In this week s Cash Cow Newsletter we are going to evaluate recent events in the market, then look at several new profit opportunities.

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1 December 18 th 2013 In this week s Cash Cow Newsletter we are going to evaluate recent events in the market, then look at several new profit opportunities. The $SPX rallied 1.66% today, reaching an all-time high in the process: The Fed announced that it would begin to taper its stimulus to $75 billion a month. This $10 billion decrease is a moderate amount, which eased most investors. Starting in January 2014, the Fed is going to start buying $35 billion a month in mortgage-backed securities, and $40 billion a month in treasury bonds. 1

2 There was also news that the Fed would continue to provide low interest rates. This news helped spur the afternoon rally. During the recent drop in the $SPX that occurred last week, many traders were calling for a large correction and advocated taking short positions. These traders went against the trend and paid for it. Despite the speculation at the time, we stayed disciplined and followed the trend. All of our positions are up (NOC +3.19%, NFLX +.78%, ABC +1.22%) since Thursday s close. This demonstrates the value in following the trend and not trying to predict the future. With the Fed announcements out of the way, volatility is noticeably lower. The $VIX dropped % by today s close. For this week s profit opportunities we should use our call option purchase strategy to give us the highest return potential possible if the market continues its bullish momentum. Those of you who are unfamiliar with the type of strike prices I use when purchasing a call option should read the 5/8/13 Newsletter. Without further ado, let s get into this week s profit opportunities. 2

3 The first profit opportunity we ll look at this week is BEAV (BE Aerospace): B/E Aerospace designs, manufactures, sells, and services cabin interior products for commercial aircraft and business jets worldwide. Over the past 4 years the company has consistently increased their annual Revenue, Equity, and Retained Earnings. We can see from the chart that BEAV is in a clear uptrend, and has an up-sloping On Balance Volume that confirms this price uptrend. The stock closed on the middle Keltner Channel, providing us with a good entry point for a call option purchase. Since BEAV does not offer weeklys, we should consider purchasing a call on BEAV for the January 18 th monthly expiration. 3

4 The second profit opportunity we ll look at this week is GILD (Gilead Sciences): Gilead Sciences is a biopharmaceutical company that discovers, develops, and commercializes human therapeutics for the treatment of life threatening diseases worldwide. The company has stellar financials that include consistent annual Revenue, Equity, and Retained Earnings growth over the past 5 years. After recently retracing, the stock is on its way back up and just passed through the middle Keltner Channel. This offers us a good entry point for a weekly call option purchase. We should consider purchasing a call option on GILD for the December 27 th expiration. 4

5 The next profit opportunity we ll look at this week is MDSO (Medidata Solutions): Medidata Solutions offers cloud-based clinical development solutions for life sciences organizations worldwide. The company has excellent financials and technicals. Looking at the price chart of MDSO, I used the Slow Stochastics indicator and found that each time the indicator s lines reached the bottom 20 line, the stock would rally in the following weeks after the Slow STO line crossed back up. 5

6 This was only looking at the past 5 occurrences, but it is a pattern nonetheless. MDSO recently crossed below the 20 line again, and seems to be on its way back up. With the stock trading near the middle Keltner Channel, and the Slow STO recently crossing above the 20 line, we are presented with an optimal entry point into this stock. We should consider purchasing a call option on MDSO for the January 18 th expiration. For a less leveraged approach, we can also initiate a call option spread on this position. At current prices the MDSO January 18 th 47.5/57.5-strike call option debit spread has a profit potential of 33.3% or $250: Buy to Open MDSO January 18 th 47.5-strike call Sell to Open MDSO January 18 th 57.5-strike call If MDSO increases, remains flat, or decreases -2.5% by expiration we would reach our 33.3% maximum profit potential. If MDSO decreases -5% by expiration we would still profit 15.1%. 6

7 The last profit opportunity we ll look at this week is MU (Micron Technology): Micron Technology manufactures and markets semiconductor solutions worldwide. As you can see from the chart, the stock has done very well over the past 8 months. The stock closed near the middle Keltner Channel today after a 2 month long rally. This drop could offer us a good entry point into this stock. We should consider purchasing a weekly call option on MU for the December 27 th expiration. Note: Profit performance displayed in this newsletter does not include transaction Costs. 7

8 This newsletter includes some trading ideas following Chuck Hughes trading strategies along with educational information. For a complete listing of Chuck s exact trades, including specific entries and exits and real time Portfolio tracking, please call Brad at or Cash Cow Newsletter Archive Click on the link provided below to access the Cash Cow Archive. Cash Cow Newsletter Archive: 8