Editor's Note:

It's been a very good week for some of our material/commodity-related plays. Some of the stocks on our list look so overbought that readers may want to take some money off the table right now. You could always jump back in on a correction.


Closed Plays


None. No closed plays this week.


Play Updates


ACI $26.82 +0.04 -- Arch Coal Inc.

It's been an extremely good week for ACI. The stock surged past resistance to close at new 52-week highs. The stock now looks short-term overbought and due for a correction. More conservative investors might want to raise their stops toward $22. I'm adjusting our exit strategy. We want to sell half at $29.75. We'll sell the final half at $34.75. I'd be tempted to buy long-term calls again if we see a bounce near $24.00.

May 14th, 2009 - entry price on ACI @ 16.00, option @ 2.40
symbol: OSE-AF, 2011 JAN $30 LEAP call - current bid/ask $3.40/3.50
-stop loss on ACI @ 19.40

Chart of ACI:


ANR $51.14 +0.75 - Alpha Natural Resources, Inc.

Target achieved. The coal stocks were in rally mode last week and ANR surged from under $45 to over $50. Our first target to take profits was at $49.80 and ANR hit this target on January 6th. I am raising our stop loss to $41.45. Our second and final target is $57.25. ANR is short-term overbought and due for a correction. I am not suggesting new bullish positions at this time.

Aug. 25th, 2009 - entry price on ANR @ 34.00, option @ 7.00
symbol: VJV-AH, 2011 JAN $40 LEAP call - current bid/ask $17.10/20.00
-stop loss on ANR @ 32.40
bought 1/2 LEAP position on 08/25/09 (option price @ 7.00)

01/06/10 ANR hits 1st target at $49.80. Option @ $15.20 (+117.1%)

Chart of ANR:


BAC $16.78 -0.15 - Bank of America Corp.

Banking stocks enjoyed a substantial rally the first week of January. Shares of BAC vaulted from the $15 region toward $17. While BAC has broken some short-term resistance levels you'll notice that the rally stalled at one of its prior trendlines of support. I am raising our stop loss to $14.75. I am not suggesting new long-term LEAPS 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 $7.20/7.30
-stop loss on BAC @ 14.75

10/31/09 Sell Half -- option at $6.00 (+152%)

Chart of BAC


BQI $1.20 +0.03 -- Oilsands Quest Inc.

Crude oil has seen a huge rebound in the last two weeks and yet BQI isn't moving very fast. The short-term trend is up but shares are struggling with technical resistance at the 50-dma and exponential 200-dma. My previous update suggested buying a breakout over the $1.20-1.25 level and shares did trade over $1.20 last week. Based on your own trading style you can wait for a dip toward $1.10-1.05 or wait for a breakout over $1.25-1.30 as your entry point. Our long-term goal is $2.90.

Nov 27th, 2009 - entry price on BQI @ 1.05, (buy the stock)
-stop loss on BQI @ 0.89

Chart of BQI:


CHK $28.91 +0.19 -- Chesapeake Energy Corp.

CHK is another energy stock enjoying the strength in the sector right now. The stock is trading at two-month highs and has yet to breakout past its 2009 resistance near $30.00. I'm concerned that the rally in the OIX oil index and OSX oil services index has stalled right at their 2009 highs and the sector could correct lower. We can expect CHK to follow its peers. Look for a dip toward $25.00, which should be new support. 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 $6.45/6.50
-stop loss on CHK @ 20.95

Chart of CHK:


CNX $56.21 +0.75 -- Consol Energy Inc.

CNX jumped from under $50 to $56.50 last week. The stock is hitting new one-year highs. I'm bullish but shares look short-term overbought. I am raising our stop loss to $44.95. CNX is very close to our second target at $58.50. More conservative traders may want to exit 100% at this level. We have a third, more aggressive target at $64.90. I am not suggesting new bullish positions at this time.

Sep 1st, 2009 - entry price on CNX @ 36.50, option @ 7.80(estimate)
symbol: VTL-AH, 2011 JAN $40 LEAP call - current bid/ask $18.00/19.70
-stop loss on CNX @ 44.95

1st Target hit 09/16/09 @ 48.50, option price $15.40 (+97%)

Chart of CNX


DE $57.63 +1.53 -- Deere & Co.

Shares of DE displayed relative strength on Friday with a bullish breakout from its recent consolidation. The stock looks ready to run higher. I'm upping our stop loss to $48.45. Our long-term target on DE is $69.50.

Nov 18th, 2009 - entry price on DE @ 51.00, option @ 8.75(estimate)
symbol: VER-AJ, 2011 JAN $50 LEAP call - current bid/ask $11.50/11.75
-stop loss on DE @ 48.45

Chart of DE:


EMR $44.06 +0.25 -- Emerson Electric Co.

EMR also broke out to new highs. The stock is slowly marching higher and just crossed potential resistance near $44.00. Our plan is to sell half of our position at our original target of $47.50. We'll sell the rest at $54.50.

Sept. 8th, 2009 - entry price on EMR @ 38.00, option @ $4.50
symbol: VHH-AH, 2011 JAN $40 call - current bid/ask $6.30/6.50
-stop loss on EMR @ 35.90.

Chart of EMR:


FSLR $139.68 -0.80 -- First Solar

This is it! We're down to our last five days before January 2010 options expire. The calls on our covered call play are set to expire worthless and the stock is up over $10 from our entry point. Be careful here with your stock position. FSLR appears to be forming a bearish double top near $140.

I am 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. At this point the $100 put, part of an old spread, is nearly worthless.

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) $0.18.
If you're curious the 2010 Jan. $150 call is at $ 0.47.

Chart of FSLR


FST $25.83 +0.44 -- Forest Oil Corp.

Strength in the oil sector has sent shares of FST soaring. The stock closed at new 52-week highs. Shares are arguably short-term overbought and due for a dip. I am raising our stop loss to $19.49. Our long-term target is $37.50.

Oct 15th, 2009 - entry price on FST @ 23.85, option @ 7.40
symbol: OJG-AD, 2011 $20 LEAP call - current bid/ask $8.10/8.40
-stop loss on FST @ 19.49

Chart of FST:


GHM $20.52 +0.13 -- Graham Corp.

Shares of GHM have spent the last three weeks moving sideways and digesting its previous gains. I am still suggesting readers consider an early exit and take some money off the table. I'm not suggesting new positions.

The spreads on the LEAPS remain horribly wide but they're getting better. As we get closer to June these spreads should narrow. When you choose to exit you may not want to use a market order.

Right now our target to exit is $24.00 but we may want to add a second, higher target.

Oct 26th, 2009 - entry price on GHM @ 15.15, option @ 2.65
symbol: GHM-FC, 2010 JUNE $15 call - current bid/ask $5.70/6.70
-stop loss on GHM @ 15.75

- or -

Oct. 26th 2009 - entry price on GHM (the stock) @ 15.15
- stop loss on GHM @ 15.75

Chart of GHM:


GNK $25.68 +1.20 -- Genco Shipping

Investor appetite for risk has improved and the shipping stocks sailed higher last week. GNK rebounded from under a cloud of resistance near $23 to new four-week highs. I've discussed the problem with oversupply in the shipping industry before. Many analysts are concerned that new ships coming online in late 2010 and early 2011 will push shipping rates lower. I heard one opinion this past week that suggested many of the shipping companies would cancel orders to reduce that risk of oversupply. Looking out over the next few months, if the economy does improve, then I would still expect GNK to benefit.

In summary I would be tempted to buy LEAPS again on a new dip or bounce near $24.00. I am raising our stop loss to $20.95, just under the simple 200-dma. Our plan was to use small positions to keep our risk limited. Our long-term target is $39.00.

Nov 21st, 2009 - entry price on GNK @ 25.46, option @ 5.00
symbol: OKJ-AF, 2011 $30 LEAP call - current bid/ask $3.70/4.10
-stop loss on GNK @ 20.95

Chart of GNK:


HON $42.12 change: +0.91 - Honeywell Intl. Inc.

Industrial good stocks were big winners last week. Shares of HON rallied to new 52-week highs. I am almost tempted to buy LEAPS at this level but I'm still concerned about a potential market correction in January. Our first target to take profits is at $49.00. Our second target is at $54.00.

Dec 11th, 2009 - entry price on HON @ 41.00, option @ 3.25
symbol: VAD-AI, 2011 $45 LEAP call - current bid/ask $2.75/2.90
-stop loss on HON @ 36.85

Chart of HON:


INTC $20.83 +0.23 -- Intel Corp.

Once again we are faced with the choice of taking profits early or buying some short-term put protection. Intel is due to report earnings after the market's close on January 14th. January options expire 24 hours later after the close on January 15th. You could choose to buy some cheap January puts before the closing bell on Thursday and if Intel disappoints and spikes down on Friday you've got some protection (just be sure to sell those puts before expiration). You could also choose to buy some out of the money February puts. Or you could just take profits now ahead of earnings.

The newsletter is going to let it ride. We're not taking profits and we're not buying puts although I would seriously consider it. Right now expectations are pretty bullish for INTC's earnings. They're so bullish that we're at risk for Intel to disappoint and the stock could overreact lower. Given our long-term time frame I suggest we hang on and endure any post-earnings volatility.

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 $2.55/2.59
-stop loss on INTC @ 17.90.

Chart of INTC:


MTW $13.30 +0.77 -- Manitowoc Inc.

All I can say is "wow!" The +33% rally in MTW last week was totally unexpected. Investors were on a buying frenzy and MTW just exploded higher. I'm not complaining. Our LEAPS almost doubled. However, short-term the stock is clearly overbought and due for a correction. Nimble traders could sell now, and just buy the dip when it happens. The $11.50 zone might be a good spot to look for a bounce.

Please note that I'm raising the stop loss to $8.95. I am 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 $4.60/4.80
-stop loss on MWT @ 8.95

- or -

Oct. 30th 2009 - entry price on MTW (the stock) @ 9.10
- stop loss on MTW @ 8.95

Chart of MTW:


ORCL $24.68 +0.30 -- Oracle Corp.

We've been expecting ORCL to roll over and fill the gap. It is slowly drifting lower but has yet to break down under the $24.00 level again. I'd prefer to launch new positions on a dip near $23.00. Our stop loss is at $21.75. Our long-term target is $29.75.

FYI: Shares of ORCL don't move very fast. Readers might want to consider turning this play into a calendar or diagonal spread to further maximize your gains.

Dec. 18th, 2009 - entry price on ORCL @ 24.05, option @ 2.55
symbol: VOC-AE, 2011 LEAP $25 call - current bid/ask $2.56/2.61
-stop loss on ORCL @ 21.75.

Chart of ORCL:


PBR $48.46 +0.26 - Petroleo Brasiliero

The performance in shares of PBR has been very disappointing. The oil sector has rocketed higher this past week and yet PBR is still struggling with resistance near its 50-dma and its broken trendline of support. We are down to our last five days before January options expire. Odds are very much against us here.

Our adjusted target to exit is $53.00 or higher.

Apr. 4th, 2009 - entry price on PBR @ 35.10, option @ $2.80
symbol: PMJ-AJ, 2010 $50.00 LEAP call - current bid/ask $0.23/0.25
-stop loss on PBR at $44.40

Chart of PBR:


PEP $60.77 -0.20 -- PEPSICO Inc.

Once again I feel the need to warn investors about the trading action in shares of PEP. The stock's rally attempt past the 50-dma has quickly reversed lower. Traders bought the dip again at the 100-dma on Friday but overall PEP looks vulnerable. More conservative traders may want to exit early or raise their stops. At this time I would expect a pull back toward $58.00 or the 200-dma near $57.00. We still have 12 months to go but it could be rocky going forward.

I'm not suggesting new bullish positions at this time. 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 $4.80/5.00
-stop loss on PEP at $54.95

Chart of PEP:


RAI $53.14 -0.25 -- Reynolds American Inc.

I was worried a week ago because RAI had broken down from its sideways consolidation. Fortunately there was no follow through lower. Shares remain under resistance near $54.00. More conservative traders will want to seriously consider a complete exit right here! Please note our new stop loss at $49.45. 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 $13.10/13.60
-stop loss on RAI at $49.45

Sold Half on 10/19 @ 49.50, option @ $8.90 (+97%)

Chart of RAI:


RGLD $49.65 +1.28 -- Royal Gold Inc.

Gold futures have bounced sharply higher this past week and the miners have followed. Shares of RGLD have managed to hold technical support at the rising 100-dma. I would be tempted to open new bullish positions on a breakout back above the $50.00 level. If you do initiate a new position consider buying the $50 or $55 strikes.

Our long-term 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 $5.00/5.20
-stop loss on RLGD @ 41.95

Chart of RGLD


TEX $22.76 +0.17 -- Terex Corp.

TEX has been another big winner with a strong rally past short-term resistance. The stock now looks short-term overbought and due for a dip. I would still hesitate to launch new positions in TEX right here. 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 $5.90/6.20
-stop loss on TEX @ 17.75

Sell half (10/24/09), option at $7.50 (+82.9%)

Chart of TEX:


UNH $32.70 -0.31 -- UnitedHealth Group Inc.

Wow! What a difference a week can make. The healthcare stocks rallied and UNH has set new one-year closing highs. I am inching up our stop loss to $27.99. More conservative traders may want to place their stops closer to $29.50ish. The $30.00 level should be significant support.

The plan was to use small positions to limit our risk. Our long-term target is $42.50.

Dec 16th, 2009 - entry price on UNH @ 31.55, option @ 3.80
symbol: VUH-AG, 2011 JAN $35 LEAP call - current bid/ask $3.45/3.55
-stop loss on UNH @ 27.99

Chart of UNH:


UYG $6.15 -0.05 - ProShares Ultra Financials (2x) ETF

Financials were some of the best performers last week. The UYG shot past resistance at $6.00 but has stalled at technical resistance with its exponential 200-dma and the old trendline of support now acting as resistance (see chart). The sector looks a bit overbought. I'm not suggesting new positions. JPM's earnings report late next week could be a pivotal moment for the industry. Please note our new stop loss at $5.30.

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: 5.30)

10/14/09 Exit - Sell Half @ 6.31 (gap open exit, +320%)

Chart of UYG:


VICR $ 9.92 +0.47 -- VICOR Corp.

As expected VICR has broken out higher from its sideways consolidation. This looks like a new bullish entry point. However, readers will want to keep positions small as I'm still concerned about a January correction in the stock market.

Our twelve-month target is the $13.50-14.00 zone (one reason I prefer the stock over the option). Remember, if the market dips in January VICR will probably dip with it.

Dec 26th, 2009 - entry price on VICR@ 9.30, option @ 1.40
symbol: VQV-GB, 2010 JUL $10 LEAP call - current bid/ask $1.35/1.60
-stop loss on VICR @ 7.45

- or -

Dec. 26th 2009 - entry price on VICR (the stock) @ 9.30
-stop loss on VICR @ 7.45

Chart of VICR: