Posted by: ctraderd | February 18, 2013

Watchlist- Week of 2/18/13 $DXJ $WAC

Last week, Options Expiration for the monthly February options caused the market to go sideways most of the week. The Dow Jones Industrial Average lost only –11.21 for a measly –.08%, the S&P 500 gained a small +3.50 for +.23%, and QQQ shares closed Friday’s trading session at $67.75 losing –.24 for a total of –.28% on the week. I made two day trades last week, because I had the day off from school on Thursday and Friday. In my first day trade, I lost commission and fees (-$30.12) on 3 AAPL FebWk4 470 Calls when I entered and exited the options at $5.65. In my second day trade, I bought 7 LNKD FebWk4 160 Calls at $3.75 and exited them around 2 hours later at $3.90 for a $74.61 profit, after commission. Unfortunately, in that LNKD trade, I left a lot of money on the table, because those contracts soon spiked to $4.30 and then back down again. Overall on the week, I made a total profit of +$44.49 and you can see those trade on my profit.ly page.

On the month, I am still down a total of –$54.73. I have made 2 winning trades with LNKD and KERX, but two losing trades in AAPL and AMZN. I am hopeful that I will close the month profitable, with a few good swing trades as we near the end of the month. This is the first month in a long time that I did not lose any money on Options Expiration, which is very rare for me. Hopefully I can keep this trend going, but we all know how the markets are! Before making any decisions based on this article, read my disclaimer and do your own research!!

1.) WisdomTree Japan Hedged Equity Fund (DXJ)

DXJ fell –.60 last week for a total of –1.47% as the Nikkei pulled back. Currently, as of 10:22 EST, the Nikkei 225 is trading and is down –12.71 for a small –.11% so we well see how the rest of the night goes with it. DXJ shares are still up ~11% since our buy, so things are going according to plan. Remember, this is still my #1 Pick for 2013.

2.) Walter Investment Management Corp. (WAC)

WAC was on fire last week gaining +3.69 for a total of +8.18%. One of my first trades I ever did was in this baby here. I came out at a $81 profit. Unfortunately, if I held it from then till now, I would be up nearly 100% on it, but I’m not going to lose sleep over that. It hit my price target on that trade back in early June through July, so I was satisfied. I saw a good quote today which stated, “What do you call doing the same thing over again and expecting the same results? In our case, genius!” So that is why I’m getting back into this one.

For some background on WAC, let’s start with the stock price itself. Since WAC’s IPO back in June of 2007, the company has gained +40.31 for a total of +474.24%, which is incredible if you happen to take a look at their financials. Over the past three years, net income is down from +$113.18M in 2009, to –$69.3M in 2011! That’s a gigantic –162% over three years! However, on the quarterly side of financials, they are are up an opposing +125% over the first three quarters in 2012. This fact leads me to believe that WAC will have great yearly earnings and will cause the stock price to shoot up more as we near that report on March 4th. I also believe that WAC will have record breaking fourth quarter earnings as well.

For these reasons I have stated above, I will watch WAC like a hawk over these next few days for an entry either into the stock or calls. That is my fundamental stand point on the company. My technical standpoint is that WAC will move down these next few days, because of the double-top chart pattern in which the stock has just run into. If WAC breaks the resistance point, I will follow my fundamental game plan and buy calls or stock. If WAC fails to break the resistance, I will buy puts on the company for a short pull back, and then long WAC in either stock or calls.

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