Closed Plays


BA has been closed.


Play Updates


BorgWarner Inc. - BWA - close: 40.43 change: -2.15

The bullish reversal in BWA from July 7th continued into this week. Shares managed to hit a new two-month high before giving up 5% on Friday's market-wide decline. Fueling the move higher was an analyst upgrade and a new $50 price target (FYI: the point & figure chart is suggesting a $58 price target)

On the weekly chart BWA has a bearish reversal pattern but it needs to see some confirmation. If the major indices continue to sink we can expect BWA to retest the $38-36 zone. I am not suggesting new positions at this time. More conservative traders may want to take profits now and exit early.

BWA is due to report earnings on July 30th.

Prior Comments:
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 $5.40/5.70
-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: 51.85 change: -1.01

The big news in the oil industry this past week was BP's success on finally stopping the leaking well in the Gulf of Mexico. It's a temporary fix but oil stocks rallied on the news. Well, most oil stocks rallied. COP did not see much of a bump on Thursday. Technically shares of COP are not acting very healthy. The bounce from its July lows stalled at the 61.8% Fibonacci retracement of the late June sell-off. COP now has a new lower high and we can expect shares to retrace back toward the $49-48 zone. Given the rising chances that the stock market will sink to new relative lows, more conservative traders will want to seriously consider an early exit from our COP trade. A week ago I warned readers that if this bounce fails you'll want to consider an early exit!

In other news COP announced their quarterly cash dividend of $0.55 payable on September 1st to shareholders of record on August 2nd. FYI: COP is due to report earnings on July 28th.

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 $2.73/2.80
-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

07/17/10 COP's bounce has failed. Consider an early exit!
07/03/10 More Conservative traders may want to exit early!

Chart of COP:


Carpenter Technology - CRS - close: $32.49 change -1.38

I am growing more and more concerned about shares of CRS. Last week's economic data from the Philly Fed and New York Fed manufacturing reports shows a clear slow down in manufacturing in the U.S. That certainly doesn't bode well for the likes of CRS. Indicators are mixed depending on what time frame you look at. Short-term the stock appears headed lower. I am expecting a dip toward the simple 200-dma near $31.17. Please note that I am raising the stop loss to $29.90. More conservative traders may want to go ahead and exit early now or raise your stop toward $31.00.

I am not suggesting new bullish positions at this time. FYI: CRS is due to report earnings on July 29th.

Previous Comments:
The plan was to initiate small positions to limit our risk. Our long-term target is $44.75.

June 29, 2010 - entry price on CRS @ 34.00, option @ 5.30*
symbol: CRS 10L35.00 2010 DEC $35 call - current bid/ask $3.10/3.30
-stop loss on CRS @ 29.90 *(entry price is an estimate)

Chart of CRS:


EMC Corp. - EMC - close: 20.15 change: -0.43

EMC remains an outperforming stock. Shares rallied eight days in a row and broke out to new 2 1/2 year highs this past week before giving back 2% on Friday. The breakout and close over the $20.00 level is a very bullish development but I'm not sure if shares can hold it. If the market retreats I would expect EMC to pull back into the $19-18 zone.

Please note that we are raising the stop loss to $17.45. The Point & Figure chart is very bullish and points to a $34.50 target. Investors should be aware that EMC is due to report earnings on Wednesday, July 21st before the opening bell. Analysts are expecting a profit of 27 cents a share. More conservative traders may want to consider some sort of hedge in case EMC disappoints.

Previous Comments:
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 $1.89/1.93
-stop loss on EMC @ 17.45

- or -

May 6, 2010 - entry price on EMC @ 18.25, option @ 2.50
symbol: EMC 12A20.00 2012 Jan $20 call - current bid/ask $3.20/3.35
-stop loss on EMC @ 17.45

07/17/10 new stop @ 17.45
07/03/10 More Conservative Traders may want to exit early!

Chart of EMC:


Infosys Technologies - INFY - close: 58.31 change: -1.04

INFY reported earnings on July 13th. The results were in-line with expectations. Revenues were slightly ahead of estimates at $1.36 billion. Unfortunately, INFY offered mixed guidance and traders decided to sell the news, thus the gap down on Tuesday morning. INFY has been relatively volatile over the past few weeks. I would not be surprised to see the stock retest the rising 200-dma near $56.00. Look for a bounce from the $56 area before considering new bullish positions.

Previous Comments:
We have a stop loss at $54.90. Our long-term target is $79.00.

July 1, 2010 - entry price on INFY @ 59.00, option @ 7.50
symbol: INFY 11A60.00 2011 Jan $60 call - current bid/ask $4.60/ 5.00
-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 $7.10/ 7.90
-stop loss on INFY @ 54.90

Chart of INFY:


McDonald's Corp. - MCD - close: 69.94 change: -1.39

MCD lost 1.9% on Friday but still managed a gain for the week. The multi-day rally had stalled near its 2010 highs around the $71-72 area so it is not a surprise to see some profit taking. While I'm on the subject of profit taking I think it's time that we took some profits early! We want to sell part of our position now with shares struggling under resistance. If MCD performs well following its earnings report we'll reconsider adding to positions.

MCD is due to report earnings on Friday, July 23rd before the opening bell. Wall Street expects a profit of $1.12 a share. Keep in mind that if the market sinks lower we can expect MCD to fade back toward the $68-66 zone. I am raising our stop loss to $64.75. FYI: The Point & Figure chart forecasting an $82 (long-term) target.

Prior Comments:
Keep your positions small. 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 $4.00/ 4.10
-stop loss on MCD @ 64.75

- or -

June 29, 2010 - entry price on MCD @ 66.50, option @ 2.20
symbol: MCD 12A80.00 2012 Jan $80 call - current bid/ask $3.50/ 3.65
-stop loss on MCD @ 64.75

07/17/10 Take Profits! 2011 Jan $70 call @ 4.00, 2012 $80 call @ 3.50

Chart of MCD:


Mckesson - MCK - close: 68.00 change: -1.40

We are seeing a little bit of a change in character for MCK. After churning sideways for several days the stock rallied midweek and broke out over the 50-dma. The rally didn't last long but short-term technicals have improved. I'm still concerned the $70-71 level remains resistance and I expect MCK to retest the $65-64 zone before moving much higher but the retest of $65 looks a lot less of a sure thing after this past week. I am not suggesting new bullish positions at this time.

FYI: MCK is expected to report earnings on July 30th.

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 $ 2.40/ 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 $ 4.30/ 4.60
-stop loss on MCK @ 62.90

Chart of MCK:


Millicom Intl. - MICC - close: 85.88 change: -2.10

This past week saw MICC challenge short-term resistance near the $88 level. While it failed to break out the stock's posture has taken on a more bullish tone. This coming week could be a volatile one. MICC is due to report earnings on Tuesday, July 20th before the opening bell. Wall Street expects a profit of $1.40 a share. I am not suggesting new bullish positions ahead of the earnings report. If you're concerned MICC will miss and crash you have one day (Monday) to consider buying puts to protect yourself. Readers may want to consider a tighter stop loss closer to $80 and the 200-dma.

Previous Comments:
Keep your positions small to limit your risk. MICC is (normally) 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 $ 7.30/ 7.90
-stop loss on MICC @ 74.40

Chart of MICC:


PEPSICO Inc. - PEP - close: 62.45 change: -0.71

This could be an important week for PEP and our LEAPS trade. The company is due to report earnings on Tuesday, July 20th before the opening bell. Wall Street estimates a profit of $1.08 a share. If PEP disappoints I would not be surprised to see shares dip under the $60.00 level and hit our stop loss. Given the current trend of lower highs and lower lows more conservative traders may want to exit early. 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 $5.00/5.10
-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: 52.08 change: -2.62

Shares of RIG spent most of the week drifting sideways under resistance near $55 and its 50-dma. Things got exciting late Thursday afternoon after BP said they successful stopped the leaking well with a temporary cap. Shares of RIG shot from $52 to $55 in a few minutes on this announcement. Unfortunately, RIG gave back all of its gains with a 4.7% decline on Friday.

I remain bullish on RIG but readers may want to wait for another bounce from the $50 level or wait for a strong close over the $55 level.

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 $ 8.80/ 9.00
-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 $ 9.25/ 9.70
-stop loss on RIG @ 41.80

Chart of RIG:


U.S. Oil Fund - USO - close: 34.16 change: -0.42

The USO posted a loss for the week even though the dollar has been plunging. Normally a falling dollar is bullish for commodities since it takes more dollars to buy them. Unfortunately for the oil bulls the rally stalled on Wednesday and reversed. Considering all of the negative economic data last week on the fading momentum in the U.S. manufacturing sector, I see the recent action in the USO as a new entry point to buy puts. 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 $ 1.74/ 1.79
-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 $ 2.14/ 2.46
-stop loss on USO @ 36.15

Chart of USO


CLOSED Plays

Boeing Co. - BA - close: 61.60 change: -2.47

A few days ago BA updated their 20-year outlook for global aircraft demand. Based on their optimistic assumptions of +3% global growth for the next 20 years BA is estimating that the current worldwide fleet of commercial and freight airplanes will need to grow from 18,890 planes (now) to 30,900 planes. This is an improvement from their prior estimate of 29,000. The industry revenues to sell these planes is estimated at 3.6 trillion (over the next 20 years). The bullish forecast had no impact on shares of BA. Well, that may not be true. The stock did spike higher on Thursday morning, tagged its 50-dma and immediately reversed lower. After more than a week of hovering near the $65 level shares plunged 3.8% on Friday's market-wide decline.

I have been warning readers that if BA fails near the $66 area, more conservative traders will want to exit early. The newsletter is going to follow that suggestion tonight and close this play early. Obviously there is still a chance that BA will hold support near its 200-dma and the $60.00 area but I'm not willing to bet on it at this time. Exit now to preserve capital.

Prior comments:
Remember we want to keep our positions very small.

07/17/10 - Exit Early. BA @ 61.90

Jun 12th, 2010 - entry price on BA @ 66.22, option @ 5.55
symbol: BA1122A70 2011 JAN $70 LEAP call - option @ $3.00 (-45.9%)
-stop loss on BA @ 59.45

Chart of BA: