Good evening traders. Wow! The buyers are still stepping in doing everything they can to keep the market propped up at these levels. I mentioned last night that often times when markets whipsaw back and forth it is a warning signal that a trend change may be happening. All of this back and forth means there is a lot of indecision and it has been quite a battle between the bulls and bears. Earnings reports from Amazon and Microsoft looks like it will put more pressure on the indices overnight as investors were not enthused. So until we find out who wins stay nimble with your position management and be sure to protect profits.
CALL Play Updates
Diana Shipping Inc - DSX - close 15.25 change +0.10 stop 14.32
DSX closed above yesterday's highs which helped our calls gain 10-cents (+15%). I am looking for the stock to follow through from here and re-test the highs from April 6, which is near our target of $15.65. A +40-cent move in the stock from here should garner another 25-cents in profit on our calls. This will represent a +50% gain. A second more aggressive target can be placed at $16.00. I suggest traders protect profits if DSX continues today's rally. I envision this as a fairly quick trade lasting about one week. Our stop is $14.32 which is below Monday's low and all of the stocks moving averages.
Current Position: CALL MAY $15, entry at $0.60
Entry on April 21, at $ 0.60
Earnings Date 5/6/2010 (unconfirmed)
Average Daily Volume = 1.2 million
Listed on April 20th, 2010
Goodyear Tire & Rubber Co. â€“ GT â€“ close 14.49 change -0.08 stop 13.50
GT recovered nicely today off of its lows, but was still down -0.55%. Our $1.90 calls our now worth about $2.10, or +10%. The stock almost hit our target on Wednesday trading up to $14.66 which was only $0.09 away from our target. Considering the whipsaws in the market continue I am suggesting readers tighten stops or sell their positions to protect profits. I still suggest the strategy I mentioned last night by placing a good til cancelled (GTC) sell order on the call option at $2.25. We are looking to exit the trade if GT trades into the $14.70 to $14.75 area which is our target. A more aggressive target is $15.90 but GT has earnings on April 28 so I doubt there will be enough time to reach this level. There is a key pivot level at $14.00 that I would expect to hold as support if there is any weakness in GT, but I would not let the stock reverse on you at this point. I am not recommending new positions at this time. Our time frame is now one or two days.
Current Position: Long MAY CALL $12.50, entry @ $1.90
Entry on April 20th at $ 1.90
Earnings Date 4/28/10
Average Daily Volume = 4.3 million
Listed on April 19th, 2010
Hanson Natural Corp. - HANS - close 41.32 change +0.08 stop 39.25
HANS traded down to $40.82 today and we are still waiting on our trigger. Here are my comments from the new play last night. HANS is approaching an upward trend line and a recent support/resistance level at about $40.50. In addition, the stock is forming an ascending triangle and is approaching the bottom portion of an upward channel that has been intact since mid 2009 (see weekly in new plays). I am waiting for HANS to trade to $40.50 which I suggest readers use as a trigger to buy calls. I believe the stock will bounce from these levels as long as the overall market is cooperating. The company reports earnings on May 6 so we will be out of this trade prior to the report. Let's use a stop of $39.25. Our target is $43.40 and our time frame is 1 to 2 weeks.
Trigger to buy calls at $40.50
Suggested Position: Buy MAY CALL $42, current ask $1.35, estimated ask at entry $1.00
Entry on April xx at $ xx.xx
Earnings Date 5/06/10
Average Daily Volume = 854,000
Listed on April 21, 2010
PUT Play Updates
SPDR S&P 500 Index - SPY - close: 121.02 change: +0.36 stop: 123.05
The whipsaws are relentless and testing our will on this position. However, we are still below the highs of the last few days and earnings reports from Amazon and Microsoft have the futures under pressure again. I mentioned last night often times when markets whipsaw back and forth it is a warning signal that a trend change may be happening. It is tough to tell if this truly happening but I feel buyers are getting exhausted and sellers show up whenever they push the market higher. Someone will eventually win. And there is plenty of resistance from last week just overhead, along with SPY's 200-week SMA. With that being said conservative traders should consider moving up their target to the $119.00 area which is near today's low and SPY's 20-day SMA. Should SPY trade to this level I will be looking to tighten stops and exit the position if SPY proceeds to spike higher again. Our stop remains 123.05 which is just above SPY's 200-week SMA.
Current Position: SPY PUT MAY $119.00, entry at $2.05
Entry on April 13th at $ 2.05
Earnings Date Not Applicable
Average Daily Volume = 164 million
Listed on April 12th, 2010