Editors Note:

The Russell traded back to the 1,550 level for the 4th day. This was only minor resistance, but it has turned into a price magnet. The index fell back to close fractionally below it again today and used it as support at the close. There is no excitement in the small caps and they are following rather than leading. The Nasdaq was the leader today. We currently have a lower high on the Russell chart and any new move below 1,550 is going to be a sell trigger.



Current Portfolio


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.


Profit Targets

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


XON - Intrexon
The long position was entered at the open.

MDR - McDermott
The long position was closed at the open.



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Full updates on all plays on Wednesday and Saturday. Only closed plays are updated on other days.


BULLISH Play Updates

MDR - McDermott International - Company Profile

Comments:

We closed the position at the open.

Original Trade Description: March 2nd.

McDermott International, Inc. provides engineering, procurement, construction and installation, front-end engineering and design, and module fabrication services for upstream field developments. It operates through three segments: the Americas, Europe and Africa; the Middle East; and Asia. The company delivers fixed and floating production facilities, pipeline installations, and subsea systems from concept to commissioning for offshore and subsea oil and gas projects. Its operations include fabrication and offshore installation of fixed and floating structures; and the installation of pipelines and subsea systems, as well as provision of shallow water and deep water construction services. The company's customers include national, integrated, and other oil and gas companies. McDermott International, Inc. was founded in 1923 and is headquartered in Houston, Texas. Company description from FinViz.com.

McDermott posted a whopping $15.33 per share loss for Q4 after writing down $2.2 billion in goodwill. The adjusted loss was $1.55 and analysts were expecting earnings of 17 cents. This was a kitchen sink quarter. They knew it was going to be bad so they bundled everything they could find into the quarter to get it over with in one bad report.

On the flip side they guided for full year earnings of $1.65-$1.75 and analysts were only expecting $1.47. Revenue forecast of $9.5-$10.5 billion was also better than the $9.8 billion estimate.

They ended the year with an order backlog of $10.9 billion and have received $5.5 billion in awards YTD in 2019. They are bidding on $93.1 billion in projects. They have $1.4 billion cash on hand and $2 billion in unused credit.

They recently closed a merger with Chicago Bridge & Iron (CBI) which gave them broader expertise, additional capabilities, and a deeper order book. They expect the $475 million in cost savings synergies to be realized in 2019.

They are currently planning to sell their pipe fabrication business and storage tank business to focus more on their key sectors. They expect proceeds in excess of $1 billion. The pipe business is expected to close in Q2 and the tank business in Q3.

The strong guidance is the key to this position. Shares have rebounded sharply from the earnings disaster and should break over $10 in the next couple of weeks with the potential to move a lot higher. The risk should be minimal because all the bad news is over.

Position 3/4/19:
Closed 3/14: Long May $10 call @ 90 cents, exit .45, -.45 loss.

Previously Closed 3/7: Long MDR shares @ $9.16, exit $8.15, -1.01 loss.



BEARISH Play Updates

No Updates on Current Positions