Option Investor
Newsletter

Daily Newsletter, Wednesday, 8/19/2009

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Drop in Crude Supplies Sends Market Higher

by Judy Alster

Click here to email Judy Alster
After early losses the market turned swiftly higher Wednesday. It was led by a jolt in energy stocks, following signs that demand for oil could soon rise. News that the nation's oil inventory fell sharply (see below) last week pushed the price of crude higher with stocks following as investors assumed that the drop in energy stockpiles is a harbinger of an improving economy.

MARKET INDEX WRAPUP, Wednesday, Aug. 19:

The S&P500, along with the Dow and the Nasdaq, gapped down at the open but quickly rallied. It lost steam in the afternoon but still closed up 6.79 points or 0.69% at 969, a nice change from the gloom of Monday and Tuesday. Volume was nothing spectacular but that is often the way in August, with a great many investors on vacation until after Labor Day. Some analysts said the rise was amplified by short-covering, especially as the S&P topped 900 and stayed there. About eight stocks rose for every seven that fell on the New York Stock Exchange.

The S&P and the Dow are still above their 20-day simple moving averages . . . .

S&P500:

DOW JONES INDUSTRIAL AVERAGE:

. . . . but not the Nasdaq. Low summer volume? The start of an expected correction? Investor indecision? All three?

NASDAQ:

Big New York Stock Exchange gainers were Reddy Ice (FRZ), up 94 cents or 33.9%; Dana Holding (DAN), up 51 cents or 11% and American Axle (AXL), up 56 cents or 9.8% and LaZ Boy (LZB), up an energetic 59 cents or 7.9%. Reddy Ice announced a decent-enough quarter, but that was three weeks ago. The stock soared today on stunning volume and no compelling news; one wonders whether an acquisition by sole rival Manitowoc (MTW) is in the offing:

REDDY ICE:

Nasdaq movers featured Perry Ellis (PERY), up %1.53 or 17%; Builders FirstSource (BLDR), up 88 cents or 13.8%, and FuelCell (FCEL), up 45 cents or 12.4%.

Not a lot of market-moving economic news was out today, but at least some of it was cheering, kind of. The Mortgage Bankers' Association's purchase index, which measures applications at mortgage lenders every week and is a fair leading indicator of home sales, rose 3.9% in week ending last Friday, the third straight weekly gain. The refinance index rose 6.9% and has been vacillating along with changes in mortgage rates, as the purchase index has been moving gradually upward. Mortgage rates swung lower in the week, with 30-year loans down nearly 25 basis points to an average 5.15%.

Still, as we've been hearing, even three weeks of rising mortgage applications doth not a recovery make and besides, I've shown you housing graphs. Let's look at something different. The Architecture Billings Index, a leading indicator of U.S. nonresidential construction spending nine to 12 months out, rebounded more than five points in July to 43.1, reversing a decline in June. The index is still below 50, though, and has been since January 2008, indicating contraction in demand for design services. As a confirming indicator it's worth watching. Nonresidential construction includes commercial and industrial facilities like hotels, office buildings, schools, hospitals and other institutions. Notice that the ABI has never surpassed its high of the third quarter of 1998.

ARCHITECTURE BILLINGS INDEX, JAN. 1996 to PRESENT:

Companies in this arena include diversified manufacturers like Honeywell (HON) and Illinois Tool Works (ITW); lighting maker Acuity Brands (AYI); electrical components maker Thomas & Betts (TNB); heating and cooling systems makers Ingersoll-Rand (IR); power solutions providers Johnson Controls (JCI), Parker-Hannifin (PH) and Eaton (ETN) and heavy equipment makers Caterpillar (CAT), Deere (DE) and Terex (TEX). All are well off their March lows.

Deere, who makes farm equipment as well as construction equipment, posted earnings: a 27% decline in third-quarter profit, with sales of its tractors and bulldozers down, but those numbers handily topped estimates. Sales of the company's equipment fell 25% worldwide, hurt by lower crop prices -- a big driver of demand for agricultural equipment -- and slumping construction. Still, it expects farm sales to pick up in North America and stands by its annual profit forecast of $1.1 billion. More than half its agricultural sales came from outside North America for the first time last year. The stock lost $1.31 or 2.9% on very heavy volume, closing below its 20-day moving average for the first time in a month; the stock is having trouble breaking through a roughly-47-dollar ceiling.

DEERE & CO.:

In this group, incidentally, Ingersoll-Rand and Johnson Controls are staging terrific comebacks; they pay dividends, too:

JOHNSON CONTROLS:

INGERSOLL RAND:

Very briefly, the Business Employment Dynamics report, out today, tells us all we need to know about job gains and losses from expanding and contracting establishments in the long, long-ago fourth quarter of last year: 6.7 million and 8.5 million respectively. Old news, but I thought you'd like to know.

One report with some actual power to affect the markets is the Energy Information Administration's petroleum status report. And it turns out that supplies were down in the week ending last Friday. Stocks of crude fell 8.4 million barrels to 343.6 million, the largest drop since May; stocks of gasoline were down 2.1 million gallons and distillates were down 0.7 million.

Oil prices zoomed in anticipation of and after the news. Even so, demand is still weak for what has traditionally been a heavy driving season. The EIA estimates that demand is down 0.1% from this time last year, when pump prices were at $3.75, rather higher than the current average of $2.60.

Exxon Mobil (XOM) and Chevron (CVX), both Dow components, led the blue-chip Dow industrials' advance; Exxon Mobil was up 2.3% at $68.00 while Chevron gained 1.8% to $68.16. Murphy Oil (MUR) was also up 3.1% at $58.05 and the S&P Energy Index gained 1.9%.

U.S. front-month crude futures rose $3.23 or 4.7% to settle at $72.42 a barrel; do you think pump prices will follow? Tracking that, the Amex oil and gas index jumped $14.78 or 1.58%.

AMEX OIL INDEX:

The surprising decline in crude inventories was reassuring, but investors still aren't exactly jumping up and down; Treasurys, for example, a safety cushion in bad times, kept most of their gains as investors decided that there's nothing wrong with owning a little safe government debt. The yield on the benchmark 10-year Treasury note, which moves opposite the price, fell to 3.46% from Tuesday's 3.52% (still not bad).

10-YEAR TREASURY NOTE:

Where stocks were concerned, Par Pharmaceutical (PRX), already near 52-week highs, continued climbing Wednesday after the FDA approved the company's generic version of the Catapres TTS high blood pressure patch. In more good news, earlier this week Par said it had successfully challenged the patent on the pain drug Ultram ER, which could allow it to begin selling a generic version of that product. The stock has traded on extreme volume since Friday; big profit taking pared Wednesday's gain to just 2 cents for a close of $19.81. The stock is up 14.5% for the week so far.

PAR PHARMACEUTICAL (PRX):

After hours Tuesaday, Dow component Hewlett-Packard (HPQ) reported earnings. Including items, third quarter net income was $1.6 billion or 67 cents a share, down from $2 billion or 80 cents a year ago. Global revenue slipped 2%. Without one-time items, earnings almost hit estimates with service revenue almost doubling on the EDS acquisition. The company expects Q4 revenue to rise about 8%. Excluding items, the company said it would have earned $2.2 billion, or 91 cents a share. The stock lost three cents.

HEWLETT-PACKARD:

So. Let's talk about the recovery. Do we really have enough to base a prediction on? The market is almost certainly on the rebound -- that's what I say, and you know my name and where I live -- but how high will we go? The markets are likely to be indecisive in weeks to come while investors agonize between real signs of and hopes for a lasting recovery, and the fear that this rebound is not going to hit the sky any time soon.

I know one thing: You don't want to hear the phrase "V-shaped recovery" again, for as we know, V-turns or even U-turns off the bottom of a bear market are so rare as to be nonexistent. In a bear market of any length, stocks will go through a fairly long basing period before a true bull market can resume.

Since 1929, the average basing period -- some are shorter, some longer -- has lasted about seven months although it can easily last a year or more (often the longer the base, the stronger the rebound). The amount of time it takes to break past resistance after the bottom of the bear is made also varies, but that average is about four months. From the start of the bear to a return to the previous peak can commonly take two years. As always with a true trend, corroborating volume is critical.

That sharp "V" that the three major indexes made from roughly mid-February to mid-April of this year? That was just a downward spike. If we step back and look at the whole forest, we can see that it's a mere blip in a long base.

S&P FINDING A BOTTOM AND RETURNING TO THE NECKLINE:

The U.S. market stopped making highs and started its fall in mid-October 2007. It didn't begin to make anything like a floor until a year later, as this chart shows -- about normal. Assuming that we're now coming out of the woods, that would give us a base of about nine months, also within normal limits. Notice that every new low from October '07 to October '08 was confirmed by a sharp increase in volume.

S&P, INVERSE HEAD SND SHOULDERS:

A base usually has a characteristic shape, and so far this one seems to be a loose "head and shoulders bottom," or inverse head and shoulders. This formation is a harbinger of a reversal to the upside, a mirror of the way a top head and shoulders foreshadows a reversal to the downside. With a "neckline" around 945, the left shoulder here occurred in December 2008, the head in March of this year, and the complete right shoulder break through the neckline in July, making the period from bottom to breakthrough about four months. There was a tentative shoulder formation, without the decisive break, in May. Ideally, the two shoulders will be the same height and width, but sometimes the right shoulder defies our wish for symmetry.

However, above-average volume is necessary to corroborate a strong bull market outlook -- and with a bottom formation it's crucial. (To be precise, the left shoulder should have an increase in volume, the head lighter volume, and the rally off the low of the head should show greater volume than the rally from the left shoulder. The right shoulder's decline should register the lightest volume of all, since profit taking is normal after an advance. When the market rallies through the neckline, there should be a big increase in volume.

It's best to look at more than one volume indicator because absolute volume may not always tell the whole story. Volume analysis that combines price and volume helps distinguish between normal profit-taking and heavy selling pressure. For example, the Chaikin Money Flow index rising above zero can tell us that a security, or in this case securities, is being accumulated. On Balance Volume, assumed to precede price changes, indicates that smart money is flowing into a security; as ordinary investor money follows, the price will rise.

In a genuine reversal, even with light absolute volume the CMF and OBV should remain strong, especially on the advance off the low and through the breakout. So far, this formation has largely conformed to the rules for a bottom head and shoulders. Still, that right shoulder isn't clean, and volume could be better. What I'd like to see is a smooth ride up to about 1200 on the S&P and then a cup-and-handle formation. Then we'll know that happy, or at least happier, days are here again and if you missed the upturn off the bottom, that will be another buy signal. For now, the trend seems to be up.

And here's a new possibly-sporadic feature that I'm going to call: Silly Graphs. Today's SG is designed in part to reveal to you one of the crucial, decisive, vital-to-the-nation's-defense items that the government is keeping track of with your tax bucks and, even more important, to provide you with ammo when you sit your dog down and tell him to get a job:

PETFOOD PRICES:

Some price increase, huh? Does Sparky think those cans of Alpo grow on trees? And since this graph is for all pet food, you might as well tell Miss Kitty that it's time she started pulling her weight in the boat, too.

Earnings will continue tomorrow and include, from U.S. exchanges, Aeropostale (ARO), Barnes & Noble (BKS), China Finance Online (JCJC), Dick's Sporting Goods (DKS), Brocade Communications (BRCD),Foot Locker (FL), Gamestop (GME), Gap (GPS), H.J. Heinz (HNZ), Hormel (HRL), Intuit (INTU), Mentor Graphics (MENT), Pacific Sunwear (PSUN), Open Text (OTEX), Patterson Dental (PDLI), Rio Tinto (RTP), Ross Stores (ROST), Sears (SHLD), SkillSoft (SKIL), the Buckle (BKE) and Zumiez (ZUMZ).

Tomorrow also brings us, among other things, reports on jobless claims, natural gas, leading indicators, and announcements of the size of a half-dozen Treasury Bill and Note announcements. Most eyes will be on the first two.


New Option Plays

Business Services & Transportation

by James Brown

Click here to email James Brown

Editor's Note:

I am suggesting that readers trade carefully. The market has been really choppy with a lot of false signals. Even professional traders are having a hard time in this market.

If you're bullish on the financials I'd keep an eye on STT as a potential candidate. If the oil stocks keep rising APC might be a bullish candidate on a breakout over $52.50. Meanwhile if Siemens (SI) breaks $78.00 it might be a bearish candidate.


NEW DIRECTIONAL CALL PLAYS

FISERV Inc. - FISV - close: 48.05 change: +0.60 stop: 46.60

Why We Like It:
FISV is a business software and services company. Shares have been consolidating sideways with a bearish trend of lower highs for three weeks now. The consolidation met support at its 50-dma and the $47.00 level recently. Today's move is a bullish engulfing (reversal) pattern. I'm suggesting we look for some follow through and buy calls on the breakout.

Use a trigger at $48.60. Our first target to take profit is at $52.50.

Suggested Options:
My time frame is only a few weeks so I'm suggesting the September calls.

BUY CALL SEP 50.00 FQV-IJ open interest=1304 current ask .65

Annotated Chart:

Picked on   August xx at $ xx.xx <-- TRIGGER @ 48.60
Change since picked:      + 0.00
Earnings Date           10/28/09 (unconfirmed)
Average Daily Volume =       1.5 million  
Listed on August 19, 2009         


NEW DIRECTIONAL PUT PLAYS

iShares Transports - IYT - close: 65.40 change: +0.15 stop: 66.75

Why We Like It:
I am doubtful of the bounce in stocks this week. The rebound looks like just enough to fill the gap from Monday and test new resistance. I'm suggesting puts on the IYT with a tight stop at $66.75. More aggressive traders can place their stop above resistance at $68.00 instead. We'll take some money off the table at $62.00 (1st target) and exit completely at $60.25 (2nd target).

Suggested Options:
My time frame is only two or three weeks (if not sooner). I'm suggesting the September puts.

BUY PUT SEP 00.00 ___-__ open interest=     current ask .00

Annotated Chart:

Picked on   August 19 at $ 65.40
Change since picked:      + 0.00
Earnings Date           00/00/00
Average Daily Volume =       772 thousand 
Listed on August 19, 2009         



In Play Updates and Reviews

GMCR Tags Our 2nd Target

by James Brown

Click here to email James Brown


CALL Play Updates

Fluor Corp. - FLR - close: 53.22 change: +0.68 stop: 49.45

Shares of FLR gapped open lower with the market this morning but quickly rebounded. Shares ended the session up 1.2%. I've been suggesting readers look for another dip near $51 or $50 but the low today was only $51.28. Shares are approaching potentially short-term resistance at $54.00. I would still buy calls on dips but readers may want to go ahead and up their stop toward $50.00. Our first target is $54.80. Our second target is $59.00. This could take several weeks.

Picked on   August 17 at $ 51.00 *triggered            
Change since picked:      + 2.22
Earnings Date           08/10/09 (confirmed)
Average Daily Volume =       2.4 million  
Listed on  July 25, 2009         


Flowserve - FLS - close: 87.49 change: +0.22 stop: 72.45

After yesterday's upgrade-inspired rally FLS only rose 22 cents today. Right now the plan is to wait and buy calls on a dip at $76.00 but we might want to up that trigger toward $80.00.

More conservative traders can use a stop closer to $74.00. If triggered at $76.00 our first target is $83.50. Our second target is $89.00. Our time frame is several weeks.

Picked on   August xx at $ xx.xx <-- TRIGGER @ 76.00
Change since picked:      + 0.00
Earnings Date           10/28/09 (unconfirmed)
Average Daily Volume =       1.1 million  
Listed on August 17, 2009         


Genesse & Wyoming - GWR - close: 29.17 change: -0.05 stop: 26.90

The railroad sector did not participate in the market's strength today. Shares of GWR drifted sideways. Look to initiate positions in the $28.50-27.50 zone. An alternative would be to wait for a rise over $30.00 before launching positions. Our first target is $32.90. Our second target is $34.75.

FYI: The plan was to use small position sizes to limit our risk.

Picked on   August 15 at $ 28.66 /gap down entry
                               /originally listed at $29.30
Change since picked:      + 0.51
Earnings Date           11/03/09 (unconfirmed)
Average Daily Volume =       230 thousand
Listed on August 15, 2009         


IDEXX Labs - IDXX - close: 50.45 change: +0.52 stop: $44.95

IDXX's close over $50.00 is short-term bullish but we're still waiting for a dip toward support. The plan is to buy calls on a dip at $47.50. If triggered at $47.50 our first target is $52.00. Our second target is $54.90. Our time frame is six to eight weeks once triggered.


*Original Strategy*
Picked on     July xx at $ xx.xx <-- TRIGGERs @ 47.50 
Change since picked:      + 0.00
Earnings Date           07/24/09 (confirmed)
Average Daily Volume =       383 thousand 
Listed on  July 25, 2009         


Legg Mason - LM - close: 27.84 change: +0.27 stop: 24.75

The action in LM over the last three weeks almost looks like a bull-flag consolidation pattern. Aggressive traders might want to consider a trigger to buy LM above $28.50 or above the August high (29.20).

Currently the plan is to buy calls at $26.00. If triggered our first target is $29.75. Our second target is $33.40. My time frame is six to eight weeks. FYI: The P&F chart is bullish with a $39 target.

Picked on     July xx at $ xx.xx <-- TRIGGER 26.00
Change since picked:      + 0.00
Earnings Date           07/20/09 (confirmed)
Average Daily Volume =       3.4 million  
Listed on  July 25, 2009         


Lorillard Inc. - LO - close: 73.16 change: -0.12 stop: 69.45

LO did not participate in the market's rally today. I don't see any changes from my prior comments. We have a trigger to buy calls at $70.50. Our first target is $74.50. Our second target is $77.00. The Point & Figure chart is bullish with a $92.00 target.

Picked on   August xx at $ xx.xx <-- TRIGGER @ 70.50
Change since picked:      + 0.00
Earnings Date           07/27/09 (confirmed)
Average Daily Volume =       1.5 million  
Listed on August 01, 2009         


Ultra-Short S&P 500 - SDS - close: 45.90 chg: -0.80 stop: 44.90

While the market's rally today was a little surprising all it has done is fill the gap from Monday morning. There's no reason to abandon ship just yet. While I would buy calls on this dip readers may want to wait for a new bounce over $46.60 to initiate positions. Our first target to take profits is at $49.75. Our second target is $51.50. My time frame is less than four weeks (probably closer to two weeks).

Picked on   August 18 at $ 46.70 
Change since picked:      - 0.80
Earnings Date           00/00/00
Average Daily Volume =        38 million  
Listed on August 18, 2009         


U.S. Oil Fund - USO - close: 38.12 change: +1.26 stop: 33.75 *new*

Economists were expecting last week's oil inventory numbers to rise by 1.2 million barrels. The Energy Department released their weekly report this morning and oil inventory fell by 8.4 million barrels. Naturally this sent oil shooting higher. The USO has rallied to its August highs and on strong volume. Unfortunately we're still on the sidelines. The plan was to buy calls on the USO with a dip toward its trendline of higher lows. That plan is still in place but more nimble traders may want to consider some sort of breakout entry point. I am raising our entry point to buy calls to $35.00 and our stop loss to $33.75. Our first target is $37.50.

Picked on   August xx at $ xx.xx <-- TRIGGER @ 35.00 *new*
Change since picked:      + 0.00
Earnings Date           00/00/00
Average Daily Volume =      11.5 million  
Listed on August 15, 2009         


PUT Play Updates

Ultra-Short Oil&Gas - DIG - close: 28.20 change: +0.95 stop: 29.10

A big move in crude oil today lifted the oil sector. The DIG has filled the gap from Monday. Shares have risen higher than expected and closed above potential resistance at the 50-dma and the $28.00 level. The rally today hit our trigger to buy puts at $27.75. I would wait for a new decline under $27.75 or $27.50 before initiating new put positions. Our first target is $24.50.

Chart:

Picked on   August 19 at $ 27.75 *triggered 
Change since picked:      + 0.45
Earnings Date           00/00/00
Average Daily Volume =       5.9 million  
Listed on August 18, 2009         


First Solar - FSLR - close: 131.43 chg: -1.69 stop: 151.00

FSLR continues to under perform. The stock gapped open lower and fell to $127.84 before trimming its losses. The stock is short-term oversold so I'd expect a bounce soon.

We have two targets. Our first target is $122.50. Our second target is $111.00. This is a very aggressive trade and FSLR can be an extremely volatile stock. I'm suggesting very small position sizes. FYI: the Point & Figure chart is bearish with a $108 target.

Picked on   August 17 at $135.88 *triggered/gap down entry
Change since picked:      - 4.45
Earnings Date           11/03/09 (unconfirmed)
Average Daily Volume =       3.5 million  
Listed on August 15, 2009         


Genzyme - GENZ - close: 51.02 change: +0.47 stop: 52.55

GENZ is still churning sideways but the last few days have a bullish trend of higher lows. I am not suggesting new put positions at this time. More conservative traders may want to exit early right now. You can re-enter on a failed rally pattern or a new drop under $49.00.

Our first target to take profits is $45.25. Our second target is $41.00. The P&F chart is bearish with a $40 target.

FYI: More aggressive traders may want to give GENZ just a little bit more room and raise their stop loss above the $53.00 mark.

Picked on   August 03 at $ 49.90 *triggered         
Change since picked:      + 1.12
Earnings Date           10/22/09 (unconfirmed)
Average Daily Volume =       3.9 million  
Listed on August 01, 2009         


Intl.Business Machines - IBM - cls: 118.57 change: +0.94 stop: 120.10

HPQ did not see much of a post-earnings move. Shares of IBM appeared to follow the market lower this morning and its rebound in the afternoon. The bounce places IBM back in its previous trading range. Another failed rally under $120.00 can be used as an entry point for puts. Our first target to take profits is at $113.75, which is just above the top of the gap from mid July. Our second and final target is $111.25, which is near the bottom of the gap.

FYI: I would still buy calls at $120.25 should IBM breakout higher. Use the September strikes. I prefer the $120s and $125s.

Picked on   August 08 at $118.17 /gap down entry
                               /originally listed at $119.33
Change since picked:      + 0.40
Earnings Date           10/08/09 (unconfirmed)
Average Daily Volume =       7.9 million  
Listed on August 08, 2009         


Intercontintental Exchange - ICE - cls: 89.85 change: +0.73 stop: 92.55

ICE temporarily traded over what should be resistance at $90.00. the rise today was just enough to fill the gap down from Monday morning. Shares are once again testing technical resistance at its 30-dma, which has been an entry point to bearish positions since early August.

ICE can be a very volatile stock so we should consider this an aggressive trade. Our target to exit is $83.75. More aggressive traders can aim lower.

Picked on   August 08 at $ 93.60 Buy Half Now   
Change since picked:      - 3.75

Picked on   August 13 at $ 89.85 triggered 2nd half
Change since picked:      - 0.00

Earnings Date           10/29/09 (unconfirmed)
Average Daily Volume =       2.1 million  
Listed on August 08, 2009         


Marvel Entertainment - MVL - close: 37.66 change: -0.09 stop: 39.26

MVL is bouncing back toward $38.00, which as broken support should be resistance. Readers can use this as a new entry point for puts. Our target is $34.10 as the $34.00 level could be support. I am lowering the stop loss to $39.26.

Picked on   August 17 at $ 37.90 *triggered         
Change since picked:      - 0.24
Earnings Date           11/04/09 (unconfirmed)
Average Daily Volume =       710 thousand 
Listed on August 10, 2009         


Shanda Interactive - SNDA - close: 46.55 chg: -0.76 stop: 51.25

I'm a little surprised that SNDA isn't showing more weakness considering the plunge in the Chinese markets. Volume remains light this week. Look for resistance in the $49.00-50.00 zone. Our target is the $41.50-40.00 zone. Remember, SNDA is a volatile stock and readers may want to use smaller position sizes.

Picked on   August 08 at $ 48.10 /gap higher entry
                               /originally listed at $47.83
Change since picked:      - 1.55
Earnings Date           09/01/09 (unconfirmed)
Average Daily Volume =       1.5 million  
Listed on August 08, 2009         


Strangle & Spread Play Updates

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

McDonald's - MCD - close: 55.65 change: +0.39 stop: n/a

This bounce is bad news for our strangle play. We need to see a strong move under $55.00 if we're going to make any money on this trade. Time is running out fast. I am lowering our exit target. I am not suggesting new strangle positions at this time.

I suggested the August $60 calls (MCD-HL) and the August $55 puts (MCD-TK). Our estimated cost is $1.25 (0.70 + 0.55). We want to sell if either option hits $1.75 or higher.

Picked on     July 18 at $ 57.84
Change since picked:      - 2.19
Earnings Date           07/23/09 (unconfirmed)
Average Daily Volume =       7.8 million  
Listed on  July 18, 2009         


Schlumberger - SLB - close: 52.87 change: +0.84 stop: n/a

SLB has filled the gap from Monday morning but the short-term trend is still down. I'm not suggesting new positions at this time.

The options we suggested were the September $60.00 calls (SLB-IL) and the September $45.00 puts (SLB-UI). Our estimated cost is $1.00 and we want to sell if either option hits $2.50 or higher.

Picked on   August 15 at $ 52.00 /gap down entry Aug. 17th
Change since picked:      + 0.87
Earnings Date           10/15/09 (unconfirmed)
Average Daily Volume =       9.2 million  
Listed on August 15, 2009         


CLOSED BEARISH PLAYS

Green Mtn Coffee - GMCR - close: 55.61 chg: -3.22 stop: 66.55

Target achieved. GMCR fell to $54.32 midday. Our second and final target to exit was $55.50. Readers may want to keep an eye on it. A failed rally under $60.00 or its 50-dma might be another entry point for puts.

Chart:

Picked on   August 11 at $ 65.84
Change since picked:      -10.34<--2nd target hit @ 55.50 (-15.7%)
                              /1st target hit @ 60.50 (-8.1%)
Earnings Date           11/12/09 (unconfirmed)
Average Daily Volume =       1.8 million  
Listed on August 11, 2009