Navivest Stocks and Options Blog

The Technical Trader – Google

May 3, 2010 Uncategorized

Google’s (GOOG) stock, which closed at $595.30 on April 15, have fallen to $530.60 (05/03/10). At current levels, the stock may not only have found support, but is also forming a triple bottom. Multiple bottoms are generally bullish technical signals and we could see Google shares rebound from current levels, assuming the stock market holds up.

On March 24, with Google having pulled out of the mainland China market, we posted a Google Baidu (BIDU) trade that recommended shorting Google and going long Baidu. Google was at $541.33 and Baidu was at $610.42. Google is down $10 since then and with Baidu closing at $708.99 on 05/03/10, we are up $98.57 in those shares. Obviously, we are closing out the Google short position here.

Tags: baidu, google, Technical Analysis

Trade Of The Day – Commodity Stocks

Mar 30, 2010 Uncategorized

With other major currencies beginning to recover against the U.S Dollar, traders might do well to look at commodity stocks. On Monday, with the news that the European Union had reached an agreement over Greece, the Euro climbed against the dollar and that sent commodity prices rallying, resulting in big one day gains in copper, gold, coal and other commodity stocks. We would look for more of the same today.

If stock market futures are up throughout the morning, the stock market opens to the upside and the dollar is down against the Euro, buy commodity related stocks at the open. Our two favorites right now are Freeport McMoRan (FCX), a gold and copper miner and Bucyrus International (BUCY), which is actually a mining equipment manufacturer.

Both stocks have options on them and for traders looking to maximize profits, buying at the money or in the money calls could be the way to go. We would want to see FCX break above $84, else do not enter into the trade. If the broader markets are doing well, we would also look at Caterpillar (CAT).

Once in, look to take very quick profits. While this slow but steady rally has been very impressive and looks to continue, we are severely overbought and could see a pull back on technicals any day now. There is also the risk that we could get more bad news that sends the markets reeling. So take early profits and trade with caution.

Navivest provides stock and options trading recommendation services. More info on our services can be found here.

Tags: bucyrus international, commodity stocks, freeport mcmoran

Triumph Group Up 13% On Acquisition News

Mar 23, 2010 Uncategorized

Triumph Group (TGI), a company that supplies and overhauls aerospace systems and components, is seeing its stock rally $8.01 to $69.23, for a 13.08% gain in early trading, on mergers and acquisition news from the company.

The company today announced that it had signed a definitive agreement to purchase Vought Aircraft Industries, Inc. from private equity firm The Carlyle Group, in a cash and stock deal worth $1.44 billion, which includes the retirement of $590 million of Vought debt. Upon the deal’s closing, Carlyle will own approximately 31% of Triumph Group’s outstanding stock.

According to Triumph Group, the acquisition will create a company with industry-leading breadth of product and capabilities.
Vought, which had 2009 sales of $1.9 billion, manufactures aerostructures for commercial, military and business jet aircraft. Its product line includes fuselages, wings, empennages, nacelles and helicopter cabins.

Tags: acquisition, mergers, triumph group, vought aircraft industries

The Technical Trader – Genzyme

Mar 21, 2010 Technical Analysis, Trading Idea, Uncategorized

Biotech company Genzyme (GENZ) had the second best performing stock among S&P 500 stocks on Friday (Precision Castparts was the best performer with a $2.44 move to $121.79), climbing $1.98 or 3.45% to $59.39. The shares traded 4.6 million shares, compared to a most recent three-month average of 2.6 million shares.

On January 5, the stock, which had been in a downtrend since October, hit a bottom of $48.18, and started rebounding. This was a very bullish signal, as the stock had long-term support at $48, which was maintained. The stock has tested or fallen to the $48 area four times going back to August and each time, the shares bounced off that area.

Since the January rebound, the stock has had a nice upward formation, culminating in Friday’s decent move.

GENZ is once again butting against resistance, but we would look for short-term buying opportunities. If the shares are moving to the upside, we would enter and look to capture two to three points.

The April 57.50 calls are asking $2.85 and a $1 move to the upside from here on Monday or Tuesday could mean a better than 40% gain.

Navivest provides subscription based trading advisory services and newsletters for options, equity and ETF traders. More information on our services can be found on our website at http://www.navivest.com

Tags: genzyme, Technical Analysis

Stock To Watch – Google

Mar 21, 2010 Stock to watch, Uncategorized

Shares of Google (GGOG) might come under pressure this week, if rumors that the company will announce on Monday that it is pulling out of the Chinese market, turn out to be true. If on the other hand, the company announces that it has reached a compromise with the Chinese government, the shares might rally.

Google as with all other internet companies, is required to censor the content that Chinese consumers access through its platform. This results in blocked content for those users. For instance, searchers in China searching Google for “Fulan Gong” a Buddhist/Taoist based religious group that the Chinese government deems a cult, or Tibet, which China invaded in 1950 and has occupied since or the Dalai Lama, the Tibetans’ spiritual leader, will come up short and their search results will not return any non-Chinese government sponsored sites on those matters.

With the potential profit potential of operating in the world’s largest country a motivating force, Google has willingly operated in China under the Chinese government’s censorship guidelines. However, in January, Google found out that the Google email accounts of some Chinese dissidents had been compromised via very sophisticated techniques, which led Google to conclude that the Chinese government was behind the attacks. The company has since been in a public war of words with the Chinese government, while in the background, the company is holding talks to see if a compromise can be reached. Needless to say, the Chinese government is not about to allow any internet company, especially a foreign one, provide fully unfettered access to global internet content to its citizens. As a dictatorship, you have to wonder about and be paranoid about what your citizens might do if they if they got too much information.

Google shares are right at support levels at $560 and on one hand, one would look for a trading move to $560 or even better if Google announces it is staying in China. On the other hand, the overall market is overbought and Google has this possible pullout out of the Chinese markets acting as a negative overhang on the shares. As such, a near-term downside move is a strong possibility.

Tags: google

Trade Of The Day – Apache Corp

Mar 19, 2010 Uncategorized

The stock market, which is way past due for some pull back, is finally losing some ground today and while we may see another slow creep upwards on Monday, we should get some retracement next week. We also expect some continued pull back in oil.

Short Apache Corp (APA) at current levels ($101.79), or buy the April 2010 100 puts. They are asking $2.10.

Navivest provides subscription based trading advisory services and newsletters for options, equity and ETF traders. More information on our services can be found on our website at http://www.navivest.com

Tags: apache, stock recommendation, trade of the day

Massey Energy Shares Rallying On Acquisition

Mar 17, 2010 Uncategorized

Coal producer Massey Energy (MEE) is a strong performer today, on the company’s news that it has signed a definitive agreement to acquire Cumberland Resources, a privately held coal producer, for $960 million, in a cash and stock deal. Massey Energy is offering $460 million in cash and the balance, or $320 million, in Massey stock.

Cumberland Resources, which owns 416 million tons of coal reserves, had 2009 coal revenue of $550 million. The company posted 2009 EBITDA of $115 million.

Cumberland Resources produces both steam coal, which is used by power generating plants and metallurgical coal, which is used in the production of steel. Massey believes that the acquisition will strengthen its position in the metallurgical coal arena.

Cumberland currently produces 4.8 million tons of metallurgical coal annually and 800,000 tons of that is sold into the metallurgical coal market. After the acquisition, Massey will be producing 5 million tons of metallurgical coal.
Massey shares are up $2.95 to $53.17 for a gain in early trading.

Tags: acquisition, m&a, massey energy, merger

DSW Falls 10% On Latest Earnings

Mar 16, 2010 Uncategorized

Shares of women’s shoe retailer DSW Inc (DSW) fell $3.10 or 10.53% to $26.33 after the company released its 2009 Q4 earnings results, which came in at $0.30 against estimates of $0.32. The company also announced that it now expects fiscal 2010 earnings to come in between $1.35 and $1.45 per share, up from its previous guidance of $1.15 to $1.25 per share. Current analysts’ estimates are for 2010 EPS of $1.40.

Tags: dsw inc, Earnings

Technical Trade of The Day – AboveNet

Mar 11, 2010 Uncategorized

AboveNet - 03/10/2010

AboveNet (ABVT), which provides high bandwidth connectivity solutions to businesses, yesterday fell $7.70 to $55.46, a huge 12.19% decline, after the company reported fourth quarter and full year 2009 results. The company also provided guidance for the 2010 guidance, all which served to disappoint investors.

The stock hit an intra-day low of $53.32, but managed to cut its losses. With the rebound in the shares off the day’s lows, the stock held above $55, which is a support area. However, we don’t expect to see the stock rebounding immediately and we should see a retest of that $53 area again.

A drop of $1.50 from yesterday’s close would be a 2.7% gain and traders shorting the stock here should realize that over the next five trading days. With this trade, take quick profits.

Tags: abovenet, Technical Analysis, trading recommendation

Facet Biotech Up 66.44%

Mar 10, 2010 Uncategorized

Facet Biotech (FACT) is one of the best performing stocks overall today, on  a $10.77 rally to $26.98, for a 66.44% gain so far on the day.

Abbot Laboratories (ABT) announced that it is $27 per share in cash to buy the company, in a deal worth a total of $450 million.

Tags: abbot labs, facet biotech