Dropped Plays


DRYS hit our stop loss last Monday and we posted the closing update in the intraday week letter on June 23rd.

MON broke down under support and hit our stop loss on a disappointing earnings report.


Play Updates


ACGY $ 9.60 +0.34 -- Acergy S.A.

After a very painful mid June sell-off the oil and oil service stocks delivered an oversold bounce. ACGY had tagged its 38.2% Fibonacci retracement level before finally bouncing. Now shares are testing potential resistance near $9.50 and its exponential 200-dma.

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: QLS-AB, 2010 JAN $10 LEAP call - current bid/ask $1.65/1.90
-stop loss on ACGY @ 6.95

FYI: The symbol has changed from LGQ-AB to QLS-AB.

Chart of ACGY


ACI $15.35 -0.24 -- Arch Coal Inc.

The same sell-off that crushed oil stocks hit the coal stocks pretty hard. ACI began to see an oversold bounce last week after touch a low of $14.46. Now the stock faces potential resistance at $16.00 and its 50-dma. I would be tempted to buy ACI here with shares off more than 25% from their June highs but with the market trending sideways there's a chance that ACI could slip toward $14.00 or its trendline of higher lows (see chart). I'm raising our stop loss to $12.85. FYI: If you do open new positions I would buy the $15 or $20 strikes instead.

May 14th, 2009 - entry price on ACI @ 16.00, option @ 1.30
symbol: ACI-AE, 2010 JAN $25 LEAP call - current bid/ask .50/0.60
-stop loss on ACI @ 12.85

-or-

May 14th, 2009 - entry price on ACI @ 16.00, option @ 2.40
symbol: OSE-AF, 2011 JAN $30 LEAP call - current bid/ask $1.15/1.30
-stop loss on ACI @ 12.85

Chart of ACI:


BAC $12.75 +0.40 - Bank of America Corp.

Traders continue to buy the dip near $12.00 but the last two weeks have developed a trend of lower highs. Overall the larger trend of higher lows is still in place. BAC could be testing significant resistance at its 200-dma soon. 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 $5.10/5.20
-stop loss on BAC @ none.

Chart of BAC


CHK $19.64 +0.03 - Chesapeake Energy

CHK had a rough week, especially on Monday. Last Monday seems like a long time ago but oil futures were expiring and falling fast ahead of expiration. CHK plunged with oil and gas on Monday and dipped to a low of $18.78 on Tuesday. Shares have found some technical support at the rising 100-dma but it could just be an oversold bounce. A lot of investors believe that natural gas is ripe for a rally but fundamentals are not favorable with inventory piling up and demand still soft. Eventually natural demand will pick up and CHK is a leader in this sector but it could be a rough summer. Last week's dip was a test of the 50% retracement so I'm still tempted to buy LEAPS here but I wouldn't be surprised to see a dip toward $18.00 before CHK really bounces. FYI: If you launch new positions I would buy the $25 strike instead of the $30.

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 .65/0.75
-stop loss on CHK @ 16.40.

Chart of CHK:


CRM $38.91 -0.87 -- Salesforce.com

The action in CRM has almost been a mirror image of the NASDAQ only weaker. The market's decline on Monday sent CRM plunging through a number of short-term support levels. Traders finally bought the dip on Tuesday near $36.40. Only now the action on Friday looks like a failed rally under resistance at $40.00.

I am not suggesting new bullish positions. CRM has a trend of higher lows but it's a painful one and shares have developed a stronger trend of lower highs as well. 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: CRM-AH, JAN 2010 $40 LEAP call - current bid/ask $5.00/5.20
-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

-or-

April 1st, 2009 - entry price on CRM @ 30.00, option @ 2.00
symbol: CRM-AI, JAN 2010 $45 LEAP call - current bid/ask $2.95/3.10
-stop loss on CRM @ 32.45.
FYI: The symbol just changed from ODK-AI to CRM-AI.

Chart of CRM:


CRS $20.24 -0.15 -- Carpenter Technology

The correction in CRS has now reached -20% from its June highs. The intraday low last week came very close to tagging the intraday low in May. Is this a double bottom? Or could CRS be forming a bearish head-and-shoulders pattern with the stock poised to create the right shoulder? At this time we don't know. There seemed to be a lot of mixed opinions about the steel and metal industry. The World Bank's new lowered forecast for global GDP last Monday didn't help the bull's case. I am still tempted to buy LEAPS right here but readers may want to raise their stop loss closer to $18.00 or even toward last week's lows (18.69). FYI: If you're launching new positions I would buy the $20, $22.50, or $25.00 strikes.

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 $1.45/1.60
-stop loss on CRS @ 17.45.

