Closed Plays


BPOP, CLF, and UNG have been closed.


Play Updates


Boeing Co. - BA - close: 64.66 change: -0.07

The market's widespread oversold bounce allowed BA to tack on about three points last week. Traders bought the dip near its rising 200-dma on Tuesday morning. Shares are now hovering around round-number resistance near $65 and have yet to breakout past technical resistance at the 50-dma. I am concerned that BA, like so many other stocks, is facing a bearish trend of lower highs.

In news this week BA announced it had signed an agreement to purchase privately held Narus, a technology company focused on real-time computer network traffic and software that deals with cyber attacks. Terms of the deal were not disclosed. The bigger announcement was BA's latest bid on the U.S. aircraft tanker refueling bid. This is a story that has been filled with politics and scandal for years. Many of the U.S. air force refueling tankers are 50 years old. Right now U.S.-based Boeing, Europe's Airbus (EADS), and a new competitor Antonov, a Ukrainian plane builder, have submitted new bids for the project to build 179 new tankers. In a surprising move BA actually lowered its bid on the project.

Last week I said that if BA rebounds and fails near $66 then readers may want to exit early to save some capital. I'm still suggesting that plan today.

Remember we want to keep our positions very small. Our long-term target is $79.00.

Jun 12th, 2010 - entry price on BA @ 66.22, option @ 5.55
symbol: BA1122A70 2011 JAN $70 LEAP call - current bid/ask $4.15/4.25
-stop loss on BA @ 59.45

Chart of BA:


BorgWarner Inc. - BWA - close: 39.93 change: +1.04

BWA under performed on Tuesday with a sharp drop toward the 200-dma. It didn't look good for the bulls. Fortunately BWA managed to turn things around with an equally sharp bounce the following session. Shares really performed well on Friday in spite of the low volume. I remain cautious on BWA so we're not suggesting new bullish positions. More cautious traders might want to raise their stops toward last week's low near $35.68.

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 $4.40/5.40
-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:


ConocoPhillips - COP - close: 52.30 change: +0.75

After a very sharp two-week sell-off the oil stocks finally bounced. Crude oil also saw a rebound with a bounce over $76, which helped the oil sector's gains. COP closed back above its simple 200-dma, which is a positive sign. However, I don't think it's a coincidence that the rally stopped right at the 50% retracement of the sell-off(see chart). I remain very cautious on COP. If this bounces fails, readers will want to consider an early exit!

Prior Comments:
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 $2.88/2.96
-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 $3.65/3.90
-stop loss on COP @ 47.99

07/03/10 More Conservative traders may want to exit early!

Chart of COP:


Carpenter Technology - CRS - close: $35.54 change +1.11

Traders continued to buy the dip near $32.00 early last week and the market's bounce helped CRS reclaim the $35 level. The IMF's upgraded out look for the global economy certainly doesn't hurt companies like CRS. Technically shares are still facing short-term resistance near $36 and its 50-dma closer to $37.00. Plus, there is the trend of lower highs to deal with. Yet if you step back and look at a weekly chart it almost looks like CRS is forming a big bull flag-shaped pattern. I would still be tempted to open bullish positions near $32 or on a breakout above the trendline of lower highs. Keep in mind this trade is somewhat aggressive, especially since CRS does not have LEAPS available.

Previous Comments:
The plan was to initiate small positions to limit our risk. Our long-term target is $44.75. We'll use stop loss at $29.40.

June 29, 2010 - entry price on CRS @ 34.00, option @ 5.30*
symbol: CRS 10L35.00 2010 DEC $35 call - current bid/ask $4.70/5.00
-stop loss on CRS @ 29.40 *(entry price is an estimate)

Chart of CRS:


EMC Corp. - EMC - close: 19.45 change: +0.08

EMC made headlines last week with its purchase of software firm Greenplum Inc. This pits EMC against Oracle (ORCL) in the data warehousing software and hardware business. Terms were not disclosed but EMC didn't move much on the news. A day later EMC was upgraded and given a $22 price target. A positive market that day really allowed EMC to rally sharply. The stock is up about 8% in the last four days and nearing its potential trendline of lower highs. I would expect some profit taking soon but the overall trend is still higher. I am not suggesting new bullish positions at this time.

I inching up our stop loss to $16.95. Readers may want to consider a higher stop (maybe near $17.50 or the 200-dma). 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 $1.47/1.51
-stop loss on EMC @ 16.95

- or -

May 6, 2010 - entry price on EMC @ 18.25, option @ 2.50
symbol: EMC 12A20.00 2012 Jan $20 call - current bid/ask $2.85/2.96
-stop loss on EMC @ 16.95

07/03/10 More Conservative Traders may want to exit early!

Chart of EMC:


Infosys Technologies - INFY - close: 62.57 change: +1.23

It turned out to be a strong week for INFY with shares rising four days in a row. INFY gained about 3 1/2 points. The stock is poised to challenge its 52-week high soon. Bear in mind that this week could see additional volatility. INFY is due to report earnings on July 13th before the opening bell. Wall Street is looking for a profit of $0.57 a share. I would hesitate to launch new positions ahead of the earnings report.

FYI: If you are worried that INFY might disappoint and the stock crashes then consider buying some short-term puts. July options expire in five days so they should be cheap. You could buy some puts on Monday at the close, if INFY disappoints on Tuesday the puts should rally. I'm not recommending this strategy on INFY today but it is available to you. The July 60 puts are only 65 cents.

Previous Comments:
We have a stop loss at $54.90. Our long-term target is $79.00, which happens to coincide with the Point & Figure chart that has an $81 target.

July 1, 2010 - entry price on INFY @ 59.00, option @ 7.50
symbol: INFY 11A60.00 2011 Jan $60 call - current bid/ask $7.60/ 7.90
-stop loss on INFY @ 54.90

- or -

July 1, 2010 - entry price on INFY @ 59.00, option @ 8.20
symbol: INFY 12A65.00 2012 Jan $65 call - current bid/ask $9.30/10.00
-stop loss on INFY @ 54.90

Chart of INFY:


McDonald's Corp. - MCD - close: 69.22 change: +0.20

Our bullish bet on MCD is finally off to a decent start. Shares rallied sharply the last three days. The close over MCD's 50-dma is a bullish signal but the stock has additional resistance at its trendline of lower highs. I remain positive on MCD but if the market rolls over we can expect shares to follow. That's why I am very tempted to actually take profits early right here, especially on the 2011 LEAPS. The goal of the newsletter is longer-term trades but the 2011 $70 calls are already up almost 34%. You may want to consider it! I am not suggesting new positions at this time but if shares retest the $66 area I'd consider buying calls on the bounce.

Prior Comments:
Keep your positions small. I'm suggesting a stop loss at $63.45. Our long-term target is $79.75.

June 29, 2010 - entry price on MCD @ 66.50, option @ 2.65
symbol: MCD 11A70.00 2011 Jan $70 call - current bid/ask $3.55/ 3.65
-stop loss on MCD @ 63.45

- or -

June 29, 2010 - entry price on MCD @ 66.50, option @ 2.20
symbol: MCD 12A80.00 2012 Jan $80 call - current bid/ask $2.97/ 3.15
-stop loss on MCD @ 63.45

Chart of MCD:


Mckesson - MCK - close: 67.43 change: -0.56

Uh-oh! I have to issue a warning here. MCK still managed a gain for the week but the stock clearly underperformed the rest of the market. Shares were downgraded a few days ago but the stock hasn't moved much. Instead shares are churning sideways in the $67-68 zone. I am warning readers again that MCK is probably headed for the $65-64 level and possibly its 200-dma. Wait for shares to test this area and bounce before considering new bullish positions.

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 $ 2.30/ 2.50
-stop loss on MCK @ 62.90

- or -

May 18, 2010 - entry price on MCK @ 71.00, option @ 4.10
symbol: MCK 12A80.00 2012 Jan $80 call - current bid/ask $ 4.20/ 4.70
-stop loss on MCK @ 62.90

Chart of MCK:


Millicom Intl. - MICC - close: 84.95 change: +0.31

MICC is still trading without much direction. Shares did bounce this past week but they are stuck hovering around the $85 area, which has been both support and resistance in the past. You can clearly see the trend of higher lows and lower highs, which is a neutral trend. Longer-term the trend in MICC is still higher. Once again more conservative traders may want to consider upping their stop loss toward the $80 area. I am not suggesting new bullish positions at this time.

Previous Comments:
If you open positions keep them small to limit your risk. MICC is (normally) a volatile stock. Our long-term target is $99.50 and the $109.00 levels. FYI: Earnings are expected around July 20th but the date is unconfirmed.

May 6, 2010 - entry price on MICC @ 80.00, option @ 8.60
symbol: MICC 11A90.00 2011 Jan $90 call - current bid/ask $ 6.80/ 9.20
-stop loss on MICC @ 74.40

Chart of MICC:


PEPSICO Inc. - PEP - close: 63.50 change: -0.50

The oversold bounce managed its second week in shares of PEP. Shares are now testing technical resistance near the 50-dma and prior support and resistance near the $64 area. I remain cautious on PEP. Since the May highs the stock has a bearish trend of lower highs and lower lows. There is no change from my prior comments. More conservative traders will want to consider an early exit now. I am not suggesting new bullish positions at this time. Our final target remains $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 $5.75/5.85
-stop loss on PEP at $59.85

06/26/10 Repeat - More cautious traders will want to consider an exit.
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: 51.83 change: -0.24

The oversold bounce in shares of BP have been picking up steam. That has lightened the mood in the oil sector. A rebound in crude oil prices last week didn't hurt either. Furthermore a U.S. district court has rejected the Obama administration's request for a stay on a lower court's decision to repeal the six-month offshore drilling ban.

