Dropped Plays


CHK. We are closing the Chesapeake Energy position.


Play Updates


Editor's Note:

The S&P 500 index has been trading sideways the last several weeks. Meanwhile many of our LEAPS candidates have already seen a substantial correction. If the S&P 500 does break support near 880 the next couple of months could end up being very painful for bullish investors like ourselves. I am suggesting that investors try and protect or hedge your positions. You can choose to buy short-term put options on stocks that you own LEAPS or you might do well to buy shorter-term S&P 500 index put options or puts on the S&P 500 ETF (the SPDRs, symbol: SPY).


ACGY $10.18 -0.32 -- Acergy S.A.

ACGY displayed relative strength with a 6% gain last week. Shares have continued to bounce following the dip to its 38.2% Fib retracement around June 22nd. Investors need to be aware that ACGY is expected to report earnings on Wednesday, July 15th but it's an unconfirmed date.

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 $1.95/2.20
-stop loss on ACGY @ 6.95

Chart of ACGY


ACI $14.78 -0.45 -- Arch Coal Inc.

I am growing more concerned over the action in ACI. This coal producer's stock has been consolidating sideways the last several days. The action on Wednesday-Thursday last week is suggesting the next move is going to be another breakdown. I've been warning readers that ACI could slip toward $14.00 or its trendline of higher lows but that doesn't mean you want to ride it lower. The Point & Figure chart has turned bearish and is currently forecasting a $9.00 target.

More conservative traders may want to contemplate an early exit. On the other hand more aggressive traders may want to move their stop loss under the late April low ($12.52) or the early March low ($11.77). I am not suggesting new bullish positions at this time but we'll be watching for a bounce from its trendline (see chart). 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 .35/0.45
-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 $1.05/1.25
-stop loss on ACI @ 12.85

Chart of ACI:


BAC $12.64 -0.41 - Bank of America Corp.

Banking stocks were under performers on Thursday. I suspect it was just short-term traders taking profits in a light volume environment. The pull back in BAC is not a surprise following a test of technical resistance at its 200-dma. The trend is still up but BAC could be building a bearish pattern of lower highs now (see chart). I'm not suggesting new positions at this time. Wait and watch for a potential correction toward $10.00 or even the $9.00 (50% retracement) level.

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 $5.00/5.15
-stop loss on BAC @ none.

Chart of BAC


CRM $38.16 -0.75 -- Salesforce.com

The action in CRM is turning bearish. Investors sold the breakout in mid June. Now they're selling the bounce near $40.00. The stock has developed a bearish trend of lower highs. More conservative traders may want to cut their losses early right now. If you do you can probably exit without a loss on the 2010 $40 LEAP and still make a profit on the $45 LEAP. I'm not suggesting new positions at this time. We can look for potential support at the 100-dma or at the $35.00 level. Traders may want to raise their stops toward $35.00.

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 $4.30/4.50
-stop loss on CRM @ 32.45.
(note: readers have reported getting a better entry price than $4.30)

-or-

April 1st, 2009 - entry price on CRM @ 30.00, option @ 2.00
symbol: CRM-AI, JAN 2010 $45 LEAP call - current bid/ask $2.45/2.60
-stop loss on CRM @ 32.45.

Chart of CRM:


CRS $20.06 -0.83 -- Carpenter Technology

I have to issue a bearish reversal warning for CRS. The oversold bounce failed near $22.00 and a number of moving averages on Wednesday. It also looks like the right shoulder to a bearish head-and-shoulders pattern. If CRS breaks down under $18.50 then the H&S pattern would be forecasting a drop back toward support near $12.00. I mentioned the prospect of an H&S pattern last weekend. I am raising our stop loss to $17.90. This way CRS has to breakdown under its 200-dma, 100-dma and the $18.00 level to close this play. More conservative traders are probably better off just exiting early right now.

We have two targets. Our first target to take profits is $29.85. Our second target is $34.90.

June 17th, 2009 - entry price on CRS @ 20.25, option @ 3.00
symbol: CRS-LE, DEC 2009 $25 call - current bid/ask $1.25/1.45
-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 .40/0.55
-stop loss on CRS @ 17.45.