-or-

June 17th, 2009 - entry price on CRS @ 20.25, option @ 1.90
symbol: CRS-LF, DEC 2009 $30 call - current bid/ask .55/0.65
-stop loss on CRS @ 17.45.

Chart of CRS:


DBA $25.88 -0.20 -- PowerShares DB Agriculture ETF

Last week produced some volatility in DBA. Shares spiked down to their rising 100-dma on Monday at $25.26. I've been suggesting readers wait for a dip near $25.00 as an entry point. The weakness on Friday was a little surprising because the U.S. dollar is starting to roll over again. That should be bullish for commodities. Volume has been very light the last couple of days so it's hard to put much emphasis on the moves. If you launch new positions I would buy the $27 or $28 strikes.

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 .80/0.90
-stop loss on DBA @ 23.90.

-or-

May 23rd, 2009 - entry price on DBA @ 27.63, option @ 2.25
symbol: ZBV-AI, 2011 JAN $35 LEAP call - current bid/ask $1.35/1.65
-stop loss on DBA @ 23.90.

Chart of DBA:


DXO $4.31 -0.12 -- Deutsche Bank Double-long Oil ETN

Crude oil expiration last Monday produced some downward volatility in oil prices. The DXO dropped to $4.10 and spent the rest of the week producing an oversold bounce. Oil continues to look overbought even after the mid June correction but if the U.S. dollar continues its journey lower oil should find strength.

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.

ETN Info:

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 $20.90 -0.15 -- Electronic Arts

After more than two weeks of declines ERTS finally found support near $20.00. Unfortunately the oversold bounce is finding resistance near its 40 and 200-dma. Last week I said buying LEAPS near $20.00 should work but I'd rather wait for a dip near its rising 100-dma. Currently the 100-dma is near $19.40 and the intermediate trend is still down. If you decide to open new positions at this time I would buy the $22.50 or $25.00 strikes not the $30s.

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 $1.25/1.35
-stop loss on ERTS @ 16.90.

-or-

April 20th, 2009 - entry price on ERTS @ 18.00, option @ 0.70
symbol: WZW-AF, JAN 2010 $30 LEAP call - current bid/ask .35/0.45
-stop loss on ERTS @ 16.90.

Chart of ERTS:


FAS $ 9.15 +0.17 - Direxion Fincl.Bull 3x ETF

The bullish trend for a lot of financials, including the FAS, has been broken. The $RIFIN index found support at the 600 level and is bouncing but for now it's just an oversold bounce.

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)


FCX $50.55 -0.20 - Freeport McMoran

Last week the correction in FCX dipped enough to hit our trigger for LEAPS at $46.00. Shares actually fell to $45.00 before bouncing. The U.S. dollar is beginning to roll over again and that should be good for commodity prices like copper and gold, which is good for FCX. If you missed the entry point look for another dip near $46-45 or its trendline of higher lows (see chart). Although if FCX does return toward $45.00 I'll worry that it's building a bearish head-and-shoulders pattern. We have a very wide stop loss because FCX can be so volatile. You may want to use a tighter stop. Our long-term target is $69.00.

June 22nd, 2009 - entry price on FCX @ 46.00, option @ 6.00
symbol: FCX-AK, 2010 JAN $55 LEAP call - current bid/ask $7.80/7.95
-stop loss on FCX @ 35.95
-or-
June 22nd, 2009 - entry price on FCX @ 46.00, option @ 10.00
symbol: OBQ-AL, 2011 JAN $60 LEAP call - current bid/ask $11.75/12.00
-stop loss on FCX @ 35.95

Chart of FCX:


FSLR $160.72 +1.24 -- First Solar

More often than not gaps get filled. It's taken about two months but FSLR is now filling the gap from late April. The bottom of this gap should be support. If the $160 level fails then look for FSLR to find support at $150 and its 200-dma. Next week FSLR and the solar sector could find strength as congress just passed the controversial energy and climate bill. It now moves to the senate where democrats will try and pull in the 60 votes necessary to pass it.

I don't have anything new to say about our FSLR strategy. 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 $95.90.
If you're curious the 2010 Jan. $150 call is at $33.70.

Chart of FSLR


GLBL $5.70 +0.14 -- Global Industries

The plunge in oil and oil service stocks in mid June took GLBL to a low of $5.16. Shares finally produced an oversold bounce but it's hard to say if this is a new bottom or just a bear-flag pattern.

I am 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 $11.22 -0.04 -- Goodyear Tire & Rubber Co.

The trend has turned bearish for GT. Last week's sell-off pushed GT toward its mid May lows and now there is a clear pattern of lower highs. I don't see any changes from my previous comments on GT. I'm not suggesting new positions at this time. The Point & Figure chart is still bullish with a $35.00 target but it's on the verge of reversing lower. 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 $1.00/1.10
-stop loss on GT @ 9.90.
-or-
June 6th, 2009 - entry price on GT @ 12.94, option @ 2.65
symbol: VYR-AD, 2011 $20 LEAP call - current bid/ask $1.35/1.80
-stop loss on GT @ 9.90.

Chart of GT:


HES $54.28 -0.35 -- HESS Corp.

After plunging to support near $50.00 HES finally produced an oversold bounce. Now shares are facing short-term resistance at $55.00. If HES rolls over under $55.00 more conservative traders may want to exit early. For now support at $50.00 is holding but if HES tests this level again I do not expect it to hold.

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 $3.20/3.40
-stop loss on HES @ 49.00.

Chart of HES:


INTC $16.29 -0.02 -- Intel Corp.

Tech stocks have been pushing higher in spite of weakness in the semiconductor sector. The SOX index topped out in early June and just tagged its 38.2% Fibonacci retracement level last week. The group produced an oversold bounce and if we see traders start buying the dips again then semis may help lift this market higher.

Intel has been holding up pretty well. Traders bought the dip near short-term support at $15.60 last week. Thursday's rally pushed INTC above its exponential 200-dma. The relative strength is encouraging. 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 $1.34/1.39
-stop loss on INTC @ 14.40.

Chart of INTC:


JOYG $36.55 -0.17 -- Joy Global Inc.

JOYG, much like FCX, sold off sharply in mid June as commodities contracted. JOYG hit our trigger to buy LEAPS in the $33.00-30.00 zone last week. If the U.S. dollar continues to roll over that should be bullish for commodities and thus JOYG. Our stop loss on this play is at $24.75. Our first target is $48.50.

June 22nd, 2009 - entry price on JOYG @ 33.00, option @ 3.80
symbol: JQY-AH, 2010 JAN $40 LEAP call - current bid/ask $5.00/5.20
-stop loss on JOYG @ 24.75
-or-
June 22nd, 2009 - entry price on JOYG @ 33.00, option @ 6.90
symbol: ZMC-AH, 2011 JAN $40 LEAP call - current bid/ask $8.40/9.00
-stop loss on JOYG @ 24.75

Chart of JOYG:


KSU $16.32 -0.24 -- Kansas City Southern

The Monday-Tuesday sell-off last week hit the transports and the railroads pretty hard. Fortunately the railroad sector has recovered and looks poised for more gains. KSU has seen a lot of false breakdowns and breakouts so readers may want to wait for more confirmation with a move over $17.00 or $18.00 before launching positions.

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 .40/0.60
-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 $20.55 -0.13 - McDermott Intl. Inc.

Profit taking last Monday sent MDR to $18.40. The stock recovered and closed unchanged on the week. Unfortunately the two-week correction has done some technical damage. Please note that I'm raising the stop loss to $14.90. Our target to exit is a move into the $30.00-35.00 zone.

April 4th, 2009 - entry price on MDR @ 15.56, option @ 2.70
symbol: MDR-AD, 2010 $20 LEAP call - current bid/ask $3.70/4.00
-stop loss on MDR @ 11.90.

FYI: The symbol has changed from YAE-AU to MDR-AD.

Chart of MDR:


MSFT $23.35 -0.44 -- Microsoft Corp.

MSFT has been pretty resilient. After weeks of gains the stock has started churning sideways in the $23-24 zone. A correction would be normal. I would open new long-term LEAPS positions in the $21.50-21.00 zone.

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 $2.93/2.99
-stop loss on MSFT @ 18.40.

Chart of MSFT:


MT $33.31 +0.00 -- ArcelorMittal

MT tested support near $30.50 again last week. The stock is bouncing and looks like a bullish candidate near the bottom of its bullish channel. I would buy the $40 strike, not the $50s. 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 $3.30/3.80
-stop loss on MT @ 24.45.

-or-

June 17th, 2009 - entry price on MT @ 30.50, option @ 2.00
symbol: LLU-AJ, JAN 2010 $50 call - current bid/ask $1.30/1.50
-stop loss on MT @ 24.45.

Chart of MT:


NYX $28.00 +0.90 -- NYSE Euronext

I am encouraged by the action in the NYX last week. Monday's market sell-off pushed NYX toward support at $26.00. The stock held that support for a few days testing the rising 50-dma. Now it's on the rebound. I'm not suggesting new positions at this time. Please note that I'm raising the stop loss to $19.95. More conservative investors may want to raise theirs toward $22.00 or higher.

Our long-term target is the $35.00-40.00 zone.