Shares of RIG managed to deliver an 8.2% gain for the holiday-shortened week. I remain bullish on RIG and the close over $50 looks like a potential entry point. More conservative traders may want to use a stop loss closer to $45.00.

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 $41.80. Our long-term targets are $59 and $75. FYI: The P&F chart is forecasting an $82 target.

Jun 09, 2010 - entry price on RIG @ 43.50, option @ 6.50
symbol: RIG 11A50.00 2011 Jan $50 call - current bid/ask $ 8.85/ 9.05
-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 $ 9.35/ 9.70
-stop loss on RIG @ 41.80

Chart of RIG:


U.S. Oil Fund - USO - close: 32.60 change: -0.27

If the U.S. is facing a double dip recession and Europe is facing a double-dip recession, and China is slowing down its economy, then odds are demand for oil will eventually slow down again. Thus we needed a hedge or some way to play this decline in demand. I would still consider new put positions here or you can wait for the bounce to stall and roll over before initiating positions. Look for the $36.00 level to be overhead resistance on the USO oil ETF. FYI: I have heard arguments that the oil spill and moratorium on drilling in the Gulf (currently repealed by the courts) will have a longer-term bullish affect on oil prices due to lower production but I have not heard the time frame for this argument.

Previous Comments:
I'm suggesting a stop loss at $36.15. Our first target to take profits is $28.00. Our second is $25.25. Keep your positions small to limit your risk.

- PUT PLAY -

July 06, 2010 - entry price on USO @ 33.06, option @ 2.34
symbol: USO 11M30.00 2011 Jan $30 PUT - current bid/ask $ 1.71/ 1.77
-stop loss on USO @ 36.15

- or -

July 06, 2010 - entry price on USO @ 33.06, option @ 2.70
symbol: USO 12M25.00 2012 Jan $25 PUT - current bid/ask $ 2.15/ 2.22
-stop loss on USO @ 36.15

Chart of USO


CLOSED Plays


Popular Inc. - BPOP - close: 2.50 change: -0.06

The banking sector has seen a very nice four-day rally thanks in part to bullish analyst comments and optimism over the outcome for the European stress tests. Sadly BPOP underperformed its peers on Tuesday and Wednesday and managed to slip to new relative lows under the $2.40 level.

BPOP hit our stop loss at $2.40 on Tuesday, closing this play before shares produced a +22.5% rally off its lows of the week. If BPOP can close above the resistance near the $3.10 level I would give BPOP another look.

07/06/10 - BPOP hit our stop loss at $2.40 (-17.5%)

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

Chart of BPOP:


Cliffs Natural Resources - CLF - close: 51.07 change: +1.65

Shares of CLF also displayed some volatility, especially on Tuesday. Shares plunged over 4% after the company announced it was paying $757 million for INR Energy's coal mine business. Analysts raised concerns that CLF might be paying much, which pushed the stock price lower. CLF managed to rebound quickly with a +14% rally off its lows for the week. Unfortunately, shares of CLF hit our stop loss at $44.90 on Tuesday afternoon before the rebound. Now shares are testing technical resistance near its 200-dma.

Prior Comments:
This is an aggressive trade. CLF can be volatile. I suggested readers keep their position size small.

07/06/10 Stopped out at $44.90

May 21, 2010 - entry price on CLF @ 46.50, option @ 6.65
symbol: CLF 11A60.00 2011 JAN $60 call - exit near $3.10 (-53%)
-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 - exit near $6.30 (-16.5%)
-stop loss on CLF @ 44.90

06/05/10 Suggested Cautious Traders Exit Early!

Chart of CLF:


U.S. Natural Gas ETF - UNG - close: 7.44 change: +0.01

Has the rally failed in natural gas or did we have the stop loss too tight? The UNG had been holding near support but broke down sharply on Thursday with a -4.5% plunge. The EIA inventory report showed an unexpected build up in natural gas stockpiles. The market must have been expecting a draw down since natural gas demand normally rises when the weather gets hotter (energy demand for air conditioners). Instead the EIA said natural gas inventories rose +78 billion cubic square feet instead of the expected +72 bcf.

Shares of the UNG fell to an intraday low of $7.35. It is coincidence that our stop loss was $7.35? Maybe. The trade has been closed. I'd reconsider launching new positions if the UNG retests the $7.00 area and bounces again. Or you could wait for a close above its 200-dma.

Prior Comments:
Just because the options look "cheap" don't buy too many. Be disciplined with your position size.

07/08/10 Stopped out at $7.35

Jun 12, 2010 - entry price on UNG @ 8.17, option @ 1.38
symbol: UNG1122A8 JAN 2011 $8 LEAP call - exit @ 0.86 (-37.6%)
-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 - exit @ 1.07 (-32.7%)
-stop loss on UNG @ 7.35

Chart of UNG: