Buyers Have Left the Building
The indexes gave up ground once again as the quarter end approaches. Monday's window dressing attempt failed at resistance and those buyers brave enough to attempt a rebound entry ran for the exits. This typically bullish period on the calendar has turned ugly and this does not bode well for the weeks ahead.
MGM Mirage - MGG - close: 70.25 chg: -2.51 stop: 72.51
Why We Like It:
BUY PUT MAY 70.00 MGG-QN OI= 81 current ask $3.70
Picked on March xx at $ xx.xx <-- see TRIGGER
Amer. Intl Grp - AIG - cls: 58.20 chg: 1.18 stop: 55.95
AIG proved to be one of the Dow's best performers on Tuesday with the stock adding more than two percent on volume more than three times the norm. The move was fueled by news that its CEO Greenberg would step down and the company would promote a new leader. Meanwhile there was also talk that Eliott Spitzer's investigation into AIG was coming to a close. Our strategy was to go long (buy calls) on a move over $58.01. AIG traded at our trigger this morning. We are a little disappointed that the stock did not hold on to more of its gains but the rest of the market looks pretty weak. If the Dow continues lower tomorrow watch the $57.00-57.50 level in AIG for possible support. We would consider buying a bounce from this area. We would not open new bullish positions if the Industrials keep falling lower.
Picked on March 29 @ $ 58.01
PalmOne - PLMO - close: 24.86 chg: -1.28 stop: 23.25 *new*
Uh-oh! PLMO lost 4.89 percent and broke down under the $25.00 level. This is a significant under performance compared to the rest of the market and the drop under what should have been support at the $25.00 mark is bad news. Conservative traders may want to exit here to minimize any losses, especially with the major averages selling off. We'll keep the play open for now but we're watching the $24.00.00 level as the next area for possible support. A drop under $24.00 and we'll probably close the play early. We are raising the stop loss to $23.25.
Picked on March 23 at $ 25.71
Red Robin Burger - RRGB - cls: 50.42 chg: 0.19 stop: 44.99
No change from previous update.
Picked on March 10 at $ 48.00
Allergan - AGN - close: 70.41 chg: -0.35 stop: 75.01 *new*
Weakness in Pfizer (PFE) helped pull the drug sector lower and AGN fell near the opening bell but managed to rebound by the close. Looks like the bulls aren't giving up on the $70 level without a fight. We are lowering our stop loss to $75.01.
Picked on March 13 at $ 73.09
Beazer Homes - BZH - close: 50.05 chg: -2.15 stop: 54.01
CNBC had yet another analyst on today discussing the homebuilders and his outlook was not positive. The DJUSHB index lost 1.88 percent to close at a new two-month low. Shares of BZH lost more than four percent to hit its own two-month low and test support at the $50.00 level. Our split adjusted target is the $48.00-46.50 range. Given the bearish market environment we're going to target the lower end of our range. However, more conservative traders may want to consider exiting near $48.50 or anywhere near the rising 100-dma, which could act as possible support.
Picked on March 17 at $ 51.43
Fedex Corp - FDX - close: 93.21 chg: -1.39 stop: 96.01
The good news is that the Dow Transports (-1.79%) appears to be leading the Dow Industrials lower. The drop under the 3700 level in the Transports is good news for the bears. Shares of FDX followed with its own decline. The challenge now is that the Transports are nearing significant support stretching back to last August. Of course if the Transports break this support, currently near 3650, then the sector could easily slip towards the rising 200-dma, which will probably coincide with the January low (you can see all of this on a daily chart of the Transports). If you remember we were playing FDX on a short-term basis. We expected that the Transports would turn lower and FDX would fall toward the $90 level. Tomorrow could be an important day as we see if there is any follow through to the downside. Today's decline does look like a new bearish entry point but pay attention to the action in the Dow Transports.
Picked on March 27 at $ 93.89
Google Inc - GOOG - close: 179.57 chg: -1.85 stop: 185.01
GOOG continues to flirt with the $180 level. News that the company bought web-analytics firm Urchin Software had no noticeable affect on the stock. However, today's decline could be used as confirmation that yesterday was indeed a failed rally. Yet we would still prefer to see shares under $177 before considering new bearish positions.
Picked on March 10 at $179.49
Cheniere Energy - LNG - close: 63.66 chg: -2.64 stop: 70.01*new*
LNG is almost there! The stock lost almost four percent on Tuesday's session. Shares broke under the $64.00 level but are still clinging to the 100-dma. Our target is the $62.50-60.00 range and tomorrow could be our exit if the markets and LNG continue lower. Conservative traders may want to consider exiting now since LNG is down almost six points from our entry. We are lowering our stop loss to $70.01.
Picked on March 11 at $ 69.49
Intl Bus. Mach. - IBM - close: 90.60 chg: -0.44 stop 92.15
IBM is showing some relative strength as bulls and bears fight it out near the $90.00 level and its 200-dma again.
Picked on March 17 at $ 89.86
Mcgraw Hill Cos - MHP - close: 86.06 chg: -2.30 stop: 90.21
Finally! Today's market decline helped spark a breakdown in MHP from its two-week consolidation. Volume was more than double the daily average. The stock is nearing our short-term target in the $85.00-84.00 range. Readers can prepare to exit. Conservative traders may want to exit anywhere under $85.50. We'll wait for $85.00 or lower.
Picked on March 15 at $ 88.40
Millipore - MIL - close: 44.17 chg: -0.31 stop: 46.05
No change from previous update.
Picked on March 16 at $ 43.95
Pacificare Health - PHS - close: 57.98 chg: -1.05 stop: 62.01
The action in PHS on Tuesday looks like another failed rally at the $60.00 level but this time shares neared the 10-dma before rolling over again. We are still keeping a wary eye on the rising 100-dma near $56.50 but today's decline could be used as a new entry point.
Picked on March 20 at $ 59.04
Toll Brothers - TOL - close: 77.19 chg: -0.08 stop: 80.51*new*
TOL did lose 1.28 percent on Tuesday but shares fared better than the DJUSHB home construction index. Plus, TOL remains inside the current eight-day trading range. We remain bearish and we're lowering the stop loss to $80.51.
Picked on March 17 at $ 76.81
Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.
Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.
To ensure you continue to receive email from Option Investor please add "email@example.com"
Option Investor Inc