Chart of CRS:


DBA $25.06 -0.66 -- PowerShares DB Agriculture ETF

DBA displayed some end-of-quarter volatility on Tuesday with a sharp spike down in the first couple of hours of trading. The weak-dollar/strong commodity relationship has been breaking down a little the last couple of weeks. A weak dollar should be bullish for any commodity traded in dollars so the trend should reassert itself. I would still launch positions in the DBA right now but readers might want to wait for a bounce over $26.00 to confirm the larger up trend. 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 .55/0.65
-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 .95/1.35
-stop loss on DBA @ 23.90.

Chart of DBA:


DO $77.70 -4.15 -- Diamond Offshore

We have been waiting for a correction in DO for weeks. Yet the stock didn't just hit our trigger it jumped right over it and collapsed under support at its 50-dma, the exponential 200-dma, and at the $80.00 level. It was our plan to buy LEAPS at $81.00. When the market opened on Thursday DO gapped open at $80.08 and quickly fell toward $78.00.

This action is VERY bearish and I am not suggesting new positions at this time. Given the action in the oil sector and oil services I would expect DO to hit $75.00 and potentially the $71-70 zone. Do not open positions at this time.

As a matter of fact I am suggesting readers sell your LEAPS if you did open positions on Thursday. The 2010 Jan. $90 calls opened at $7.40 and they're trading at $6.90. Take the 50-cent loss now because it could be a lot cheaper in a few days. The 2010 Jan. $100 calls is a tougher pill to swallow. It opened at $7.30 but is currently trading at a bid of $3.70. Instead of selling these now let's take the chance that DO fills the gap down from Wednesday's close. Then we can sell these at $81.00.

We are still long-term bullish on oil and oil services but I suspect the market is going to correct within the next few weeks. I'm adjusting our entry point to open new LEAPS positions to $72.50 and our stop loss will be $67.45. We want to sell our position at $99.00.

July 2nd, 2009 - entry price on DO @ 80.08, option @ 7.40
symbol: KWJ-AR, 2010 JAN $90 LEAP call - current bid/ask $6.90/7.40

*We want to SELL these now and take the 50-cent loss.

-or-

July 2nd, 2009 - entry price on DO @ 80.08, option @ 7.30
symbol: KWJ-AT, 2010 JAN $100 LEAP call - current bid/ask $3.70/4.30
- stop loss on DO @ 67.45

**We want to sell these on a bounce at $81.00 to cut our losses early.

-NEW- Buy the dip trigger: $72.50

BUY 2010 JANUARY $80 CALL (symbol: KWJ-AP)
-or-
BUY 2010 JANUARY $90 CALL (symbol: KWJ-AR)

Chart of DO:


DXO $4.13 -0.19 -- Deutsche Bank Double-long Oil ETN

The action in crude oil over the last couple of weeks has grown increasingly bearish. If you have been waiting for an entry point we might get it soon. Look for a correction back to the $3.65-3.30 zone. That's where I would start contemplating a new bullish entry point (or just stick to my previous suggestions 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 $21.40 -0.54 -- Electronic Arts

The oversold bounce that began two weeks ago continued and ERTS reclaimed its 200-dma. Unfortunately the action over the last three trading sessions almost looks like a bearish reversal. I am not suggesting new positions at this time.

I am raising our stop loss to $17.95, which is still under the 61.8% Fibonacci retracement of its March-June rally. 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 $ 8.34 -0.83 - Direxion Fincl.Bull 3x ETF

Alert! FAS is poised to move lower. I warned readers a week ago that the FAS had broken its bullish trend. Now the oversold bounce is rolling over. We've been expecting a correction for a long time. The FAS could easily contract back toward the $6.00 region. I'm not suggesting new bullish positions at this time.

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.

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 $49.72 -0.85 - Freeport McMoran

In the last few weeks there have been conflicting analyst reports on the future of copper. Currently copper and the copper mining stocks like FCX should be benefiting from a weak U.S. dollar, which will help buoy copper prices. Long-term, as the global economy recovers, copper demand will increase and copper will rise. What concerns me is short-term. If investors start to think the economic recovery is going to be delayed then they could start selling copper and the miners.

The S&P 500 index is forming what appears to be a bearish head-and-shoulders pattern. I'm starting to see a similar pattern in FCX. Last week's failed rally could be the top of the right shoulder. More conservative traders may want to raise their stop loss toward $45.00 to really reduce your risk. I am raising our stop loss to $39.45, which is under the longer-term trendline of higher lows. I am not suggesting new bullish positions at this time. 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 $6.65/6.80
-stop loss on FCX @ 39.45
-or-
June 22nd, 2009 - entry price on FCX @ 46.00, option @ 10.00
symbol: OBQ-AL, 2011 JAN $60 LEAP call - current bid/ask $10.60/10.85
-stop loss on FCX @ 39.45

Chart of FCX:


FSLR $154.20 -1.09 -- First Solar

Solar stocks continue to sell-off. It may be a function of weakness in crude oil, which tends to lead the entire energy sector even alternative energy. FSLR has now broken what should have been support near $160 and is close to testing potential support near $150 and its 200-dma.

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 $6.50.
The 2010 Jan. $250 put is worth $97.70.
If you're curious the 2010 Jan. $150 call is at $28.40.

Chart of FSLR


GLBL $5.57 -0.17 -- Global Industries

I remain very cautious on GLBL. Oil and oil service stocks continue to retreat. The oversold bounce in GLBL has failed at resistance near $6.00. If you look at an intraday chart (say a 30-minute chart) the recent consolidation almost looks like 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 loss or an early exit to lock in a gain. 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 $11.47 +0.01 -- Goodyear Tire & Rubber Co.

I remain cautious on GT with the May and June peaks looking like a bearish double top. The stock spent the last week consolidating sideways and failed to sell-off with the rest of the market on Thursday. 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 .95/1.00
-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 $1.05/1.50
-stop loss on GT @ 9.90.

Chart of GT:


HES $49.65 -3.46 -- HESS Corp.

HES has continued to show relative weakness ever since the early June failed rally and reversal. The oversold bounce from $50 has failed at $55.00 and now shares are breaking down even further. It's almost guaranteed that HES will hit our stop loss at $49.00 on Monday and close this play. The breakdown under support at $50.00 would suggest HES will contract toward the $40-35 zone. I am not suggesting new bullish positions in HES at this time.

April 1st, 2009 - entry price on HES @ 52.50, option @ 7.30
symbol: IGG-AN, 2010 $70 LEAP call - current bid/ask $1.80/1.95
-stop loss on HES @ 49.00.

Note the symbol changed from LAH-AN to IGG-AN.

Chart of HES:


HOS $20.49 -1.19 -- Hornbeck Offshore Services

The oversold bounce in HOS didn't make it very far last week. Oil continued to slip and oil stocks were weak. HOS failed at its 10-dma on Wednesday and now looks poised to test the $20.00 level and its 100-dma soon. The stock should have additional support at $18.00, which is why our stop loss is at $17.85.

Please note that while HOS has already seen a sharp correction I'm concerned that if the market and oil do correct that HOS will overshoot to the downside. I would hesitate to open new positions today. Our long-term target is $35.00.

June 27th, 2009 - entry price on HOS @ 21.20, option @ 4.90
symbol: WVG-AD, 2010 JAN $20 LEAP call - current bid/ask $3.80/4.30
-stop loss on HOS @ 17.85
-or-
June 27th, 2009 - entry price on HOS @ 21.20, option @ 2.70
symbol: WVG-AE, 2010 JAN $25 LEAP call - current bid/ask $2.00/2.30
-stop loss on HOS @ 17.85

Chart of HOS:


INTC $16.72 -0.32 -- Intel Corp.

INTC broke out to new multi-month highs last week. More than one analyst firm upgraded INTC and the news was enough to push shares above resistance. Let's hope the company doesn't disappoint when it reports earnings on July 14th. I would wait until after the earnings report before launching new positions. 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 $1.47/1.54
-stop loss on INTC @ 14.40.

Chart of INTC:


JOYG $34.33 -1.92 -- Joy Global Inc.

The action in JOYG has turned short-term bearish. The stock has failed under resistance near $38.00 for more than a week. At the very least I expect a retest of its low near $33.00 and probably a test of the $30.00 level. Keep an eye on the U.S. dollar, which should begin trending lower again, which will strengthen commodities like copper. 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 $3.80/4.00
-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 $7.30/7.60
-stop loss on JOYG @ 24.75

Chart of JOYG:


KSU $15.97 -0.66 -- Kansas City Southern

The railroad sector still has a bullish trend of higher lows but we should be worried about the transports. The Dow Jones Transportation index just produced a new failed rally/bearish reversal last week. KSU will probably retest its recent lows near $15.00. More conservative traders may want to consider raising their stops, especially if KSU breaks down under $14.75-14.50.

I'm not suggesting new positions at this time but if you do open positions 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 .20/0.45
-stop loss on KSU @ 13.90.

Chart of KSU:


MDR $19.34 -0.81 - McDermott Intl. Inc.

The oversold bounce in MDR is failing and it looks like the correction will continue. We can probably expect a decline toward the $16.50-16.00 zone. I'm not suggesting new bullish positions at this time. Our stop loss is at $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 $3.00/3.20
-stop loss on MDR @ 11.90.

Chart of MDR:


MSFT $23.37 -0.67 -- Microsoft Corp.

Upward momentum in MSFT has stalled and shares have turned sideways. If the market corrects I would expect MSFT to reluctantly follow it lower. 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 $3.00/3.05
-stop loss on MSFT @ 18.40.

Chart of MSFT:


MT $31.89 -1.27 -- ArcelorMittal

MT has been holding up so far but the stock is in danger of breaking its bullish trend of higher lows (see chart). I would expect a dip toward $30.00 but a breakdown under support near $30.00 would definitely be bearish. If you launch new positions 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 $2.55/2.75
-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 .90/1.10
-stop loss on MT @ 24.45.

Chart of MT:


NYX $26.07 -1.28 -- NYSE Euronext

NYX is still correcting. The bounce failed near $28.00 and the stock is now testing support near $26.00. I expect it to break so look for a dip near $23.50. Our stop loss is at $19.95. More conservative investors may want to raise their stop 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 $2.09/2.14
-stop loss on NYX at $19.95

Chart of NYX:


PBR $39.00 -1.48 -- Petroleo Brasiliero

As oil corrects PBR has been slipping toward its long-term trendline of higher lows. I would expect PBR to actually test that trendline this week. If the stock breaks that trend we can look for additional support near $35.00. 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 $1.60/1.70
-stop loss on PBR at $29.00

Chart of PBR:


PCU $19.59 -0.79 - Southern Copper Corp.

Mining stocks are starting to breakdown as investors worry that the economic recovery may be farther off then previously expected. The U.S. dollar should continue its declining trend, which is bullish for commodities and thus the miners but for now investors are still taking profits. I would expect a dip toward $17.00 and its 200-dma. I'm not suggesting new bullish positions at this time. If we do see another bullish entry point 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 $1.35/1.50
-stop loss on PCU @ 16.45.

Chart of PCU:


RIG $70.74 -2.73 -- Transocean Ltd.

RIG has finally hit our entry point with Thursday's breakdown. The stock gapped open lower at $71.80 and dipped to $69.58 intraday. Our trigger to buy LEAPS was the $70.50-67.50 zone. While our play is open I am strongly suggesting that readers wait to open new positions. Looking at the weakness in oil stocks I suspect that RIG will dip to $67.50 at a minimum and probably decline towards $62.50. Therefore I would wait to buy dips in that zone (67.50-62.50). I am adjusting our stop loss to $59.90. Our target is $98.50.

July 3rd, 2009 - entry price on RIG @ 70.50, option @ 5.40
symbol: RIG-AP, JAN 2010 $80 call - current bid/ask $5.10/5.40
-stop loss on RIG @ 59.90.

-or-

July 3rd, 2009 - entry price on RIG @ 70.50, option @ 3.90
symbol: RIG-AZ, JAN 2010 $85 call - current bid/ask $3.70/3.90
-stop loss on RIG @ 59.90.

Chart of RIG:


SGY $6.94 -0.61 -- Stone Energy Corp.

SGY delivered a bounce from $6.20 to almost $7.70 in little more than a week. Unfortunately the stock just erased a big portion of those gains with an 8% sell-off. If crude oil corrects SGY could breakdown under the $6.00 level. I'm not suggesting new positions at this time. 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 .80/1.00
-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 $52.55 -1.73 -- Schlumberger Ltd.

SLB is testing support in the $51.00-50.00 zone. After several days of failing at resistance near $56.00 I'm concerned that the correction still has farther to fall. I would expect a dip toward the $47.50 area.

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 $3.60/3.80
-stop loss on SLB @ 44.90.

1st exit @ $59.00 (1/3 of position) option @ $7.25 (+141% estimate)

Chart of SLB:


UNG $13.11 -0.57 - U.S. Natural Gas ETF

It was not a good week for commodities, especially oil and natural gas. The UNG natural gas ETF has broken down from its pennant formation. With this new bearish breakdown we can expect new relative lows. More conservative traders will want to seriously consider an early exit right now or use my suggested stop loss at $12.60 under the April lows.

Big picture natural gas is in the process of making long-term lows here but that doesn't mean the commodity won't get more oversold first (and the UNG will probably hit new multi-year lows as well). Readers can choose to either ride out this decline since our time frame is about 18 months or you can exit now and look to re-enter when it looks like the UNG has bottomed. Officially we're going to ride out the decline and probably consider adding to positions when the UNG makes a new bottom. I am not suggesting new bullish positions at this time. 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 $2.10/2.30
-stop loss on UNG @ no stop

Chart of UNG:

Weekly Chart of UNG:


UYG $3.65 -0.25 - ProShares Ultra Financials (2x) ETF

We've been waiting for a correction in financials for weeks and weeks. It's finally beginning to happen. The UYG broke its up trend in mid June and now the oversold bounce is rolling over under $4.00. A dip toward $3.00 might be a new entry point but I'd wait for signs of a bounce first.

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:
Weekly Chart of UYG:


WFR $17.49 -0.55 -- MEMC Electronic Materials Inc.

I've been expecting a dip toward the 100-dma, which has now risen toward $17.00. That's too close. We should look for WFR to correct toward $16.00 and potentially lower since the S&P 500 looks ready to breakdown under a bearish H&S pattern. Watch the trendline of higher lows (see chart) and look for a bounce from there. I prefer the $20 strike over the $25s. Please note I'm adjusting our stop loss to $14.75. 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 $2.15/2.35
-stop loss on WFR @ 14.75

-or-

June 23rd, 2009 - entry price on WFR @ 17.50, option @ 3.43
symbol: ZET-AE, 2011 JAN $25 LEAP call - current bid/ask $2.55/2.75
-stop loss on WFR @ 14.75

Chart of WFR:


DROPPED Plays

CHK $18.68 -0.99 - Chesapeake Energy

ALERT! My thought process on CHK has changed in the last week. Natural gas prices are breaking down. My earlier concerns about investors perceiving a glut and selling natural gas and natural gas stocks on fears of falling demand with inventory near record highs are coming true. Don't get me wrong. There is still a large camp of investors and analysts that believe natural gas is making a multi-year low right now and will be much higher in late 2010 and beyond. Unfortunately, the ultimate low may be near $10.00 or in the single digits (speaking for the UNG and not natural gas futures themselves).

The consolidation in CHK near its 100-dma is breaking down. The move looks like a little bear-flag pattern. If it is a flag pattern then CHK looks like it's headed for $14.00. I am suggesting an early exit right now! I'd rather sell now and collect .45-0.50 for the LEAP than see it sink to .10 or .15. I will be moving CHK to our watch list for a new entry point to buy a dip near $14.00. Currently the P&F chart is bearish with a $13.00 target.

April 9st, 2009 - entry price on CHK @ 21.00, option @ 2.00
symbol: HKW-AF, JAN 2010 $30 LEAP call - current bid/ask .45/0.55
-stop loss on CHK @ 16.40.

Exit on July 4th, 2009 @ .45

Chart of CHK: