ACI $22.26 -0.66 -- Arch Coal Inc.
It was not a good week for ACI. The stock produced a failed rally near $24.00 and broke technical support at the rising 50-dma. News that Goldman Sachs had raised their price target on ACI to $27 had no affect on the stock price. Shares of ACI appear to be building a bearish head-and-shoulders pattern with last week's high as the right shoulder. A breakdown under support at $20.00 would forecast a drop toward $14.00. More conservative traders may want to consider an early exit now. We have a long-term target on this stock so we're going to try and weather the volatility but we'll leave our stop loss at $19.40.
I am not suggesting new bullish positions at this time. Our long-term target is the $30 region.
May 14th, 2009 - entry price on ACI @ 16.00, option @ 2.40
symbol: OSE-AF, 2011 JAN $30 LEAP call - current bid/ask $2.20/2.50
-stop loss on ACI @ 19.40
Chart of ACI:
ANR $40.10 -0.22 - Alpha Natural Resources, Inc.
It looks like the rally in ANR is also running out of steam. Shares reversed at their October highs. Now we have a potential bearish double top pattern. I would expect a pull back toward $35 and possibly the exponential 200-dma. News that Goldman Sachs had raised their price target on ANR to $56 had no real affect on the stock.
I'm not suggesting new bullish positions at this time.
Our long-term target is the $50-60 zone.
Aug. 25th, 2009 - entry price on ANR @ 34.00, option @ 7.00
symbol: VJV-AH, 2011 JAN $40 LEAP call - current bid/ask $9.60/9.90
-stop loss on ANR @ 32.40
bought 1/2 LEAP position on 08/25/09 (option price @ 7.00)
Chart of ANR:
BAC $16.09 +0.01 - Bank of America Corp.
Shares of BAC did not make much progress last week even though billionaire hedge fund manager John Paulson made headlines with his call that BAC could double in the next two years. BAC has been bouncing around different technical levels with overhead resistance at its 40 and 50-dma(s) and support near its 10-dma and exponential 200-dma. If you take a step back it still looks like the oversold bounce has stalled at resistance. If you consider the S&P 500's recent weakness I would be cautious here.
I'm not suggesting new positions at this time. Our long-term target is the $25-30 zone.
Jan 25th, 2009 - entry price on BAC @ 6.24, option @ 2.38
symbol: VBA-AB, JAN 2011 $10 LEAP call - current bid/ask $7.00/7.10
-stop loss on BAC @ 11.90
10/31/09 Sell Half -- option at $6.00 (+152%)
Chart of BAC
CHK $23.03 -0.35 -- Chesapeake Energy Corp.
It turned out to be an ugly week for CHK. The stock is down four days in a row after Monday's rally failed at its 20-dma. Natural gas futures have fallen to new multi-year lows, which is not helping the stock at all. The breakdown under $24.00 in shares of CHK is definitely bearish but the $22.00 level should be additional support with the simple 200-dma. I am adjusting our stop loss higher to 20.95. More aggressive traders may want to keep their stops under $20.00, which should be psychological round-number support. I'm not suggesting new long-term positions at this time.
Our long-term target is $40.00.
Oct 30th, 2009 - entry price on CHK @ 24.00, option @ 4.70
symbol: VEC-AE, JAN 2011 $25 LEAP call - current bid/ask $3.70/3.80
-stop loss on CHK @ 20.95
Chart of CHK:
CNX $46.00 -1.55 -- Consol Energy Inc.
Trading has definitely taken a bearish turn for the worse in CNX. This is another coal stock that's building a bearish head-and-shoulders pattern and if CNX closes under the neckline at $42.00 it will project a bearish target of $32.00. If that wasn't bad enough CNX just produced a short-term bearish double top near $50.00. News that Goldman Sachs had raised their price target on CNX to $58 had no affect at all.
I am adjusting our stop loss higher to $41.00 since the $42.00 level should be support. More conservative traders may want to exit early right now! I'm not suggesting new positions.
CNX has already hit our first target at $48.50. We will plan to sell the second half or our position at $57.50.
Sep 1st, 2009 - entry price on CNX @ 36.50, option @ 7.80(estimate)
symbol: VTL-AH, 2011 JAN $40 LEAP call - current bid/ask $12.30/13.40
-stop loss on CNX @ 41.00
Target hit 09/16/09 @ 48.50, option price $15.40 (+97%)
Chart of CNX
DE $50.83 -0.06 -- Deere & Co.
DE produced some fireworks last week with a bullish breakout over major resistance at the $50.00 level. Shares hit our trigger to buy LEAPS at $51.00 on Wednesday, November 18th. Our estimated entry price on the 2011 January $50 call option is $8.75. I would still consider bullish positions now. However, with the S&P 500 looking vulnerable to more selling pressure I'd probably start with a small position that you can add to over time once the market looks a little stronger.
Our long-term target on DE is $69.50. The Point & Figure chart is bullish with a $66 target. FYI: Readers will want to note that DE is due to report earnings around November 25th. The results could produce some volatility. More cautious traders might want to consider some put protection.
Nov 18th, 2009 - entry price on DE @ 51.00, option @ 8.75(estimate)
symbol: VER-AJ, 2011 JAN $50 LEAP call - current bid/ask $ 8.35/ 8.55
-stop loss on DE @ 44.00
Chart of DE:
EMR $41.68 -0.18 -- Emerson Electric Co.
EMR has managed to keep a relatively bullish posture but the rally did stall last week at its 200-weekly moving average. Traders bought the dip near short-term support at $41.00 on Friday but I wouldn't be surprised to see a dip closer to $40.00 or even back to $38.00 if the market really turns south. Another bounce near $38 and its rising 100-dma is where I'd look for a new long-term entry point. Our target is $47.50.
Sept. 8th, 2009 - entry price on EMR @ 38.00, option @ $4.50
symbol: VHH-AH, 2011 JAN $40 call - current bid/ask $5.80/6.20
-stop loss on EMR @ 33.50.
Chart of EMR:
FSLR $121.18 + 0.05 -- First Solar
FSLR tried another oversold bounce but it's already rolling over. I would focus on potential support at its September 2009 lows near $112.
If that fails I'd look for possible support near $100.
We're not suggesting new positions at this time. Currently we are long the 2010 January $100 put and we have a covered call play that should be fine if FSLR stays above $90.
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%)
if FSLR is above $150.00.
Put Spread position:
Long 2010 $100 LEAPS Put LQM-MT @ $32.90
Short 2010 $250 LEAPS Put LZL-MJ @ $135.70, net credit $103
- Update 08/15/09 -
Cover the 2010 $250 Put at $109.40. Keep the $100 put.
Currently the 2010 Jan. $100 put is worth (bid) $3.20.
If you're curious the 2010 Jan. $150 call is at $ 2.09.
Chart of FSLR
FST $17.68 -0.56 -- Forest Oil Corp.
It has been a truly terrible week for FST. The Monday rally reversed midday and it's been down hill ever since. Shares broke support at $18.00 and at the 100-dma. The early October low was $17.43 and shares hit $17.40 on Friday. The 200-dma near $17.00 should offer a little more support but that means our stop loss at $17.35 is too close. I'm adjusting our stop loss down to $16.85. FST is very short-term oversold and due for a bounce. Unfortunately stocks can always grow more oversold and the broader market doesn't look super strong right here. I'm 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 $3.10/3.50
-stop loss on FST @ 16.85
Chart of FST:
GHM $18.86 -0.13 -- Graham Corp.
GHM extended its gains and hit new 2009 highs over the $20.00 level last week. The relative strength here is very encouraging but the stock is now short-term overbought and probably due for a correction. I'd look for short-term support in the $17.00-16.00 zone.
Our target is $24.00. Our stop is at $12.40.
Oct 26th, 2009 - entry price on GHM @ 15.15, option @ 2.65
symbol: GHM-FC, 2010 JUNE $15 call - current bid/ask $5.00/5.40
-stop loss on GHM @ 12.40
- or -
Oct. 26th 2009 - entry price on GHM (the stock) @ 15.15
- stop loss on GHM @ 12.40
Chart of GHM:
INTC $19.24 -0.06 -- Intel Corp.
It was a rough week for the semiconductor stocks after the sector was downgraded on Thursday. Shares of INTC gapped open lower and fell toward the rising 100-dma on the downgrade. The analyst who issued the downgrade felt that inventories were rising too fast for current demand. I am seeing some bearish divergences between Intel's stock price and some of its technical indicators. It's certainly not a healthy sign for the stock. I'm concerned that last week could be a new lower high in a larger rounded top for INTC. More conservative traders may want to start taking some money off the table now. I would seriously consider closing all or part of the trade if INTC closes under $18.00 but I've been predicting that the stock will eventually fill the gap near $17.00. Shares should have support near the 200-dma and the $16.00 level.
An alternative stop loss strategy would be to put a stop on your LEAPS option instead of focusing on shares of Intel. If you choose this route I'd put the stop at breakeven.
I am not suggesting new long-term positions at this time. Our long-term 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 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 $2.18/2.22
-stop loss on INTC @ 15.90.
Chart of INTC:
MTW $10.56 -0.35 -- Manitowoc Inc.
The rally in MTW is starting to roll over. Shares have found short-term support near $10.50 but I don't think it will hold. If the S&P 500 continues to slide lower we could see MTW dip toward its exponential 200-dma or worse, back to the $8.00 level. I'm not suggesting new 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 $3.30/3.60
-stop loss on MWT @ 7.90
- or -
Oct. 30th 2009 - entry price on MTW (the stock) @ 9.10
- stop loss on MTW @ 7.90
Chart of MTW:
PBR $50.06 -0.98 -- Petroleo Brasiliero
Last week most of the energy sector turned lower. Shares of PBR managed to hit new 2009 highs. It could hold those highs but the stock out performed most of its peers. Unfortunately, if crude oil reverses lower on continued dollar strength PBR may not be able to maintain this strength.
NOTE: I want to repeat some earlier comments. We only have a few weeks left with our options expiring in January 2010. More conservative traders may want to exit early right now to avoid potential losses.
I would continue to look for support in the $46-45 zone. I'm inching our stop loss up to $44.40. I'm not suggesting new bullish positions at this time.
I'm suggesting we sell half our position at $54.50. We'll sell the second half at $59.50.
Apr. 4th, 2009 - entry price on PBR @ 35.10, option @ $2.80
symbol: PMJ-AJ, 2010 $50.00 LEAP call - current bid/ask $3.00/3.15
-stop loss on PBR at $44.40
Chart of PBR:
PEP $62.08 +0.20 -- PEPSICO Inc.
As investors get nervous they're starting to put money into more defensive names and PEP has been able to stay near its 2009 highs. If shares see any profit taking look for support near the rising 50-dma (bottom of the bullish channel). I am not suggesting new bullish positions at this time.
I am adjusting our stop loss up to $54.95. Our exit target is the $69.90 mark.
July 7th, 2009 - entry price on PEP @ 57.25, option @ $4.50(estimate)
symbol: VP-AL, 2011 $60.00 LEAP call - current bid/ask $6.20/6.60
-stop loss on PEP at $54.95
Chart of PEP:
RAI $50.88 +0.08 -- Reynolds American Inc.
Not much has changed for RAI. The stock continues to look strong. Broken resistance at $50.00 should be new support.
I'm not suggesting new positions at this time.
Our second and final target is $57.50.
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 $10.60/11.10
-stop loss on RAI at $43.40
Sold Half on 10/19 @ 49.50, option @ $8.90 (+97%)
Chart of RAI:
RGLD $52.94 -0.34 -- Royal Gold Inc.
Gold has continued to hit new all-time highs in spite of a bounce in the U.S. dollar. Gold miners have continued to climb in gold's shadow. RGLD is also hitting new all-time record highs.
The Point & Figure chart has a new buy signal with a $72 target. Our target to exit is $64.50.
Nov. 7th, 2009 - entry price on RGLD @ 50.70, option @ 7.50
symbol: ZMO-AL, 2011 JAN $60 LEAP call - current bid/ask $7.30/8.10
-stop loss on RLGD @ 41.95
Chart of RGLD
TEX $20.30 -0.80 -- Terex Corp.
Uh-oh! The bulls are in trouble here. Round-number support at $20.00 is holding for now but shares of TEX have broken technical support at their 50-dma. This is a serious break in the stock's bullish up trend. I would expect a dip back toward $18.00. I'm not suggesting new positions at this time.
Our final target is $29.50.
Sept. 11th, 2009 - entry price on TEX @ 18.25, option @ 4.10
symbol: VXQ-AD, JAN 2011 $20 LEAP call - current bid/ask $5.70/6.60
-stop loss on TEX @ 17.75
Sell half (10/24/09), option at $7.50 (+82.9%)
Chart of TEX:
UYG $5.63 -0.06 - ProShares Ultra Financials (2x) ETF
It was a forgettable week for UYG. This financial ETF has been churning sideways. Unfortunately I'm seeing more and more of a bearish title so some of the technical indicators. More conservative traders may want to exit completely right here. I am raising our stop loss to $4.80. More cautious traders could up their stop toward the 100-dma.
I am not suggesting new positions at this time. Our second and final target is $9.50.
FYI: The UYG trades off the DJUSFN index.
Our strategy called for buying the ETF instead of the options.
Current position in the UYG = $1.50 entry (stop loss: 4.80)
10/14/09 Exit - Sell Half @ 6.31 (gap open exit, +320%)
Chart of UYG: