Editor's Note:

I want to inform readers that I will be traveling for the next several days. Thus the early newsletter today (Friday, Feb. 26th) instead of the weekend. Estimated delivery of the next LEAPStrader newsletter is Tuesday, March 9th. There will be no LEAPS newsletter for the next two weekends (Feb. 28th or March 7th).


The action on Thursday was impressive. Bullish engulfing (reversal) candlestick patterns were very common and suggest the pull back might ending soon.


Closed Plays


None. No closed plays this week.


Play Updates


Arch Coal Inc. - ACI - close: 22.15 change: +0.99

ACI has provided us another entry point. Last week I suggested waiting to buy the dip in the $21-20 zone and shares hit $20.50 on Thursday morning. Investors did buy ACI near its rising 200-dma and the rebound on Thursday has produced a bullish engulfing (reversal) candlestick pattern.

Our exit strategy hasn't changed. Our final target is $34.75.

May 14th, 2009 - entry price on ACI @ 16.00, option @ 2.40
symbol: OSE-AF, 2011 JAN $30 LEAP call - current bid/ask $1.20/1.30
-stop loss on ACI @ 18.99

--2nd Entry--
Feb 13th, 2010 - entry price on ACI @ 21.65, option @ 4.40
symbol: YEP1221A25 2012 JAN $25 LEAP call - current bid/ask $4.10/4.40
-stop loss on ACI @ 18.99

Chart of ACI:


Biogen IDEC - BIIB - close: 54.89 change: -0.40

Our buy-the-breakout strategy hasn't worked that well for us on BIIB. Shares immediately reversed following last Friday's breakout. Fortunately shares appear to be finding support near $54.00 and its 40-dma. Last week I suggested readers might be better off looking for an entry point near $54.00 and we got it! Overall the biotech sector continues to outperform the rest of the market. Our first target to take profits is at $64.90.

Feb 19th, 2010 - entry price on BIIB @ 56.60, option @ 4.60
symbol: OIY1122A60 2011 JAN $60 LEAP call - current bid/ask $3.40/3.70
-stop loss on BIIB @ 51.85

Chart of BIIB:


Berkshire Hathaway Inc. - BRK.B - $79.40 -0.28

Last week I warned readers that the $80.00 level might be overhead resistance. Thus far that has proven to be true with shares struggling to make it past $80 all week. With upward momentum slowing odds are rising that BRK.B is nearing a correction. A normal correction could see the stock dip back toward to the $75-73 zone.

This is a long-term trade. Take your time and wait for the right entry point. Our first target is $90.00. Our second target is $99.50

Feb 6th, 2010 - entry price on BRK.B @ 73.57, option @ 4.80
symbol: 2011 JAN $80 XPB1122A80 LEAP call - current bid/ask $6.10/6.70
-stop loss on BRK.B @ 64.95

Feb 6th, 2010 - entry price on BRK.B @ 73.57, option @ 6.50
symbol: 2012 JAN $85 WDW1221A85 LEAP call - current bid/ask $7.60/8.40
-stop loss on BRK.B @ 64.95

Chart of BRK.B:


BorgWarner Inc. - BWA - close: 38.02 change: -0.12

Shares of BWA continue to consolidate sideways in the $37-38 zone. I would still consider new long-term positions here. If you prefer to buy on strength then look for a new high over $39.00. If you prefer to buy on dips then look for a dip toward $36.00, which should see additional support with the rising 50-dma. Our first target is $44.50. Our second target is $49.75. FYI: More conservative traders might want to use a stop loss closer to $34.00.

Feb 17th, 2010 - entry price on BWA @ 37.55, option @ 3.90
symbol: ZWY1122A40 2011 JAN $40 LEAP call - current bid/ask $3.80/4.50
-stop loss on BWA @ 31.90

Chart of BWA:


Chesapeake Energy Corp. - CHK - close: 26.73 change: +0.19

If you were looking for another entry point in CHK this appears to be it! Traders are buying the dip near the 50% retracement of its February rebound. Thursday's session also looks like a bullish reversal higher although it neeOur long-term target is $40.00.

Oct 30th, 2009 - entry price on CHK @ 24.00, option @ 4.70
2nd entry Feb. 6th, 2009 - entry on CHK @ 24.52, option @ 3.80
symbol: VEC-AE, JAN 2011 $25 LEAP call - current bid/ask $6.00/6.35
-stop loss on CHK @ 20.95

Chart of CHK:


Consol Energy Inc. - CNX - close: 49.60 change: +1.42

CNX is another example of investors buying the dip in coal stocks on Thursday. Shares of CNX also produced a bullish engulfing candlestick with Thursday's intraday rebound. If you were looking for an entry point on CNX this is it. More conservative traders can wait for a close over $51.00.

CNX hit our first target back in September. Currently the plan is to sell another portion of our position at $58.50. Our third and final target is $64.90.

Sep 1st, 2009 - entry price on CNX @ 36.50, option @ 7.80(estimate)
symbol: VTL-AH, 2011 JAN $40 LEAP call - current bid/ask $13.00/13.70
-stop loss on CNX @ 41.45

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

Chart of CNX


EMR $47.70 -0.46 -- Emerson Electric Co.

After hitting our first target at $47.50 last week the upward momentum in EMR has stalled. Shares do look overbought and due for a correction. I wouldn't be surprised to see a dip toward the 50-dma or even a pull back closer to the 100-dma. Our second and final target is still $54.50. I am not suggesting new positions at this time. The $50.00 level could easily be round-number, psychological resistance. We should expect resistance and some profit taking.

Sept. 8th, 2009 - entry price on EMR @ 38.00, option @ $4.50
symbol: VHH-AH, 2011 JAN $40 call - current bid/ask $8.60/9.30
-stop loss on EMR @ 41.90

02/18/10 1st Target hit @ 47.50, option @ $8.80 (+95.5%)

Chart of EMR:


Forest Oil Corp. - FST - close: 26.83 change: +0.50

FST is holding up pretty well. The company reported earnings on Feb. 22nd and missed expectations by 4 cents. Not only did FST miss the earnings number but it also missed the revenue number. Analysts were expecting 60 cents a share on $256 million in revenues. FST delivered 56 cents on $214.4 million. I am very, very surprised that FST did not see a bigger decline on this news. In fact the overall bullish trend remains intact and the intraday rebound on Thursday looks like a short-term bullish entry point. 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 $8.00/8.90
-stop loss on FST @ 21.75

Chart of FST:


Intel Corp. - INTC - close: 20.63 change: -0.33

The bearish reversal on Tuesday was looking pretty ugly but there was no follow through. Traders appear to be buying INTC near its 50-dma. I'm almost hopeful that INTC will try and breakout from this multi-month consolidation sideways. I am not suggesting new 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 $2.31/2.35
-stop loss on INTC @ 17.90.

Chart of INTC:


Mosaic Co. -MOS - close: $58.52 change: +0.90

If you are looking for another entry point in MOS this could be it. Most of the agriculture/fertilizer stocks were correcting sharply this week and almost all of them have produced a short-term bullish reversal with Thursday's intraday rebound. Now this reversal needs to see some confirmation but if you were looking for an entry point this could be it. However, before you commit any capital I have to warn you that MOS could be forming a bearish head-and-shoulders pattern. You may want to wait and see if shares clear the $62.50 region before launching positions. Our long-term target is the $90-100 zone. (Readers might want to consider the 2012 LEAPS too).

NOTE: In 2009 MOS issued a special cash dividend of $1.30 per share payable back on December 3rd, 2009. The CBOE issued a new LEAPS symbol to account for the dividend. The old 2011 LEAPS have a root symbol of ZHX. The LEAPS we want to use are the ZXW root symbols.

Jan 28th, 2010 - entry price on MOS @ 56.00, option @ 6.10
symbol: ZXW-AM, 2011 LEAP $65 call - current bid/ask $6.50/6.80
-stop loss on MOS @ 49.00

Chart of MOS:


Manitowoc Inc. - MTW - close: 11.53 change: -0.05

Last week I cautioned readers to look for MTW to pull back toward $11.50 or its 50-dma and shares have done both. This should be short-term support. I would be tempted to reconsider new positions if MTW can trade back above $12.25 again but if you jump in that level you'll want a much higher stop loss. Our long-term target is $17.00.

NOTE: current bid/ask for the options is not correct. At the time of this update quotes were unavailable. The last trade was $3.00.

Oct 30th, 2009 - entry price on MTW @ 9.10, option @ 2.61
symbol: VMT-AB, 2011 JAN $10 call - current bid/ask $3.60/3.90
-stop loss on MWT @ 9.45

01/18/10 Sell Half! MTW @ 13.70, option at $4.80 bid (+83.9%)

- or -

Oct. 30th 2009 - entry price on MTW (the stock) @ 9.10
- stop loss on MTW @ 9.45

01/18/10 Sell Half! MTW @ 13.70 (+50.5%)

Chart of MTW:


Oracle Corp. - ORCL - close: 24.87 change: +0.10

Shares of ORCL have been trading sideways all week but shares finally look ready to move again. Traders quickly bought the dip on Thursday when ORCL tested its rising 50-dma. There is still potential resistance near $25.00 but the trend is up. Our stop loss is at $21.40. 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.

NOTE: current bid/ask for the option is not correct. At the time of this update quotes were unavailable. The last trade was $2.25.

Dec. 18th, 2009 - entry price on ORCL @ 24.05, option @ 2.55
symbol: VOC-AE, 2011 LEAP $25 call - current bid/ask $2.11/2.15
-stop loss on ORCL @ 21.40.

Chart of ORCL:


PEPSICO Inc. - PEP - close: 62.30 change: +0.22

Shares of PEP did not react much to news that rival KO was following in PEP's footsteps. KO announced it was buying its North American bottler in a deal worth nearly $12 billion. Shares of PEP were too busy bouncing from technical support at the 50-dma. Thursday's intraday rebound looks like a short-term bullish entry point although the stock currently has resistance near the $63.00 level.

I still hesitate to launch new long-term LEAPS with PEP still under resistance at $63.00. The strength we're seeing in PEP means our protective March put may not be needed. Our exit target for the 2011 January $60 LEAP is $69.90.

NOTE: current bid/ask for the option is not correct. At the time of this update quotes were unavailable. The last trade was $4.79.

July 7th, 2009 - entry price on PEP @ 57.25, option @ $4.50(estimate)
symbol: VP-AL, 2011 $60.00 LEAP call - current bid/ask $5.45/5.60
-stop loss on PEP at $54.95

Temporary protective put:
Jan. 23rd, 2009 - entry price on PEP @ 60.39, option @ 0.50
symbol: PEP-OK March $55 put - current bid/ask $0.06/0.08

Chart of PEP:


Potash Corp. - POT - close: $111.40 change: +2.88

The pull back in POT was a little deeper than expected but that's not surprising given the stock's volatility. Most of the fertilizer-related stocks rallied sharply on Thursday off their morning lows. The move in POT looks like a bullish reversal but it needs to see confirmation. I do want to point out that POT could be forming a bearish head-and-shoulders pattern (see chart). Readers may want to wait for a close over $116.50 before considering new positions (and a higher stop). Our long-term target is $160 or higher.

NOTE: current bid/ask for the option is not correct. At the time of this update quotes were unavailable. The last trade was $14.50.

Jan. 28th, 2010 - entry price on POT @ 101.00, option @ 11.75
symbol: VPT-AB, 2011 LEAP $110 call - current bid/ask $19.10/19.70
-stop loss on POT @ 94.75

Chart of ORCL:


PartnerRe Ltd. - PRE - close: 79.46 change: +0.31

PRE continues to show relative strength. Traders bought the dip near $78.00 on Wednesday and shares did not suffer as much as the rest of the market on Thursday morning. I am still concerned that PRE looks short-term overbought and due for a deeper correction. The $76-75 region should offer decent support.

FYI: On Thursday PRE that its Board of Directors had authorized a stock buyback program of up to eight million shares, which replaces the previous five million-share plan of which they had only redeemed 1.8 million shares.

Our first target is $84.90. Our second, longer-term target is $97.50.

NOTE: current bid/ask for the option is not correct. At the time of this update quotes were unavailable. The last trade was $3.90.

Feb. 13th, 2010 - entry price on PRE @ 76.28, option @ 2.70
symbol: PRE1021H80, 2010 AUG $80 call - current bid/ask $3.70/4.10
-stop loss on PRE @ 69.75

Chart of PRE:


Reynolds American Inc. - RAI - close: 53.14 change: -0.23

RAI continues to creep higher. The good news is that the bounce is chewing through potential resistance in the $52.50-53.00 zone. The stock is also on the verge of breaking out over its 50-dma again. I am not suggesting new long-term positions. Our final exit target is $57.50.

NOTE: current bid/ask for the option is not correct. At the time of this update quotes were unavailable. The last trade was $8.57, which probably doesn't reflect current values.

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 $11.60/13.10
-stop loss on RAI at $49.75

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

Chart of RAI:


UltraShort 20+ Year Treasury Bond ProShares - TBT - cls: 47.55 chg: -0.56

Bonds have begun to rally again and that's pushing the TBT lower. I don't see any changes from my prior comments. However, more conservative traders may want to raise their stop loss toward $46.50. I wouldn't consider new long-term positions until we see the TBT close over the $51.50 level.

Our first long-term target is $59.75. Our second target is $67.50.

NOTE: current bid/ask for the options below are not correct. At the time of this update quotes were unavailable. The last trade for the 2011 $55 call was $2.48. The last trade for the 2012 $60 call was $5.80.

FYI: The TBT is an exchange traded fund (ETF) that tries to deliver twice the inverse performance of the Barclays Capital 20+ Year U.S. Treasury index.

Jan. 09th, 2010 - entry price on TBT @ 50.63, option @ 4.90
symbol: XRJ-AC, JAN 2011 $55 LEAP call - current bid/ask $3.15/3.50
-stop loss on TBT @ 45.90

Jan. 09th, 2010 - entry price on TBT @ 50.63, option @ 7.90
symbol: YHT-AH, JAN 2012 $60 LEAP call - current bid/ask $6.70/7.05
-stop loss on TBT @ 45.90

Chart of TBT


Titanium Metals - TIE - close: 11.71 change: +0.06

Shares of TIE remain an aggressive trade for us. China's attempts to slow down their economy will remain a larger threat in the background. On a more short-term basis the earnings report we expected on Feb. 25th appears to have been pushed out to the first week of March. I can't find a confirmed date yet. Our next challenge is the recent failed rally near the 30 and 50-dma. Traders did buy the dip on Thursday morning at the 100-dma but I'm suggesting readers take a step back. Let's be choosy about our next entry point. The $10.50 level has been resistance in the past so it should be decent support. Plus TIE has the rising 200-dma closer to $10.00. A bounce in the $10.50-10.00 zone could be a good entry point. Or you could wait for a new relative high over $12.50 as an entry point to buy call LEAPS. More conservative traders may want to wait until after we see the reaction to TIE's earnings whenever they announce. We're using a stop at $9.80.

There is some resistance near $15.00 but our long-term target is $19.75. Choose either the 2011 or 2012 LEAPS.

NOTE: current bid/ask for the options below are not correct. At the time of this update quotes were unavailable. The last trade for the 2011 $15 call was $1.05. The last trade for the 2012 $15 call was $2.60.

Feb. 20th, 2010 - entry price on TIE @ 12.06, option @ 1.40
symbol: VWN1122A15, 2011 JAN $15 LEAP call - current bid/ask $-.--/-.--
-stop loss on TIE @ 9.80

Feb. 20th, 2010 - entry price on TIE @ 12.06, option @ 2.60
symbol: WWN1221A15, 2012 JAN $15 LEAP call - current bid/ask $-.--/-.--
-stop loss on TIE @ 9.80

Chart of TIE:


iShares 20+Yr Bond ETF - TLT - close: 91.20 change: +0.51

The action in the bond market has produced a bounce in the TLT. That's not too surprising since the TLT was testing support. The close over $91.00 is short-term bullish but the TLT should also have additional resistance near $92.50. I am not suggesting new positions at this time. Our first target is $81.00.

NOTE: current bid/ask for the options below are not correct. At the time of this update quotes were unavailable. The last trade for the 2011 $85 put was $3.80. The last trade for the 2012 $80 put was $6.80.

FYI: The TLT is an exchange traded fund that tries to mimic the performance of the Barclays Capital U.S. 20+Year Treasury Bond Index.

Jan. 09th, 2010 - entry price on TLT @ 89.29, option @ 6.40
symbol: VJL-MG, JAN 2011 $85 LEAP put - current bid/ask $4.70/4.85
-stop loss on TLT @ 94.15

Jan. 09th, 2010 - entry price on TLT @ 89.29, option @ 8.90
symbol: YLI-MB, JAN 2012 $80 LEAP put - current bid/ask $6.95/7.30
-stop loss on TLT @ 94.15

Chart of TLT


UnitedHealth Group Inc. - UNH - close: 33.45 change: -0.17

These past few days have been bullish for UNH. It looks like shares are starting to turnaround. Maybe the correction is finally over. After five weeks of digesting its previous gains the stock is definitely rested. I was expecting a dip toward support near $30.00 but it may not happen.

It is noteworthy that healthcare stocks barely budged on Thursday in spite of President Obama's healthcare summit and debate. Many are expecting to see democrats apply more pressure on trying to get some sort of healthcare reform passed soon. Thus I need to reiterate the risk involved given the political game in Washington. Lawmakers could always do something unexpected that puts our position at risk.

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

NOTE: current bid/ask for the option below is not correct. At the time of this update quotes were unavailable. The last trade for the option was $3.55.

Dec 16th, 2009 - entry price on UNH @ 31.55, option @ 3.80
symbol: VUH-AG, 2011 JAN $35 LEAP call - current bid/ask $2.95/3.05
-stop loss on UNH @ 28.95

Chart of UNH:


VICOR Corp. - VICR - close: 9.44 change: +0.25

I cautioned traders to look for a dip toward $9.00. Thankfully VICR did find some support near $9.00 this past week. The big bounce on Thursday is encouraging but VICR still has significant resistance near the $10 level. More aggressive traders could buy this bounce but consider a tighter stop loss. An alternative would be to wait for a new close over $10.00 as your entry point.

Our twelve-month target is the $13.50-14.00 zone (one reason I prefer the stock over the option).

NOTE: current bid/ask for the option below is not correct. At the time of this update quotes were unavailable. The last trade for the option was $1.00.

Dec 26th, 2009 - entry price on VICR@ 9.30, option @ 1.40
symbol: VQV-GB, 2010 JUL $10 call - current bid/ask $0.80/1.15
-stop loss on VICR @ 7.45

--2nd Entry Point-- Feb 6th, 2009 - entry price on VICR @ 8.38, option @ 0.70
symbol: VQV-GB, 2010 JUL $10 call - current bid/ask $0.80/1.15
-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: