Several stocks are trading at or near their 52-week highs. I would hesitate to chase these here. Readers may want to think about taking some money off the table on a few of these to lock in a profit.
BIIB turned lower following its earnings report and hit our stop loss.
Arch Coal Inc. - ACI - close: 28.13 change: +0.53
Shares of ACI continue to climb in spite of a disappointing Q1 earnings report. The company announced a profit of 3 cents a share versus estimates of 8 cents. Revenues were also a miss. Yet management raised their full year 2010 guidance on stronger metallurgical coal sales. ACI now expects 2010 earnings in the $1.00-1.40 range compared to estimates of $0.89. The stock has been creeping higher all week and shares are now challenging their 2010 highs near $28.00. In other news ACI raised their cash dividend from 9 cents to 10 cents a share, payable on June 15th to shareholders of record on June 1st.
The recent strength the last couple of weeks is encouraging and helps break up the bearish head-and-shoulders pattern that has been forming over the last several months. While I remain bullish on ACI I'm not suggesting new bullish positions at this time. Our final target for the LEAP trade is $34.75. Please note our new stop loss at $21.95.
FYI: Readers may want to consider taking some money off the table right now. The 2012 option has almost doubled.
May 14th, 2009 - entry price on ACI @ 16.00, option @ 2.40
symbol: OSE-AF, 2011 JAN $30 LEAP call - current bid/ask $3.50/3.70
-stop loss on ACI @ 21.95 *new*
Feb 13th, 2010 - entry price on ACI @ 21.65, option @ 4.40
symbol: YEP1221A25 2012 JAN $25 LEAP call - current bid/ask $8.20/8.50
-stop loss on ACI @ 21.95 *new*
Chart of ACI:
Berkshire Hathaway Inc. - BRK.B - $78.95 +0.27
If you just looked at the closing numbers then last week was very forgettable. Shares of BRK.B barely moved. Yet the trend continues to deteriorate. The midweek bounce failed near $80.00 and its 50-dma. It certainly looks like the path of least resistance is down for the moment. That's okay. We've been expecting a correction in BRK.B for weeks. While the $77-75 zone could offer some support I am suggesting readers focus on the $73-70 zone instead. The market has yet to correct and when it does it will probably over-correct. The $70.00 level is bolstered by the simple 200-dma and should be very significant support. 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 $5.80/6.10
-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 $7.60/8.10
-stop loss on BRK.B @ 69.00
Chart of BRK.B:
BorgWarner Inc. - BWA - close: 41.16 change: +0.97
BWA delivered a solid performance last week with shares finally breaking out past resistance at the $40.00 level. While I would have preferred to open new positions on a dip I did suggest an alternative entry point with a close over $40.00, which happened on Thursday. Investors have been buying the dips for weeks now. Let's just hope that BWA does not disappoint the street when they report earnings on April 29th. The results come out before the opening bell and analysts are expecting a profit of 41 cents a share. Naturally, I'm expecting some post-earnings profit taking so readers may still want to take a wait-and-see approach before launching positions. Please note our new stop loss at $33.90 near the 200-dma.
Our first target is $44.50. Our second target is $49.75.
Feb 17th, 2010 - entry price on BWA @ 37.55, option @ 3.90
symbol: ZWY1122A40 2011 JAN $40 LEAP call - current bid/ask $5.00/5.70
-stop loss on BWA @ 33.90 *new*
Chart of BWA:
Celgene Corp. - CELG - close: 59.81 change: +1.15
Ouch! It was a painful week for CELG. The stock broke down under round-number support at $60.00 with two days of selling. I have yet to find any specific news to account for the sharp selling pressure on Wednesday and Thursday morning. There was some chatter that maybe investors are worried about how the healthcare reform law will affect CELG sales. I cautioned readers a week ago that the $58 level may not hold and CELG could correct toward technical support at its rising 200-dma. Thankfully traders bought the dip on Thursday near $57.00. Unfortunately, I'm not very enthusiastic about buying this bounce at least not with the major market averages still looking overbought.
Right now the levels I am watching are likely support in the $57-55 zone and overhead resistance in the $60-62 zone. You can choose to buy dips or bounces near support or wait for a breakout over resistance again but bigger picture I'm reluctant to open positions with the market still this extended.
Keep in mind that the BTK biotech index has begun to correct and that could put additional pressure on shares of CELG. Furthermore the company is due to report earnings on April 29th. The results come out before the market opens and Wall Street expects a profit of 60 cents a share.
Our long-term 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 $4.30/4.50
-stop loss on CELG @ 54.75
Chart of CELG:
Fortune Brands - FO - close: 53.86 change: +0.13
Consumer-related stocks continue to march higher and FO managed to make new 52-week highs. I don't see any big changes from my prior comments. I remain bullish on the stock but would hesitate to buy it ahead of its earnings report. Short-term the stock should have some support near $50.00 but if the market really corrects then shares of FO could pull back toward the $48-46 zone.
We have already chosen to sell half our position near $52. Our long-term (final) target is $59.75.
FYI: FO is due to report earnings on April 29th. The results come out before the opening bell and analysts expect a profit of 31 cents a share.
Mar. 12th, 2009 - entry price on FO @ 47.55, option @ $2.20
symbol: FO1018I50 SEP 2010 $50 call - current bid/ask $5.50/ 5.90
-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: 30.31 change: +1.78
It's amazing the difference another week can make. A few days ago I was worried that FST was about to breakdown and retest the $25-24 zone. Instead shares have surged back toward their March highs near $30.00. The stock garnered some bullish analyst comments on Thursday, which helped accelerate the rally. Short-term shares look strong but they have to get through resistance at $30.00 first. I wouldn't be surprised to see a dip and bounce near $28.00 before FST finally breaks out higher.
We also want to keep in mind that FST is due to report earnings in about six trading days. The results come out on Monday, May 3rd after the closing bell. Wall Street wants to see a profit of 47 cents a share. The strength in oil service stocks is encouraging since this is normally a seasonally weak period before oil rallies into summer for driving season.
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 $10.20/11.40
-stop loss on FST @ 23.45
Chart of FST:
McDermott Intl. - MDR - close: 28.70 change: +0.94
The trading gods have smiled on us and the correction in MDR appears to have been aborted. Traders bought the dip on Monday near its rising 30-dma and the stock has been making its way higher since. Now shares are hitting new 52-week highs. While the action in MDR is bullish I'm still somewhat reluctant to open new positions. My concern remains the broader market and how long it's been without a correction. Readers could choose to open small positions in MDR. We started with a half position given our aggressive entry point.
If the stock does correct I'm looking for support in the $26-24 zone.
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 $ 2.90/ 3.20
-stop loss on MDR @ 23.90
Chart of MDR:
Manitowoc Inc. - MTW - close: 15.63 change: +0.09
MTW has spent the last few days consolidating its gains. Actually the stock has spent almost two weeks now churning sideways and given the trend of higher lows MTW looks poised to rally from here. The success of any future rally could be determined by the company's earnings report. MTW announces on April 27th after the closing bell. Analysts are expecting a loss of 1 cent per share.
On a short-term basis if MTW can breakout past the $15.75 level I would expect a move toward the $17.50-17.75 zone. Therefore I am adjusting our final target again. We've already taken profits once. We'll move the final target to exit to $17.50. More aggressive traders, or if you bought the stock instead of the option, may want to hold on and aim for the $20.00 level over the next several months.
I am not suggesting new bullish positions at this time.
Oct 30th, 2009 - entry price on MTW @ 9.10, option @ 2.61
symbol: VMT-AB, 2011 JAN $10 call - current bid/ask $6.00/6.30
-stop loss on MWT @ 11.75
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
01/18/10 Sell Half! MTW @ 13.70 (+50.5%)
Chart of MTW:
PEPSICO Inc. - PEP - close: 64.71 change: -0.05
As expected PEP continued to drift sideways into its earnings report. Management announced a profit of 89 cents a share, which was 14 cents better than expected. Unfortunately, the revenue number missed estimates. PEP offered 2010 guidance that was inline with prior estimates of 12% growth. Investors decided to sell the news. That's not too surprising since we were expecting a correction toward the $64-62 areas. I would still watch for a dip toward $62 or even the rising 200-dma.
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 $6.40/6.55
-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: $109.84 change: +0.90
POT finally produced an oversold bounce. Shares managed to end three weeks of declines with a gain this past week. Yet the trend is still down. I would not be surprised to see shares of POT churn sideways as investors wait for the company's earnings report. POT is due to announce results on April 29th before the market opens. Wall Street expects a profit of $1.32 a share.
The stock should have short-term support near $105 and its simple 200-dma. If that fails then the $100 level could offer some round-number support. POT can be volatile following its earnings reports and traders may want to consider the cost of buying a protective put ahead of the earnings announcement.
I am not suggesting new bullish positions at this time. Let's wait and see what the company has to say about earnings.
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 $14.30/14.50
-stop loss on POT @ 98.50
SELL HALF (03/13/10) option @ $26.35 bid (+124%)
Chart of ORCL:
PartnerRe Ltd. - PRE - close: 81.57 change: +0.50
A week ago it looked like PRE was going to roll over after failing more than once near the $81 level. Traders changed their mind and bought the dip on Monday and PRE has been up every day since. Now shares are breaking out to new six-month highs. The relative strength is encouraging but I hesitate to chase the stock here. The 2009 highs near $81.70 remain potential resistance.
I remain long-term bullish on PRE but short-term I am not suggesting new positions. Please note our new stop loss at $74.75. 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 $3.90/4.30
-stop loss on PRE @ 74.75 *new*
Chart of PRE:
UltraShort 20+ Year Treasury Bond ProShares - TBT - cls: 47.37 chg: +0.31
U.S. bonds continue to garner money as the bond market rallied. I suspect most of this is concern over Europe and the festering problem with Greece. The U.S. dollar has been rising as the euro sinks toward its lows. A week ago I suggested that nimble traders may want to buy calls on a dip near $46.50 and the low on Thursday was $46.37. The TBT is bouncing from this short-term level of support. For those of us that are less aggressive I'm suggesting we wait for a 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 $2.09/2.21
-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 $4.40/4.60
-stop loss on TBT @ 45.90
Chart of TBT
Titanium Metals - TIE - close: 16.72 change: +0.31
The correction in TIE was also cut short this past week. Traders jumped in on Monday to buy the dip and TIE ended up with a gain for the week. Depending on the time frame you look at TIE is still overbought and due for a pull back or it's ready to rally higher. Given the market's trajectory I wouldn't be surprised to see TIE challenge its highs near $17.30 soon. I'm still long-term bullish on this stock but I'm not suggesting new bullish positions at this time. I will raise the stop loss to $12.90.
Last week we sold the 2011 January $15 LEAP but kept the 2012 January $15 LEAP open. Our final, long-term target is $19.75.
Feb. 20th, 2010 - entry price on TIE @ 12.06, option @ 2.60
symbol: WWN1221A15, 2012 JAN $15 LEAP call - current bid/ask $4.70/5.00
-stop loss on TIE @ 12.90 *new*
03/27/10 SELL HALF: TIE @ 16.21, option @ 4.50 (+73%)
Chart of TIE:
iShares 20+Yr Bond ETF - TLT - close: 90.11 change: -0.32
The bond market has continued to rally but it appear to run out of steam Thursday and Friday. Shares of the TLT failed right where you might expect near its trendline of lower highs and its 100-dma. More aggressive traders may want to consider new bearish positions at this time. I am not suggesting new positions for the average investor.
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 $3.60/3.75
-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 $6.20/6.35
-stop loss on TLT @ 93.15
Chart of TLT
UnitedHealth Group Inc. - UNH - close: 30.95 change: +0.49
The HMO healthcare sector index managed a bounce this week and that helped UNH hold on to support near the $30.00 level. Unfortunately we also saw UNH produce a failed rally near short-term resistance near $32.00. It is somewhat disappointing to see UNH act this weak following its earnings report. The company delivered a Q1 profit of $1.03 a share compared to estimates for just $0.69. Revenues rose over 5% and management raised their 2010 guidance. The lack of support by investors following this bullish earnings news could be a warning signal. Readers may want to wait for UNH to close over its 50-dma (currently near $32.60) before considering new bullish positions.
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 $1.92/1.98
-stop loss on UNH @ 28.95
Chart of UNH:
Visa Inc. - V - close: 96.59 change: +1.45
Anything consumer-related continues to march higher and shares of Visa managed to breakout to new all-time highs. The rally picked up steam on Thursday and managed to push past the $95 level. Visa should have a clear shot at the $100 level soon. The $100.00 mark could act like a psychological magnet for traders but it could also be round-number resistance. This past week saw V garner bullish analyst comments and a new $110 price target.
More conservative traders may want to consider taking profits ahead of Visa's earnings report since there is always a chance investors could sell into strength to lock in gains. The company is due to announce on April 28th after the closing bell. Wall Street is expecting a profit of 91 cents a share. I am not suggesting readers chase this stock. Broken resistance near $90.00 should become new support. Please note that I am raising our stop loss to $84.90. More conservative traders may want to adjust theirs even higher.
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 $6.50/6.60
-stop loss on V @ 84.90 *new*
Chart of V:
Wal-Mart Stores Inc. - WMT - close: 54.53 change: +0.04
WMT managed to eke out a gain for the week as investors bought the dip near $54.00. I don't see any changes from my prior comments and since WMT tends to move somewhat slowly I'm not expecting any real changes in our strategy.
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 $4.80/5.00
-stop loss on WMT @ 49.45
Chart of WMT
Biogen IDEC - BIIB - close: 52.59 change: +0.56
It has been a disappointing week for BIIB. The company reported earnings on April 20th and missed estimates and the revenue numbers. The oversold bounce from Monday was sold immediately and shares eventually broke down under support near $52.00. The stock hit our stop loss at $51.85 on Thursday. This week's weakness makes sense given the earnings news but the relative weakness over the last several weeks remains a mystery. The BTK biotech index is beginning to correct so the weakness in BIIB may not be over yet.
Feb 19th, 2010 - entry price on BIIB @ 56.60, option @ 4.60
symbol: OIY1122A60 2011 JAN $60 LEAP call - current bid/ask $2.30/2.50
-stop loss on BIIB @ 51.85
04/22/10 Stopped out $51.85, option @ $2.20 (-52%)
Chart of BIIB: