Editor's Note:

A number of our bullish candidates hit new one-year highs last week. Both BIDU and GLD jumped from the watch list to the play list this past week.


Closed Plays


USO and XLY were stopped out.


Play Updates


Baidu, Inc. (Baidu.com) - BIDU - close: 86.53 change: +0.96

It did not take long for BIDU to graduate from the watch list to our play list. The market-wide rally on Monday gave BIDU a sharp lift and shares opened at $83.03 and quickly rallied past our trigger to buy calls at $83.50. The stock managed to post gains four out of the last five days (actually if you're counting it's up to 5 out of the last 6 trading sessions). BIDU closed near its all-time highs, set this week, and remain short-term overbought. If you are looking for a new bullish entry point I suggest waiting for a dip (or a bounce) near the $80.00 level. BIDU is a volatile stock. A dip toward $80 could happen pretty quickly.

Previous Comments:
BIDU is a very volatile stock. This is an aggressive, higher-risk trade. Keep your position size small to limit your risk. Our first long-term target is $99.50.

Aug 02, 2010 - entry price on BIDU @ 83.50, option @ 8.00
symbol: BIDU1122A90 2011 JAN $90 call - current bid/ask $8.80/8.95
-stop loss on BIDU @ 73.40

- or -

Aug 02, 2010 - entry price on BIDU @ 83.50, option @ 13.00
symbol: BIDU1221A100 2012 JAN $100 call - current bid/ask $13.60/13.80
-stop loss on BIDU @ 73.40

Chart of BIDU:


BorgWarner Inc. - BWA - close: 47.01 change: +0.07

Shares of BWA continue to outperform. The stock rallied sharply on Monday and broke out past resistance near $45.00 to close at new one-year highs. That rally slowly continued the rest of the week. While BWA is short-term overbought the trend is up and there was not much profit taking on Friday. I am raising our stop loss to $39.75 but more conservative traders may want to raise their stops closer to $41.75 instead. Or consider exiting early. We only have a very small position left.

FYI: BWA is due to present at an analyst conference on Aug. 9th.

Prior Comments:
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 $9.20/9.60
-stop loss on BWA @ 39.75

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: 56.93 change: -0.77

COP delivered another weekly gain thanks to the big pop higher on Monday. Shares essentially churned sideways with the rest of the market into Friday. On a short-term basis the stock looks a little overbought with the rally from $48 in early July. I would expect a correction toward $54 or possibly the 50-dma. Wait for the dip or a bounce before launching new positions.

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 $4.85/4.95
-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 $4.85/5.05
-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: $36.38 change +0.87

We're not seeing a lot of action in CRS. Shares managed a gain for the week but essentially churned sideways in a $2 range. The stock continues to struggle with the $36.50 level. I would focus on the trendline of lower highs. Wait for a close over this trendline (see chart) and then consider bullish positions. An alternative would be to buy another dip or bounce near the simple 200-dma approaching $32.

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 $4.50/4.80
-stop loss on CRS @ 29.90 *(entry price is an estimate)

Chart of CRS:


EMC Corp. - EMC - close: 20.24 change: -0.46

EMC appeared to breakout from its pennant-shaped consolidation midweek only to reverse on Friday thanks to the market-wide profit taking. I would hesitate to launch new bullish positions here but more aggressive traders may want to consider it if EMC can close over $20.70 again (although if you do I suggest you raise your stop loss significantly). We are adjusting our stop loss to $17.80, which is just under the July 1st low (17.87).

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 $1.66/1.70
-stop loss on EMC @ 17.80

- or -

May 6, 2010 - entry price on EMC @ 18.25, option @ 2.50
symbol: EMC 12A20.00 2012 Jan $20 call - current bid/ask $2.96/3.15
-stop loss on EMC @ 17.80

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

Chart of EMC:


SPDR Gold ETF - GLD - close: 117.84 change: +0.86

The GLD rallied more than $2.00 for the week and shares of the gold ETF traded above $118.00 on Friday morning. Investors are seeking safe havens as money flows into bonds and the dollar sinks. The GLD has broken the trend of lower highs but it is worth noting the rally stalled at its 50-dma today. I would anticipate a pull back toward the $116 level again. Use a dip near $116 as another entry point or if you want to see more confirmation of the up trend wait for a close over the simple 50-dma (near $118.50).

Previous Comments
Since the GLD hit our trigger at $118.00 (and not $112.00) our stop loss on the play is $111.00. Our first long-term target is $140.

Aug 6, 2010 - entry price on GLD @ 118.00, option @ 7.70
symbol: GLD1119C120 2011 Mar $120 call - current bid/ask $7.15/7.35
-stop loss on GLD @ 111.00

- or -

Aug 6, 2010 - entry price on GLD @ 118.00, option @ 10.75
symbol: GLD1221A130 2012 Jan $130 call - current bid/ask $10.30/10.65
-stop loss on GLD @ 111.00

Weekly Chart of GLD:


Infosys Technologies - INFY - close: 61.88 change: -0.34

INFY is holding up pretty well considering the market's weakness on Friday and the news out Thursday night regarding foreign worker visas. Evidently the U.S. senate passed legislation Thursday night regarding a $600 million border-security bill. As a way to help pay for a significant chunk of this border-security bill the Senate included a measure that significantly raised fees on companies that have more than half of their U.S.-based employees on H1-B or L-1 visas. It is estimated this could raise between $200-250 million. INFY would be one of the major companies affected by this bill if it becomes law. Yet the stock failed to see much reaction to the news and shares rebounded from their intraday lows on Friday.

Short-term I would expect INFY to rally again and challenge resistance near the $64.00 area. If you are looking for a new entry point wait for another bounce from the trendline of higher lows or a close over $64.00.

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 $5.90/ 6.20
-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 $7.50/ 8.60
-stop loss on INFY @ 54.90

Chart of INFY:


McDonald's Corp. - MCD - close: 71.74 change: +1.29

MCD was a real outperformer on Friday. I was unable to find out any specific reason for the stock's +1.8% rally on Friday. Maybe investors think fast-food companies like MCD with their value meals will continue to do well as consumers cut back? Whatever the cause, shares of MCD closed at a new all-time high on Friday. There is still some resistance in the $72 area but readers may want to consider adding to positions or launching new ones if MCD can close over $72.00. More conservative traders might want to consider raising their stop loss.

Prior Comments:
Keep your positions small. Our long-term target is $79.75. FYI: The Point & Figure chart forecasting an $82 (long-term) target.

June 29, 2010 - entry price on MCD @ 66.50, option @ 2.65
symbol: MCD 11A70.00 2011 Jan $70 call - current bid/ask $4.25/ 4.35
-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 $2.92/ 3.40
-stop loss on MCD @ 64.75

07/17/10 Take Profits! 2011 Jan $70 call @ 4.00 (+51%), 2012 $80 call @ 3.50 (+59%)

Chart of MCD:


Millicom Intl. - MICC - close: 94.71 change: +0.01

MICC posted another gain for the week but the stock was actually drifting lower the last four days following Monday's rally higher. Volume has been very light this past week as well. I don't see any changes from my prior comments but more conservative traders may want to raise their stops toward the $85 area. I am not suggesting new positions at this time. Be prepared to take profits if MICC hits our first target at $99.50 soon (sell half our position).

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 $10.90/11.90
-stop loss on MICC @ 79.90

Chart of MICC:


PEPSICO Inc. - PEP - close: 65.90 change: +0.32

PEP rallied another dollar for the week. Shares are slowly marching higher and look poised to challenge resistance near $67.00 soon. I don't see any changes from my previous updates. We're not suggesting new positions at this time.

Previous Comments:
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 $6.85/7.00
-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: 57.11 change: -0.82

It was a big week for RIG with shares surging more than $10 and closing above resistance at the $55 level. The market rally on Monday was the launching point with a move over $50 and its 50-dma. Earnings midweek kept the rally going as RIG blew past estimates. News that BP was close to finally sealing the leaking well in the Gulf of Mexico probably boosted investor confidence. On a short-term basis RIG is now overbought but I would consider new positions on dips. RIG should find support near $55, 52 and $50. Don't forget that our first target is $59.00. More conservative traders may want to go ahead and take some money off the table.

I am adjusting the stop loss to $41.80. More conservative traders may want to raise theirs toward the July low of $44.30.

Previous Comments:
This is a very aggressive trade given the unknown risks associated with RIG's connection to the Gulf oil spill. 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 $10.80/11.00
-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 $10.05/10.35
-stop loss on RIG @ 41.80

Chart of RIG:


CLOSED Plays

U.S. Oil Fund - USO - close: 36.20 change: -0.51

Our put play on the USO was foiled by the extreme weakness in the U.S. dollar. Normally as the dollar declines commodity values rise as it takes more dollars to buy them. The dollar plunged to new relative lows this past week. Our play on the USO was stopped out on Monday when shares opened at $36.18. Our stop loss was $36.15.

- PUT PLAY -

08/02/10 - Stopped out @ 36.18 (gap open)

July 06, 2010 - entry price on USO @ 33.06, option @ 2.34
symbol: USO 11M30.00 2011 Jan $30 PUT - closed at $1.14 (-51.2%)
-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 - closed @ 1.74 (-35.5%)
-stop loss on USO @ 36.15

Chart of USO


Consumer Discretionary Sector - XLY $32.03 -0.22

It looks like our stop loss was just too close. Shares of the XLY struggled with resistance near the $32.20 level all week long. Yet on Thursday afternoon, as stocks inched higher, the XLY managed to trade at $32.25, hitting our stop loss and closing this play.

Falling consumer sentiment, consumer spending, and the disappointing same-store sales figures are not a bullish environment for consumer discretionary stocks. Yet the short-term trend for this ETF is still up. There may be another bearish entry point in the future so keep this name on your watch list. The next level of resistance is the $33.00 area.

This is a PUT play!

08/05/10 - Stopped out @ $32.25

July 19, 2010 - entry price on XLY @ 30.09, option @ 1.95
symbol: XLY 11M28.00 2011 Jan $28 PUT - exit @ 1.07 (-45%)
-stop loss on XLY @ 32.25

- or -

July 19, 2010 - entry price on XLY @ 30.09, option @ 2.81
symbol: XLY 12M25.00 2012 Jan $25 PUT - exit @ 1.96 (-30.2%)
-stop loss on XLY @ 32.25

Chart of XLY