Closed Plays


We are closing TIE.


Play Updates


BorgWarner Inc. - BWA - close: 37.82 change: +0.02

It was a very quiet week for BWA. The stock spent the entire week in the $36-38 range. Depending on your bias BWA is coiling for a move higher or forming a mini head-and-shoulders pattern for a breakdown lower. I am not suggesting new bullish positions at this time. More conservative traders could exit now to try and avoid a loss.

We have already taken profits once at $44.50. Our second and final long-term target is $49.75.

Feb 17th, 2010 - entry price on BWA @ 37.55, option @ 3.90
symbol: BWA1122A40 2011 JAN $40 LEAP call - current bid/ask $3.90/4.40
-stop loss on BWA @ 33.75

05/29/10 Sell half of remaining position, BWA @ 37.26, option @ 3.90 (+0.00%)
04/29/10 1st Target Hit, BWA @ 44.50, option @ $7.63 (+95%)

Chart of BWA:


Cliffs Natural Resources - CLF - close: 55.97 change: +1.10

Volatility continues in CLF and shares rebounded more than 10% off their recent lows. The mining sector got a boost when word spread that Australia's Prime Minister was open to a compromise on the proposed "super tax" for miners. The big bounce in CLF is encouraging but we're not out of the woods yet. The stock has formed a pattern of lower highs and higher lows. This pennant-shaped pattern is normally neutral and stocks tend to breakout in the direction of the prior trend, which in this case was down with the April sell-off. Fortunately we do have the simple 200-dma providing some support.

Traders looking for an entry point could try and jump in on another bounce near $50.00 and the 200-dma or wait for a close over $60.00 and its 50-dma. Keep your positions very small.

Prior Comments:
This is an aggressive trade. CLF can be volatile. Plus, there is a chance that Australia will levy a new tax on resource names like CLF. I suggested readers keep their position size small. Our first target is $75.00.

May 21, 2010 - entry price on CLF @ 46.50, option @ 6.65
symbol: CLF 11A60.00 2011 JAN $60 call - current bid/ask $8.25/8.45
-stop loss on CLF @ 44.90

- or -

May 21, 2010 - entry price on CLF @ 46.50, option @ 7.55
symbol: CLF 12A70.00 2012 JAN $70 call - current bid/ask $10.00/10.80
-stop loss on CLF @ 44.90

06/05/10 Suggested Cautious Traders Exit Early!

Chart of CLF:


ConocoPhillips - COP - close: 53.50 change: +0.13

Crude oil managed a bounce and the oil sector stocks delivered a sharp two-day rebound late last week. Shares of COP managed to outperform with a move to new three-week highs. On one hand the action over the past few weeks has produced a higher low in its long-term up trend. Or you could argue that COP has formed a bear-flag pattern following the May sell-off. A close over short-term resistance at $54.00 would help alleviate the bear-flag fears. A close over $54 might also be a new bullish entry point but keep an eye on the 50-dma. Our first target is $69.00.

May 20, 2010 - entry price on COP @ 51.00, option @ 3.75
symbol: COP 11A55.00 2011 JAN $55 call - current bid/ask $3.70/3.95
-stop loss on COP @ 46.00

- or -

May 20, 2010 - entry price on COP @ 51.00, option @ 4.75
symbol: COP 11A55.00 2012 JAN $60 call - current bid/ask $4.10/4.50
-stop loss on COP @ 46.00

Chart of COP:


EMC Corp. - EMC - close: 18.67 change: +0.13

The action in EMC this past week was encouraging. Shares managed to rebound near their 200-dma and form a higher low. Shares appear to be building steam for a move higher. A close over June's high near $19.12 or the mid May high of $19.22 bolster this outlook. If the market can avoid a meltdown I think EMC's odds are improving. Keep any new positions small to limit your risk.

Currently our stop loss is at $16.75. More aggressive traders may want to use a wider stop (maybe $15.90). Our first target is $22.50. Our second, longer-term target is $24.75.

May 6, 2010 - entry price on EMC @ 18.25, option @ 1.40
symbol: EMC 11A20.00 2011 Jan $20 call - current bid/ask $1.15/1.19
-stop loss on EMC @ 16.75

- or -

May 6, 2010 - entry price on EMC @ 18.25, option @ 2.50
symbol: EMC 12A20.00 2012 Jan $20 call - current bid/ask $2.37/2.57
-stop loss on EMC @ 16.75

Chart of EMC:


Fortune Brands - FO - close: 47.11 change: -0.20

The action in FO is also encouraging. Shares underperformed on Friday after Citigroup started coverage on them with a "sell" rating and a $41 price target before the bell on Friday. Traders bought the dip and FO recovered toward the close. Traders bought the dip last week near FO's rising 200-dma so the trend of higher lows is still intact. However, I will point out that FO needs to close over $48.25 or maybe the 50-dma closer to $50.00 to really affirm the up trend. If you do launch positions keep them small to limit your risk.

We have already chosen to sell half our position near $52. Our long-term (final) target is $59.75.

