The major indices may be flirting with new 52-week highs but we're starting to see some profit taking across the different sectors. Our biotech stocks are inching lower. Agriculture names are retreating. The rally's momentum has definitely stalled for most issues although FO surged to a new high last week.
Deluxe Corp. (DLX) has been closed.
Arch Coal Inc. - ACI - close: 25.29 change: +0.27
It is amazing what a difference a week can make. The coal mine disaster for Massey Energy did not have much affect on the rest of the coal stocks. Shares of ACI started the week on a strong note and managed an 8% gain for the week. The stock needs to see follow through. If shares fail here it will look like a lower high and we have not yet escaped the bearish head-and-shoulders pattern. I am reluctant to suggest new bullish positions at this time even though analysts seem to be growing more bullish on coal again.
Readers need to note that ACI is due to report earnings on Monday, April 19th before the opening bell. If you are considering any protective puts you'll need to buy them before the market closes on Friday, April 16th. I am not suggesting any puts at this time.
Our final target for the LEAP trade is $34.75.
May 14th, 2009 - entry price on ACI @ 16.00, option @ 2.40
symbol: OSE-AF, 2011 JAN $30 LEAP call - current bid/ask $2.15/2.25
-stop loss on ACI @ 19.85
Feb 13th, 2010 - entry price on ACI @ 21.65, option @ 4.40
symbol: YEP1221A25 2012 JAN $25 LEAP call - current bid/ask $6.10/6.40
-stop loss on ACI @ 19.85
Chart of ACI:
Biogen IDEC - BIIB - close: 56.52 change: +0.09
BIIB continues to under perform the broader market and its peers in the biotech sector. We were expecting a pull back toward the $55-54 zone but this relative weakness is not a good sign. Shares have now broken technical support at their simple 50-dma. Bigger picture it looks like BIIB should find support in the $55 area but I'm almost tempted to cut this play early and look for more promising candidates. Let's give the stock another week and see what happens. Readers should note that BIIB is due to report earnings on April 20th before the market's opening bell.
Our first target to take profits is at $64.90.
Feb 19th, 2010 - entry price on BIIB @ 56.60, option @ 4.60
symbol: OIY1122A60 2011 JAN $60 LEAP call - current bid/ask $3.80/4.10
-stop loss on BIIB @ 51.85
Chart of BIIB:
Berkshire Hathaway Inc. - BRK.B - $80.49 +0.81
Shares of BRK.B have been correcting slowly for five weeks now. The profit taking began to pick up some speed this past week until shares hit the rising 50-dma. Traders bought the dip and while the stock lost ground for the week it ended on a strong note. I still think shares are overbought even after a five-week churn sideways. I would prefer to launch new longer-term bullish positions on a pullback into the $77-73 zone. We remain very long-term bullish. Take your time and wait for the entry point to come to you.
Our first target is $90.00. Our second target is $99.50
Feb 6th, 2010 - entry price on BRK.B @ 73.57, option @ 4.80
symbol: 2011 JAN $80 XPB1122A80 LEAP call - current bid/ask $6.20/6.50
-stop loss on BRK.B @ 69.00
Feb 6th, 2010 - entry price on BRK.B @ 73.57, option @ 6.50
symbol: 2012 JAN $85 WDW1221A85 LEAP call - current bid/ask $7.90/8.20
-stop loss on BRK.B @ 69.00
Chart of BRK.B:
BorgWarner Inc. - BWA - close: 38.19 change: +0.16
BWA made some headlines this past week when the company purchased Dytech ENSA. Details of the deal were not disclosed but Dytech, which makes parts for exhaust systems, had sales of $180 million in 2009.
On a short-term basis the action in BWA looks almost bearish with the failed rally on April 5th. Yet there was not much follow through and traders bought the dip at its 50-dma on Thursday. Longer-term the trend is still up and shares should be poised for a big move higher given the months of building a base in the $30-35 zone.
If you are looking for a new position now I would prefer to buy a bounce in the $36-35 area or wait for a breakout past $40.00.
Our first target is $44.50. Our second target is $49.75. FYI: More conservative traders might want to use a stop loss closer to $34.00.
Feb 17th, 2010 - entry price on BWA @ 37.55, option @ 3.90
symbol: ZWY1122A40 2011 JAN $40 LEAP call - current bid/ask $3.50/3.90
-stop loss on BWA @ 32.49
Chart of BWA:
Celgene Corp. - CELG - close: 61.89 change: -1.23
CELG under performed the market on Friday after the stock was downgraded to a "hold" one day after the company's analyst day. The action over the past week actually looks short-term bearish with a failed rally at $64.00. I have been suggesting readers wait for a dip back toward the $60.00-58.00 zone before considering new bullish positions. Considering the relative weakness the past few days I would focus more on the $58 level and/or its rising 100-dma as likely support. You can wait for the bounce before initiating positions.
Our target is the $74.00 level. I have been suggesting the 2011 Jan. $65 calls but readers may want to buy the 2012 calls.
FYI: A few weeks ago CELG was number 5 on Morningstar's top ten list of potential takeout (acquisition) targets.
Mar 1st, 2010 - entry price on CELG @ 60.75, option @ 5.40
symbol: VCS1122A65 2011 JAN $65 LEAP call - current bid/ask $5.30/5.80
-stop loss on CELG @ 54.75
Chart of CELG:
EMR $50.80 -0.14 -- Emerson Electric Co.
The rally in EMR stalled this past week with shares churning sideways above the $50.00 level. I want to repeat my prior suggestion that more conservative traders go ahead and exit early now to lock in a gain. I am not suggesting new bullish positions. The trend is up but EMR is overbought. I would look for support near $48 and its rising 50-dma on a pull back.
EMR has already hit our first target at $47.50. Our second and final target is $54.50.
Sept. 8th, 2009 - entry price on EMR @ 38.00, option @ $4.50
symbol: VHH-AH, 2011 JAN $40 call - current bid/ask $11.00/11.60
-stop loss on EMR @ 44.75
02/18/10 1st Target hit @ 47.50, option @ $8.80 (+95.5%)
Chart of EMR:
Fortune Brands - FO - close: 50.67 change: +1.09
Good news! FO is in breakout mode again. After three weeks of consolidating sideways under resistance at $50.00 the bulls finally managed to push the stock to new 52-week highs. This is very bullish and aggressive traders may want to consider new positions here. I am raising our stop loss to $45.75. More conservative traders could try placing their stop closer to $48.00 instead. Please note I am adjusting our long-term target down to $59.75.
Mar. 12th, 2009 - entry price on FO @ 47.55, option @ $2.20
symbol: FO1018I50 SEP 2010 $50 call - current bid/ask $3.50/ 3.80
-stop loss on FO @ 45.75 *new*
Chart of FO:
Forest Oil Corp. - FST - close: 27.53 change: +0.21
The price of oil has been getting tossed around by the U.S. dollar but it looks like the dollar's bounce is rolling over and that should be bullish for oil prices. Traders bought the dip in FST on Thursday morning and shares do look poised to rally higher but the $30.00 level remains overhead resistance.
I remain cautious on FST given its relative weakness.
I am not suggesting new bullish 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 $ 8.60/ 9.00
-stop loss on FST @ 23.45
Chart of FST:
Intel Corp. - INTC - close: 22.55 change: +0.24
The SOX semiconductor index managed to hit new 52-week highs last week and it did so without any help from Intel. Shares of INTC have been consolidating sideways and has done so for the last two and a half weeks. On a positive note INTC appears to have short-term support near $22.00. We are raising our stop loss to $19.80 near the 200-dma.
INTC reports earnings on Tuesday April 13th after the closing bell. If you're worried the company might disappoint then consider some protective puts. Officially the newsletter is not suggesting any puts. I suspect any profit taking would be met with support at $22, $21 and near $20. If INTC can breakout past resistance near $22.80 I suspect shares could see a quick rally toward our target in the $24-26 zone.
FYI: Shares of Intel don't move very fast. Readers might want to consider turning this play into a calendar or diagonal spread to further maximize your gains.
June 13th, 2009 - entry price on INTC @ 16.31, option @ 1.36
symbol: VNL-AD, 2011 LEAP $20 call - current bid/ask $3.45/3.55
-stop loss on INTC @ 19.80 *new*
Chart of INTC:
Mosaic Co. - MOS - close: $56.65 change: -0.94
The correction in MOS continues. After a worse than expected earnings report the stock has been slowly sinking. I cautioned readers last week that MOS would probably fall toward $55.00. It's getting close to this level, which should offer some support that is now underpinned by its simple 200-dma. More conservative traders may want to raise their stop loss just in case the $55 level does not hold.
Longer-term we're bullish on the agriculture sector and MOS but the short-term trend remains down. Wait for a bounce from support before considering new bullish positions.
I have gone ahead and added the $0.17 for the protective put we bought two weeks ago to the cost of our LEAPS position. FYI: Our long-term target is the $90 level.
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 @ 6.27
symbol: ZXW-AM, 2011 LEAP $65 call - current bid/ask $4.30/4.45
-stop loss on MOS @ 51.90
Chart of MOS:
Manitowoc Inc. - MTW - close: 14.33 change: +0.73
It's taken about three months but the LEAP calls have rallied back to the same price we first took profits at back in January. Shares of MTW continue to perform well and the stock outperformed on Friday with a 5.3% gain. I couldn't find any specific news for the outperformance but investors remain bullish for the industrial sector. The 2010 January high was $14.60, which will probably be overhead resistance. Don't be surprised to see some profit taking soon. Please note our new stop loss at $10.85.
I am not suggesting new bullish positions at this time.
Our long-term target is $17.00.
Oct 30th, 2009 - entry price on MTW @ 9.10, option @ 2.61
symbol: VMT-AB, 2011 JAN $10 call - current bid/ask $4.80/5.10
-stop loss on MWT @ 10.85 *new*
01/18/10 Sell Half! MTW @ 13.70, option at $4.80 bid (+83.9%)
- or -
Oct. 30th 2009 - entry price on MTW (the stock) @ 9.10
- stop loss on MTW @ 10.85 *new*
01/18/10 Sell Half! MTW @ 13.70 (+50.5%)
Chart of MTW:
Oracle Corp. - ORCL - close: 26.13 change: +0.30
The NASDAQ managed to close up at a new 52-week high and shares of ORCL are not far behind. Traders continue to buy the dip and the stock has closed above recent resistance near the $26.00 level. I remain concerned that ORCL's trajectory is just too slow but we still have months to go. I am not suggesting new positions at this time due to ORCL's slow movement rate.
Please note our new stop loss at $22.95.
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 $2.89/2.94
-stop loss on ORCL @ 22.95 *new*
Chart of ORCL:
PEPSICO Inc. - PEP - close: 66.36 change: +0.39
After several days of failing to breakout past the $67.00 level shares of PEP are beginning to drift lower. Broken resistance in the $63-64 zone should offer some support as well as the 200-dma now above the $60 level. The larger trend is up but PEP still looks overbought and due for a deeper pull back.
I am not suggesting new positions at this time. Our adjusted final target is $72.25.
July 7th, 2009 - entry price on PEP @ 57.25, option @ $4.50(estimate)
symbol: VP-AL, 2011 $60.00 LEAP call - current bid/ask $7.70/7.85
-stop loss on PEP at $59.40
03/27/10 SELL HALF: PEP $ 66.59, Option @ $8.00 (+77.7%)
Chart of PEP:
Potash Corp. - POT - close: $115.19 change: +0.62
Shares of POT continue to perform as expected. I have been warning readers to expect a pull back toward the $115-110 zone and shares hit $112.27 on Thursday. The short-term trend is still down so the correction may not be over yet. On a short-term basis the agriculture stocks are correcting but longer-term we remain bullish on this industry. If the $110 level fails to hold support then look for additional support near $105 and POT's rising 200-dma. I am not suggesting new bullish positions at this time.
We sold half our position near $125. Our final target is $160.00.
Jan. 28th, 2010 - entry price on POT @ 101.00, option @ 11.75
symbol: VPT-AB, 2011 LEAP $110 call - current bid/ask $17.60/17.95
-stop loss on POT @ 99.50
SELL HALF (03/13/10) option @ $26.35 bid (+124%)
Chart of ORCL:
PartnerRe Ltd. - PRE - close: 80.70 change: +0.19
Shares of PRE displayed some relative strength last week with a new five-month high. Traders continue to buy the dips near the rising 10-dma. While our bias on PRE is bullish I still hesitate to launch new positions at this time. Eventually the market will correct and we will see a better entry point. The $76 region should offer some support as well as the 50-dma.
If we do see a new entry point I would use the November calls. Please note our new stop loss at $73.75.
Our first target is $84.90. Our second, longer-term target is $97.50 but this could be wishful thinking given the August options.
Feb. 13th, 2010 - entry price on PRE @ 76.28, option @ 2.70
symbol: PRE1021H80, 2010 AUG $80 call - current bid/ask $3.50/3.80
-stop loss on PRE @ 73.75 *new*
Chart of PRE:
Reynolds American Inc. - RAI - close: 54.47 change: +0.54
RAI posted a loss on the week but investors continue to buy the dips. Traders jumped in twice near the $53.60 level last week. The stock has spent over four months consolidating sideways in the $51-55 zone and if shares can finally break out of this range it could begin a new leg higher.
Currently our final target to take profits and exit is $59.75. More conservative traders may want to take profits right now! I am not suggesting new positions at this time.
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 $12.70/15.00
-stop loss on RAI at $50.75
Sold Half on 10/19 @ 49.50, option @ $8.90 (+97%)
Chart of RAI:
UltraShort 20+ Year Treasury Bond ProShares - TBT - cls: 48.70 chg: -0.24
The bond market sold off hard on Monday morning but recovered following a very strong auction on Wednesday. The Treasury department sold $21 billion in 10-year notes with huge demand. The bond market continued to drift higher the rest of the week. Our fundamental outlook on the dollar, bonds and interest rates has not changed. Eventually the ballooning U.S. debt will push yields higher and that's bearish for bonds and bullish for the TBT.
I have been suggesting that readers wait for a move over $51.50 before launching new positions.
Our first long-term target is $59.75. Our second target is $67.50. Keep in mind that this security tends to move pretty slowly.
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 $2.57/2.69
-stop loss on TBT @ 45.90
Jan. 09th, 2010 - entry price on TBT @ 50.63, option @ 7.90
symbol: YHT-AH, JAN 2012 $60 LEAP call - current bid/ask $4.70/5.05
-stop loss on TBT @ 45.90
Chart of TBT
Titanium Metals - TIE - close: 16.46 change: -0.02
Warning! The action in TIE this past week looks like a failed rally and reversal lower. You could argue the action on Tuesday looks like a lower high or a second peak in a bearish double top pattern. The bounce on Friday morning failed. I expect shares of TIE to correct lower from here. More conservative traders may want to exit early immediately. At the very least I would look for a dip toward $15.00 and probably closer to the $14-13 zone.
I am not suggesting new bullish positions at this time. We decided to sell half our position on March 27th. Our final, long-term target is $19.75.
Feb. 20th, 2010 - entry price on TIE @ 12.06, option @ 1.40
symbol: VWN1122A15, 2011 JAN $15 LEAP call - current bid/ask $3.30/3.60
-stop loss on TIE @ 11.90
03/27/10 SELL HALF: TIE @ 16.21, option @ 3.20 (+128.5%)
Feb. 20th, 2010 - entry price on TIE @ 12.06, option @ 2.60
symbol: WWN1221A15, 2012 JAN $15 LEAP call - current bid/ask $4.50/5.10
-stop loss on TIE @ 11.90
03/27/10 SELL HALF: TIE @ 16.21, option @ 4.50 (+73%)
Chart of TIE:
iShares 20+Yr Bond ETF - TLT - close: 88.98 change: +0.21
Bonds sold off hard last Monday but bounced on a strong auction of 10-year notes on Wednesday. The path of least resistance appears to be down but it will likely be a bumpy ride. Our first target is $81.00.
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 $4.05/4.15
-stop loss on TLT @ 93.15
Jan. 09th, 2010 - entry price on TLT @ 89.29, option @ 8.90
symbol: YLI-MB, JAN 2012 $80 LEAP put - current bid/ask $6.35/6.80
-stop loss on TLT @ 93.15
Chart of TLT
UnitedHealth Group Inc. - UNH - close: 32.26 change: -0.36
I am growing more concerned over the weakness in the healthcare sector and shares of UNH. The HMO healthcare index appears to have formed a bearish double top. Meanwhile UNH is forming a new trend of lower highs. It's true that traders bought the dip again near $32 and its 100-dma on Friday but odds are growing this stock will see a dip back toward support near $30.00. After three months of consolidating in the $32-35 zone I'm not so sure the $30 level is going to hold as support. More conservative traders may want to consider taking some money off the table. I am not suggesting new bullish positions at this time.
Plus we have to consider the risk of UNH's earnings report. The company reports earnings on Tuesday, April 20th before the opening bell. At this time I am not suggesting any protective puts but you might want to consider them ahead of the report.
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 $2.51/2.56
-stop loss on UNH @ 28.95
Chart of UNH:
Visa Inc. - V - close: 92.52 change: +1.52
Visa posted a very minor loss for the week. More importantly investors continue to buy the dips and shares look poised to rally higher. I'm still concerned about the market being overbought but it can always grow more overbought. If you're willing to buy a new high then look for V to trade above $93.75 before considering new positions. I would still prefer to open positions on a dip near support but that may not happen soon.
Our long-term target is the $109 mark. Investors might want to consider the 2012 LEAPS instead.
Mar 9th, 2009 - entry price on V @ 91.00, option @ 4.60
symbol: VSK1122A100 JAN 2011 $100 LEAP call - current bid/ask $4.65/4.80
-stop loss on V @ 81.75
Chart of V:
Wal-Mart Stores Inc. - WMT - close: 55.07 change: -0.31
After almost three weeks of churning sideways WMT is finally beginning to see some profit taking. The $54.00 level should offer some support and if we're really lucky we'll see a dip closer to $52.50. I would launch new positions on weakness. This is a long-term trade for us so you can take your time on an entry point.
Our long-term target is the $63.00 level. Since WMT does not move very fast readers may want to supplement their position by turning it into a calendar spread or a diagonal spread to enhance their gains.
Mar 7th, 2009 - entry price on WMT @ 54.14, option @ 4.60
symbol: WWT1221A55 JAN 2012 $55 LEAP call - current bid/ask $5.10/5.25
-stop loss on WMT @ 49.45
Chart of WMT
Deluxe Corp. - DLX - close: 19.42 change: -0.17
We have been expecting a correction in shares of DLX for several days now. This past week the stock has produced a new lower high and I suspect the correction could be close at hand. Instead of sitting through the pull back I'm suggesting we go ahead and exit early. We can exit now and avoid a loss and still put DLX back on our watch list for a better entry point.
Mar 1st, 2010 - entry price on DLX @ 19.10, option @ 1.10
symbol: DLX1016J20 2010 OCT $20 call - current bid/ask $1.25/1.45
-stop loss on DLX @ 16.75
04/10/10 - Exit Early @ $1.25, cost $1.10.
Chart of DLX: