We are choosing to take profits on several positions now before earnings season has a chance to spoil the party.
EMR, INTC, MOS, ORCL, OXY, RAI, and part of TIE have all been closed.
Arch Coal Inc. - ACI - close: 26.00 change: -0.67
It was another bullish week for ACI but shares gave back 2.5% on Friday as the market sank on the Goldman Sachs fraud charge. Earlier in the week Citigroup upgraded ACI to a "buy". The coal industry garnered additional bullish analyst comments a couple of days later. Shares of ACI rallied toward their March highs on Thursday before Friday's market-wide sell-off.
It's possible this could be a bearish double top if ACI reverses lower here. There is a big risk the market continues to sink come Monday as more investors react to the market's surprising Friday decline. However, ACI is due to report earnings on Monday morning (April 19th). Wall Street expects the company to report a profit of 8 cents a share. ACI's results could supersede any broad market strength or weakness. The most recent data listed short interest at more than 10% of ACI's float. A better than expected result could spark a little short covering. Odds are pretty good that ACI will see a gap open (up or down) on Monday morning.
I am not suggesting new bullish positions in ACI at this time.
Our final target for the LEAP trade 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 $2.60/2.70
-stop loss on ACI @ 19.85
Feb 13th, 2010 - entry price on ACI @ 21.65, option @ 4.40
symbol: YEP1221A25 2012 JAN $25 LEAP call - current bid/ask $6.60/7.10
-stop loss on ACI @ 19.85
Chart of ACI:
Biogen IDEC - BIIB - close: 53.64 change: -0.77
After weeks of consolidating sideways it looks like the BTK biotech index is finally going to correct lower following it's stunning February-March rally. When the sector index does correct it could put additional pressure on shares of BIIB. Then again BIIB may not need any help. The stock has been correcting for four weeks in a row now with a drop from $60 to almost $53 on Friday morning.
I haven't uncovered any specific news to account for the stock's relative weakness. The company reported generally positive news regarding its Tysabri MS drug a few days ago. The stock was due for a correction but why it's correcting ahead of its earnings report and ahead of the rest of the market is a mystery. The 50-dma and the $56-55 zone, which should have offered some support did not help at all. Could it be that someone wants to get out before BIIB reports earnings on April 20th? Analysts are expecting a profit of $1.13 a share. BIIB reports Tuesday morning before the bell. More conservative traders may want to exit ahead of the report.
I am not suggesting new bullish positions at this time. The $52.00 level is the next line of potential support. 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 $2.55/2.90
-stop loss on BIIB @ 51.85
Chart of BIIB:
Berkshire Hathaway Inc. - BRK.B - $78.72 -1.35
We have been expecting a deeper correction in BRK.B for weeks now. The stock spent most of last week consolidating along its rising 50-dma but shares finally broke that level of technical support on Friday. The Goldman Sachs fraud news sent most financial-related stocks lower. Berkshire is a conglomerate of several companies but they do have a strong insurance business and the company did take a high-profile stake in Goldman during the financial crisis last year. Currently that stake is profitable but the sharp drop in GS shares today could have spooked traders. Investors are also worried that the GS news today strengthens the government's push for financial reform.
Shares of BRK.B did spike down toward $75.50 on Friday but managed to rebound off its lows. I have been suggesting that readers look for a dip into the $77-73 zone before considering new bullish positions. We need to take another look at that strategy now that market conditions have "changed". Financial stocks could see a multi-week decline as this Goldman news gets digested. Readers may want to focus on the $73-70 zone for BRK.B. Broken resistance near $70.00 should be very strong support, which is now bolstered by the rising 200-dma. More conservative traders will want to consider waiting to buy LEAPS on a bounce than choosing to buy on a dip.
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 $5.70/6.10
-stop loss on BRK.B @ 69.00
Feb 6th, 2010 - entry price on BRK.B @ 73.57, option @ 6.50
symbol: 2012 JAN $85 WDW1221A85 LEAP call - current bid/ask $7.40/7.90
-stop loss on BRK.B @ 69.00
Chart of BRK.B:
BorgWarner Inc. - BWA - close: 38.35 change: -0.70
The trend of higher lows in BWA continues but the rally has failed again in the $39.50-40.00 zone. Friday's move certainly looks like a bearish reversal but we've seen these before and BWA has yet to see much follow through on these patterns. This time could be different with the market looking vulnerable following Friday's decline. I am still suggesting that readers looking for a new entry point wait for a pull back into the $36-34 zone (which is a change from $36-35). The rising 200-dma near $34 should offer some support. Such a move would break the bullish trend of higher lows but the stock so wait for the bounce before jumping in. An alternative entry point would be to wait for a breakout (and close) over $40.00.
BWA has earnings on April 29th and Wall Street expects a profit of 41 cents a share.
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 $3.50/4.00
-stop loss on BWA @ 32.49
Chart of BWA:
Celgene Corp. - CELG - close: 60.88 change: +0.26
Last week CELG announced a new partnership with Agios Pharmaceuticals, a privately-held biotech firm, to target cancer cell metabolism. I don't think the announcement had much affect on the stock price since CELG appears to be helping Agios finance its research and will have the option to license any breakthroughs.
I've been warning readers to expect a pull back toward the $60-58 zone. Shares of CELG broke through their 50-dma and finally tested the $60.00 level, which is potential round-number support. Unfortunately, I don't expect it will hold. The BTK biotech index is finally beginning to waver after weeks of drifting sideways in an overbought condition. Any correction in the sector could accelerate any correction in CELG. While I would like to think the $58.00 level will hold for CELG shares may dip toward its 200-dma closer to $55. I would be hesitant to open new positions until we see a strong bounce from support and preferably support in the $55-58 zone.
FYI: CELG is due to report earnings on April 29th.
Our target is the $74.00 level. I have been suggesting the 2011 Jan. $65 calls but readers may want to buy the 2012 calls.
FYI: A few weeks ago CELG was number 5 on Morningstar's top ten list of potential takeout (acquisition) targets.
Mar 1st, 2010 - entry price on CELG @ 60.75, option @ 5.40
symbol: VCS1122A65 2011 JAN $65 LEAP call - current bid/ask $4.80/5.00
-stop loss on CELG @ 54.75
Chart of CELG:
Fortune Brands - FO - close: 52.00 change: -0.44
The rally in FO continued last week although it seems to have stalled near the $53.00 level. The stock garnered an upgrade to a "buy" and the next day Fitch raised their outlook on FO to "stable". I remain bullish on FO but I'm concerned about the broader market. I'm suggesting readers take a defensive approach here and go ahead and sell half our position. Sell half now and if the market corrects we can reconsider increasing our position if we see another entry point.
On a short-term basis we can look for FO to find support near $50.00 and the $48.00 levels. Our long-term target is $59.75.
FYI: FO has earnings on April 29th.
Mar. 12th, 2009 - entry price on FO @ 47.55, option @ $2.20
symbol: FO1018I50 SEP 2010 $50 call - current bid/ask $4.30/ 4.70
-stop loss on FO @ 45.75
04/17/10 Sell Half - FO @ $52.00, option @ $4.30 (+95%)
Chart of FO:
Forest Oil Corp. - FST - close: 26.40 change: -0.59
Readers need to take a moment and reconsider how much risk they're willing to take here on FST. Not only have shares formed a lower high in April but technicals on the daily and weekly charts are starting to turn bearish. On a short-term basis I am expecting a correction back to the $25.00 level but if the market sees much follow through lower FST could end up hitting our stop loss before the month is over.
Longer-term we're still bullish on oil and oil stocks through the rest of the year but over the next few weeks oil and the energy sector could easily correct before making new relative highs. Conservative traders will want to seriously consider exiting part or all of their LEAPS position now. If you exit now you can potential avoid any significant loss.
I am 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 $ 7.90/ 8.10
-stop loss on FST @ 23.45
Chart of FST:
McDermott Intl. - MDR - close: 27.22 change: -0.66
MDR was a watch list candidate and shares hit our trigger to open bullish positions when the stock broke out past resistance at $28.00. The plan was to buy the 2011 January $30 calls. However, I warned readers that we were at risk of seeing MDR spike higher and reverse, which is exactly what appears to be happening. This is why the plan was to open half (or less) your normal position to downsize our risk. Bigger picture the forecast is still bullish but MDR could correct back toward the $25-24 zone before resuming its up trend.
