Editor's Note:
The U.S. market continues to climb with the S&P 500 above 1400 and the NASDAQ above 3000.

JAH was closed as planned. I am suggesting an early exit on SNDK tomorrow morning. We removed APOL as a candidate. EZPW and IM were stopped out.

Current Portfolio:

BULLISH Play Updates

Sandisk Corp. - SNDK - close: 42.08 change: +0.60

Stop Loss: 40.35
Target(s): 49.75
Time Frame: 4 to 6 weeks
Entry on July 30 at $ 42.75
Earnings Date 07/20/12 (past)
Average Daily Volume = 4.5 Million
Listed on July 28, 2012
New Positions: Yes, see below

08/07/12 update: Prepare to exit.

The U.S. market is up three days in a row. Yet SNDK continues to struggle with resistance in the $42.00-42.50 area. I am suggesting we close this trade at the open tomorrow. More aggressive traders could keep it open and just raise their stop loss instead.

Suggested Positions:

Long SNDK stock @ $42.75


Long SNDK Sept $44 Call, @ $2.28

08/07/12 prepare to exit at the open tomorrow
08/06/12 adjust the exit target to $49.75
07/30/12 triggered at $42.75

BEARISH Play Updates

GMCR - Green Mountain Coffee - close: 23.30 change: +1.83

Stop Loss: 24.35
Target(s): 18.00
Current Gain/Loss: - 7.8%
Time Frame: 4 to 6 weeks
Entry on August 6 at $21.62
Earnings Date 08/2/12
Average Daily Volume = 9.7 Million
Listed on August 4, 2012
New Positions: see below

08/07/12 update: The market's continued rally and the bullish reversal in shares of GMCR today is very bad news for us. Short scurried for cover and this stock soared +8.5%. I am concerned that GMCR is headed for the next level of significant resistance at the $25.00 mark. More conservative traders may want to abandon ship immediately. I am not suggesting new positions at this time.

Earlier Comments:
GMCR recently reported earnings. Revenue rose +21% to $869 million but the +37% growth rate for the prior quarter declined to +31% in Q2. That may not seem like a major decline but it gets worse. The company cut its guidance for both revenue and earnings for the rest of the year. They now project only 15-20% revenue growth compared to the mid to high double digits of prior years when growth was over 50% or even 70%. The business is definitely declining as their competition increases and their patents on the k-cups expire. Not commonly reported in the press the company booked $2.99 million in charges for the quarter related to an SEC inquiry into their accounting practices. There was no mention if the inquiry was completed or ongoing. I suspect if it had been completed they would have been eager to announce it and remove the cloud. Also, inventory grew by 60% in the quarter. For a company where sales are slowing it seems strange they would let inventory increase that rapidly. They also announced they would likely have NEGATIVE free cash flow during 2012 but generate $100-$150 million in 2013. Again, exactly how are they going to do that with the business declining so rapidly? In a grasping at straws effort they announced a $500 million share repurchase. Makes you wonder where they are going to get that cash since they are going to be cash flow negative for 2012. Of course announcing a share repurchase and actually carrying it out are two different things. The announcement may boost your stock temporarily but if you don't buy shares it will only be a temporary bounce.

current Position: Short GMCR stock @ $21.60

- or -

Long GMCR Sept $20 Put entry @ $1.40

08/06/12 trade opened.

Suburban Propane Partners - SPH - close: 40.19 change: +0.04

Stop Loss: 41.51
Target(s): 35.50
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks

Entry on August xx at $ xx.xx
Listed on August 6, 2011
Average Daily Volume = 144 thousand New Positions: Yes, see below

08/07/12 update: It was close but SPH failed to hit our trigger. Shares dipped to $39.81 intraday. Our trigger to launch bearish positions is at $39.75. There is no change from my prior comments.

Trigger @ 39.75

Suggested Position: short SPH @ (trigger)

- or -

buy the Sep $40 PUT


Jarden Corp. - JAH - close: 48.60 change: +0.96

Stop Loss: 46.50 (new)
Target(s): 49.00
Time Frame: 6 to 8 weeks
Earnings Date 07/24/12
Average Daily Volume = 652 thousand
Listed on July 26, 2012
Entered on July 27, 2012
New Positions: , see below

08/07/12 update: Our plan was to exit our JAH play at the open this morning. JAH gapped higher at $48.13 before eventually climbing to a +2.0% gain.

Closed: Long JAH Stock @ $45.55 exit $48.13 (+5.7%)

08/06/12 prepare to exit at the open on Tuesday morning (tomorrow)



Apollo Group - APOL - close: 28.11 change: +0.87

Stop Loss: 28.60
Target(s): 21.00
Current Gain/Loss: unopened
Time Frame: 4 to 6 weeks
Entry on Aug xx at $ xx.xx
Earnings Date 09/24/12
Average Daily Volume = 1.7 Million
Listed on August 2, 2012
New Positions: see below

08/07/12 update: We were expecting APOL to breakdown to new lows. Instead the market's three-day rally has inspired some short covering in APOL. We're dropping APOL as a bearish candidate. Our trade never opened.

Trade did not open.

08/07/12 removed APOL from the newsletter. Trade did not open.


EZCORP, Inc. - EZPW - close: 23.02 change: +0.49

Stop Loss: 22.85
Target(s): 20.05
Time Frame: 3 to 4 weeks
Entry on Aug 1st at $ 21.80
Earnings Date 07/24/12
Average Daily Volume = 381 thousand
Listed on July 26, 2012
New Positions: see below

08/07/12 update: The rebound in EZPW continues and shares breached technical resistance at its 40 and 50-dma today. Our stop loss was hit at $22.85.

closed Position: short EZPW stock @ $21.80 exit $22.85 (-4.8%)

- or -

Sep $20 PUT (EZPW1222U20) @ $0.50 exit @ $0.30 (-40%)

08/07/12 stopped out @ 22.85
08/02/12 opened @ 21.80


Ingram Micro - IM - close: 15.15 change: +0.10

Stop Loss: 15.25
Target(s): 12.00
Time Frame: 6 to 8 weeks
Entry on August 2nd at $ 14.60
Earnings Date 08/09/12
Average Daily Volume = 1.3 Million
Listed on August 1, 2012
New Positions: see below

08/07/12 update: IM saw an early morning spike to $15.30, which was enough to stop us out. Shares spent the rest of the day moving sideways.

The long-term trend is still bearish but readers may want to wait for a failed rally at resistance (maybe $16.00) before considering new bearish positions.

closed Position: Short IM stock @ $14.60 exit $15.25 (-4.5%)

Premiums on options are skewed so shorting is the only play.

08/07/12 stopped out at $15.30
08/02/12 triggered @ 14.60