We have been expecting a weak market since expiration Friday and it appeared as expected. The nine-week rally is in jeopardy without a major short squeeze on Friday. However, after several days of weakness the futures are pointing to a positive day on Friday. There is still a lot of darkness before the dawn but hopefully it will stick.
Stop Loss Updates
Check the graphic below for any new stop losses in bright yellow.
We need to always be prepared for an unexpected decline.
Check the graphic below for any profit stops in green.
We need to always be prepared for a profit exit at resistance.
Current Position Changes
BOX - Box Inc
The long position was stopped at the open.
RDUS - Radius Health
The long position was closed at the open.
XRX - Xerox Corp
The long position was stopped at $31.15.
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Full updates on all plays on Wednesday and Saturday. Only closed plays are updated on other days.
BULLISH Play Updates
BOX - Box Inc - Company Profile
As expected we were stopped at the open and at the low for the day.
Original Trade Description: Jan 19th.
Box, Inc. provides a cloud content management platform that enables organizations of various sizes to manage and share their enterprise content from anywhere or any device. The company's Software-as-a-Service platform enables users to collaborate on content internally and with external parties, automate content-driven business processes, develop custom applications, and implement data protection, security, and compliance features. Box, Inc. offers its solution in 23 languages. It serves healthcare and life sciences, financial services, legal services, media and entertainment, retail, education, and energy industries, as well as government sector primarily in the United States. The company was formerly known as Box.net, Inc. and changed its name to Box, Inc. in November 2011. Box, Inc. was founded in 2005 and is headquartered in Redwood City, California. Company description from FinViz.com.
Earnings February 27th.
Box is a provider of cloud content management services to enterprise customers. Procter & Gamble and GE are two of its largest customers. Over the last several weeks there has been a persistent rumor they will be acquired. Google has been a rumored acquirer but it is more likely Microsoft or even Hewlett Packard could be interested.
Entering a position on acquisition rumors is rarely a good move. More than 90% of the time nothing happens. In this case revenue is growing in excess of 25% for 2018 and they guided for 20%+ for 2019. They also guided for their first quarterly profit in Q4 since they went public in 2015.
Their customer retention rate is close to 100% and they had more than 90,000 customers at the end of Q3. Box has enough scale that it makes sense to be acquired rather than a large company trying to replicate their product and service and spend years stealing market share. Buying Box now would be an instant add on to profits.
Shares broke over three-month resistance on Friday and the next material level is $24.
Update 2/27: The stock closed at a 5-month high but fell to $19 on weak guidance. The company said it was expecting to post an adjusted loss of 5-6 cents for the quarter and 1-3 cents for the year. Analysts were looking for a loss of 1 cent for Q1 and earnings of 3 cents for the year. This will be a major loss at the open on Thursday.
Closed 2/28: Long BOX Shares @ $19.74, exit $19.22, -.52 loss.
Optional: Long March $21 Call @ $1.00, exit .27, -.73 loss.
RDUS - Radius Health - Company Profile
We closed this position at the open for lack of movement.
Original Trade Description: Feb 2nd.
Radius Health, Inc., a biopharmaceutical company, develops and commercializes endocrine therapeutics in the areas of osteoporosis and oncology. The company markets TYMLOS for the treatment of postmenopausal women with osteoporosis. It is also developing abaloparatide transdermal patch, a short-wear-time patch formulation of abaloparatide that is in Phase III clinical trial to treat postmenopausal women with osteoporosis; RAD1901, a selective estrogen receptor down-regulator/degrader, which is in Phase I clinical trial for the treatment of metastatic breast cancer; and RAD140, a non-steroidal selective androgen receptor modulator that is in Phase I clinical trial to treat breast cancer. The company has collaborations and license agreements with 3M; Ipsen Pharma SAS; Eisai Co. Ltd.; Duke University; and Teijin Limited, as well as research and development agreements with Nordic Bioscience Clinical Development VII A/S. Radius Health, Inc. was founded in 2003 and is headquartered in Waltham, Massachusetts. Company description from FinViz.com.
A week ago, Radius took advantage of the JP Morgan Healthcare Conference to raise guidance for the full year 2018. Sales of their lead drug, Tymlos, surpassed the upper range of $95-$98 million. This is for osteoporosis in postmenopausal women. This is the only anabolic drug in the US market that is increasing its market share. Share rose from 20% at the beginning of 2018 to 27% at the end of the year. In December, market share of new anabolic patients was 40%.
They announced an accelerated late stage clinical pipeline for two drugs with blockbuster potential ($1 billion a year). These are elacestrant (breast cancer) and abaloparatide-patch (osteoporosis in postmenopausal women.)
For the full year 2019 they expect revenue of $155-$175 million and year-end cash of more than $100 million.
Earnings February 28th.
Since the JP Morgan conference three weeks ago, Radius has moved steadily higher. If shares can move over $20 the rally should accelerate.
Closed 2/28: Long March $20 call @ $.90, exit .60, -.30 loss.
Previously closed 2/7: Long RDUS shares @ $18.70, exit $17.95, -.75 loss.
XRX - Xerox - Company Profile
I wrote yesterday that the EU said they were drawing up tariffs on Caterpillar, Xerox and others in case President Trump put tariffs on European cars. I tightened the stop loss to just under Wednesday's lows, just in case. That stop was hit at the open when shares fell sharply.
Original Trade Description: Feb 16th.
Xerox Corporation designs, develops, and sells document management systems and solutions worldwide. It offers managed document services, including managed print services and multi-channel communication services, as well as a range of digital solutions, such as workflow automation services, content management, and digitization services. The company also provides desktop monochrome and color printers, and multifunction printers; copiers, digital printing presses and light production devices, and solutions; graphic communications and commercial printers; inkjet presses; and FreeFlow portfolio of software solutions for the automation and integration of print jobs processing. In addition, it sells paper products, wide-format systems, and global imaging systems network integration solutions. The company sells its products and services directly to its customers through sales force, as well as through independent agents, dealers, value-added resellers, systems integrators, and the Web. Xerox Corporation was founded in 1906 and is headquartered in Norwalk, Connecticut. Company description from FinViz.com.
Unlike other stocks with post earnings depression the strong guidance has powered XRX higher. Friday's close was a 10-month high.
Earnings April 30th.
Closed 2/28: Long XRX shares @ $30.47, exit $31.15, +.68 gain.
Closed 2/28: Long July $32 call @ $1.60, exit $1.65, +.05 gain.
BEARISH Play Updates
No Updates on Current Positions