expect more selling to continue. 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 34.13 change -2.55 stop 38.80 *NEW*
SINA triggered our entry to short the stock at $34.95 today. Once the stock broke below $35.00 it was all she wrote. SINA closed the day down -6.95%. The stock has now broken all of its major daily and weekly SMA's except for the 100-week SMA, which it closed just above today. SINA is bound to get a relief bounce from here but I expect the overhead resistance and SMA's to hold. Our new stop is $38.80 but we will adjust it as the trade develops. Our first target is $33.25 which is a point where I would tighten stops to protect profits. We are less than $1.00 away from hitting this target. If SINA trades down there in the coming days it will represent a +4.8% gain. A more aggressive 2nd target is $30.50. If a market correction gets going I think SINA could easily trade down to this level. Our time frame is several weeks.
Current Position: Short SINA stock at $34.95
Suggested Position: JUNE $35.00 PUT
Entry on May 4th at $34.95
Earnings Date June 9, 2010 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on May 1, 2010