None. There were no LEAP plays dropped this week.
ACGY $ 9.78 -0.17 -- Acergy S.A.
I cautioned readers to expect a decline toward $10.00-9.50 and we got it. Oil service stocks were sold hard last week as investors began locking in profits. The rally in oil stalled and traders were quick to sell their winners. Shares of ACGY gave up more than 12% and have come close to filling the gap from late May. Broken resistance near $9.50 should offer some support. A normal 38.2% Fibonacci retracement would bring ACGY down toward $8.75.
I'm not suggesting new positions at this time. Our stop is at $6.95.
Our plan is to exit in the $14.50-15.00 zone.
April 25th, 2009 - entry price on ACGY @ 7.61, option @ 1.05
symbol: LGQ-AB, 2010 JAN $10 LEAP call - current bid/ask $1.85/2.10
-stop loss on ACGY @ 6.95
Chart of ACGY
ACI $16.35 +0.09 -- Arch Coal Inc.
ACI produced a nasty breakdown last week (-12.5%). The failed rally at the 200-dma two weeks ago was a warning. The selling stalled near broken resistance and new support near $16.00 and its 100-dma. Readers could use this pull back as a new entry point. However some of the short-term technicals, naturally bearish after such a down week, are suggesting more weakness ahead. I would open positions in the $16.00-15.00 zone but readers may want to raise their stops toward the $14.00 region (or even near $15.00)). Currently our stop is at $12.45.
Our stop loss is at $12.45 just under the late April low. More conservative traders might want to consider a stop loss closer to $15.00. Our target is the $30.00-35.00 range.
May 14th, 2009 - entry price on ACI @ 16.00, option @ 1.30
symbol: ACI-AE, 2010 JAN $25 LEAP call - current bid/ask .80/0.95
-stop loss on ACI @ 12.45
May 14th, 2009 - entry price on ACI @ 16.00, option @ 2.40
symbol: OSE-AF, 2011 JAN $30 LEAP call - current bid/ask $1.60/1.85
-stop loss on ACI @ 12.45
Chart of ACI:
BAC $13.22 +0.32 - Bank of America Corp.
BAC continues to look strong. Investors bought the dip right where they were supposed to at broken resistance and new support at $12.00. The next challenge for the bulls is technical resistance at its simple and exponential 200-dma and the May highs near $15.00. I'm not suggesting new positions at this time.
I want to remind readers that this is a long-term, two-year trade. Our exit target is the $30-40 zone.
Jan 25th, 2009 - entry price on BAC @ 6.24, option @ 2.38
symbol: VBA-AB, JAN 2011 $10 LEAP call - current bid/ask $5.60/5.70
-stop loss on BAC @ none.
Chart of BAC
CHK $20.95 -0.90 - Chesapeake Energy
Another 12% decline. Shares of CHK appear to have formed a bearish double top in June and the sell-off has been rather sharp. The stock has broken short-term support at $22.00 and its 50-dma. I am not suggesting new positions at this time. CHK might see a consolidation back toward the 100-dma or the $19.00 region. Consider potential entry points there, near $19.00, preferably on a bounce.
Our long-term target to exit is $35.00 on CHK. We have set our stop loss on CHK at $16.40 but I'm thinking about raising the stop toward $17.50.
April 9st, 2009 - entry price on CHK @ 21.00, option @ 2.00
symbol: HKW-AF, JAN 2010 $30 LEAP call - current bid/ask $1.25/1.35
-stop loss on CHK @ 16.40.
Chart of CHK:
CRM $39.91 -0.25 -- Salesforce.com
CRM has struggled to build on the breakout over $40.00 two weeks ago. Shares spent last week consolidating sideways. Closing within a few cents of the $40.00 strike doesn't surprise me given Friday's option expiration. Where it goes from here is the question. The technical picture is mixed. The Point & Figure chart, which can filter out some of the noise we see on normal charts, is currently bearish but is suggesting support near $33.00. I am not suggesting new bullish positions. The mid June top under $42.00 could be a new lower high. Traders may want to raise their stops toward $35.00 just under the 200-dma, 100-dma and the late May lows.
Our exit target to sell our LEAPS position is $49.00.
April 1st, 2009 - entry price on CRM @ 30.00, option @ 4.30
symbol: ODK-AH, JAN 2010 $40 LEAP call - current bid/ask $5.70/6.00
-stop loss on CRM @ 32.45.
(note: readers have reported getting a better entry price than $4.30)
FYI: The symbol just changed from ODK-AH to CRM-AH
April 1st, 2009 - entry price on CRM @ 30.00, option @ 2.00
symbol: ODK-AI, JAN 2010 $45 LEAP call - current bid/ask $3.50/3.70
-stop loss on CRM @ 32.45.
FYI: The symbol just changed from ODK-AI to CRM-AI.
Chart of CRM
CRS $21.06 +0.26 -- Carpenter Technology
We have our eye on CRS for weeks. The stock finally corrected as investors took profits in the material stocks. CRS gave up more than 20% and pulled back toward round-number support near $20.00 and technical support at its rising 50-dma. Our trigger to buy LEAPS at $20.25 was hit on June 17th and again on June 18th. We're setting our stop loss at $17.45. We have two targets. Our first target to take profits is $29.85. Our second target is $34.90.
NOTE: These options don't trade that much so the difference last trade and the current bid/ask spread is pretty wide.
June 17th, 2009 - entry price on CRS @ 20.25, option @ 3.00
symbol: CRS-LE, DEC 2009 $25 call - current bid/ask $1.90/2.05
-stop loss on CRS @ 17.45.
June 17th, 2009 - entry price on CRS @ 20.25, option @ 1.90
symbol: CRS-LF, DEC 2009 $30 call - current bid/ask .80/0.95
-stop loss on CRS @ 17.45.
Chart of CRS:
DBA $26.00 -0.29 -- PowerShares DB Agriculture ETF
The commodity trade really started to break down last week. The strange thing was the U.S. dollar. The dollar had been plunging for weeks, which was helping fuel the rally in commodities. Yet last week the dollar really didn't do much. There was the Monday rally in the dollar, which sparked the gap down in the DBA. Yet the dollar trended lower the rest of the week. The fade lower in the dollar should have been bullish for commodities. The DBA has been bouncing from its 200-dma the last few days. Unfortunately the 200-dma is sinking. You might here people talk about a "golden cross". That's when the 50-dma crosses up through the 200-dma. It's supposed to be a very bullish signal. That just happened for the DBA last week.
I am suggesting new bullish positions now but readers can be patient. DBA doesn't move that fast and it might retrace back toward $25.00, which would be a better entry point.
I'm listing a stop loss at $23.90. Our long-term target is the $37.50-38.00 zone.
May 23rd, 2009 - entry price on DBA @ 27.63, option @ 1.50
symbol: DBA-AD, 2010 JAN $30 LEAP call - current bid/ask .85/1.10
-stop loss on DBA @ 23.90.
May 23rd, 2009 - entry price on DBA @ 27.63, option @ 2.25
symbol: ZBV-AI, 2011 JAN $35 LEAP call - current bid/ask $1.50/1.90
-stop loss on DBA @ 23.90.
Chart of DBA:
DRYS $6.19 -0.09 - DryShips, Inc.
-12% seems to be a trend last week. That's what happened to DRYS. Shares broke down under the simple 50-dma and then fell toward round-number support at $6.00. What's odd is that the Baltic Dry Index was rising last week, which should have been bullish for the shipping stocks like DRYS. It is worth noting that one analyst firm downgraded the dry goods shippers on Friday.
Aggressive traders might consider buying LEAPS here near $6.00 but I'd consider raising my stop loss. The short-term trend is still down.
Our stop loss is at $5.45. Our target is the $14.00-16.00 zone.
May 13th, 2009 - entry price on DRYS @ 6.50, option @ 1.50
symbol: KOO-AY, 2010 JAN $10 LEAP call - current bid/ask $1.00/1.10
-stop loss on DRYS @ 5.45
May 13th, 2009 - entry price on DRYS @ 6.50, option @ 0.85
symbol: KOO-AZ, 2010 JAN $15 LEAP call - current bid/ask .40/0.50
-stop loss on DRYS @ 5.45
Chart of DRYS:
DXO $4.44 -0.12 -- Deutsche Bank Double-long Oil ETN
As oil consolidated sideways the DXO spent the week drifting lower. Volume has been very light but most of the short-term technical indicators have turned bearish. Friday's decline was likely due to the DXO rolling out of 2009 July futures and into 2010 July futures. Since 2009 July futures expire after the close on Monday the selling could continue.
Short-term I'm not suggesting new positions at this time. I would watch for potential entry points in the DXO in the $3.50-3.00 zone.
Prior comments on this play:
The DXO is our long-term oil position. When we say long-term we're talking two or three years (or more). Currently the plan is to build a long-term position averaging down on dips. The $2.50 region is the sweet spot to buy the DXO. Anything under $2.50 is a gift.
I want to repeat that this is not a trade. It's a multi-year investment. Currently our exit target is the $25.00 to $30.00 zone.
The Crude oil double-long ETN (exchange-traded note) offers investors two times the leveraged exposure to the monthly performance of the Deutsche Bank optimum yield crude oil index plus the monthly TBill index return.
Basically, when oil was $147 a barrel this ETN was $29.65. If oil returns to the $150 range over the next few years this ETN could rally to $30 for a 1500% return. This ETN does not expire. It can be used in IRAs and has no margin requirements like crude oil futures.
Deutsche Bank ETN Fact Sheet
Deutsche Bank Pricing Description
Our plan called for buying this ETN instead of the options.
Current position in the DXO = $2.15 entry (no stop loss at this time)
Chart of DXO
ERTS $20.72 +0.20 -- Electronic Arts
It's been a rough few weeks for ERTS. Early June saw the stock topping out under its 200-dma near $23-24. The last two weeks shares have been consolidating lower. In just the last few days ERTS has broken down under its bullish channel and its 50-dma. I will repeat that I would be tempted to buy LEAPS near $20.00 but in this market I'd rather wait for a dip near the 100-dma currently near $19.00.
Our stop loss is $16.90. The $17.50 zone should offer support if ERTS falls that far. We have two targets. We want to take part of the position off the table at $29.00. Take the rest off at $34.00.
April 20th, 2009 - entry price on ERTS @ 18.00, option @ 1.08
symbol: WZW-AE, JAN 2010 $25 LEAP call - current bid/ask $1.35/1.45
-stop loss on ERTS @ 16.90.
April 20th, 2009 - entry price on ERTS @ 18.00, option @ 0.70
symbol: WZW-AF, JAN 2010 $30 LEAP call - current bid/ask .40/0.55
-stop loss on ERTS @ 16.90.
Chart of ERTS:
FAS $ 9.53 +0.40 - Direxion Fincl.Bull 3x ETF
Last week was volatile for the FAS with a drop from $10.50 to almost $8.40 in the first three days. Traders did start buying the dip in financials but the bullish trend of higher lows has been broken. Our concern now would be seeing the oversold bounce roll over under short-term moving averages and confirm the breakdown.
Currently we have sold one third of our position at $12.00 and we plan to see another third at $24.00. We'll re-evaluate our final target for the last third of our position as needed.
I am not suggesting new long-term bullish positions in the FAS at this time. We'll reconsider once it looks like any correction is ending.
The triple-leveraged FAS is based off the $RIFIN index. The $RIFIN has broken through significant resistance at the 600 level this past week. Broken resistance should start acting as new support.
Our plan called for buying the ETF instead of the options.
Current position in the FAS = $2.64 entry (stop loss: 2.64)
Current target to exit is $12.00, $24.00, and TBD
Exit 1/3 position @ 12.00 (+354%)
Chart of FAS
Chart of RIFIN (Russell 1000 financial services)
FSLR $173.46 +3.21 -- First Solar
Solar energy stocks had a rough week as they followed the rest of the energy complex lower. FSLR broke down from its trading range but the stock has been forecasting this breakdown for days. Unfortunately the oversold bounce is stalling and it looks like a short-term bearish candidate. We can watch for new support in the $160-150 zone.
I don't have anything new to say about our FSLR strategy. The April 30th rally in this stock has pretty much sealed the deal for us.
Here's a repost of our April 30th, 2009 trade recap:
The covered-call trade is now at maximum profit. We bought FSLR at $128.00 and sold the 2010 $150 LEAP for $40.70. After the April 30th move odds are almost guaranteed that we'll be called out but we have to leave it in our portfolio until we are. Profit if called is $40.70 for the call option we sold and a $22 rise in the stock price (from $128 to $150). Together that's a $62.70 gain on a $128 investment (+48.9%).
Our put-spread play is a position we plan on holding until expiration in January 2010. We bought the 2010 $100 LEAP put for $32.90. We sold the 2010 $250 LEAP put for $135.70. Our net credit was $103 into our account. If you covered on April 30th by buying back the $250 LEAP put (at the time trading around $80.00) our profit would only be about $23.00. That's not our plan. We're holding this position until January 2010 and will buy back the $250 LEAP put then with the expectation it will be worth even less (as the stock continues to climb).
Covered Call position:
Long 100 shares of FSLR @ $128.00
Short 2010 $150 LEAPS Call LZL-AA @ $40.70
Profit if called is $40.70 in option premium + $22 in stock (+49%)
Put Spread position:
Long 2010 $100 LEAPS Put LQM-MT @ $32.90
Short 2010 $250 LEAPS Put LZL-MJ @ $135.70, net credit $103
Currently the 2010 Jan. $100 put is worth $6.40.
The 2010 Jan. $250 put is worth $86.70.
If you're curious the 2010 Jan. $150 call is at $44.10.
Chart of FSLR
GLBL $6.13 -0.07 -- Global Industries
Oil service stocks were a weak spot in the market and GLBL gave up 13.4%. Unfortunately the stock has broken its bullish pattern of lower highs and several key moving averages. The short-term trend is down. I'm not suggesting new bullish positions at this time.
We are not suggesting new bullish positions at this time. Please note that our stop loss is at $3.95. Readers might want to consider the use of a higher stop (maybe near $5.00 or even $5.50 depending on your tolerance for risk). Our target to exit is $8.85.
Our plan called for buying the stock instead of the options.
Our entry point to buy GLBL was hit on January 6, 2009
Current position in GLBL = $4.10 entry (stop loss: 3.95)
Current target to exit is $8.85.
Chart of GLBL:
GT $12.23 +0.15 -- Goodyear Tire & Rubber Co.
GT is a relatively new LEAPS play from two weeks ago. Our premise was that if the economy is weak and consumers are cutting back they'll keep their old cars longer. Thus consumers will take better care of their current vehicles, which would mean newer tires more often. Evidently the market is so weak that GT is taking a $60 million charge for the quarter as the company pares back production and lays off more than 500 workers.
Technically the early June bullish breakout has failed. While shares are bouncing from their rising 50-dma I'm a little hesitant to buy the bounce. Shares could easily retreat toward $10.00 a share. I'd wait for a bounce there before launching new positions. Our stop loss might need to be adjusted a tiny bit lower to give GT room to maneuver around the $10 level should it get that low.
The Point & Figure chart is bullish with a $35.00 target. Our target is $25.00.
June 6th, 2009 - entry price on GT @ 12.94, option @ 2.20
symbol: GT-AC, 2010 $15 LEAP call - current bid/ask $1.55/1.70
-stop loss on GT @ 9.90.
June 6th, 2009 - entry price on GT @ 12.94, option @ 2.65
symbol: VYR-AD, 2011 $20 LEAP call - current bid/ask $1.90/2.20
-stop loss on GT @ 9.90.
Chart of GT:
HES $53.21 -0.79 -- HESS Corp.
The sell-off in oil stocks was painful last week and HES is really looking bad here. Now I'm wishing I'd taken my own suggestion to exit early on the early June sell-off. The recent consolidation failed under the 200-dma and now HES is plunging to new lows on big volume. The stock lost 11% last week and the Point & Figure chart is forecasting a $44 target. The stock does have support near $50.00, which is why we set the stop loss at $49.00. However, I'm seriously considering an early exit probably on a bounce near $58.00. There are plenty of oil stocks for us to trade. We don't have to trade LEAPS on HES.
I am not suggesting new bullish positions in HES at this time.
We're keeping our stop loss at $49.00. Our exit target is $79.00.
April 1st, 2009 - entry price on HES @ 52.50, option @ 7.30
symbol: LAH-AN, 2010 $70 LEAP call - current bid/ask $3.10/3.40
-stop loss on HES @ 49.00.
Chart of HES:
INTC $16.01 +0.14 -- Intel Corp.
Semiconductor stocks spent the week churning sideways. Intel traded in a 50-cent range most of the week. Considering the market's new weakness I would wait for a dip into the $15.25-15.00 zone to open new LEAPS positions but anywhere in the $15.00-17.00 zone will work for longer-term investors. Our target is the $24-26 zone.
FYI: Shares of Intel don't move very fast. Readers might want to consider turning this play into a calendar 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 $1.20/1.25
-stop loss on INTC @ 14.40.
Chart of INTC:
KSU $16.60 +0.03 -- Kansas City Southern
KSU failed to build on the bullish breakout from a week ago. Shares stalled under $18.00 and are now back under resistance near $17.00. The only good news is that the chart for KSU looks a lot more bullish than the charts for the transportation index or the railroad index. The last two have failed near their 200-dma and could be poised for more profit taking.
I could see buying LEAPS on a dip near $16.00, which is where the 50-dma and 100-dma are converging so they should both offer technical support there. More conservative traders may want to inch up their stops. If KSU breaks the trend of higher lows bulls could try exiting in a hurry. Please note that instead of buying the $25 calls I'd probably buy the 2010 January $17.50 or $20.00 calls.
Our target is the $27.50-30.00 zone.
May 9th, 2009 - entry price on KSU @ 17.01, option @ 0.90
symbol: LJR-AE, 2010 LEAP $25 call - current bid/ask .50/0.75
-stop loss on KSU @ 13.90.
Note: KSU actually gapped open lower at $16.64 on Monday, May 11th and the option opened at .90.
Chart of KSU:
MDR $20.54 +0.34 - McDermott Intl. Inc.
The profit taking in MDR was pretty steep last week. Shares lost about 20% from their recent highs. Bulls are starting to buy the dip near $20 and its rising 40-dma but volume has been light. I suspect that MDR could be a target for window dressing before the end of June but I'm not willing to launch new long-term positions here.
Our target to exit is a move into the $30.00-35.00 zone. The Point & Figure chart is bullish and forecasting a $25 target (for now).
April 4th, 2009 - entry price on MDR @ 15.56, option @ 2.70
symbol: YAE-AU, 2010 $20 LEAP call - current bid/ask $3.80/4.00
-stop loss on MDR @ 11.90.
FYI: The symbol has changed from YAE-AU to MDR-AD.
Chart of MDR:
MON $80.73 -1.57 - Monsanto Co.
Shares of MON held up pretty well last week considering the HUGE sell-off in the chemical/agriculture names. Potash (POT) issued an earnings warning midweek that sent the whole group lower. MON lost 6.7% for the week. I remain concerned. The technical picture is turning bearish. One could argue that MON is building the right shoulder to a bearish head-and-shoulders pattern. Investors should turn more defensive. That's going to mean different things to different people. Maybe that means raising your stop. Maybe that means exiting your position early. Maybe the best strategy for you is to buy a short-term put. Our stop loss isn't that far away. I'm not suggesting new bullish positions.
Our stop loss is currently at $76.75. We have two targets on MON. We want to take some profits off the table at our first target of $99.00. Our second target is $115.00. At the moment the Point & Figure chart is forecasting at $96 target.
April 3rd, 2009 - entry price on MON @ 77.00, option @ $7.80
symbol: MON-AC, 2010 $100 call - current bid/ask $3.70/3.90
- stop loss on MON @ 76.75.
Chart of MON:
MSFT $24.07 +0.57 -- Microsoft Corp.
Software titan MSFT continues to show relative strength. Yet the rally is getting pretty long in the tooth here. The stock is up four weeks in a row and the trend, while slow, has been almost straight up. Shares got a boost again on Friday with Goldman Sachs placing the stock on their "conviction buy" list with a $29 target.
Shares are short-term overbought. I would wait for a dip back toward $21.50-21.00 before initiating new positions.
This is going to be a very long-term play as MSFT doesn't move very fast in spite of its recent performance. My long-term target is the $30 region.
June 2nd, 2009 - entry price on MSFT @ 21.60, option @ 2.20
symbol: VMF-AE, 2011 Jan. $25 call - current bid/ask $3.30/3.40
-stop loss on MSFT @ 18.40.
Chart of MSFT:
MT $33.33 +0.98 -- ArcelorMittal
MT was a watch list candidate and we had a trigger to buy LEAPS at $30.50. The stock saw a correction from $37.25 down to $30.45 as shares hit our trigger on June 17th. The stock has already begun to bounce but traders need to be aware that MT is a volatile stock.
There appears to be some disagreement over the future of the steel industry. Last week Moody's offer some negative comments for the group while J.P.Morgan Chase issued positive comments. If the global economy is truly rebound then steel and steel producers should continue to improve. I would look for dips near $30 as potential entry points. Please note that I would only buy the $40 strikes at this point. The $50s might be too aggressive. Our target is the $50 region. We'll use a stop loss at $24.45.
June 17th, 2009 - entry price on MT @ 30.50, option @ 2.70
symbol: LLU-AH, JAN 2010 $40 call - current bid/ask $3.50/4.00
-stop loss on MT @ 24.45.
June 17th, 2009 - entry price on MT @ 30.50, option @ 2.00
symbol: LLU-AJ, JAN 2010 $50 call - current bid/ask $1.40/1.65
-stop loss on MT @ 24.45.
Chart of MT:
NYX $28.33 +0.26 -- NYSE Euronext
NYX had been overbought for weeks and shares are starting to correct. The stock has already seen a 15% pull back off its highs near $32.00. It may not be enough. A 38.2% Fibonacci retracement would be a dip near $25.50. I'm not suggesting new positions at this time.
Our long-term target is the $35.00-40.00 zone but shares have been so strong I'm seriously considering raising the target. The P&F chart's bullish target has risen from $37 to $49.
FYI: On Thursday, June 18th NYX announced a joint venture with the DTCC for a fixed-income derivatives clearing house. Here's an excerpt from the press release:
NYSE Euronext and The Depository Trust & Clearing Corporation (DTCC) today agreed to create a joint venture for clearing U.S. fixed income derivatives. The new clearing house, New York Portfolio Clearing, "NYPC", will combine the industry-leading capabilities of NYSE Euronext's U.S. futures exchange (NYSE Liffe U.S.) and DTCC's Fixed Income Clearing Corporation (FICC) to offer innovative risk management, clearing and settlement efficiencies for U.S. fixed income securities and derivatives. The initiative has been approved by the Boards of both companies and is expected to be operational in the second quarter of 2010, subject to definitive documentation and regulatory approval.
Margining cash and derivatives in a "single pot," NYPC will bring together cash positions and their natural derivatives hedge in a manner designed to substantially improve operational and capital efficiency. It will provide a single view of risk across asset classes. As a result, NYPC intends to offer an unprecedented level of market transparency that can be used to identify and moderate systemic market risks. It is expected to facilitate more orderly risk mitigation and reduce settlement risks.
Apr. 11th, 2009 - entry price on NYX @ 21.51, option @ $1.81
-- YVX-AU, 2010 $30.00 LEAP call - current bid/ask $3.45/3.55
-stop loss on NYX at $17.99
Chart of NYX:
PBR $40.29 +0.50 -- Petroleo Brasiliero
PBR lost about 10% last week. The correction isn't that worrisome. Shares were already overbought. What should make investors cautious is the bearish double-top that PBR has formed at the $46.00 level. That and the new P&F chart sell signal pointing to a $33 target. I am suggesting readers wait for a dip near the $36-35 zone.
The plan is to sell half our position at $49.50 and the rest at $57.50.
Apr. 4th, 2009 - entry price on PBR @ 35.10, option @ $2.80
symbol: PMJ-AJ, 2010 $50.00 LEAP call - current bid/ask $2.50/2.70
-stop loss on PBR at $29.00
Chart of PBR:
PCU $21.34 -0.10 - Southern Copper Corp.
PCU is another stock that gave up 12% last week. Shares dipped enough to fill the gap from early June. It was also a big enough correction to tag the bullish trend of higher lows. I would be tempted to buy new LEAPS here but we might bet a better entry point a dip near $20.00 instead.
Our target is $30.00.
April 20th, 2009 - entry price on PCU @ 19.00, option @ 1.95
symbol: YPV-AE, JAN 2010 $25 LEAP call - current bid/ask $2.20/2.35
-stop loss on PCU @ 16.45.
Chart of PCU:
SLB $55.35 -0.40 -- Schlumberger Ltd.
Profit taking in the oil service stocks was pretty strong. SLB gave up 8% last week but the selling seemed to stall near the $55.00 level and its exponential 200-dma. Would I buy LEAPS on the dip here? Probably not but SLB's trend looks stronger than a lot of its peers.
Currently our exit strategy has three parts. The plan is to sell one third of our position at $59.00, which was originally our first target. We'll sell another one third at $69.00. We'll exit our final third at $77.50.
April 20th, 2009 - entry price on SLB @ 45.01, option @ 3.00
symbol: WUB-AL, JAN 2010 $60 LEAP call - current bid/ask $5.80/6.10
-stop loss on SLB @ 44.90.
FYI: The symbol has changed from WUB-AL to SLB-AL.
1st exit @ $59.00 (1/3 of position) option @ $7.25 (+141% estimate)
Chart of SLB:
UNG $15.16 -0.13 - U.S. Natural Gas ETF
Last Tuesday the UNG gapped open higher at $16.26. This was a move above resistance at $16.00 and technical resistance at its 100-dma. We had a trigger to buy LEAPS at $16.25. The play was opened. Unfortunately the rally failed and shares quickly retreated. Even more unfortunate was how the spike in the ETF produced a spike in the option price, which opened at $3.90 on Tuesday.
The last few days I've been reading more negative comments about the short-term glut of natural gas, which leads me to believe the UNG might retest the $14.00 or even $13.00 levels. I'm suggesting readers wait for a decline toward $14.00 before considering new positions. If it reverses higher then we can jump in above $16.50.
This is a long-term trade. We are making an 18-month bet that natural gas has bottomed or is in the process of bottoming. I'm removing our stop loss for this trade. More cautious traders will obviously want to reconsider. My suggested stop was $12.60 under the 2009 lows. Our long-term target is the $25-30 zone.
June 16th, 2009 - entry price on UNG @ 16.26, option @ 3.90
symbol: ZZM-AT, JAN 2011 $20 LEAP call - current bid/ask $3.30/3.40
-stop loss on UNG @ no stop
Chart of UNG:
UYG $4.00 +0.13 - ProShares Ultra Financials (2x) ETF
It might be time to turn defensive on the financials. Most of the financial indices and ETFs have all broken their bullish up trend of higher lows. The group began to bounce on Thursday but the concern now is if this rebound rolls over under short-term resistance and confirms the trend change.
We shouldn't be too worried. This sector has been overbought for weeks and due for a correction. I dip toward $3.00 might be a new entry point.
Please note that we have set our stop loss on UYG at breakeven at $1.50. More conservative traders might want to consider a stop near $2.00 or $2.25.
Don't forget that the UYG trades off the DJUSFN index. Currently the picture is mixed for the DJUSFN. The trend of higher lows is still in place but this index just tested its 200-dma on Friday and pulled back.
At the moment we're thinking a very long-term UYG target (emphasis on long) at $13.00 and then at $24.00 (very long term). I'd scale out half at $13.00 and hold on to the rest until $24.00. I have to honest with you it's going to be extremely tough to not exit early at say $7.00 or maybe $9.75. We'll have to adjust our expectations based on how the financials are doing in the second half of 2009.
Our plan called for buying the ETF instead of the options.
Current position in the UYG = $1.50 entry (stop loss: 1.50)
Current target to exit is $13.00 and $24.00 (could change)
Chart of UYG: