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Ooooooklahoma where the winds come sweep'n down the plains

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Yesterday's we mentioned a Wall Street Journal article that briefly discussed some stocks that were listed by S&P as potential "cash crunch" concerns should the companies be "triggered" by any number of issues that spanned from debt levels to stock prices.

A couple of weeks ago we alerted traders to energy trader Dynegy (NYSE:DYN) $6.80 -11.11% looking vulnerable to the downside just before the stock broke a new 52-week low of $19.99. Today the stock hovers right at our "fitted" retracement level of $6.57 and buyers have been hard to find.

Dynegy Chart - Daily Interval

Dynegy bears have had some good short-term and even a nice swing- trade from a put. The decline was very fast. Sometimes you just never know what will happen when a stock trades a new 52-week low, but often times, bulls are hard to find, especially if there's any question or uncertainty hanging over the stock.

I've said before that bears can get hungry and will often feed on a food source where they look to fill their bellies. I don't know how many bears live in Oklahoma, but I do know that some destructive tornado frequent "tornado alley" and has had some rather bearish winds sweeping down the plains.

Fellow energy trader and Oklahoma based Williams Company (NYSE:WMB) $15.06 -4.2% is looking strikingly similar to the chart of Dynegy a couple of weeks ago and there may be some funnel clouds appearing on the horizon should the stock break the $14.00 level near-term.

Williams Cos. Chart - Daily Interval

It may be time for bulls to me moving to the proverbial storm cellar in shares of WMB. Put option activity has been rather high in the August expiration. I like a partial position in the November $15 puts (WMBWC) offered near $2.70. No stop and targeting the $7.50 level by expiration.

Jeff Bailey
Senior Market Technician
Option Investor

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