I am not liking TSRA price/action this morning so I decided to close my position and sell my November $25 calls for a 17% profit. The stock reversed from a 52-week high and is currently trading down 1.5% on high volume. This is not a good sign. Sometimes it is better to protect profits at the very first signs of weakness. If INTC doesn’t report extraordinary earnings tomorrow, TSRA could very well tank. If that happens, a second buying opportunity might arise when TSRA retreats to the 10-week line. Look for institutional support before pulling the trigger however.
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The TSRA trade I recommended on October 8th is currently working. On Friday TSRA advanced 3.8% in 62% higher volume, a sign of continued institutional support. It also marked a new 52-week high @ $31.63.
My November $25 calls are already showing a 20% return as of today. If the market continues to trend higher, TSRA should follow. On Tuesday Intel reports earnings and that could affect the price of TSRA as well.
I expect this stock to move another 5 or 6%higher before possibly pulling back to the 10-week line. Continue to stay long as the market conditions continue to improve.
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Tessera Technologies designs smart/micro optics and chip-scale, multi-chip, and wafer-level packages for semiconductor manufacturers.
The stock, ticker TSRA broke out of a consolidation yesterday with a buy point of $29.35. TSRA is currently 2% extended in price but it is still in safe buying range. Volume on the breakout has been impressive, a sign that large institutions are buying shares.
Today I initiated an aggressive position with deep-in-the-money November $25 calls. We shall see if this breakout continues to work.
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Last week the market suffered two days of professional selling which raised the question: are we due for a pull-back? Though to say. By keeping an eye on the market we can tell if it is time to hedge long positions or to add to our existing trades. Yesterday we gained almost 2% in lower volume.
Two weeks ago I closed my Visa trade because the breakout was working on low volume, a sign of weakness. In fact the stock sold off in the next few days and is trading now around $71, below its buy point.
Goldman Sachs hit a 52-week high of $188 last week and then reversed lower to close at $179.50, not a good sign. Volume was unimpressive however. Today GS is back around $183 and if the market doesn’t start a correction I will continue to be long GS calls for the time being.
CTRP briefly dipped below its buy point last week without a significant correction however. This week the stock is charging higher in healthy volume, a sign that institutions are fueling this breakout. Resistance area for CTRP is the May 2008 absolute high around $70. I expect CTRP to test that level in the coming weeks. It is still not too late to jump into this trade.
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Goldman Sachs
Closed the trading day at $177.71, up 1.72% and outperforming the broad market once again. By looking at the chart, I see possible resistance around the $190 level but for now it looks like the stock will continue to trade higher. Hold your position, today GS marked another 52-week high @ $177.90.
Visa
This stock traded higher as well today closing @ $72.87 and marking another 52-week high @ $73. There is still time to get in this trade as V is only slightly more than 1% extended from its buy point. The only red flag on this breakout is lack of volume during the upside move. I would very much like to see volume pick-up as the week progresses otherwise I might cut my position.
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It is difficult to say which one is going to be the industry that will lead the recovery. Maybe is going to be more than one. What we know for sure is that rarely past market leaders are the steam behind a new rally. When the bear market began, top growth stocks fell harder than the major indices. You would expect a proportionally faster recovery of those stocks if this is really a new bull market. Well, most times it doesn’t work like that. Look at the performance of different stock groups over the last few months. We all know that the global growth story that pushed feritlizer stocks, commodities, energy came to an end last year and those stocks have been pratically killed. Many of them have rallied 100% or more off their lows, however they remain well below their 52-weeks high. Probably, they won’t come back to that level for a very long period of time however this is one of the trades that is working.
Financials have been killed as well and those that still remain trade at very little value. I believe that it will take less for bank stocks to go back to their recent levels simply because the goverment has done everything in its power to make them very profitable. It will take years however, maybe 3 or 4. That said, the bank trade is working.
The internet content/gaming trade appear to be working as well. To be more precise, it has been working for quite sometime. Look at BIDU, NTES, SNDA. Just this last thursday I closed my position in SNDA. I noticed some overbought conditions and some overhead supply at around the $40 level which is pretty much the all-time high for the stock. The last time we touched this level and corrected lower was at the end of October 2007. Following a healty chart pattern of double bottom with handle I entered SNDA at $33.70 and sold at $39.80 for a decent 18% return. The stock has corrected 10% since I sold and I am looking in establishing a position again if I see heavy institutional buying at the 10-weeks moving average. I am convinced that the online gaming industry will continue to grow as more people chose this inexpensive form of entertaiment even during difficult economic times.
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