Mar. 12th, 2009 - entry price on FO @ 47.55, option @ $2.20
symbol: FO1018I50 SEP 2010 $50 call - current bid/ask $1.65/ 1.80
-stop loss on FO @ 42.90

05/29/10 -Conservative traders should exit now-
04/17/10 Sell Half - FO @ $52.00, option @ $4.30 (+95%)

Chart of FO:


Lockheed Martin - LMT - close: 78.75 change: +0.28

Shares of LMT dipped to a new relative low at $75.74 but traders quickly bought the dip under $76.00 and LMT began a four-day rebound. The close over its 200-dma is technically bullish but I remain wary. LMT could face a lot more volatility. The Pentagon is still mulling over how they're going to shave $100 billion off their budget and LMT's programs could be affected. I am not suggesting new bullish positions in LMT at this time.

Our first target is $99.00. Our second, longer-term target is $109.00.

FYI: Our plan was to only use small (half) positions to limit our risk.

May 6, 2010 - entry price on LMT @ 80.50, option @ 6.50
symbol: LMT 11A85.00 2011 Jan $85 call - current bid/ask $ 3.30/ 3.60
-stop loss on LMT @ 74.75

- or -

May 6, 2010 - entry price on LMT @ 80.50, option @ 7.70
symbol: LMT 12A90.00 2012 Jan $90 call - current bid/ask $ 4.80/ 5.40
-stop loss on LMT @ 74.75

06/05/10 More Conservative traders may want to exit early!

Chart of LMT:


Mckesson - MCK - close: 69.67 change: -0.03

It turned out to be a quiet week for MCK. Shares spent most of it drifting sideways in the $68-70 zone. Thus far MCK has managed to maintain its bullish trend of higher lows. However, it is worth noting that Reuters ran an article on June 9th showing that MCK was one of the top five stocks that saw the biggest change in short interest. Bears increased their short-interest from 2.1 million shares on May 14th to 15.1 million shares on May 28th. It could have been traders betting that MCK would roll over under the $70.00 level. Whatever the case the +600% surge in short interest is a warning. It also creates the opportunity for a short squeeze if MCK can break higher.

MCK will hold an analyst meeting on June 17th, which might produce some stock moving headlines.

Previous Comments:
This was labeled an aggressive trade with a plan to keep positions small. Our first target is $94.50.

May 18, 2010 - entry price on MCK @ 71.00, option @ 3.25
symbol: MCK 11A75.00 2011 Jan $75 call - current bid/ask $ 3.70/ 4.00
-stop loss on MCK @ 63.99

- or -

May 18, 2010 - entry price on MCK @ 71.00, option @ 4.10
symbol: MCK 12A80.00 2012 Jan $80 call - current bid/ask $ 5.00/ 6.00
-stop loss on MCK @ 63.99

Chart of MCK:


Millicom Intl. - MICC - close: 85.14 change: +1.53

Things are looking up for MICC. After three weeks of consolidating sideways on either side of $80 and its 200-dma the stock managed to breakout higher thanks to the market's widespread rebound late last week. The rally did stall near short-term resistance near $85 and its 50-dma but hopefully this is just temporary. I'm still bullish on MICC but this remains an aggressive trade on a volatile stock.

Previous Comments:
If you open positions keep them small to limit your risk. MICC is a volatile stock. Our long-term target is $99.50 and the $109.00 levels.

May 6, 2010 - entry price on MICC @ 80.00, option @ 8.60
symbol: MICC 11A90.00 2011 Jan $90 call - current bid/ask $ 7.00/ 8.10
-stop loss on MICC @ 74.40

Chart of MICC:


PEPSICO Inc. - PEP - close: 63.56 change: -0.28

The sideways consolidation in PEP continues. Shares are stuck in the $61-64 zone with technical resistance at $64 and its 100-dma. If PEP does breakout the stock has additional resistance in the $66-67 zone. More aggressive traders may want to consider bullish positions on a close over $64 but I would up your stop toward $61 and keep your positions small. If the S&P 500 breaks down under 1040 I think PEP will follow it lower. Our final target is $72.25.

July 7th, 2009 - entry price on PEP @ 57.25, option @ $4.50(estimate)
symbol: VP-AL, 2011 $60.00 LEAP call - current bid/ask $6.15/6.30
-stop loss on PEP at $59.85

06/05/10 More cautious traders may want to exit now to avoid a loss.

03/27/10 SELL HALF: PEP $ 66.59, Option @ $8.00 (+77.7%)

Chart of PEP:


Transocean Ltd. - RIG - close: 46.85 change: +2.58

Our aggressive trade on RIG has been opened. We recently placed RIG on the watch list with a plan to buy call LEAPS if shares dipped toward the December 2008 low of $41.95. Sure enough on June 9th the stock fell to $41.88 and bounced the next day. Our official entry point was $43.50. The overall trend is still down and there is nothing stopping RIG from rolling over and plunging through $40.00, especially the way the political rhetoric is heating up over the oil spill. We don't know yet if RIG will have any exposure to the clean up costs and how much that might be. Given the huge decline in RIG's market cap investors seem to be pricing in a worst case scenario.

Previous Comments:
This is a very aggressive trade given the unknown risks associated with RIG's connection to the Gulf oil spill. Our stop loss is at $38.45. More conservative traders could place theirs closer to $40.00 or the low near $41.88. Our long-term targets are $59 and $75.

Jun 09, 2010 - entry price on RIG @ 43.50, option @ 6.50
symbol: RIG 11A50.00 2011 Jan $50 call - current bid/ask $ 7.70/ 7.95
-stop loss on RIG @ 38.45

- or -

Jun 09, 2010 - entry price on RIG @ 43.50, option @ 7.25
symbol: RIG 12A60.00 2012 Jan $60 call - current bid/ask $ 7.90/ 8.35
-stop loss on RIG @ 38.45

Chart of RIG:


Ruby Tuesday Inc. - RT - close: $10.02 change: +0.16

We have had RT on our watch list for a long time. Shares finally hit our trigger to open bullish positions last week. The stock dipped to $9.03 on June 8th. We suspected that the $9.00 level would act as support and placed our trigger to buy the stock or calls at $9.05. I am raising our stop loss to $8.40. Shares managed to bounce back toward $10.00, which as prior support is now new resistance. Don't be surprised to see RT bounce around the $9-10 zone for a while if the market doesn't trend higher.

Previous Comments:
I prefer buying the stock over the option. Our long-term targets are $12.00 and $14.75.

Jun 08, 2010 - entry price on RT stock @ 9.05
-stop loss on RT @ 8.40

- or -

Jun 08, 2010 - entry price on RT @ 9.05, option @ 1.90
symbol: RT 11A10.00 2011 Jan $10 call - current bid/ask $ 1.40/ 2.25
-stop loss on RT @ 8.40

Chart of RT:


WLT - Walter Energy Inc. close: $72.02 change: +2.31

Whew! A week ago things were looking pretty ugly for the coal stocks. Thankfully traders bought the dip in WLT near the May lows. This rebound could be part of a bullish double-bottom pattern. It could also be part of a larger bearish head-and-shoulders pattern. It all depends on your bias and time frame. Short-term WLT still has some resistance near the 200-dma and then near the $80.00 level.

The recent news out of China regarding the growing exports and growing loans through their banking system should bode well for the country's growth rate and that should be bullish for coal demand. Aggressive traders could use this bounce as a new bullish entry point but keep your positions small to limit your risk. WLT is a very volatile stock.

Prior Comments:
Keep an eye open on news regarding China. The plan was to use small positions to limit our risk. Our first target is $99.00.

May 6, 2010 - entry price on WLT @ 73.00, option @ 12.00
symbol: WLT 11A80.00 2011 Jan $80 call - current bid/ask $ 9.10/ 9.90
-stop loss on WLT @ 64.90

- or -

May 6, 2010 - entry price on WLT @ 73.00, option @ 14.10
symbol: WLT 12A90.00 2012 Jan $90 call - current bid/ask $12.00/14.60
-stop loss on WLT @ 64.90

Chart of WLT:


Wal-Mart Stores Inc. - WMT - close: 50.86 change: -1.36

It was a very quiet week for shares of WMT, which drifted sideways in a narrow range. Shares held up reasonably well considering the disappointing May retail sales numbers. The three-month trend is still down but thus far WMT is holding above its long-term trend of higher lows (see chart). I'm still bullish on WMT and see the dip near $50 as an entry point to buy long-term call LEAPS. If the U.S. economy is going to recover then WMT should be a major beneficiary. Even if we do roll over into a double-dip recession WMT should weather the storm better than most but odds are we'll be stopped out early on.

Previous Comments:
Our stop loss is at $48.95. 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 $3.80/4.00
-stop loss on WMT @ 48.95

Chart of WMT


CLOSED Plays

Titanium Metals - TIE - close: 19.56 change: +0.32

On May 29th in my editor's note for the play updates section I suggested that investors should be more defensive and quicker to take profits. I'm trying to follow that suggestion tonight with an early exit in TIE. The stock has continued to outperform. Shares broke out to new 52-week highs last week and hit $19.61 on Friday afternoon. Our final target we have been aiming for is $19.75. I suggest we go ahead and close this play early. More aggressive traders could keep this trade open since there is nothing slowing down this stock. The $20.00 level could be psychological, round-number resistance but it may be temporary resistance. TIE could hit $24-25 before the year is out at this pace and we still have the 2012 call LEAPS.

Previous Comments:
A few weeks ago we closed the 2011 January $15 call LEAP. Our final, long-term target is $19.75. More aggressive traders may want to aim a lot higher.

Feb. 20th, 2010 - entry price on TIE @ 12.06, option @ 2.60
symbol: WWN1221A15, 2012 JAN $15 LEAP call - current bid/ask $7.30/7.80
-stop loss on TIE @ 13.49

06/12/10 EXIT EARLY: TIE @ 19.56, option @ 7.30 (+180%)

03/27/10 SELL HALF: TIE @ 16.21, option @ 4.50 (+73%)

Chart of TIE: