Hawk's Weekly Dispatch

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Shana Walters
5 years ago
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Hawk's Weekly Dispatch Trading Quote of the Week "When I'm bearish and I sell a stock, each sale must be at a lower level than the previous sale. When I am buying, the reverse is true.

" - Jesse Livermore Weekly Technical and Sentiment Outlook Technical View: The S&P followed the path laid out in the last few weeks of the technical view's with a 5 year closing high Friday and

6 Fibonacci Extension of 2012 Range) range target before there is any significant pullback, but always paying attention to the trend health by watching the short term moving averages, important to

1 Hawk's Weekly Dispatch Trading Quote of the Week "When I'm bearish and I sell a stock, each sale must be at a lower level than the previous sale. When I am buying, the reverse is true. I must buy on a rising scale. I don't buy long stocks on a scale down, I buy on a scale up. " - Jesse Livermore Weekly Technical and Sentiment Outlook Technical View: The S&P followed the path laid out in the last few weeks of the technical view's with a 5 year closing high Friday and clearing all resistance, so now it becomes more difficult to project the next move, but maintain a 1,515/1,525 (Measured Move of 1,430 Breakout / Fibonacci Extension of 2012 Range) range target before there is any significant pullback, but always paying attention to the trend health by watching the short term moving averages, important to close above the 10 day EMA. The major resistance levels above 1,525 include 1,540 (2000/2007 Double Top) and 1,569 (123.6% Fibonacci Extension of 2011/2012 Range). Short-term support levels are 1,470 (10 Day EMA), 1,450 (1/8 Lows), and 1,440 (Trend Support and Re-Test of Trend Breakout). The weekly chart below shows a strong rising channel pattern with higher lows and higher highs, and if the pattern of falling 150 points and rallying 200 points continues the next target is near 1,550, but upper channel resistance should come into play around 1,525.

Sentiment Views: The latest AAII Sentiment Survey showed that Bullish Sentiment fell 2.5% to 43.9%, still well above the 39% historical average, while Bearish Sentiment rose 0.4% to 27.

2 Sentiment Views: The latest AAII Sentiment Survey showed that Bullish Sentiment fell 2.5% to 43.9%, still well above the 39% historical average, while Bearish Sentiment rose 0.4% to 27.3%, below the 30.5% historical average. After a record week of Equity Fund Inflows of $18.3B last week saw a small $286M of inflows. The NAAIM Survey of Manager Sentiment jumped to 84.67, still below the 12/26 peak reading of 88.1, but still elevated at dangerous levels of optimism. Market short interest has started to decline, but remains fairly elevated, but shows that the rally is nearing its latter stages. As of Friday's close 812 New Highs and 46 New Lows, powerful numbers being seen in that ratio, and 83% of stocks above the SMA 50, and 75.7% above the SMA 200. The CBOE Equity Put/Call Ratio closed Friday at 0.54, near an extreme and the lowest reading since January 7th and 14th, but has tended to snap right back. The CBOE Index Put/Call Ratio closed at 0.77, also near a lower extreme. Much of the markets uncertainties have been removed between the European Debt Crisis, Chinese Slowdown, and the US Fiscal Cliff, and now the US Debt Ceiling has been extended. The lack of fear is being shown in the VIX that is at 5+ year lows, but looking forward on the futures curve we can expect volatility to pick-up in March/April, but gives this rally time to grind higher defying the skeptics. Earnings season has started out positive, especially with the Bank earnings, the group expected to account for the majority of EPS growth in FY13. Also, economic data continues to show strong improvements with great housing data, expansion seen in Services and Manufacturing, and Jobless Claims dropped to multi-year lows last week. In conclusion, although sentiment is nearing too much optimism, it appears well-founded because there are a lot of reasons to be optimistic, and most importantly the current market action shows that a major asset allocation shift from Treasuries to Stocks is underway and can catapult markets for weeks, even months. Options Hawk Institutional Trade of the Week Boeing (BA) shares have been under pressure all week with issues found in its Dreamliner 787 which the FAA has now grounded. Option traders were actively buying into the weakness on Wednesday, notable buyers in February $75 calls where more than 8,000 traded. However, there was a much more interesting professional trade: Trade Details: A trader sold 6,500 August $65 puts at $2.40 and bought 6,500 August $75/$85 call spreads at $3 in a bullish 3 way spread, a net debit of $0.60 per spread. The trader is willing to be long 650,000 shares of Boeing at $65, but is expecting a move higher with the $390,000 debit for the trade. The trade is profitable with Boeing shares above $75.60 on August expiration and potential to profit $6,110,000 on a close at $85 or higher. These type of trades can also be used to hedge a short stock position, and 397,500 shares traded along with this spread, but often just the market maker hedging off his/her Delta exposure, but worth watching the Boeing short interest trends. Trade View:

3 Fundamental Analysis: Boeing (BA) has a $56B market cap and trades 14.55X FY13 earnings, 1.14 PEG, 0.71X Sales and 17.57X FCF. The Aerospace industry remains an area of strength and especially overseas in Asia where orders have been very strong. The issue with the 787 Dreamliner seems fairly minor, and although Boeing is receiving bad press, it is a supplier that is at fault. Boeing as blown away Street estimates each of its last 6 quarters and shares closed higher 5 of those 6 quarters, next report on 1/30/13. Deutsche Bank and Jefferies each reiterated a Buy rating today with $85 and $87 targets respectively. Technical Analysis: Boeing shares look to be forming a large cup and handle pattern on the 1 year with a measured move target to $85 on a break past $77, and the chart reminds me of another Transport name Fed-Ex which finally cleared long term resistance and rallied sharply with Transports strong lately. Boeing has support at its 200 day SMA at $72.50 and expect it to find buyers on weakness which has been reflected in its gap-down moves all week.

Options Radar Daily Freebies Recap (Available Daily on OptionsHawk by 2pm at "Options Radar" on Menu) 1/18: Gold (GLD) with April $180/$195 call spread bought 20,000X, earlier the June 28 (Q)

4 Options Radar Daily Freebies Recap (Available Daily on OptionsHawk by 2pm at "Options Radar" on Menu) 1/18: Gold (GLD) with April $180/$195 call spread bought 20,000X, earlier the June 28 (Q) $175/$185 ratio call spread bought 18,300X36,600 at $0.15 debit. Both trades looking for significant upside for Gold through June. 1/17: HSBC (HBC) saw strong call buying last week and breaking out today, the March $57.50 calls attracting strong buying again for 3,500 contracts at $0.73/$0.74 1/16: Tiffany's (TIF) with a large opening put sale showing a vote of confidence long term. A trader sold 6,000 January 2014 $55 puts at the $4.25 bid to open. 1/15: Nvidia (NVDA) oversold again and buyers active in June $13 calls at $0.73 for $270K call premium, Net Delta +170K. Buyers are paying the offer and 3,480 trading against OI of 5,418 as traders buy into the dip. 1/14: Total SA (TOT) buyers of 2,800 February $52.50 calls at the $1.40 offer for $265K call premium, bullish action with shares nearing a breakout of the 2012 highs. TOT is strengthening with Crude Oil and the Europe recovery and trades 7.53X earnings and 1.24X book with a 5.6% dividend yield. Weekly Small Cap Growth Bullish Chart and Fundamentals Photronics (PLAB) is a $372.2M supplier to the Semiconductor industry and trades 9.43X FY13, 0.83X Sales, 0.67X Book, 1.71X Cash Value and 10.46X FCF with 60% EPS growth. PLAB also has 11.1% of its float short, days to cover. New product designs in the Tablet and Smartphone industries drive its Photomask sales and PLAB is a supplier to Samsung, LG Display, Intel and others and has grown its market share to 22% in 2011 from 17% in On the chart shares are breaking a 2 year downtrend and currently forming a bullish consolidation flag above its 200 day SMA with next resistance at $6.70 and $7.35.

Weekly Earnings Snapshot Preview 3M (MMM) will report earnings 1/24 before the open and the Street consensus is $1.41 EPS and $7.19B in Revenues, and $6.86/$31.35B for FY13. 3M shares closed 4.

5 Weekly Earnings Snapshot Preview 3M (MMM) will report earnings 1/24 before the open and the Street consensus is $1.41 EPS and $7.19B in Revenues, and $6.86/$31.35B for FY13. 3M shares closed 4.1% lower last report after closing higher the prior 3, and an average 6 quarter max move of 4.3%. The $69.2B diversified conglomerate trades 14.4X FY13, 1.5 PEG, 2.34X Sales, 3.87X Book and 31.55X FCF with a 2.39% yield. Shares are at an 18 month high on Price/Sales and Price/Book. 3M anticipates 2-5% top-line growth in 2013 organically and an additional 1.5% via M&A. Industrial and Transports account for 33% of Revenues, Health Care 17%, Display and Graphics 12%, Consumer of Office 14%, Safety and Security 13%, and Electro and Communications 11%. JP Morgan cut to Underweight on 1/11 with a $97 target, while after the outlook given in December BofA put a fair value on shares at $113. On the charts shares are in a tight channel up pattern since late 2011 and nearing resistance at $100. Shares did recently break out of a cup and handle pattern at $94 that measures to a $101 target. RSI near 75 and MACD at 1 year highs, shares are overbought into earnings, but under strong accumulation as a safety play. 3M's weekly option IV at 23% compares to February at 15.2%, options pricing in an earnings move of 2.6%. There has not been any notable positioning in the options market. Weekly Options Trade Idea Long the SLW January Weekly $36.50 Calls at $0.45 (Target Exit $1.50) Silver Wheaton (SLW) shares have pulled back with a tight falling wedge to the 200 day SMA and longer term trend support. The $12.86B Silver Company trades 16.8X earnings and 4.3X Book. Shares are tightly coiled below its 50 day SMA and a breakout past $36.45 should allow for a move to the $38/$39 area. Potential Triggers for Stocks with Weekly Options: QCOM over $65 CF over $220

6 Options Action Trade Highlight of the Week CBS Corp (CBS) was first highlighted by me to subscribers on and each and every day in the Options Hawk Trading Hub I highlighted unusual large bullish call buying. Shares jumped this week after announcing plans for its Outdoors Business and depending on what strike call was bought gains ranged from 300% to 600%. Original 1/9 Options Radar Report: "CBS Corp (CBS) with 6,000 February $39 calls bought to open at $0.90 in an intraday surge for $500K call premium and Net Delta +238K, and a name with large bullish spreads in March and June Open Interest. Shares have pulled back this week to the rising 20 day EMA and re-testing the former cup and handle breakout, a pattern with a target of $ The $23.85B Co. trades 12.9X earnings, 1.16X PEG, and 1.63X sales, and has shown strong earnings momentum, advertising strong into the Super Bowl and with Auto companies strong. Barrington Research raised its target for shares to $48 in November." Express (EXPR) was featured by me on noting strong call buying in the January $15 strike close to expiration, but seeing the upcoming catalyst. Shares jumped more than 20% this week on a positive outlook and the calls jumped 1,000% for the early buyers at $0.30. Original 1/8 Options Radar Report: Express Inc. (EXPR) seeing a 13.5% surge in its IV30 with call volume 5X daily average as 7,700 January $15 calls are bought in the $0.30 to $0.45 range ahead of the ICR Xchange Conf. on 1/17, a big event for retailers. There was notable January $12.50 and $15 call buying on 1/2/13 as well and significant Open Interest from prior action, also April $15 calls bought $0.65 to $0.75 for 3,750X on EXPR shares have moved well off its $11 bottom and now forming a bull flag with next resistance near $17.50 on a break of the recent $15.41 highs. The $1.27B retailer is very cheap on valuation at 9.2X FY13 earnings, 0.51 PEG, 0.61X sales and 8.9X FCF. UBS reiterated a Buy in November with a raised $17 target. Express will look to carry some of its momentum from the recent quarterly report into the Conference when it will discuss Holiday sales. Please Visit OptionsHawk.com for More Content and for Information on Premium Subscription Services

7 Disclaimer: Not Investment Advice or Recommendation Any descriptions "to buy", "to sell", "long", "short" or any other trade related terminology should not be seen as a recommendation. The Author may or may not take positions in any of the names mentioned, and is not obligated to disclose positions, nor position sizes. Content is for informational and educational purposes only. You alone will need to evaluate the merits and risks associated with the use of this content. Decisions based on information provided are your sole responsibility, and before making any decision on the basis of this information, you should consider (with or without the assistance of a financial and/or securities adviser) whether the information is appropriate in light of your particular investment needs, objectives and financial circumstances. Investors should seek financial advice regarding the suitability of investing in any securities or following any investment strategies. No reference to any specific security constitutes a recommendation to buy, sell or hold that security or any other security. Nothing constitutes investment advice or offers any opinion with respect to the suitability of any security, and the views expressed on this website should not be taken as advice to buy, sell or hold any security. In preparing the information contained in this website, we have not taken into account the investment needs, objectives and financial circumstances of any particular investor. This information has no regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this information and investments discussed may not be suitable for all investors. Additional Notes - This Weekly Dispatch is Expected to be Sent Weekly on Sunday's. As a free piece of content there will be week's that it will not be issued depending on time constraints, vacations, etc.

Options Hawk End of Day Market Report

Options Hawk End of Day Market Report Markets had a positive day closing near highs as crude oil rallied sharply, although participation was slim as volume was very light on the first day of the shortened