Saturday, September 19, 2009

NVEC at Support

NVE Corp (NVEC) develops and sells spintronic devices (nanotechnology).

The stock has been in a strong uptrend in 2009 and has consistently found support at the 50-day moving average, providing a clear buy signal when the price touches the line and presumably a good stop level for traders. The stock tested the 50 DMA ($53.33) on Friday with a low of $53.50 (it recovered and closed at $54.66).

Another consistent feature of the trend has been the ability of RSI to signal buy points. As indicated by arrows in the chart below, the stock tends to recover soon after breaching the 50 level in RSI. Note that RSI dropped below 50 on Friday. RSI has also signaled short term tops throughout the uptrend.

I've included MACD and Stochastics in the charts below. They are providing mixed signals for the short term movement (MACD lines did not reach a new high with the recent peak, but the Stochastics from the sideways trending period Aug-Sept showed a bullish divergence preceding the peak).

Strategy: The RSI is signaling a buy here or ideally at a retest of the 50 DMA, with a stop just below the moving average.

Friday, September 18, 2009

CQB Call Volume Spikes

Chiquita Brands International, Inc. (CQB) distributes and markets fresh produce. CQB triggered my unusual options volume alert today when over 10,000 of the $17.50 October calls traded (versus open interest of 2,613). Crimson Mind later reported that the contracts had traded in a block of 10k at the ask of 35 cents. Less than 250 CQB puts traded today. The underlying stock closed at $15.52 (down $0.01).

Trading History: September 18th, bought CQB for $15.64
Current Position: Long CQB ($15.64)

Wednesday, September 16, 2009

THOR Breaks Out

Thoratec Corp (THOR) develops and markets medical devices. The stock is now up over 3% for the day to $28.90 on above average volume. It has taken out the August high of $28.36.

CCJ Quadruple Top Breakout

Cameco Corp (CCJ) is involved in the uranium mining, nuclear energy, and gold mining industries.

CCJ made highs of $29.60 in June, and $29.53 and $29.66 in August. CCJ is currently up nearly 3.5% for the day to $30.40 on above average volume.

Update (September 21st): The rally has broken down. CCJ looks to close below $29.50. The next major support is at the 50-DMA (about $28), so I sold the stock and took the loss.

Trading history:
September 16th, bought CCJ for $30.30
September 21st, sold CCJ for $29.34 (-96 cents, -3.2%)
Current position: None.

KOP Breakout

Koppers Holding, Inc. (KOP) is a manufacturer of carbon compounds and commercial wood treatment products used in various industries including railroads, utilities, rubber, and steel.

KOP looks to be breaking out of a multiple top formation this morning on heavy volume.

KOP made highs of $29.25 in June, $29.33 in August. KOP's current price is $29.89.

Trading History:
September 16th, bought KOP for $29.52
Sepetember 16th, sold KOP for $31.21 (+$1.69, +5.7%)
Current Position: None

Tuesday, September 15, 2009

IPHS Breakout Watch

Innophus Holding, Inc (IPHS) is a specialty chemical manufacturer (phosphate). It trades at less than 10x earnings.

IPHS triggered my breakout watch alert this afternoon when it topped $20.41. The chart for IPHS shows an ascending triangle with multiple tops in this zone: $20.35 in January, $20.28 in May, $20.41 in August.

Volume is light, and it looks like IPHS will close below the breakout price. But I'll be keeping a close watch for follow through on today's price action for the remainder of the week.

KALU Breakout

Kaiser Aluminum Corp (KALU) is attempting to breakout this morning from a triple top ascending triangle. Previous highs being taken out from November 2008 ($37.67), June ($37.41) and July 2009 ($37.33). KALU has traded as high as $38.14 today.

Trading history:
September 15th, Bought KALU for $39.47
September 15th, Sold KALU for $40.57 (+$1.10, +2.8%)

Monday, September 14, 2009

HOFT Potential Breakout

Hooker Furniture Corp (HOFT) is potentially breaking out through the $14.00 level this afternoon. $14.00 has been resistance for the stock multiple times since May, forming a ascending triangle in the chart (below). RSI and Stochastics are both rising (neither is registering oversold) and there was also a bullish MACD crossover. However, volume is light today. Support is at around $13.05 (the 50-day SMA and the lower trendline).

HOFT Trading History: No position.

STZ Front Month Calls Active

Constellation Brands (STZ) produces and imports alcoholic beverage including wine, beer and liquor. The September $15 calls have been active this morning (volume over 1,900 versus open interest of 197). With 5 days to expiration, the stock trades just above the strike at $15.10 on below average volume. The call option trades looked to be going at the ask early on, and later at the bid of 30 cents. The have been zero put transactions.

Trading History:
September 14th: bought STZ for $15.10.
September 17th: sold STZ for $15.62 (+$0.52, +3.4%)

Friday, September 11, 2009

WMGI - Breakout

Wright Medical Group, Inc. (WMGI) is an orthopaedic medical device company. The company's stock has just closed at $17.10 with above average volume. The price is above resistence ($16.95), which it tested in June and August. It also climbed above its 200-day SMA on Wednesday. Along with the breakout, the calls showed strong volume today, particularly the $20November issue, which traded 1,386 versus open interest of only 81.

Update (Sept 14): Today WGMI announced FDA 510K clearance of PRO-STIM™ Injectable Osteoinductive Bone Graft Substitute (press release). The stock took a nasty dip to $16.82 but recovered and is trading at $17.25 now. So the b/o above $17 is still on for now.

WMGI Trading History:
September 11th, bought for $17.10
September 17th, sold for $18.22 (+1.12, +6.5%)

GNVC - Unusual Afterhours Volume

GenVec, Inc. (GNVC) is a biopharmaceutical company that develops gene-based drugs and vaccines. Its lead product candidate is TNFerade, which is for the treatment of pancreatic cancer and is in Phase III trials.

GNVC saw heavy afterhours trading last night of over 4.5M shares. It closed at 79 cents/sh and finished the a/h session at 82 or 83 cents. I have no idea why interest surged in the stock so suddenly. The most plausible explanations I've seen so far are that a medical journal published something about the company's product, or that it is simply a pump-n-dump.

I purchased GNVC during yesterday's a/h session. This morning GNVC is at around 82 cents in premarket trading with volume of 400k shares with no news out.

GNVC Trading History:
September 10th, bought GNVC for 82 cents.
September 24th, sold GNVC in premarket for 91 cents (+11%).
Current Position: None.

Thursday, September 10, 2009

SMTC Possible Breakout

Semtech Corp. (SMTC) is a semiconductor company.

The stock is testing resistance at it July high of $19.00. SMTC hit a high of $19.16 this morning and is currently trading in a tight range within a nickel of $19.00. It is up about 30 cents on heavy volume. $20Dec call option volume has exceeded 1,900 versus open interest of only 77.

Update (September 11): SMTC is down 2.4% on above average volume. National Semiconductor (NSM) reported earnings last night that beat street estimates, but the stock sold off. Since the breakout failed and the sector is under pressure today, I sold SMTC for a loss.

SMTC Trading History:
September 10, bought for $19.03.
September 11, sold for $18.63 (-0.40, -2.1%)

Current position: None

Friday, September 4, 2009

CBE Puts Active Ahead of Removal From S&P500

Cooper Industries Ltd (CBE) put options are active for a second straight day. The stock will be removed from the S&P500 on September 8th (link). It appears that 2000 $30Oct puts were purchased (last transaction at $0.51) against a sell of $35Oct calls ($1.31), with shares trading at around $33.95.

Update/Correction (Sept 8): OptionMonster is reporting that the activity was actually bullish (put sells, call buys).

Thursday, September 3, 2009

LIZ Call Volume

Liz Claiborne (LIZ) call trading picked up early this afternoon, particularly in the $5Jan issues (volume over 2,700 with open interest 3,300, at leat one block appeared to be traded at the ask up to 65 cents). LIZ shares are currently trading up 8 cents to $4.02 (+2%).

Update (Sept 7th): On Thursday afternoon, LIZ announced that it had hired a turnaround firm (link to Reuters story). Also, LIZ will be presenting at the GS retailing Conference on Sept 9th. LIZ closed at $4.12 on Friday.

TRAD: Call Buyers Step In

TradeStation Group, Inc. (TRAD) is an online broker-dealer. On Wednesday, the company reported that customer trading volume declined again in August. However, bullish call buying was observed the same day, particularly in the December $7.50 issue where a block of 1,000 calls traded apparently at the ask. TRAD closed at $7.00 on Wednesday.

There are a couple of reasons to like TRAD here: First of all is the very recent trading activity, rumors, and news from other broker dealers such as ETFC and IBKR. Secondly, from the chart below, we see support and the 200 DMA both at around $6.85.

I was hoping to take a long position on a dip to support this morning, but that didn't happen.

Update (Sept 8th): I was able to pick up some TRAD at $6.95 afterhours today. The 200 day SMA is $6.93. TRAD has been testing $7 support for four days now. Stochastics are pointing up and TRAD had a positive MACD crossover today (not shown in chart). I'll have a stop just below the $6.85 support should that level fail.

TRAD Trading History:
September 8th, bought TRAD for $6.95
September 17th, sold TRAD for $7.53 (+$0.58, +8.3%)
Current position: None

HGG: Bullish Call Activity (now bearish)

Electronics and appliance retailer hhgregg, inc (HGG) announced the opening of ten new stores in the Tampa area this morning. Shares have advanced 50 cents (3.5%) to $16.50.

Call traders are apparently anticipating more upside. In particular, January $17.50 calls show volume of 1,088 thus far versus open interest of 59. We've observed trades at the ask of $1.85 and later $1.95. Less than 100 puts have traded.

HGG recently tested its lower trendline, but there is a lack of other clear support points. The 200 DMA is close to $13.

Update (Sept 8 10:45am): HGG puts are active this morning. In particular, the $15October issues have traded over 6,000 thus far versus open interest of 46. We are observing trades going at the ask of 75 cents, with the stock at $16.80.
Update (Sept 8 11:22am): Put buyers have pushed volume on the $15Oct issue over 8,000 now with trades passing at the ask of 80 cents.

HGG trading History: None.
Current Poisition: None.

CADX: Near Support Ahead of Decision

Cadence Pharmaceuticals Inc. (CADX) makes drugs for use in hospital settings. It is developing the painkiller Acetevance, which is an injectable form of acetaminphen. The FDA decision date for Acetevance is November 13th.

I took a trading position in CADX, buying the shares for $9.91. Shares are near support from September 2008, May and August 2009 and near the lower trendline. This is a trading position only. I'm not looking to hold this position into the decision in November. A stop just below support is in place.

Update (Sept 11): CADX seems to have reached an intermediate peak here and run out of momentum with mixed techincal indicators. I don't expect any upcoming events until the FDA action in November. I locked in profits by selling for $10.76 (+85 cents or +8.6%)

CADX Trading History:
September 1st. purchase CADX for $9.91
September 11th, sold CADX for $10.76 (+$0.85 or +8.6%)
Current Position: None

Wednesday, September 2, 2009

ARNA: I.V. Elevated Ahead of Stage III Results

Arena Pharmaceuticals, Inc. (ARNA) is a clinical stage biopharmaceutical company. Its lead drug candidate is lorcaserin, which is for the treatment of obesity. Clinical trial results (Stage III) are expected in September.

Implied volatility is highly elevated and I believe there has been a bullish skew to the options trading (high call/put ratios have been the norm, while some large blocks of puts have been associated with shares).

I entered a long ARNA position for $4.41/sh position on weakness during trading Tuesday (9/1), and simultaneously wrote $6Oct covered calls for a credit of $0.93. Thus it was a net charge of $3.48/sh with an upside to $6.00.

Update (Sept 18th): ARNA announced trial results for lorcaserin this morning, which were a disappointment. I closed my position, buying back the calls for 15 cents (an 84% gain), and selling the underlying stock for $4.55 (a 3.2% gain).

ALTH: Selling Volatility Ahead of FDA Review

Allos Therapeutics (ALTH) is halted today as the company is presenting its lymphoma drug pralatrexate in front of the FDA's cancer drug advisory panel this afternoon. A panel vote is expected late this afternoon, with a conference call by Allos afterwards. A final decision on the drug is expected from the FDA on or by September 24th.

I was a little late to this one, and options activity has shown no clear bias (both calls and puts have been very active since July, with rising IV, chart below).

Given the uncertain direction and elevated volatility, I wrote $2.50 September Puts (credit of $0.15) for a fairly low risk trade. Shares closed at $7.86 on Tuesday.

Update (9/3/2009): ALTH's drug was recommended for approval by the FDA panel yesterday by a 10-4 vote. Shares are only up around 3.5% now in premarket trading. This is quite a lukewarm reaction from traders. Nevertheless, my put position should be safe and I expect them to expire worthless next next week.

ALTH Trading History:
09.01.2009 Wrote $2.40Sept puts (.QATUZ) for a credit of $0.15.
09.20.2009 .QATUZ expiration at $0.00 (+100%).
Current Position: None

CYPB Trading at Support

Cypress Biosciences (CYPB) is a biotech and services firm. Among its products is Savella, a fibromyalgia treatment that received FDA approval in January. Shares have been in decline recently, possibly over concerns regarding Savella revs. Yahoo Finance shows CYPB has nearly $4 cash/sh, a short ratio of nearly 19.

I noted a large $5/10 December call spread going through on Monday August 31st for $1.90 with shares trading at $6.90. The trade would achieve maximum profit if shares reach $10 at expiration. The previous week, more bearish trading in puts was observed.

CYPB has tested support at $7 in January, March, April, May, and now August. Resistance was shown at around $9.75, with a double top in July. RSI and Stochastics show that shares are currently oversold, however, these indicators are not yet heading north.

I entered a long position at $7.00 on September 2nd. Stop placed near the May 4th low of $6.70 in the event that support does not hold.

Update (September 8th): Cypress Biosciences will be presenting at the Baird's conference tomorrow (9/9/09). The stock gained 7% today to close at $7.92, which is above the 200-day SMA with a positive MACD crossover. The RSI and Stochastics are also both very favorable (both are rising and both crossed 50 today, chart below has not been updated to show this).

Update (September 9th): It looks like CYPB may have run into a little resistance at $8.00 today. I sold half my position for $7.92 (a gain of 92 cents or 13.1%).