Whew! Another whirlwind week of activity for Profit Catalyst Alert. Each week I expect we might see some quiet waiting for earnings season to rev up. But when the action explodes, like it did last week in the semiconductor equipment space, trades must be done!

The semiconductor equipment space, where we still held calls for Applied Materials (NSDQ: AMAT) and Ichor Systems (NSDQ: ICHR) received a trifecta of good news last week, sending the group skyrocketing.

As a refresher, this group was pummelled late last year due to a downgrade by an influential analyst at Morgan Stanley. The analyst predicted lower chip prices to hit the entire industry.

My research showed that any price weakness is ways off and that demand remains healthy for the equipment manufacturers. The idea is that chip manufacturers need to make new versions of chips despite and maybe even due to, price erosion in current versions.

This week the group received an upgrade by an analyst at Susquehanna, a positive revenue pre-announcement by Ichor and a blow out quarter by competitor ASML (NSDQ: ASML), who noted robust demand from semiconductor makers.

This trade played out quite well. We sold the Lam Research calls in early January for a 43% gain and followed with gains of 43% and 53% in Ichor and Applied Materials calls last week. For those who chose to ride the bull wave a bit higher, the calls produced triple-digit returns. Well done.

The other flurry of trades involved the trucking group. I am quite bullish on the less-than-truckload (LTL) part of this industry and have been patiently waiting for a dip in the group to issue my recommendation.

Alas, the dip has not arrived, and I believe the group will move higher when industry players report earnings.

This timing led to my pre-open recommendation Friday on Old Dominion Freight (NSDQ: ODFL), SAIA (NSDQ: SAIA) and Werner Enterprises (NSDQ: WERN). Choosing buy limits on plain vanilla stock recommendations presents no problem when issuing a pre-open trade alert.

However, options limit prices are infinitely more irksome. This is the case especially when the bid/ask spreads are very wide on more thinly traded options.

I always suggest a $.05-.10 buffer around limits for options trading above $1.50 and have found placing a bid right between the bid and the ask the best way to get filled. Subscribers can also think about averaging into price by buying half their lot at one time and the second the following day or a few days later.

The SAIA and Werner calls traded around my limits early in the day but Old Dominion gapped up at the open, and the calls never traded near my limit. I don’t like chasing prices so do not currently have the Old Dominion calls marked in the portfolio but the trade recommendation stands. If I increase the price limits, you will see a new alert.

I hope we get a bit of a sell-off in response to the government shut down early in the week which might give subscribers an opening to become involved in these trades.

Unfortunately, two bearish option positions expired worthless last week. I recommended buying puts on VF Corporation (NYSE: VFC) and Columbia Sportswear (NSDQ: COLM) last July with the expectation that department store customers would cut back orders for the critical holiday season.

Neither company has reported its fourth quarter yet. Both reported tepid third quarters and pushed revenue hopes into the fourth quarter. Despite this delay, investors bid up the stocks as most of the retail group caught a bullish wave.

Obviously a worthless expiration is the worst case, but unfortunately, a possible case scenario, for any options purchase. The prices on the underlying stocks of these calls moved up quickly soon after the recommendation but had months to go before expiration.

Each losing trade is a learning experience, and I am working on the lessons on this one. In hindsight, I should have waited until we were much closer to the most critical news event before purchasing the options to avoid any “industry noise” in between.

As always, each trade, good and bad, gives me better insight into the market’s mood and lessons on how to execute more profitable ones.

Around the Portfolio:

Celgene (NSDQ: CELG) is getting clobbered due to rumors that it is in talks to acquire Juno (NSDQ: JUNO), a biotech company developing cancer drugs that work via altering a patient’s immune system. The prospects for Juno’s drugs are bright but the valuation being tossed around ($11 billion) is hefty. As a reminder, Celgene just announced the purchase of Impact Biomedicines for $7 billion.

It’s most likely the company was in early talks with Juno, but the news leak might push them to make a decision sooner than later. As of this writing (Sunday evening), no deal has been announced.

The company just presented at a giant biotech conference last week and I think management would have opted out of the conference if they had a pending deal to announce. The rumor was in the Wall Street Journal. Celgene already owns 10% of Juno so could wait a bit.

With all that, I still like the stock. These deals would help diversify Celgene away from its largest cancer drug which will see some generic pressure in the next year. The company will formally release Q4 results on January 25 but already provided a framework to investors at the conference. I think these numbers look good and expect the stock to rally as management gives more color on a possible acquisition.

Ichor Holdings (NSDQ: ICHR) pre-announced strong fourth quarter revenue and gave a robust outlook in advance of its presentation at Needham’s Growth Conference on January 18. I noted in a response from a subscriber last week that we might get a sense of how Ichor’s year ended when it gave this presentation.

I was looking for something more subtle, but a super strong press release was more than welcomed by the market. The company sees Q1 revenue of $240M-$250M, versus consensus $208.35M and announced its preliminary revenue results for Q4. For that quarter it expects to report revenue of approximately $183M versus the consensus of $181.

The stock jumped 28% on this news.

I find it a bit odd that the company did not refer to what earnings should be for either period. I’ll be scouring the internet for some comments from analysts who met with the company to find some guidance there. The market was very nervous mostly about demand trends in the semiconductor equipment space so strong revenue is a welcome sign. However, I would like to confirm that healthy earnings are following those revenues.

Jazz Pharmaceuticals (NSDQ: JAZZ) saw its price target raised to $170 from $165 at Deutsche Bank. Analyst Gregg Gilbert raised his price target after adjusting his model for a lower tax rate and higher spend in 2018. He continues to like the stock based on the “growthy” base business, “strong” leadership, and “deal potential.”

Steven Madden (NSDQ: SHOO) saw its price target raised to $56 from $48 by Citi analyst Corinna Van der Ghinst. She noted a “modestly upbeat” meeting with the CEO and the company’s positive Q4 preannouncement. She thinks management’s formal fiscal 2018 guidance, which will come late February might be conservative due to challenging first half compares but still raised her forward earnings estimates.