I am suggesting we take a wait and see approach here. We'd much rather buy call LEAPS on a bounce from $24 and its 200-dma, which could happen if we're patient. Our long-term target is $37.50. Investors may want to consider 2012 LEAPS and aim higher.
- Half position size -
Apr 14th, 2010 - entry price on MDR @ 28.25, option @ 2.95
symbol: 2011 JAN $30 LEAP call - current bid/ask $ 2.35/ 2.55
-stop loss on MDR @ 23.90
Chart of MDR:
Manitowoc Inc. - MTW - close: 15.29 change: -0.23
Shares of MTW continue to impress. The stock was upgraded on April 12th and shares surged to a new 52-week high. The stock spent the rest of the week consolidating sideways. More conservative traders may want to go ahead and take profits now. While the trend is up the market looks vulnerable. If the S&P 500 really starts to breakdown MTW could become a target for profit taking.
I am not suggesting new bullish positions at this time. Please notice our new stop loss at $11.75. I am adjusting our long-term target from $17.00 to $16.75.
Oct 30th, 2009 - entry price on MTW @ 9.10, option @ 2.61
symbol: VMT-AB, 2011 JAN $10 call - current bid/ask $5.80/6.00
-stop loss on MWT @ 11.75 *new*
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 @ 11.75 *new*
01/18/10 Sell Half! MTW @ 13.70 (+50.5%)
Chart of MTW:
PEPSICO Inc. - PEP - close: 66.14 change: -0.13
Not much has changed in a week. Shares of PEP are still drifting sideways. It looks like traders are selling into strength but there is not much follow through lower. I'm still expecting a correction toward the $64 maybe $62 area but at this rate it could take a while. It depends on the company's earnings report. PEP is due to report earnings on April 22nd, before the opening bell. Wall Street expects a profit of 75 cents a share. I would not be surprise to see PEP drift sideways into its earnings report.
I am not suggesting new bullish positions at this time. Our (adjusted) final target is $72.25. FYI: In other news PEP said their annual shareholders meeting will be held on May 5th.
July 7th, 2009 - entry price on PEP @ 57.25, option @ $4.50(estimate)
symbol: VP-AL, 2011 $60.00 LEAP call - current bid/ask $7.50/7.60
-stop loss on PEP at $59.40
03/27/10 SELL HALF: PEP $ 66.59, Option @ $8.00 (+77.7%)
Chart of PEP:
Potash Corp. - POT - close: $107.80 change: -2.35
Ouch! It was another painful week for POT with a $7 decline. The correction, now five weeks old, has shaved off 15% from its highs near $128. There seems to be some disagreement among analyst firms over the agriculture names. Goldman Sachs downgraded POT last week from a "buy" to a "neutral". While another firm is suggesting investors buy this decline in the industry.
The inventory levels for potash continue to fall, which one might think is a very bullish development for this sector since distributors will need to buy more product from manufacturers like POT. Yet the stock is still sinking. I cautioned readers last week that the correction may not be over yet. The breakdown under the $110 level is bearish. Shares are now testing their exponential 200-dma as possible support.
I strongly suggest that more conservative traders consider an early exit now to avoid any losses. I suspect that POT will make a push for the $105 level and if that fails then a drop toward $100. Please note that I'm adjusting our stop loss to $98.50. I am not suggesting new bullish positions at this time.
We sold half our position near $125. Our final target is $160.00.
Jan. 28th, 2010 - entry price on POT @ 101.00, option @ 11.75
symbol: VPT-AB, 2011 LEAP $110 call - current bid/ask $13.20/13.40
-stop loss on POT @ 98.50 *new*
SELL HALF (03/13/10) option @ $26.35 bid (+124%)
Chart of ORCL:
PartnerRe Ltd. - PRE - close: 79.59 change: -0.26
PRE continues to struggle with resistance near the $81 region. The action this past week certainly looks like another bearish failed rally pattern. I've been suggesting readers wait for a correction toward $76 before considering new positions. That correction could be ready to start. Nimble traders may want to consider exiting now (near $3.00 on the option) and then just jump back in on a dip or bounce in the $76-75 zone.
I would prefer to open positions on a bounce in the $75-76 zone versus buying a decline into this area. If we do see a new entry point I would use the November calls. Our first target is $84.90. Our second, longer-term target is $97.50 but this could be wishful thinking given the August options.
Feb. 13th, 2010 - entry price on PRE @ 76.28, option @ 2.70
symbol: PRE1021H80, 2010 AUG $80 call - current bid/ask $3.00/3.50
-stop loss on PRE @ 73.75
Chart of PRE:
UltraShort 20+ Year Treasury Bond ProShares - TBT - cls: 47.70 chg: -0.72
Are investors nervous about Q1 earnings? It looks like money was moving back into the bond market last week. The TBT slipped again following the prior week's bearish failed rally pattern. It looks like this ETF is headed back toward the $46.50 area. Nimble traders may want to consider buying dips or bounces near $46.50. I am suggesting most readers wait for a breakout and close over the $51.50 mark before considering new bullish positions.
Our first long-term target is $59.75. Our second target is $67.50. Keep in mind that this security tends to move pretty slowly.
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 $2.07/2.20
-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 $4.25/4.50
-stop loss on TBT @ 45.90
Chart of TBT
Titanium Metals - TIE - close: 16.18 change: -0.76
I have to urge caution again. TIE managed a bounce early last week but the rally failed at resistance near 17.30-17.50. The stock looks poised for a correction and it could be an ugly one. I'm expecting a pull back toward the $14-13 zone. The trader in me wants to sell all of our calls right now and then look to jump back in around $13.00. That might be the right move for some of you. However, these are supposed to be long-term positions where we ride through the ups and downs. To satisfy the urge to sell something I am suggesting we sell the 2011 January $15 call LEAP right now. We'll keep the 2012 January $15 call LEAP.
I am not suggesting new bullish positions at this time. We've already sold half our position on March 27, 2010. Our final, long-term target is $19.75.
Feb. 20th, 2010 - entry price on TIE @ 12.06, option @ 1.40
symbol: VWN1122A15, 2011 JAN $15 LEAP call - current bid/ask $3.10/3.40
-stop loss on TIE @ 11.90
04/17/10 EXIT EARLY, TIE @ 16.18, option @ 3.10 (+121.4%)
03/27/10 SELL HALF: TIE @ 16.21, option @ 3.20 (+128.5%)
Feb. 20th, 2010 - entry price on TIE @ 12.06, option @ 2.60
symbol: WWN1221A15, 2012 JAN $15 LEAP call - current bid/ask $5.50/6.20
-stop loss on TIE @ 11.90
03/27/10 SELL HALF: TIE @ 16.21, option @ 4.50 (+73%)
Chart of TIE:
iShares 20+Yr Bond ETF - TLT - close: 89.86 change: +0.65
The bond market continued to bounce following the prior week's bullish reversal. The very short-term trend is still up inside the larger downtrend. The TLT is now testing potential resistance near $90.00 and its 50-dma. If the rebound continues we can look for additional resistance in the $91.50-92.50 zone. I am not suggesting new positions at this time.
Our first, long-term target is $81.00.
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 $3.70/3.80
-stop loss on TLT @ 93.15
Jan. 09th, 2010 - entry price on TLT @ 89.29, option @ 8.90
symbol: YLI-MB, JAN 2012 $80 LEAP put - current bid/ask $6.15/6.30
-stop loss on TLT @ 93.15
Chart of TLT
UnitedHealth Group Inc. - UNH - close: 30.73 change: +0.10
Our UNH play may not be long for this world. I have been warning readers to expect a pull back toward support near $30.00 for several weeks now. It finally happened thanks to relative weakness in the healthcare sector. The broader market indices hit new 52-week highs last week but healthcare stocks continued to sink instead. That's a definitely a warning signal.
The HMO healthcare index has pulled back to short-term support near the 1500 level but it looks like it could correct down toward stronger support near the 1375-1400 zone. If that occurs then UNH will probably hit our stop loss at $28.95. I wish I could tell you that this pull back to support near $30.00 is a new buying opportunity but given Friday's action in the market we just don't know. Will there be follow through on Monday or will investors consider Friday a Goldman Sachs specific event?
Adding to the volatility this week will be UNH's earnings report. The company announces on April 20th before the market opens. Wall Street is looking for a profit of 69 cents a share. Investor reaction to UNH's results on Tuesday will probably determine if this play survives or not. Cautious traders may want to consider some short-term protective puts. I am not suggesting new positions at this time.
The plan was to use small positions to limit our risk.
Our long-term target is $42.50.
FYI: In other news UNH issued a press release last week telling the Federal government and the 50 states how they could save up to $366 billion in healthcare costs over the next ten years. Changing how the system cares for long-term care needs and disabilities along with an overhaul of Medicaid's administrative process were the main suggestions.
Dec 16th, 2009 - entry price on UNH @ 31.55, option @ 3.80
symbol: VUH-AG, 2011 JAN $35 LEAP call - current bid/ask $1.94/2.01
-stop loss on UNH @ 28.95
Chart of UNH:
Visa Inc. - V - close: 93.85 change: -0.60
The rally in V continues. News that Capital One's credit card defaults rose from 10.19% in February to 10.87% in March did not have much affect on Visa since Visa doesn't issue credit. Odds are the rise in consumer spending helped give V a lift. Better consumer spending should mean more sales and in today's world that means more transactions using Visa-branded cards.
The stock has rallied to new all-time highs hitting $95.26 on Thursday. While the trend is up and V is showing strength that does not mean the stock will be immune to any market-wide correction. If the S&P 500 sees any follow through lower Visa could become a target for profit taking.
I'm bullish on this stock but we might get a better entry point to open positions on a dip near the $87.50 area (watch the 100-dma). Our long-term target is the $109 mark. Investors might want to consider the 2012 LEAPS instead.
Mar 9th, 2009 - entry price on V @ 91.00, option @ 4.60
symbol: VSK1122A100 JAN 2011 $100 LEAP call - current bid/ask $5.15/5.30
-stop loss on V @ 81.75
Chart of V:
Wal-Mart Stores Inc. - WMT - close: 54.11 change: -0.02
WMT continues to trade as expected. We were looking for a dip toward $54.00 and we got it. The question is will the correction stop here or will WMT trade toward $52.50 or even the $50.00 level? I remain very bullish on WMT but short-term the trend is down. I would stay patient and wait for shares to dip further. This is a very long-term trade for us and we can enter positions anywhere in the $54-50 zone. Right now I would focus on the $52 area as an action point to consider putting capital at work.
Our long-term target is the $63.00 level. Since WMT does not move very fast readers may want to supplement their position by turning it into a calendar spread or a diagonal spread to enhance their gains.
Mar 7th, 2009 - entry price on WMT @ 54.14, option @ 4.60
symbol: WWT1221A55 JAN 2012 $55 LEAP call - current bid/ask $4.55/4.65
-stop loss on WMT @ 49.45
Chart of WMT
EMR $51.80 -1.15 -- Emerson Electric Co.
Take profits now!
EMR rallied to new 52-week highs with a move toward $53.00 on Thursday. Traders were quick to take profits on Friday as the market rolled over and EMR gave up 2.1%.
EMR has already hit our first target at $47.50 and we were aiming for $54.50 but given the market's performance on Friday I am suggesting an early exit right now.
I would much rather lock in a gain here than see the LEAP meltdown if the market sees any follow through lower.
Sept. 8th, 2009 - entry price on EMR @ 38.00, option @ $4.50
symbol: VHH-AH, 2011 JAN $40 call - current bid/ask $12.10/12.40
-stop loss on EMR @ 44.75
04/17/10 EXIT EARLY @ 51.80, option @ $12.10 (+168.8%)
02/18/10 1st Target hit @ 47.50, option @ $8.80 (+95.5%)
Chart of EMR:
Intel Corp. - INTC - close: 23.92 change: -0.30
Target achieved. It turned out to be a very bullish week for INTC with the stock soaring more than 6%. The company delivered a very bullish earnings report on April 13th and shares hit $24.37 by Thursday afternoon. Our target to exit has been the $24.00-26.00 range. I'm suggesting we exit now.
