Reports earnings 4/30 AMC. Masco has missed on earnings the last 3 quarters. Last quarter there was much market build up leading up to earnings, and the anticipation was met with disappointing eps, and a severe markdown of goodwill. No major news events since the last quarter report, and they still have a ton of goodwill on their books that they may need to continue to markdown. There’s always potential that the recent positive data in housing could be a reality to the housing industry and its suppliers, but I think a recovery in housing is already partially factored into the share prices. Despite consecutive up days in the share price, based on Friday’s option activity, there’s reason to believe that options speculators (or hedgers) are expecting for Masco shares to selloff on the news. Bearish activity was detected in Masco (MAS), with 4806 puts trading, or 12x the recent average daily put volume in the name. The most active puts were the Oct $7 (3k traded on zero open interest), and May $13 (1.4k traded on 588 open interest). n terms of price action, the stock has shown bullish price action over the last 3 sessions (last trade 13.44), but that has put the stock into short term overbought condition, and also placed price just barely below the most recent swing high congestion between $13.60-$14. Swing trader’s tip # 9 – the best time to short is after consecutive up days. Friday’s trade featured a bearish FI(13) divergence (see 30 minute daily chart), price is over-extended trading above the +3 ATR channel, and Impulse is blue signaling it’s ok to go short. If I turn out to be wrong on the direction of Masco’s shares after earnings and they head higher, the ADP, UE and NFP reports Wed-Fri of this week have the potential to disappoint, and cause all stocks to go lower.
- The Ticker: MAS
- Target Price: TBD per share
- The Trade
- Buy to Open Jun 2012 13 Calls at .75 or better
- Trade Opened: April 30, 2012
Chart courtesy Finviz. Click to open larger.
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