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Yesterday we said:
IT’S EARNINGS SEASON
Well true to form with thrills (IBM,AAPL,VMW) and spills (RVBD,FTNT) earnings season is here in all its glory. Going forward expect more of the same.
From here its all about follow thru and of course more thrills and spills via reactions to earnings numbers.
7-21 From the looks of things the last two days the theme seems to be more spills than thrills.
FFIV- down 9.68
TZOO-Down 25.00
TSCO- Down 2.57
Yesterday it was FTNT and RVBD amongst others.
We bring this up because AFTER THE CLOSE PLCM reports earnings. We bought a small position of this issue at 31.77 and as we post its 29.00. After this mid day update we will be walking away rather than run the risk of a spill on earnings after the close.
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Short Side Coming Attractions
NONE
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LONG SIDE WATCH LIST
"Only The Best And Forget The Rest "
"We Trade What We SEE, NOT What We Think, Hear Or Fear "
Remember the name of the game is Pullback Off Highs (POH) AND FIRST THRUST UPs as they are the only patterns you’ll ever need.
SQNS
NEW NAME
TIBX
NEW NAME
TNAV
7-21 Until this issue puts in a Pullback Off Highs (POH) pattern and moves closer to trend channel support there is nothing to talk about.
PCLN
7-20 See Monday’s lows? It was right down to the 50 day average AND IN THE FACE OF FEAR. Folks it never fails, buying in the face of fear in an oversold market in issues that are technically intact with structure will always be the lowest risk entry point. If you are not employing that stradegy to a degree you are missing some nice trades and will continue to do so throughout your trading career. BUT it takes guts and will take time to incorporate it into your mindset.
Remember: If you continue to think the way you’ve always thought you are going to get the results you’ve always got. If you are getting the results you want? Continue thinking the way you’ve always thought. If you are not getting the results you want? Then you need to change your thinking.
NFLX
7-20 Talk to us at the 50 day most likely after earnings. If on earnings this issue tags the 50 day? Sure then we can talk about it. In the meantime there is nothing to do with regards to employing new money to this name.
IRBT
7-21 Starting to follow thru.
IPGP
7-20 Nice tightening up. BUT still though, support is in the 60 range and MAY need to test it first. Overall we’ve got a three month base building here. Bigger the base bigger the break as they say.
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FEATURED BUT NOT TRADE TRIGGERED BY US
This is where names that we have on our watch list that have triggered but for whatever reason we did not take them (can’t do them all) in our trade trigger alerts. This section is because a lot of our subscribers opt to use our information as they see fit from a do-it-yourselfer standpoint.
LONG SIDE
When it rains it pours!! Look at all of the new names on this list — all from the watch list in this weekend’s newsletter!
CRS
7-21 This name gets deleted after today.
7-21 Gosh, this name reminds us of CRS and ZAGG.
CVLT
7-21 not exactly likeing the action going on with this one. We’ll delete it from the featured list. Especially should it break trend channel support at the green line.
PPO
7-21 Trying to follow thru.
AVGO
7-21 Follow thru! Exactly what one wants to see.
ICLK
7-21 Just more of the same here.
GG
7-21 Marking time going sideways. Remember digestions of gains? Sideways or down is the rule of thumb.
RGLD
SLV
7-20 Currently hanging around the right side of cup crossover level.
GLD
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All About Options In The World According To All About Trends
Over the weekend we posted an article in this space entitled:
OPTIONS- Your best friend and worst enemy
That article is at the bottom of this newsletter for reference anytime you need it.
NOTE: The exchanges recently started WEEKLY EXPIRATIONS of options. Going forward, make sure that you check to see which ones you are buying. Let’s stay with traditional options expirations which are the ones that expire the 3rd Saturday of every month.
Options Watch List – All AUGUST call options
Current Holdings
TSCO August calls to open (We are now long 2 Aug. 60 calls at 7.50 as of 7-21-11)
As we post they are currently trading at 7.40
ARBA August 30 calls to open (We are now long 2 Aug. 30 calls at 5.20 as of 7-19-11)
As we post they are currently trading at 4.40
MAKO August 25 calls to open (We are now long 2 Aug. 25 calls at 6.70 as of 7-19-11)
As we post they are currently trading at 7.00
NANO August 15 calls to open (We are now long 2 Aug. 15 calls at 4.10 as of 7-13-11)
As we post they are currently trading at 3.60
ENTG August 7.5 calls to open (We are now long 2 Aug. 7.5 calls at 1.50 as of 7-13-11)
As we post they are currently trading at .95
NXPI August 20 calls to open (We are now long 2 Aug. 20 calls at 3.70 as of 7-13-11)
As we post they are currently trading at 2.55
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Let Your Stocks Tell You What To Do By The Action They Exhibit"
LONG SIDE POSITIONS
TSCO (We are now LONG 200 shares at 65.85 as of 7-21-11)
7-21
Tractor Supply Co.’s second-quarter earnings rose 18% as sales were helped by strong demand for animal and pet-related products.
The company again boosted its full-year per-share earnings and revenue guidance, calling for a per-share profit of $2.75 to $2.82 on revenue of $4.1 billion to $4.14 billion. The company in April had boosted guidance to $2.62 to $2.70 a share on revenue of $4.04 billion to $4.11 billion.
Shares were recently off 7.3% to $65.50 as top-line results missed analyst expectations.
The largest U.S. chain of farm and ranch stores has witnessed strong sales in recent quarters despite a cautious consumer environment. It counts household users among buyers of its tractor parts and home-and-garden gear, animal feed and farm equipment.
Tractor Supply posted a profit of $91.2 million, or $1.23 a share, up from $77.3 million, or $1.04 a share, a year earlier. The per-share amounts reflect a 2-for-1 stock split split that was effective in September of last year.
Net sales rose 11% to $1.18 billion, helped by a 4.6% increase in same-store sales.
Analysts polled by Thomson Reuters recently forecast a per-share profit of $1.20 on $1.19 billion in revenue.
Gross margin rose to 34.1% from 33.8%.
Tractor Supply operated 1,043 stores as of June 25, opening 16 stores in the quarter.
RAX (We are now LONG 200 shares at 43.42 as of 7-19-11)
7-20 Triggered a POH long entry now backtesting. We’ll find out soon enough if its going to follow thru.
RUE (We are now LONG 200 shares at 33.69 as of 7-19-11)
7-20 Big daily ranges with this one, as long as its above the 50 day and green trend channel support everything is fine.
ARBA (We are now LONG 200 shares at 34.56 as of 7-19-11)
7-20 Triggered and backtesting
PLCM (We are now LONG 200 shares at 31.77 as of 7-19-11)
7-21 As we post this issue is breaking the 50 day average zone and hanging around the 29 level. Rather than run the risk of it falling apart even more on earnings spill we are going to walk away here in the form of risk management .
Expect a trade trigger alert right after this mid day update.
MAKO (We are now LONG 200 shares at 31.08 as of 7-19-11)
NANO (We are now LONG 300 shares at 18.71 as of 7-13-11)
7-18 Right down to a prior support level and one could say right back to the top of the "Right Side Of Cup Crossover" level too.
NXPI (We are now LONG 300 shares at 22.96 as of 7-13-11)
7-10 Keep an eye in this stock, these folks are leaders in NFC chips. These chips are what allow consumers to get information about a product by simply swiping their phone in front of a tag located by the product. Taking it a step further consumers are also now able to swipe their phone in front of a special terminal and the purchase is made. No more credit cards (like America really needs them right?). Mobile Commerce.
ENTG (We are now LONG 300 shares at 8.71 as of 7-13-11)
7-21 WOW! What a wild blink your eye you missed it ride on this issue today. This issue is coming back real strong as we post.
Here is today’s earnings release:
The Company recorded second-quarter sales of $209.2 million, an increase of 25 percent over the prior year, and 3 percent sequentially. Net income was $32.5 million, or $0.24 per diluted share. These results included amortization of intangible assets of $2.6 million.
Non-GAAP earnings per share of $0.24 in the second quarter of 2011 compared to non-GAAP earnings per share of $0.16 in the second quarter a year ago and $0.23 per diluted share in the first quarter of 2011. A reconciliation table of GAAP to non-GAAP earnings per share is contained in this press release.
For the first half of fiscal 2011, sales were $412.3 million, up 26 percent from the first half of 2010. Non-GAAP earnings per diluted share for the first six months of 2011 were $0.47 per share versus $0.30 per share for the same period a year ago.
Gideon Argov, president and chief executive officer, said: "We continue to execute well, achieving a record quarter for sales, profits and cash flow. Sales of our unit-driven products including wafer shippers and liquid filters grew 6 percent sequentially. On an operating basis, we achieved an adjusted operating margin of nearly 21 percent of sales, a record high for the company, due in part to improved gross margin. We also generated record cash from operations of $52 million and ended the second quarter with cash and short-term investments of $191 million.
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To our NEW SUBSCRIBERS
What we’ve tried to do is break our watch list down into chart pattern recognition structure from a visual standpoint. Learn the patterns and the components of patterns and you’ll blow those Wall Street MBAs away. You don’t need a $3,000 software program either. All you need is a BURNING DESIRE to be the best that you can be and we’re here to help.
We have a lot of new folks here and we thank you! We want you to take it easy, get to know how the routine works around here for awhile and to feel comfortable.
We hope you all aren’t here because you are chasing performance. For us it’s more about educating and making you the best you that you can be first (that’s what we focus upon!). Like many of our long time subscribers they have all found out that they have no use for traditional Wall Street (and we don’t blame them) and it’s our hope that over time you’ll have acquired enough knowledge from us to say the same with conviction.
One of the most important things we want to stress is that of RISK MANAGEMENT via POSITION SIZING. You don’t need to stack your account with just a few big positions as we’ve seen it time and time again that those who get into trouble are the ones who take large positions and do not employ any risk management system IE shoot for the fences. Those are the people who live on the fringes of extremes and yes ultimately get burned.
As a guideline a good initial system is that of the following example.
Let’s say you have a $100,000 virtual portfolio and let’s say that as a guide you never place more than 10% ($10,000) into any one position. Now let’s say that one day a news driven event hits (over which you have no control over anyway) and one of the positions tanks 20%. On its own that position is sporting a $2,000 loss, while that may seem devastating on its own its really no big deal overall.
Why? Simple its all about risk management being properly employed. What is the impact of a $2,000 loss to the TOTAL VALUE of the virtual portfolio in this example.
Answer: A whopping 2% LOSS. Now you know why we say no big deal.
We can also tell you new people here that you will get stopped out of names and you will take hits. There is nobody on the planet living that has ever hit 18 holes in one and there never will be. We’d rather get you grounded in reality right away vs talking about pie in the sky all the time like a lot of other sites. In so doing your head is screwed on straight from the start and when those days happen (and they will) mentally it won’t mean a thing to you. To us that’s what’s most important is YOUR state of mind as it’s your most important asset. We hope you appreciate our honesty.
We have a very good retention rate here at All About Trends and a lot of great outstanding people here. We like to think that a part of that is being upfront about what can happen (in both directions). Verses those up 500%, I turned $50,000 into $3 million or some other absurd number to get you to bite. That’s not who we are.
WELCOME ABOARD!
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Lastly with regards to taking any trade:
Remember the moment you take a trade you are at the mercy of the market and have no control except when to sell. If you are not willing to take the risk and are not willing to pay that price do not take the trade. We are willing to take that risk knowing full well the end result could be a loss. That said make sure that virtual portfolio management trade size is used accordingly. With any position you may take make sure that should something go awry the amount of total impact to your account does not devastate your acct. Try to stick to a 5% position That’s the key to virtual portfolio management, not biting off more than you can chew.
Remember the mechanics of reality with regards to the stock market states a stock can only do one of three things: Up, Down, Nowhere. The moment you hit the enter button you are at the mercy of the market therefore the only control you have is when to sell/cover. You can’t manage your gains as you have none to manage initially. Knowing this in advance it allows you to stay in outcome, that being you will either:
1. Make a gain
2. Wash
3. Get stopped out at a loss
Remember the market IS the boss. IT is going to do what IT wants to do.
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OPTIONS- Your best friend and worst enemy
Let’s talk about options for a moment. First off this is a big universe with a lot of advanced strategies and terms like theta, delta , straddles, butterflies and the whole gambit. For the purposes of this conversation we’ll keep it real simple and not try to get to deep.
We’ll approach it from simple buy puts (short side) buy calls (long side). The first thing I want to mention is that options attract the fast money crowd in hopes of turning 500 into 10,000 overnight. This is also the get rich quick crowd. And more often than not these type of people get broke faster than they get rich. Please don’t be one of them as greed kills.
Time and time again we hear from people who like to trade options, and time and time again we hear the horror stories too. When we hear the horror stories nine times out of ten we can guess as to why their option went to zero. Nine times out of ten it was because they bought out of the money options or at the money options. This is the reason why 80% of those who do options lose money by the way.
Sure there are folks who use out of the monies and at the monies but those are experienced traders that know the ins outs ups and downs.
You see the trick is to NOT pay for time. You want as close to a point for point move as possible with the stock because there is nothing worse than seeing your stock move yet your option does nothing or very little, know the feeling?
So for All About Trends we only want to look at IN THE MONEY CALLS OR PUTS and we DO NOT WANT TO PAY FOR TIME, sure they cost more BUT we want to be as close as possible to being able to see a point for point move with the stock.
We hate paying for time. We want true value without the time. We’re not saying our way is any better than others, we’re just saying it’s what works for us.
Now let’s touch upon how we would build a virtual portfolio dedicated to options and how to make it a piece of your overall virtual portfolio via allocation. Keep in mind this is more geared towards beginners so you advanced people might be bored with it but then again it never hurts to revisit the basics every now and then.
At All About Trends Trends we talk a lot about never biting off more than you can chew and trade size position management. We do that for a reason, we do it so as to when Murphy’s law shows up it never devastates us or blows us up. Typically we try to stay within a 5-7% position size when we do a trade. The same thing goes for options. If we were to start a virtual portfolio of options or shall we say allocate a portion of our overall virtual portfolio to options the way we would look at it is the following:
For example, let’s say the total value of your virtual portfolio is $100,000. The most we’d consider allocating towards an options strategy is 10% of the whole virtual portfolio. In this case $10,000. So now you’d have a $10,000 option virtual portfolio to work with. Now let’s say that you are the worst trader on the planet (we doubt that!) and you lose the whole option virtual portfolio, what’s the risk to the total value of the overall virtual portfolio? 10% in which case you live to play another day. Now let’s touch upon that $10,000 you allocated toward options. Let’s reduce the risk even further (and we haven’t even talked about what stocks to trade yet). Let’s take that $10,000 and split it up into no more than 10% ($1,000) can be allocated to anyone position as a guide. (Sometimes 1000 can get you 3-4 contracts you know). Now let’s say that one of those positions goes bust (and they will! and sometimes more than one at the same time we assure you.) What is the total impact to the overall options virtual portfolio? 10% right?
Now let’s take that a step further. What’s the total impact to the overall investment virtual portfolio of 100,000? 1% – that’s right 1 measly percent. When it comes to options you need to employ some sort of virtual portfolio risk management structure parameters as this way you can get in trouble and you don’t lose sleep – you just have a bad day that’s all.
As for getting rich overnight? Forget about it. That’s just a marketing ploy. As for taking 50,000 and turning it into millions? Ain’t happening overnight but it sure sounds good doesn’t it? And that is why people bite on those marketing ploys.
As for time? We never go out months. As a swing trader we’re in positions for only a couple of weeks best case so why pay for the time to go out further in time when you don’t have to. When the stock moves whether it’s right away or not they sure seem to suck that time out of you just as fast anyway right?
Typically we’ll look at the front month (current month) or the next month but not months. When we say front month if options expiration is a week or sometimes even two weeks away we’ll look out to the next month and not the current. While time is our enemy in most cases, in this case it’s your friend. It’s just that you don’t want to pay for it
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SUBSCRIBER ONLY WEB SITE
Don’t forget you can view updates in the middle and the end of each trading day complete with current charts, along with our current performance at our subscriber only web site.
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