Closed Plays


None. No closed plays this week.


Play Updates


Boeing Co. - BA - close: 67.96 change: +0.70

The rally in BA continues. Shares managed to close over technical resistance at the 100-dma but it has yet to clear the 50-dma. A week ago I mentioned that the IATA had raised their airline industry forecast to a profit for 2010. Now Forbes just ran an article suggesting the airline industry could see another buying binge for new planes.

On a short-term basis you could argue BA is a little overbought with the $8 bounce from $60. The $70 level could be significant support/resistance. Thus I would expect BA to spent a few days consolidating, maybe that means it moves sideways or maybe it retraces back to $65-63 before rebounding again. If you're looking for a new entry point I'd wait for the dip. FYI: I have adjusted our entry point for Monday's open.

Remember we want to keep our positions very small. I'm suggesting a stop loss at $59.45. Our long-term target is $79.00.

FYI: Readers may want to consider 2012 calls.

Jun 12th, 2010 - entry price on BA @ 66.22, option @ 5.55
symbol: BA1122A70 2011 JAN $70 LEAP call - current bid/ask $5.60/5.70
-stop loss on BA @ 59.45

Chart of BA:


Popular Inc. - BPOP - close: 3.00 change: +0.10

Shares of banking stock BPOP continue to churn sideways under short-term resistance in the $3.08-3.10 area. Overall the bounce in financials and BPOP still looks attractive. We still don't know what form the government's new financial regulation will take so it remains a dark cloud over the industry and raises our risk for bullish positions in the banking sector. However, BPOP is cheap enough the stock acts like a long-term option that never expires. That doesn't mean you should over do it. Keep your position size limited to reduce your risk. BPOP is still a bank and nonperforming loans could be a problem, especially since unemployment in Puerto Rico is more than 15% (Puerto Rico is BPOP's home base).

I am suggesting a stop loss at $2.40. Our first long-term target is $4.00. More aggressive traders may want to aim higher.

Keep your position size small to limit your risk!

BUY the STOCK (BPOP) not the option.
06/14/10 Entry Point: BPOP opened @ 2.91.
Stop loss at $2.40.

Chart of BPOP:


BorgWarner Inc. - BWA - close: 41.31 change: +0.22

Things got a little exciting on Tuesday. Shares of BWA gapped open higher and closed above round-number, psychological resistance at the $40.00 level. The move was fueled by an analyst upgrade from "neutral" to "buy" with a $50 price target. The rally did stall the last three days but the short-term trend is up. Look for the $40-38 zone to offer some short-term support. I am raising our stop loss to $34.75. More conservative traders who have not exited yet may want to raise their stop toward $36.00.

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 $5.70/6.30
-stop loss on BWA @ 34.75

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: 56.22 change: -0.14

It turned out to be a quiet week for CLF. The stock gained about 25 cents as it bounced around the $56-58 zone. Meanwhile CLF is still trying to negotiate a buyout offer for Spider Resources Inc. CLF raised their bid by 27% to $109 million in Canadian dollars. Currently Spider is in a merger deal with KWG Resources but Spider's board of directors has stated that CLF's bid is better. I don't see the Spider deal having much of an impact on CLF, who has annual revenues of $2.6 billion.

The $58 level has been resistance for a few weeks now. I would not be surprised to see CLF dip back toward the $52-50 zone. If shares do decline look for the dip or a rebound from this area as a new bullish entry point. An alternative entry point would be a close over resistance near $60 and its 50-dma.

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 $7.50/7.75
-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 $ 9.70/10.10
-stop loss on CLF @ 44.90

06/05/10 Suggested Cautious Traders Exit Early!

Chart of CLF:


ConocoPhillips - COP - close: 56.01 change: +0.83

Some of the big name oil stocks are doing well. Strength in oil on dollar weakness hasn't hurt this sector. Shares of COP appear to be outperforming its peers a little bit with a nice four-day rally and a bullish breakout above its 50-dma. I am raising our stop loss to $47.99. Broken resistance near $54 should offer a little support now. 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 $4.60/4.75
-stop loss on COP @ 47.99

- or -

May 20, 2010 - entry price on COP @ 51.00, option @ 4.75
symbol: COP 11A55.00 2012 JAN $60 call - current bid/ask $4.70/5.00
-stop loss on COP @ 47.99

Chart of COP:


EMC Corp. - EMC - close: 19.35 change: +0.00

It was a bullish week for EMC with a 3.6% gain and new six-week highs. The stock garnered an upgrade on the 17th to a "buy" rating and a $25 price target. While the trend in EMC has improved short-term the stock looks a little overbought with a nearly non-stop rally from its June 10th bounce. Don't be surprised to see it consolidate sideways or lower for a few days.

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 $1.34/1.39
-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 $2.75/2.87
-stop loss on EMC @ 16.75

Chart of EMC:


Fortune Brands - FO - close: 45.15 change: +0.01

The retail-related stocks have been under performing the market the last three days. Unfortunately FO's under performance started on Monday with a failed rally at $48.00. Shares are now retesting technical support near their rising 200-dma. A breakdown here would be very bearish and suggest a drop toward $35 or the fourth-quarter lows. More conservative traders who are still in this trade may want to raise their stops. I am not suggesting new positions at this time.

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 $0.65/ 0.80
-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: 80.69 change: -0.26

The short-term trend in LMT is still up but if you step back shares are stuck in the $76-82 trading range. It was encouraging to see traders buying the dips near $80.00 this past week but that could have been influenced by option expiration and the $80 strike price.

The markets are worried that LMT could suffer as the Pentagon tries to trim its budget. Investors have a right to be worried. LMT is the biggest military contractor on the planet and one of their biggest projects, the F-35 aircraft program has come under scrutiny. Long delays and out of control costs have pushed the estimated cost for the program to $382 billion for 2,457 planes over the 25-year life of the program (source: NYT). With potential budget cuts in military spending I would hesitate to launch new positions in LMT at this time. Of course there is a chance that any cuts will be smaller than expected and that could send shares of LMT higher.

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/ 3.70
-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 $ 5.00/ 5.50
-stop loss on LMT @ 74.75

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

Chart of LMT:


Mckesson - MCK - close: 70.09 change: -1.01

Hmm... the market just had its best two-week run in months and MCK has been unable to hit new highs. Shares came close to their early June high but didn't quite make it. Is this a potential bearish double top? It is too early to tell for now but I am concerned that many of MCK's technical indicators are beginning to roll over as the stock fails to make any new headway. Overall the trend remains higher but it wouldn't surprise me to see MCK retest the $68 level and its rising 50-dma before closing above $72.

Remember, MCK has seen a sharp increase in short interest. If shares do close at a new high we could witness a short squeeze as bears try and cover positions.

I did not see any stock moving headlines out of MCK's analyst meeting on the 17th but the company did reaffirm its previous earnings guidance.

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 $ 3.40/ 3.60
-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/ 5.80
-stop loss on MCK @ 63.99

Chart of MCK:


Millicom Intl. - MICC - close: 87.29 change: +0.89

MICC did post another gain for the week but shares spent most of their time churning sideways in the $86-88 zone. On a positive note MICC has broken out above its 50-dma. I remain bullish on MICC but readers may want to wait for a dip back toward the $85-84 zone before considering new bullish positions.

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 $ 8.20/ 9.20
-stop loss on MICC @ 74.40

Chart of MICC:


PEPSICO Inc. - PEP - close: 64.08 change: -0.41

Shares of PEP experienced a very quiet week with the stock barely moving as it hovered on either side if $64. The simple 50-dma is likely resistance directly overhead. If shares decline I would expect a dip back toward the $61 level and its May-June lows. I hesitate to open new positions at this time. 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 $6.10/6.25
-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: 54.61 change: +5.18

RIG delivered an exceptional performance last week with a 16.5% gain. More than 10% of that was gained on Friday. BP has been getting beat up in front of Congress and the TV cameras and the market is beginning to realize that RIG's potential liability to the oil spill in the Gulf is limited. The sharp move in shares of RIG could also be a little short covering as RIG breaks out over the $50.00 mark. I am sorely tempted to take profits now with our 2011 Jan. $50 calls almost double what we paid for them. More conservative traders may want to go ahead and book an early profit now. We are going to stick to our plan. On a technical note the $50.00 level should offer some short-term support now. Please note our new stop loss at $41.80.

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 $11.10/11.35
-stop loss on RIG @ 41.80

- or -

Jun 09, 2010 - entry price on RIG @ 43.50, option @ 7.25
symbol: RIG 12A60.00 2012 Jan $60 call - current bid/ask $10.75/11.30
-stop loss on RIG @ 41.80

Chart of RIG:


Ruby Tuesday Inc. - RT - close: $10.35 change: +0.06

Shares of RT have been bouncing around the $10.00-10.50 zone. I don't see any changes from my prior comments. If the market rolls over then RT could retest support near $9.00. If not then shares are facing technical resistance at the 50-dma near $11.00. The action two weeks ago certainly looks like a bullish reversal but I hesitate to launch new positions at this time.

FYI: RT will be presenting at an analyst consumer (industry) conference on June 23rd.

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 $ 1.60/ 2.10
-stop loss on RT @ 8.40

Chart of RT:


U.S. Natural Gas ETF - UNG - close: 8.53 change: -0.20

Shares of the UNG posted some strong gains early last week but momentum stalled a little bit. Shares have been hovering near $8.50, which was previous support back in December and March. On a short-term basis you could argue this ETF is a little overbought. Readers may want to wait for a dip or a bounce from the $8.00 area before considering new bullish positions. Look for the $9.00 level and the 200-dma to offer some overhead resistance. Our first long-term target is $10.85 but we will probably adjust this as necessary.

Just because the options look "cheap" don't buy too many. Be disciplined with your position size. You can add to positions later once UNG confirms the trend change.

Jun 12, 2010 - entry price on UNG @ 8.17, option @ 1.38
symbol: UNG1122A8 JAN 2011 $8 LEAP call - current bid/ask $1.50/1.56
-stop loss on UNG @ 7.35

- or -

Jun 12, 2010 - entry price on UNG @ 8.17, option @ 1.59
symbol: UNG1221A10 JAN 2012 $10 LEAP call - current bid/ask $1.60/1.72
-stop loss on UNG @ 7.35

Chart of UNG:


WLT - Walter Energy Inc. close: $70.68 change: -1.27

The outlook for coal depends on your bias for global growth. Companies with exposure to the metallurgical coal market are still poised to do well as it is a key ingredient in steel production. On a short-term basis I'm concerned that WLT is producing a new lower high near $75.00. If the stock market pulls back WLT could easily retest support near $65.00, which puts us at risk of getting stopped out. We opened this trade knowing WLT was extremely volatile. I'm adjusting our stop down to $63.90. If you're looking for an entry point wait for the next bounce in the $67-65 zone.

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 $ 7.30/ 8.00
-stop loss on WLT @ 63.90

- or -

May 6, 2010 - entry price on WLT @ 73.00, option @ 14.10
symbol: WLT 12A90.00 2012 Jan $90 call - current bid/ask $10.60/11.30
-stop loss on WLT @ 63.90

Chart of WLT:


Wal-Mart Stores Inc. - WMT - close: 51.55 change: +0.14

Shares of WMT have spent the last four weeks churning sideways in the $50-52 zone. On a positive note the stock has been building a bullish trend of higher lows but WMT faces lots of overhead resistance. Technically this past week saw the simple 50-dma cross under the simple 200-dma (a.k.a. the "death cross") which is normally considered a very bearish signal.

Remember, this is a slow moving stock and WMT will trend with the major market averages but will also be influenced by investor sentiment towards economic growth and consumer spending. If you are in the double-dip camp for the U.S. economy you may want to exit positions here. While WMT will probably perform better than its peers it will still trend lower if the economy rolls over.

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 $3.35/3.50
-stop loss on WMT @ 48.95

Chart of WMT