Good Evening. June was a good month. We closed 2 positions today which were both winners. I'm trying keep targets and stops fairly tight so we can limit losses and book nice gains. This strategy has caused the trades to be quick and the portfolio to be somewhat narrow, however, I'm trying to release trades daily to keep things active and book quick gains. The SPX has closed down 7 of the past 8 sessions and is oversold. I am suggesting we close LOPE at the open tomorrow due to the oversold conditions. I've released a long play on NYX that I think will benefit from the FinReg bill and an ensuing bounce in the market. Please email me with any questions.
BEARISH Play Updates
eBay, Inc - EBAY - close 19.61 change -0.08 stop 20.80 *NEW*
Target(s): 19.10, 18.40, 17.75
Key Support/Resistance Areas: 22.90, 21.50, 20.43, 20.30, 18.90, 18.39
Current Gain/Loss: +3.26%
Time Frame: 1 to 2 weeks
New Positions: Yes
6/30: It appears EBAY is headed to our first target but we may have to endure a bounce if the broader market gives us a relief rally. I want to tighten the stop to $20.80 which would be above the gap fill from 6/28 to 6/29. I doubt EBAY will trade up to this level but if it does it means the stock is strong and will limit our losses. EBAY has declined -5% since Monday's close so if the stock trades down to our $19.10 target prior to bouncing I suggest being quick to take profits.
6/29: EBAY traded below our trigger to enter short positions at $20.27 so we are short the stock. Our position is currently up almost +3%. Other than the 100-day SMA, I do not see support for EBAY until $18.90, but the stock should trend with the overall market, or possibly on news. Since conditions are oversold we may experience a bounce in EBAY. I've adjusted our first target to $19.10 which is above the next support level. If EBAY trades down there prior to bouncing I would take profits on this trade. If it bounces first and then goes lower we may be able to get more downside.
6/28: EBAY is hanging on to a key support level in the $20.30 to $20.50 area which I think will break in the coming days. If EBAY breaks this support there is not much below to hold it up until the $18.80 area which is below our first target of $18.82. The stock is below its 20-day and 50-day SMA's, both of which are declining, as well as its 20-week and 50-week SMA's (shown on the weekly chart below). I suggest we open short positions if EBAY trades to $20.27 which would be a break of support. I also suggest we use a trigger to short EBAY if it trades up to $21.30 which is just below a prior support area dating back to November and February lows. Our initial stop is $23.10 which is above the stock's recent highs and the 20-day and 50-day SMA's.
Current Position: Short EBAY stock, entry was at $20.27
Option Traders: Buy August $25.00 PUTS, current ask $1.40
Entry on June 29, 2010
Earnings 7/21/2010 (unconfirmed)
Average Daily Volume: 19.8 million
Listed on June 28, 2010
Grand Canyon Education - LOPE - close 23.43 change -0.25 stop 24.40 *NEW*
Target(s): 22.65, 21.80, 20.80, 20.05
Key Support/Resistance Areas: 25.00, 24.25, 23.00, 21.50, 20.00
Current Gain/Loss: -0.43%
Time Frame: 1 to 2 days
new Positions: No
6/30: LOPE broke below a symmetrical triangle on the intraday charts today and sold off, but it refuses to break below our key support level of $23.00. I am concerned of a bounce in the market and do not want to get caught with our pants down in this position. It simply has not worked as I anticipated. One of LOPE's competitor's (APOL) reported earnings after the bell and investors are not enthused as the stock is down -2.57% in after hours trading. I can't say for certain this weakness will translate to declines in LOPE but it shouldn't hurt us. Regardless, if the market reverses I do not want to hold LOPE as a short position. I am going to suggest we close this position tomorrow at the open and write this trade off. We should get a fill near today's close. If readers want to give this more time to work the stop in place looks like the correct one but if it is hit it translates to a -4.5% loss. Another strategy to consider would be placing a protective stop above the opening range and trail stops down if the position moves in your favor. NOTE: This sector is volatile and I suggest small position size to manage risk. This is also a highly contentious sector and is being driven by news.
6/29: LOPE remains below its daily SMA's and downtrend lines. However, I am concerned of an ensuing bounce in the market and the price action is not impressing me to remain short this stock. Therefore, I am going to tighten the stops and target and try to close this position. Our new stop is $24.40 which is above today's highs and our new target is $22.65. At the need of the day I suggest readers get defensive with this position and exit if LOPE is showing any weakness in the coming days, and honor your stop if the stock is showing strength.
6/28: LOPE did not act as I suspected today as the stock gained +2.47%. However, LOPE was turned away at its 50-day SMA and closed below our key support level at $24.25. The stock also remains in a downtrend and the stock sold off -2.35% in the last hour of trading so sellers are alive and well. The rally may have had something to do with short covering and speculation about the probes from Washington into the for-profit education sector. Volatility was expected in this position and I don't expect that to change. I've adjusted our stop up to $25.86 which is above the primary downtrend line.
Current Position: Short LOPE stock, entry was at 23.33
Option Traders: Buy August $25.00 PUTS, current ask $2.60
Entry on June 28, 2010
Earnings 8/3/2010 (unconfirmed)
Average Daily Volume: 429,000
Listed on June 26, 2010
CLOSED BULLISH PLAYS
Hanson Natural Corp - HANS - close 39.11 change -0.42 stop 38.65
Target(s): 39.95(hit) , 40.50 (hit), 41.25, 42.40, 43.25
Key Support/Resistance Areas: 42.50, 41.00, 40.25, 39.30, 38.50
Final Gain/Loss: +1.34%
Time Frame: 1 to 2 weeks
New Positions: Closed
6/30: HANS hit our target of $40.50 on Monday and then the market sold off hard on Tuesday. As such, we suggested selling into strength and revised our target to exit HANS at $39.95 which is where the stock struggled with resistance on Tuesday. HANS traded up past this level several times this morning but could never break through $40.00. We are flat the position for a small +1.34% gain. Selling intensified this afternoon so this proved to be the right call. HANS ended the day by closing below the upward trend line from 5/7 and its 20-day SMA so the bullish case for the stock is starting to wane. HANS remains above its 200-day SMA (currently $38.92) and there is support at $38.79 but I would not want to be involved on the long side much below that. Although the stock could bounce from here as the market conditions are oversold, and if that happens HANS should do well. I would still be a seller into strength.
6/29: HANS held up relatively well until the end of the day. The stock is maintaining its upward trend line from 5/6 and is still above its 20-day and 200-day SMA's. We still have a small gain on this position and if the market bounces HANS should do well. I am going to tighten the stop to just below the 200-day SMA at $38.65. Our first target was hit yesterday and considering today's events I suggest readers consider selling into strength, or at least protecting profits if HANS proceeds higher from here. I've listed a new target of $39.95 which is where HANS struggled to break through today. This is an area to tighten stops to see if we can get more our of the stock.
6/28: HANS closed above it 50-day SMA today and is maintaining the upward trend line that started on 5/7. The stock also traded to a new high that hasn't been since 5/18. Our first target of $40.50 was hit today but I think we have a good chance of hitting $41.25 so I am going to leave this open to see if we can get some follow through in the coming days.
Closed Position: Long HANS stock at $39.95, entry was at $39.42
Entry on June 23, 2010
Earnings Date 8/5/10 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on 6/22/10
CLOSED BEARISH PLAYS
Avon Products - AVP - close 26.50 change -0.57 stop 29.65
Target(s): 26.60 (hit), 25.80, 25.25, 24.25
Key Support/Resistance Areas: 29.50, 29.00, 28.00, 27.17, 25.75, 25.00
Final Gain/Loss: +3.69%
Time Frame: Several weeks
New Positions: Closed
6/30: Per last night's updates we are flat AVP as it traded down to $26.60. The stock has declined -4.6% in two days and I wanted to take profits on this trade today at this target because of the quick decline in the stock. We have a decent gain of +34.45% and I think booking profits is the right thing to do considering the oversold conditions. If readers still have positions I suggest protecting profits against a reversal. There is formidable intraday resistance between $26.90 and $27.10. AVP can be shorted on bounces and I will be looking for the stock to test its 20-day, 50-day, or downward trend line from below which should provide a another good shorting opportunity.
6/29: AVP is back below its 20-day SMA and I think the stock ultimately moves lower, but there could be bounce first. If the decline continues I don't anticipate it lasting too long considering the oversold conditions. As such, I have listed $26.60 as a new target which could be a logical bounce point for the stock. This is near the highs from 5/26 and 6/3. I would be quick to tighten stops or simply take profits at this level if it is hit tomorrow. However, if we bounce higher from here first I think that level becomes less important and we may see more downside.
6/28: AVP found some support at its 20-day SMA which also corresponds to its late May highs. AVP could bounce from here if the market does but I believe it will be short lived. Our stop is high enough to account for volatility and I expect the stock to trade down to $25.80 within the next week or so.
Closed Position: Short AVP stock at $26.60, entry was at $27.62
Entry on June 28, 2010
Earnings 7/29/2010 (unconfirmed)
Average Daily Volume: 4.2 million
Listed on June 26, 2010