ANR, DSX, GHM, GNK, and HON all hit our stop loss last week.
ACI $21.07 -3.47 -- Arch Coal Inc.
Ouch! ACI not only missed earnings estimates on Friday morning they guided lower! The stock gapped open lower at $22.64 and fell for a 14% decline breaking down through several layers of support. This is obviously very short-term bearish and we can expect ACI to fall toward round-number support near $20.00, which should be bolstered by the rising 200-dma.
If ACI does indeed hold support near $20.00 we can use it as a new bullish entry point to buy call LEAPS. Our exit strategy hasn't changed. We want to sell the final half of this trade at $34.75.
FYI: The December 2009 lows were $19.41 and $19.45. I want to give ACI just a little bit more maneuver room so I'm edging the stop loss down to $18.99.
May 14th, 2009 - entry price on ACI @ 16.00, option @ 2.40
symbol: OSE-AF, 2011 JAN $30 LEAP call - current bid/ask $2.35/2.50
-stop loss on ACI @ 18.99
Chart of ACI:
CHK $24.78 -0.73 -- Chesapeake Energy Corp.
Both crude oil and natural gas have continued to retreat as the U.S. dollar creeps higher on euro weakness. This has been tough for the oil and energy stocks to endure. CHK broke down under a handful of minor support levels. I cautioned readers to look for a dip toward $24.00 and CHK is getting close. Nimble traders may want to consider buying LEAPS on a bounce from $24 and its 200-dma. Our long-term target is $40.00.
Oct 30th, 2009 - entry price on CHK @ 24.00, option @ 4.70
symbol: VEC-AE, JAN 2011 $25 LEAP call - current bid/ask $3.80/3.95
-stop loss on CHK @ 20.95
Chart of CHK:
CNX $46.61 -2.73 -- Consol Energy Inc.
Shares of CNX were upgraded on Friday following its earnings report on Thursday. Yet that didn't save the stock from selling off hard with a 5.5% decline and a breakdown under its 100-dma. The stock looks poised for a dip to $45.00 and its exponential 200-dma. I think our stop loss might be a little too tight. CNX will probably fall toward support near $42.50 and its 200-dma. I am adjusting our stop down to $41.40. I've been warning more conservative traders to exit so anyone still in should be willing to endure the volatility. I am not suggesting new bullish positions at this time.
Currently we have a second target to take profits at $58.50. We have a third and final long-term target at $64.90.
Sep 1st, 2009 - entry price on CNX @ 36.50, option @ 7.80(estimate)
symbol: VTL-AH, 2011 JAN $40 LEAP call - current bid/ask $11.20/11.90
-stop loss on CNX @ 41.45
1st Target hit 09/16/09 @ 48.50, option price $15.40 (+97%)
Chart of CNX
DE $49.95 -1.16 -- Deere & Co.
The market correction has pulled shares of DE all the way down to prior resistance and what should be support near $50.00. This level also holds the 100-dma, which should add additional support. The stock has seen a 20% correction off its highs near $60. Technically this is a new bullish entry point, this dip to support. However, readers may want to wait for a bounce. first. We face a very real risk that DE dips toward its 200-dma near $46.00, which would stop us out and close this trade. More aggressive traders may want to lower their stops.
Our long-term target on DE is $69.50.
Nov 18th, 2009 - entry price on DE @ 51.00, option @ 8.75(estimate)
symbol: VER-AJ, 2011 JAN $50 LEAP call - current bid/ask $ 6.70/ 6.85
-stop loss on DE @ 48.45
Chart of DE:
EMR $41.54 -0.13 -- Emerson Electric Co.
EMR has now broken down under its 50-dma and one of its long-term trend of higher lows. Shares are currently testing their 100-dma and I suspect the stock will dip to the $40.00 level. The real test will be on Tuesday. EMR reports earnings on Tuesday morning (Feb. 2nd). Lately the trend has been for investors to sell the earnings news no matter how good the results are. That doesn't bode well for EMR. The option has pulled back to our entry price. More conservative traders could exit now and avoid a loss. Or you could buy some cheap out of the money February puts to protect yourself from a sharp drop lower.
I am not suggesting new positions at this time.
Our plan is to sell half of our position at our original target of $47.50. We'll sell the rest at $54.50.
Sept. 8th, 2009 - entry price on EMR @ 38.00, option @ $4.50
symbol: VHH-AH, 2011 JAN $40 call - current bid/ask $4.50/4.70
-stop loss on EMR @ 37.40.
Chart of EMR:
FST $24.12 -0.63 -- Forest Oil Corp.
As expected shares of FST have pulled back toward $24.00. This is short-term support. Unfortunately with the major averages breaking down odds are growing that FST will fall toward $22 and its 50 or 100-dma. The $22-20 zone should be decent support. I'm not suggesting new long-term positions at this time. Our long-term target is $37.50.
Oct 15th, 2009 - entry price on FST @ 23.85, option @ 7.40
symbol: OJG-AD, 2011 $20 LEAP call - current bid/ask $6.80/7.100
-stop loss on FST @ 19.49
Chart of FST:
INTC $19.40 -0.52 -- Intel Corp.
The semiconductor sector has been collapsing for days now. The SOX broke down through its 100-dma on Thursday last week and posted a 3.4% decline on Friday. INTC fell through its 100-dma on Friday after a few days of consolidation sideways. The next level of support for INTC appears to be the rising 200-dma near $18.50. Odds are very good that INTC will get there. The question is will it hold at the 200-dma? A breakdown under the $18.50-18.00 zone would be very bearish for INTC's long-term prospects.
I am not suggesting new long-term positions at this time. Our long-term target is the $24-26 zone.
June 13th, 2009 - entry price on INTC @ 16.31, option @ 1.36
symbol: VNL-AD, 2011 LEAP $20 call - current bid/ask $1.85/1.87
-stop loss on INTC @ 17.90.
Chart of INTC:
MOS - Mosaic Co. $53.51 -2.05
It proved to be an ugly week for the fertilizer/chemical names. POT reported earnings a couple of days ago. While POT beat estimates they guided lower and the whole sector plunged. Shares of MOS have broken support near $55.00 and the 100-dma. The next stop appears to be the 200-dma near $52.00.
Our trigger to buy LEAPS was hit last week at $56.00. Given the recent weakness I would wait for MOS to rebound first before launching new positions. Nimble traders could try buying dips at the 200-dma or even $50.00 but I'm suggesting readers wait for some signs of strength. Our stop loss is at $49.00.
Our long-term target is the $90-100 zone. (Readers might want to consider the 2012 LEAPS too).
NOTE: In 2009 MOS issued a special cash dividend of $1.30 per share payable back on December 3rd, 2009. The CBOE issued a new LEAPS symbol to account for the dividend. The old 2011 LEAPS have a root symbol of ZHX. The LEAPS we want to use are the ZXW root symbols.
Jan 28th, 2010 - entry price on MOS @ 56.00, option @ 6.10
symbol: ZXW-AM, 2011 LEAP $65 call - current bid/ask $5.05/5.55
-stop loss on MOS @ 49.00
Chart of MOS:
MTW $10.90 -0.27 -- Manitowoc Inc.
MTW continues to slip lower but the velocity of its decline has slowed a bit. Shares have managed to hold support near the 50-dma. Given the market's widespread weakness we should expect a pull back closer to $10.00.
More conservative traders may want to raise their stops toward $10.00.
I am not suggesting new positions at this time.
Our long-term target is $17.00.
FYI: It looks like MTW is due to report earnings around Feb. 2nd. Wall Street expects a profit of two-cents a share. Given the market's recent trend to sell the earnings news readers may want to consider some out of the money February puts to protect against any short-term implosions.
Oct 30th, 2009 - entry price on MTW @ 9.10, option @ 2.61
symbol: VMT-AB, 2011 JAN $10 call - current bid/ask $2.80/3.00
-stop loss on MWT @ 8.95
01/18/10 Sell Half! MTW @ 13.70, option at $4.80 bid.
- or -
Oct. 30th 2009 - entry price on MTW (the stock) @ 9.10
- stop loss on MTW @ 8.95
01/18/10 Sell Half! MTW @ 13.70
Chart of MTW:
ORCL $23.06 -0.41 -- Oracle Corp.
Shares of ORCL had their price target raised to $30 by an analyst firm on Thursday but it didn't help the stock price. I've been forecasting a pull back to the $23.00 level for weeks. Now that it's hear I just hope it stops. Broken resistance near $23 should be new support. However, given the market's widespread decline odds are growing that ORCL will see $22.00 and possibly its 200-dma. Currently the 200-dma is at $21.60. I am adjusting our stop loss down to $21.40 so ORCL has room to tag its 200-dma without hitting our stop.
While technically this dip to support is an entry point I would wait for the market to find a floor first. Be patient about opening new bullish positions.
Our stop loss is at $21.75. Our long-term target is $29.75.
FYI: Shares of ORCL don't move very fast. Readers might want to consider turning this play into a calendar or diagonal spread to further maximize your gains.
Dec. 18th, 2009 - entry price on ORCL @ 24.05, option @ 2.55
symbol: VOC-AE, 2011 LEAP $25 call - current bid/ask $1.77/1.81
-stop loss on ORCL @ 21.75.
Chart of ORCL:
PEP $59.62 -0.12 -- PEPSICO Inc.
I remain very cautious about PEP. You can see on the weekly chart below that PEP has clearly broken its up trend will still struggling with a long-term pattern of lower highs. Last week I suggested we protect ourselves with some March $55 puts. I would still consider owning those puts today. PEP is due to report earnings on Feb. 11th. I am not suggesting new long-term LEAPS at this time. Our exit target is the $69.90 mark.
July 7th, 2009 - entry price on PEP @ 57.25, option @ $4.50(estimate)
symbol: VP-AL, 2011 $60.00 LEAP call - current bid/ask $4.10/4.20
-stop loss on PEP at $54.95
Temporary protective put:
Jan. 23rd, 2009 - entry price on PEP @ 60.39, option @ 0.50
symbol: PEP-OK March $55 put - current bid/ask $0.45/0.55
Chart of PEP:
POT - Potash Corp. $ 99.35 -5.14
It was definitely a rough week for POT as investors sold the earnings news. The company beat estimates for the fourth quarter but management issued a warning for the first quarter 2010 and for the full year. POT gapped open lower on Thursday at $104.41 and hit our trigger to buy calls at $101 before bouncing back from the 200-dma. Sadly the bounce didn't stick. Traders sold POT again on Friday for a 4.9% loss and a bearish breakdown under support at $100.00 and its 200-dma. This is very bearish. Fortunately, I think POT is so oversold it's due for a bounce but the earnings warning takes a lot of wind out of POT's sails.
We knew this was going to be a volatile stock and set our stop loss at $89.00. I am not suggesting new positions with POT under $100. You have time to wait. Shares could plunge to $80 over the next few weeks and even if POT did bounce the $105 and $110 levels are now short-term resistance so there is no rush. Our long-term target is $160 or higher.
Jan. 28th, 2010 - entry price on POT @ 101.00, option @ 11.75
symbol: VPT-AB, 2011 LEAP $110 call - current bid/ask $11.55/11.90
-stop loss on POT @ 89.00.
Chart of ORCL:
RAI $53.20 -0.61 -- Reynolds American Inc.
Shares of RAI actually managed a small gain for the week. Overall the stock continues to drift sideways. Of course sideways is a show of strength compared to the rest of the market. Unfortunately, I suspect that if the S&P 500 continues much lower RAI will eventually breakdown. The $50.00 level should be the next level of support if RAI falls under its 50-dma (52.83).
I am still suggesting that readers take profits if you have not done so already. More conservative traders may want to exit completely. Our final target is $57.50. I'm not suggesting new positions at this time.
FYI: Earnings are due out on Feb. 4th before the market opens. Wall Street is looking for a profit of $1.16 a share. You may want to buy some protective puts in case RAI disappoints and shares crash on the earnings news.
July 24th, 2009 - entry price on RAI @ 42.50, option @ $4.50(estimate)
symbol: OWO-AH, 2011 JAN $40.00 LEAP call - current bid/ask $12.30/15.10
-stop loss on RAI at $49.45
Sold Half on 10/19 @ 49.50, option @ $8.90 (+97%)
Chart of RAI:
TBT $47.35 +0.09 -- UltraShort 20+ Year Treasury Bond ProShares
As stocks go down investors have been moving money into the perceived safety of bonds. That's been bearish for our TBT play. I believe this is temporary but there is no need to rush into positions with the TBT, which moves slowly. We can open positions now or you can wait for a dip or a bounce near the $45.00 level and its trend of higher lows.
Our time frame is 12 to 24 months. Be sure to give yourself a wide stop loss.
Our first long-term target is $59.75. Our second target is $67.50.
FYI: The TBT is an exchange traded fund (ETF) that tries to deliver twice the inverse performance of the Barclays Capital 20+ Year U.S. Treasury index.
Jan. 09th, 2010 - entry price on TBT @ 50.63, option @ 4.90
symbol: XRJ-AC, JAN 2011 $55 LEAP call - current bid/ask $3.25/3.55
-stop loss on TBT @ 41.90
Jan. 09th, 2010 - entry price on TBT @ 50.63, option @ 7.90
symbol: YHT-AH, JAN 2012 $60 LEAP call - current bid/ask $6.25/6.40
-stop loss on TBT @ 41.90
Chart of TBT
TEX $19.55 -0.98 -- Terex Corp.
Yuck! The last two weeks in TEX have been murder with an 18% haircut. Shares have now fallen through what should have been significant support in the $21-20 zone. The next place to look for support is $18.00 and its rising 200-dma. More conservative traders will want to seriously consider an early exit right here. I'm not suggesting new positions at this time.
Our final target is $29.50.
Sept. 11th, 2009 - entry price on TEX @ 18.25, option @ 4.10
symbol: VXQ-AD, JAN 2011 $20 LEAP call - current bid/ask $3.60/3.80
-stop loss on TEX @ 17.75
Sell half (10/24/09), option at $7.50 (+82.9%)
Chart of TEX:
TLT $92.31 +0.80 -- iShares 20+Yr Bond ETF
On a short-term basis it almost looks like the TLT has produced a bull-flag pattern. The close over the 50-dma on Friday is a bullish move. I've been warning readers that if the rally continues the TLT could hit $94.00 or at least trade near the 200-dma. Wait for a move toward the 200-dma, which would be a much better entry point to buy puts.
You have plenty of time to open positions. This ETF doesn't move very fast. Wait for your entry point. More conservative traders can use a stop closer to $96 or the 200-dma.
FYI: The TLT is an exchange traded fund that tries to mimic the performance of the Barclays Capital U.S. 20+Year Treasury Bond Index.
Jan. 09th, 2010 - entry price on TLT @ 89.29, option @ 6.40
symbol: VJL-MG, JAN 2011 $85 LEAP put - current bid/ask $4.10/4.40
-stop loss on TLT @ 100.50
Jan. 09th, 2010 - entry price on TLT @ 89.29, option @ 8.90
symbol: YLI-MB, JAN 2012 $80 LEAP put - current bid/ask $5.90/7.10
-stop loss on TLT @ 100.50
Chart of TLT
UNH $33.00 -0.43 -- UnitedHealth Group Inc.
Healthcare stocks managed a bounce midweek. It's already rolling over for the HMO index, which broke down under the 50-dma on Friday. I'm sure UNH will follow. I have been suggesting that readers wait for a dip near $30.00, which should be significant support.
The plan was to use small positions to limit our risk.
Our long-term target is $42.50.
Dec 16th, 2009 - entry price on UNH @ 31.55, option @ 3.80
symbol: VUH-AG, 2011 JAN $35 LEAP call - current bid/ask $3.65/3.75
-stop loss on UNH @ 28.95
Chart of UNH:
UYG $5.43 -0.07 - ProShares Ultra Financials (2x) ETF
Believe it or not we're still long the UYG. Shares hit $5.33 and $5.32 last week. Our stop loss is at $5.30. I think the financials will continue to trend lower. Readers should decide, do you exit now at $5.43 or gamble the $0.13 on the chance banks produce a bounce soon. I am not suggesting new positions at this time.
Our second and final target is $9.50.
FYI: The UYG trades off the DJUSFN index.
Our strategy called for buying the ETF instead of the options.
Current position in the UYG = $1.50 entry (stop loss: 5.30)
10/14/09 Exit - Sell Half @ 6.31 (gap open exit, +320%)
Chart of UYG:
VICR $ 8.66 +0.02 -- VICOR Corp.
VICR shaved off about 20 cents last week. The close under $9.00 and its 50-dma is definitely short-term bearish. I've been warning that VICR will probably retreat toward $8.00. There is no change from my prior comments.
Wait for a dip and probably a bounce near the $8.00 region before considering new long-term positions. More conservative traders may want to raise their stops toward the $8 level (but not too close).
Our twelve-month target is the $13.50-14.00 zone (one reason I prefer the stock over the option). Remember, if the market dips in January VICR will probably dip with it.
Dec 26th, 2009 - entry price on VICR@ 9.30, option @ 1.40
symbol: VQV-GB, 2010 JUL $10 call - current bid/ask $0.60/0.80
-stop loss on VICR @ 7.45
- or -
Dec. 26th 2009 - entry price on VICR (the stock) @ 9.30
-stop loss on VICR @ 7.45
Chart of VICR:
ANR $40.61 -4.05 - Alpha Natural Resources, Inc.
The weaker than expected earnings from ACI hit the coal sector hard and shares of ANR lost 9.0%. At least that seems to be a plausible explanation for ANR's sudden drop from $45. I did not see any company-specific news. Shares of ANR hit our stop loss at $41.45 closing this trade. I'd keep ANR on your watch list for a pull back toward what should be support near $35.00 and its 200-dma.
Aug. 25th, 2009 - entry price on ANR @ 34.00, option @ 7.00
symbol: VJV-AH, 2011 JAN $40 LEAP call - current bid/ask $ 8.10/ 8.60
-stop loss on ANR @ 41.45
bought 1/2 LEAP position on 08/25/09 (option price @ 7.00)
01/06/10 ANR hits 1st target at $49.80. Option @ $15.20 (+117.1%)
01/29/10 ANR hits our stop loss at $41.45. Option @ 9.25.
Chart of ANR:
DSX $13.26 -0.60 - Diana Shipping Inc.
Worries over China cooling its economic growth have continued to plague the shipping stocks. DSX broke down under its 200-dma. Shares hit our stop loss at $14.25 on Wednesday last week.
Jan 11th, 2010 - entry price on DSX @ 16.44, option @ 2.75(estimate)
symbol: XDJ-AW, 2011 JAN $17.50 LEAP call - current bid/ask $ 1.00/ 1.15
-stop loss on DSX @ 14.25
01/27/10 DSW hit our stop @ 14.25. Option @ $1.65
Chart of DSX:
GHM $15.88 -1.92 -- Graham Corp.
It has been an extremely ugly couple of weeks in GHM. The stock was trying to cling to support near the 100-dma. Unfortunately on Friday the stock reversed at $18.00 and then collapsed with a drop to $15.50 intraday. GHM hit our stop loss at $15.75 closing this trade. I'm not surprised that GHM hit its 200-dma I just wasn't expecting it to get there so fast. GHM lost more than 10% on Friday alone thanks to a disappointing earnings report on Friday morning.
Two weeks ago we sold half our position. Our final target is $24.00.
Oct 26th, 2009 - entry price on GHM @ 15.15, option @ 2.65
symbol: GHM-FC, 2010 JUNE $15 call - current bid/ask $2.15/2.75
-stop loss on GHM @ 15.75
01/18/10 sell half, GHM $19.65, option @ 4.90 bid
01/29/10 Stopped out at $15.75, option @ 2.40
- or -
Oct. 26th 2009 - entry price on GHM (the stock) @ 15.15
- stop loss on GHM @ 15.75
01/18/10 sell half, GHM $19.65
01/29/10 Stopped out @ 15.75
Chart of GHM:
GNK $19.16 -1.16 -- Genco Shipping
GNK is another shipping stock that has been hammered lower, day after day, as investors worry about China and the implications for less demand and trade. GNK hit our stop loss at $20.95 on Jan. 27th.
Our plan was to use small positions to keep our risk limited.
Nov 21st, 2009 - entry price on GNK @ 25.46, option @ 5.00
symbol: OKJ-AF, 2011 $30 LEAP call - current bid/ask $1.30/1.45
-stop loss on GNK @ 20.95
01/27/10 Stopped @ 20.95, option near $2.00
Chart of GNK:
HON $38.64 change: -1.18 - Honeywell Intl. Inc.
HON is another earnings-sell-off fatality. The company beat estimates by a penny and reaffirmed its prior 2010 guidance. That wasn't enough for investors, not with the market in a sell-off mode. Shares of HON gapped open lower at $38.50 on Friday and fell to its exponential 200-dma near $37.60 Friday morning. Our stop loss was hit at $37.75 closing this trade.
Dec 11th, 2009 - entry price on HON @ 41.00, option @ 3.25
symbol: VAD-AI, 2011 $45 LEAP call - current bid/ask $1.45/1.55
-stop loss on HON @ 37.75
01/29/10 stopped @ 37.75, option @ 1.50
Chart of HON: