We apologize for the slight delay today but we wanted to make sure we talked to our iPad contest winner before we went to press. The winning pick came within 16 points of hitting the nail on the head.
The Dollar Stores sector was a big winner in 2012 but we started to see some weakness in the 4Q12 on a few names. Yesterday, it was Family Dollar’s (FRO, $56.82, up $1.08) turn to confess to Wall Street and shares tanked 13% after the company missed expectations and lowered its outlook for the year. We mentioned 4Q earnings start next week – with Alcoa (AA, $9.19, up $0.12) leading the charge – but the company is on an “off” cycle as FDO reported its 1Q earnings yesterday.
The Family Dollar January 60 puts (FDO130119P00060000, $3.50, down $1.10) are down today but were up a whopping 665% after opening at $3.50 on Thursday. They were at 60 cents before Wednesday’s close and traded to a high of $5.10 yesterday and when we would have cashed out. Shares are rebounding today but a quick look at the chart shows $50 could come into play on a close below double-nickels ($55).
We missed the easy money on this earnings trade and this weekend we will be showing you how to find earnings trades like this for the upcoming season that starts this Tuesday. We will also show you some chart work on a few trades on our Watch List and why we think Solazyme (SZYM, $8.49, up $0.12) might be a good option play at current levels. We will also cover a recent IPO that now trades options and how to play a longer-term surge or a breakdown over the next 6-12 months. We will also try to cover a few Biotech names that we are watching for 2013.
We awanted to close today’s newsletter with the good news on who won the brand-new iPad we are giving away. As you know, we ran a contest back in early December for those who signed up early for the 1-year promotion we recently we did. The rules were simple and asked where you thought the Dow would be after the close on the last trading day for 2012.
At the time of the contest, the blue-chips were at 13,155.13 and finished the year at 13,104.14. There were a lot of close guesses but Gary, from Oklahoma, was our winning subscriber as he made an educated guess of 13,120.00. Amazing.
What a fun day. We were so happy to call Gary to inform him of the news and we may have another contest down the road so stay tuned.
As far as they market, the bulls are defying gravity as they continue to make a push higher. If we had a nickel for how many times the talking heads have called for a pullback today we would have $5.55 by now.
Look, there could be a pullback, but our portfolio is light and we will be ready for a pullback if and when it comes. The Fiscal Cliff debacle is over with and while there is a Debt Ceiling debate coming, it seems the market is enjoying the break it is getting with Air Force One back in Hawaii. The zombies are away for another week or two and we are looking for a few more positive days before the volatility returns.
As we head to press, the Dow is up a double-deuce to 13,412 while the S&P is higher by 5 points to 1,463. The Nasdaq is up a point to 3,101. We would like to see the bulls hold current levels and some more fluff would be nice before the close.
We have some last minute updates on our current trades before we roll and we will be back Sunday night with the Weekly Wrap. If you haven’t signed up for this publication, we urge you to do so now. We have a stock we are covering that is at $3.66 and has finally broken out of a trading range. We believe shares are headed to $6-$7 this year.
A few years ago we started touting Imax (IMAX, $22.68, down $0.12) at $3 before it zoomed to $30 and our current recommendation could experience the same price move over the next few years. Remember, you can get a one-year membership to the Weekly Wrap if you buy the Daily for one-year. You also get our option trading course, How to trade options on Momentum Stocks, at no cost. You can find the coupon by scrolling back a few days and reading our past posts but we are no longer advertising this deal. However, if you can’t find it or would like the code, email us.
That is all we have for today. Subscribers, check the Members Area for the updates and have a fantastic weekend everyone!