Apr. 11th, 2009 - entry price on NYX @ 21.51, option @ $1.81
-- YVX-AU, 2010 $30.00 LEAP call - current bid/ask $2.95/3.00
-stop loss on NYX at $19.95

Chart of NYX:


PBR $40.85 +0.49 -- Petroleo Brasiliero

PBR almost pulled back to its multi-month trendline of higher lows and its exponential 200-dma last week. If you are looking for a new entry point I would still prefer waiting for a dip near $36-35. You'll also want to raise your stop loss. Currently our stop is at $29.00.

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 $2.25/2.40
-stop loss on PBR at $29.00

Chart of PBR:


PCU $20.70 -0.31 - Southern Copper Corp.

The correction in commodities has been very sharp. PCU fell from $25 to almost $19. Now shares are seeing an oversold bounce. The longer-term trend is still bullish and with the U.S. dollar slipping lower again commodities should recover. I would buy LEAPS near $20.00 or the rising 100-dma. At this time I would buy the 2010 $20, $22.50 or $25.00 strikes. 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 $1.80/2.10
-stop loss on PCU @ 16.45.

Chart of PCU:


SGY $7.36 +0.29 -- Stone Energy Corp.

SGY hit our trigger to buy the stock or LEAPS on it last week during Monday's market sell-off. The oversold bounce has been pretty strong Our stop loss is $4.90. Our target is $14.75.

June 22nd, 2009 - entry price on SGY @ 6.35, option @ 0.75
symbol: YLO-AB, 2010 JAN $10 LEAP call - current bid/ask $1.05/1.20
-stop loss on SGY @ 4.90

-or-

June 22nd, 2009 - entry price on SGY @ 6.35, (buying the stock)
-stop loss on SGY @ 4.90

Chart of SGY:


SLB $54.48 -0.87 -- Schlumberger Ltd.

The oversold bounce in SLB is running into some resistance near $55.00 and its exponential 200-dma. Shares might retest the $52.00-50.00 zone again. Investors can open new positions in the $52-47.50 zone.

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: SLB-AL, JAN 2010 $60 LEAP call - current bid/ask $5.30/5.50
-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 $14.79 +0.23 - U.S. Natural Gas ETF

UNG provided a new entry point near $14.00 last week. Short-term the markets are still a little worried about oversupply and lackluster demand but these are temporary 2009 problems that will eventually fade away.

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 and keep a stop loss. 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 $2.85/3.60
-stop loss on UNG @ no stop

Chart of UNG:


UYG $3.91 +0.05 - ProShares Ultra Financials (2x) ETF

The financials have been correcting lower in mid June. This last week saw an oversold bounce. I'm not convinced the correction is over yet. The group could roll over or just churn sideways until the second quarter earnings arrive and offer investors more clarity into the health of the banks. A 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 DJUSFN index is still struggling under technical resistance at its 200-dma. I wouldn't be surprised to see it correct back toward 180 or its 100-dma.

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:


WFR $17.96 -0.34 -- MEMC Electronic Materials Inc.

WFR is another watch list candidate that hit our trigger to buy LEAPS during last week's sell-off. Solar energy tends to follow crude oil but that could change next week. Congress just passed the climate and energy bill and now it goes to the senate. If the senate can pass the bill then solar energy companies should be beneficiaries. Please note I'm not offering any political opinion on the bill just what might happen if it passes. I'll let you decide if congress should pass a bill they don't bother to read.

The correction in WFR may not be over yet. Readers can watch for a dip near the 100-dma as a potential entry point. I prefer the $20 strike over the $25s. Our stop loss is at $14.95. Our target is the $30.00 region.

June 23rd, 2009 - entry price on WFR @ 17.50, option @ 2.50
symbol: CJC-AD, 2010 JAN $20 LEAP call - current bid/ask $2.40/2.55
-stop loss on WFR @ 14.95

-or-

June 23rd, 2009 - entry price on WFR @ 17.50, option @ 3.43
symbol: ZET-AE, 2011 JAN $25 LEAP call - current bid/ask $2.70/2.95
-stop loss on WFR @ 14.95

Chart of WFR:


DROPPED Plays

MON $75.25 -0.41 - Monsanto Co.

I continue to hear nothing but positive things about Monsanto but investors were unhappy with the recent earnings report. Shares spiked to their 200-dma on the 24th and immediately reversed hitting our stop loss at $76.75. The action over the last three or four months looks like a bearish head-and-shoulders pattern that is forecasting a drop to the $65.00-62.50 zone.

April 3rd, 2009 - entry price on MON @ 77.00, option @ $7.80
symbol: MON-AC, 2010 $100 call - stopped out around $2.50
- stop loss on MON @ 76.75.

Chart of MON: