Good evening. Monday was a painfully light volume day in the equity markets as US bond markets and banks were closed for the Columbus Day federal holiday. There was not much movement in our model portfolio and as a result, I do not have many changes to my weekend comments. I have provided an updated portfolio snapshot, along with a few new comments on each position, plus reprinted comments from the weekend that remain valid. Please refer to the weekend updates for more details and feel free to email me with any questions.
CALL Play Updates
DRC - The stock lost -2 cents today as it consolidated Friday's gains. DRC continues to look good here as long as the broader market cooperates. If we continue drifting higher this week DRC should easily reach our first target. However, a correction could certainly derail long positions. There has been no material change to our current gain.
V - The stock gained +29 cents today and the 20-day SMA crossed up through the 50-day SMA. Any pullback to the 20-day SMA (currently $72 and rising) provides good entry point. The stock also has support at $72.50 V continues to look bullish and traded to within 10 cents of our first target. The primary target is $76.90 but be cognizant of a broader market correction. There has been no material change to our current gain.
TC - TC came within 12 cents of our $11.10 trigger to enter long positions. $11.00 offers solid support so I suggest we remain patient. Please refer to the released play on Saturday for more details.
PUT Play Updates
ATK - ATK looked weak early but bounced the remainder of the day to close +1% higher. There was no follow through to Friday's decline. The stock has resistance near current levels and remains below its 200-day SMA. I am ultimately looking for a move towards its 50-day SMA and our second target of $71.25. However, I do think a sell-off is likely to get bought so be prepared to take profits or tighten stops to protect them. Our loss has widened in the position. I believe short positions at these levels offers a good risk/reward set-up.
ISLN - The stock lost -2.60% today. Readers should begin to look for an exit to preserve capital. 23.20 and 21.50 are the primary targets. My comments from the weekend haven't changed. There is a possible double top play that is being met with selling. A move back down to the $23 area is still certainly in the cards and that should get us out of the position near breakeven. The 20-day SMA is another target readers should consider.
DIA - DIA gained 10 cents today and I remain leery of any gap higher which could be sold into. I am also leery of possible volatility with the FOMC minutes released tomorrow afternoon as it feels like we could get a false breakout. As such, this is how I suggest readers manage the trade. Temporarily remove the stop and wait for tomorrow's open. If there is a gap higher near our stop, place a new protective stop above the opening range. This provides us the chance to measure the true strength or weakness of DIA. Often times this will keep you in the trade and looking for a better exit. At these elevated levels it would not surprise me to see a gap higher and an immediate sell-off so we don't want to have a GTC stop in place that gets taken out if DIA is only going to head lower. This is just a scenario. If the markets are surging higher and convincingly break the opening range then we need to get out of the way.
PNC - PNC drifted lower the entire day and the stock lost nearly -0.50%. If the broader market corrects I'm looking for PNC to break lower towards the $49.50 to $50.35 level which is our 2nd and 3rd targets. I suggest using weakness as an opportunity to exit positions.
WFMI - The stock gained +1% today and came within 30 cents of our trigger at $35.65 to enter short positions. The bounce from Friday's lows are at depressed levels and I think these bounces will be short lived. WFMI is close to a downtrend line on its hourly chart. I suggest we open positions tomorrow.