The details of INTC's report were very positive. The company beat estimates by 5 cents and revenues came in at $10.3 billion versus estimates of $9.8 billion. INTC's management raised their Q2 revenue estimates and their gross margin estimates. Longer-term I remain bullish on INTC but shares are overbought here. We may reconsider new positions following a correction.
June 13th, 2009 - entry price on INTC @ 16.31, option @ 1.36
symbol: VNL-AD, 2011 LEAP $20 call - current bid/ask $4.50/4.60
-stop loss on INTC @ 19.80
04/17/10 Target Achieved, INTC @ 23.92, option @ $4.50 (+230%)
Chart of INTC:
Mosaic Co. - MOS - close: $54.13 change: -1.03
I am suggesting we cut our losses on MOS. The stock was downgraded by Goldman Sachs this past week even. The firm believes potash prices could fall even though inventories for the industry have continued to slip for several months now. MOS has been under performing the market and broke down under potential support near $55.00 and its 200-dma.
Now it's certainly possible that shares rebound from here (here being the February lows near $53.00) but I would rather exit now. We still have exposure to the sector with the POT trade.
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 @ 6.27
symbol: ZXW-AM, 2011 LEAP $65 call - current bid/ask $3.30/3.50
-stop loss on MOS @ 51.90
04/17/10 Exit Early, MOS @ 54.13, option @ 3.30 (-47%)
Chart of MOS:
Oracle Corp. - ORCL - close: 25.95 change: -0.25
I am kicking ORCL off the newsletter for moving too slowly. I have mentioned this was a concern. While the trend is up and I think ORCL could be trading near $29-30 by the end of the year there is also an opportunity cost. I would rather free up our money tied up in ORCL to have available for candidates that offer more reward. Patient investors may want to keep this trade active. Just keep in mind that any time premium on the 2011 call is going to start eroding fast, especially once we get into the second half of the year.
Our long-term target was $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 $2.81/2.87
-stop loss on ORCL @ 22.95
04/17/10 Exit Early, ORCL @ 25.95, option @ 2.81 (+10%)
Chart of ORCL:
Occidental Petrol - OXY - close: 85.06 change: -1.41
Our aggressive trade on OXY did not get off to a very good start. There has been no follow through on its bounce from support near $85.00. Instead shares have only churned sideways bouncing along the $85 level even though the market hit new 52-week highs midweek. I find the lack of follow through higher to be disappointing and would rather take a 10% loss now than see it worsen.
I'm still bullish on OXY but we'd much rather open positions on a bounce from $77.50 than suffer through that decline and hope it bounces. Aggressive traders could let it ride since shares are still holding support near $85 for now. I hate to jump in and out of a trade like this but we need to make adjustments for market conditions.
I labeled this an aggressive trade because last week seemed like a riskier entry point and I suggested we only open small (half-sized) positions.
Apr. 10th, 2010 - entry price on OXY @ 86.56, option @ 7.00
option: 2011 JAN $90 call - current bid/ask $6.25/6.45
-stop loss on OXY @ 77.45
04/17/10 Exit Early, OXY @ 85.06, option @ 6.25 (-10%)
Apr. 10th, 2010 - entry price on OXY @ 86.56, option @ 8.00
option: 2011 JAN $100 call - current bid/ask $7.35/7.75
-stop loss on OXY @ 77.45
04/17/10 Exit Early, OXY @ 85.06, option @ 7.35 (-8.1%)
Chart of OXY:
Reynolds American Inc. - RAI - close: 53.84 change: -0.15
We have a new strategy for RAI - exit now! Big picture nothing has really changed for RAI. Shares are still consolidating sideways and the larger trend is still up. Short-term the market made a new high last week and RAI did not. Normally I would argue that RAI's trend of higher lows is bullish. Yet I'm also motivated to have readers lock in a gain with our LEAP call rising in value in spite of RAI's sideways movement.
Instead of holding on for our (adjusted) final target of $59.75 I am suggesting we exit 100% right now. Go ahead and lock in a profit.
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 $13.40/15.10
-stop loss on RAI at $50.75
04/17/10 Exit Early, RAI @ 53.84, option @ $13.40 (+197%)
10/19/09 Sell Half, RAI @ 49.50, option @ $8.90 (+97%)
Chart of RAI: