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Chart of Day: Sears is Dead, Mr. Lambert

Jan 09, 2017

The box is built. The hole is dug. The nails are in place.

Now all we have to do is wait for Eddie Lambert to stop parading the dead, and we can finally bury Sears. It’s not coming back. The company is finished. Sales have fallen 37% over the last three years. It’s closed hundreds of stores.

It can only be propped up for so long by the CEO’s hedge fund.

The stock had a brief spike on news the company obtained a secured standby letter of credit facility that provides it with additional liquidity to fund operations. Under the terms of the deal, it will have access to $200 million, which could be expanded by $300 million at some point.

In short, it’s just kicking the bankruptcy can down the road yet again.

What’s interesting is that the company was so desperate for cash just after the holidays – a time when most retailers are flush with cash.

Even with $500 million liquidity injected, it may not be enough. The company just recently posted a loss of $748 million for Q3 2016 from $454 million year over year. Revenue dropped $721 million for Q3 as well. For SHLD to make it through 2017, it needs $1.5 billion.

It may be best if SHLD just filed for bankruptcy instead of kicking the can. Consider buying to open a small number of SHLD March 9 put up to $2.30 and / or the June 8 put up to $2.80.

Chart of Day: Nordstrom (JWN) Put Nearly Doubles

Jan 05, 2017

Just the other day, we noted the following:

You know what they say about falling knives.  After plunging $4.80 on Friday, JWN still looks ugly here, likely to refill a prior bullish gap around $45. That is, if support at $50.48 fails to hold.  JP Morgan just finished downgrading the stock, cutting its target to $48 from $55. Analysts believe the company is out of “silver bullets” to boost sales growth any longer. Plus, it’s brick and mortar traffic levels haven’t been this bad since 1972, as the retail model shits online.  We see no reason to get excited about the stock. Again, if it breaks support at $50.48, it’ll fall even more. A good way to trade JWN is by buying to open the April 2017 47.50 put.

This morning, the underlying stock fell another $4.33 on news of poor holiday sales.  The April 47.50 put has now run from an entry of $2.95 to its current price of $5.75.  If you bought, consider exiting half.  Hold the second half.  After breakign through its 200-day moving average, its next support point is at less than $40.



Chart of Day: Proofpoint (PFPT) Starting to Move

Jan 05, 2017

Just yesterday, we spoke about how undervalued PFPT was after finding support around $70 a share.  Today, the stock is up another $1.55 on the day and could accelerate higher with patience especially as the Senate holds hearings on the cyber threats we face daily.  It's not as if the threat will disappear any time soon so be sure to hold PFPT until it refills its gap around $85 a share.


Chart of Day: The Undervalued Cyber War Opportunities

Jan 04, 2017

Over the last year, 51% of us were hacked and we didn’t even know.

You’ve seen the reports of how hackers exposed the payroll and benefits from nearly 640,000 U.S. companies in May 2016.

Even the company behind sites like Adult Friend Finder found that hackers exposed the accounts of 312 million users. 

Mark Zuckerberg’s Twitter and Pinterest accounts were breached quite a few times because he reused the same password, which is odd.  You'd think he'd know better.

And it’s only getting worse.

In fact, the average cost of annual attacks breached $400 billion. By 2021, that number could easily be $6 trillion.

And yet, up to 75% of U.S. companies aren’t prepared.

At the same time, many of the very companies that can help protect us have gone ignored in recent months, driven to insanely cheap valuations, including FEYE, CHKP and PANW. But they won’t stay cheap for long.

In fact, PANW is a steal at current prices, as is Proofpoint Inc. (PFPT) at market prices.

Technically, PFPT found solid support at $70 and is beginning to break higher. RSI, MACD and Money Flow are just beginning to rebound, as well. Buy and hold.


Chart of Day: Biogen Still Undervalued

Jan 03, 2017

Shares of BIIB are technically undervalued at $288 support. We'd like to see an eventual bearish gap refill near $400 shortly, as traders wake back up to the opportunity here especially after the FDA approved its co-developed spinal muscular atrophy treatment... Priced at $125,000 a dose, a successful launch could be a big catalyst for BIIB.

One way to trade a potential gap refill is by buying to open the BIIB February 300 calls at market.  While pricey, we believe this trade could work out quite well with patience.  

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