Closed Plays


None. No closed plays this week.


Play Updates


Baidu, Inc. (Baidu.com) - BIDU - close: 82.83 change: +0.18

Alert! Investors need to rethink their risk when it comes to BIDU. We were expecting a pull back toward $80.00 but what sent the stock lower is a little alarming. BIDU is the dominant search player in China but this past week the state-run Xinhua News Agency announced it was partnering with China Mobile Ltd. (CHL) to launch their own search engine. This could be serious competition for both BIDU and GOOG and could effectively change the landscape and influence how much the market is willing to value shares of BIDU.

This has always been an aggressive, higher-risk trade but I want to encourage more conservative traders to raise their stop loss or even consider an early exit. On a short-term basis the technicals for BIDU have turned negative and the stock has created a bearish engulfing candlestick pattern on the weekly chart but this pattern normally needs to see confirmation. Given the market's recent weakness readers may want to wait for a new bounce from $80.00 or potentially look for a dip and bounce near the rising 50-dma around the $75 area before considering new positions.

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 $7.35/7.50
-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 $12.25/12.50
-stop loss on BIDU @ 73.40

Chart of BIDU:


BorgWarner Inc. - BWA - close: 45.31 change: -0.19

BWA was not immune to the market-wide profit taking but shares are holding up reasonably well. The highs in April near $44 acted as short-term support. Short-term technicals have naturally turned bearish with the pull back from overbought conditions. The trend is still up but the correction may not be over yet. I am not suggesting new positions at this time. We only have a very small position left.

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 $8.20/8.50
-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: 55.02 change: -0.33

The rally in crude oil futures has rolled over and the oil stocks followed the commodity lower. After failing multiple times to breakout over the $58 level two weeks ago we were expecting a correction back to $54. Shares hit $54.60 on Thursday. Given the market's recent weakness I am starting to think COP could dip back toward the 200-dma near $52.50. More conservative traders may want to raise their stops toward $50 or $52. I am not suggesting new bullish positions at this time but a strong bounce near $52 might change that.

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 $4.00/4.10
-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 $4.45/4.70
-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: $32.53 change +0.86

The market sell-off on Wednesday hit the metal stocks pretty hard. ATI, NUE, and CRS all plunged. The selling continued on Thursday for shares of CRS and the stock broke down and closed under technical support at the 200-dma but it failed to break the early July low near $31.20. The markets are concerned that U.S. GDP could get revised significantly lower and cyclical stocks will remain volatile to economic data.

On a short-term basis the trend is down and CRS never broke the pattern of lower highs and lower lows. However, there is still some support in the $31.50 area. The low this past week was $31.44 on both Thursday and Friday. Nimble traders could launch new bullish positions now but if you do I would strongly consider very tight stop loss (maybe near the $30.90 area).

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 $2.20/2.35
-stop loss on CRS @ 29.90 *(entry price is an estimate)

Chart of CRS:


EMC Corp. - EMC - close: 18.76 change: +0.07

It was an ugly week for tech stocks. The worldwide decline on Wednesday was pretty rough. Then investors were disappointed with CSCO's earnings Wednesday night and tech stocks sank again on Thursday. EMC erased 7% and broke down under several layers of short-term support. I am suggesting readers wait for the stock to bounce from what should be technical support at its 200-dma before considering new bullish positions.

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 $0.98/1.02
-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 $2.27/2.38
-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: 118.74 change: -0.03

The U.S. dollar has been in rocket mode the last few days. Normally a strong dollar is bearish for gold but this time gold is holding up pretty well. The GLD actually posted a gain for the week. Gold, the dollar, and bonds are all considered "safe haven" investors, with bonds being the safest. This could be why gold has been able to shake off the dollar's rally. This past week saw the GLD breakout over its 50-dma but the rally has stalled under $119.00. I would expect a pull back toward $116.50 before we see further gains.

Previous Comments
Currently our stop loss is at $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 $7.45/7.65
-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 $10.80/11.15
-stop loss on GLD @ 111.00

Weekly Chart of GLD:


Infosys Technologies - INFY - close: 59.05 change: -0.23

Stocks were weak across the globe, especially on Wednesday. Shares of INFY gapped open lower and closed under its 50 and 100-dma on Wednesday. The selling paused near $59.00 but I don't think the correction is over yet. Wait for INFY to test and bounce from the rising 200-dma near $57.20 or the $56.00 level 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 $4.50/ 4.80
-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 $6.30/ 7.40
-stop loss on INFY @ 54.90

Chart of INFY:


McDonald's Corp. - MCD - close: 71.89 change: -0.17

Believe it or not MCD posted a gain for the week. On Monday MCD said same-store sales rose +7% and the stock popped to a new all-time high ($73.34). That proved to be the high for the week and shares slowly consolidated back toward their prior highs. If the market starts to accelerate lower it will make further gains in MCD challenging. I am expecting a correction toward $70. Nimble traders could try and buy a dip or bounce near $70. I would prefer to wait for the dip and then look for a close back above $72.00.

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 $4.55/ 4.70
-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 $3.25/ 3.45
-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: 89.85 change: -0.32

MICC lost about five points for the week. Most of that was on Tuesday and Wednesday. Traders bought the dip at its 50 and 100-dma unfortunately the bounce doesn't look very healthy. If you look at a weekly chart the last two weeks appear to be forming a potential bearish reversal pattern. More conservative traders will want to seriously consider raising their stop loss. I am not suggesting new positions at this time. I suspect that MICC will retest the $85 level before the end of August.

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 $ 8.30/ 9.10
-stop loss on MICC @ 79.90

Chart of MICC:


NetApp, Inc. - NTAP - close: 38.14 change: +0.56

The profit taking in technology stocks accelerated the correction in shares of NTAP. The market's reaction to CSCO's earnings report on Thursday morning was enough to push NTAP under $38 and under its 100-dma. Shares hit our trigger to buy calls at $37.50 on Thursday morning. The bounce on Friday added +1.49% but shares pared their gains. I'm not convinced the profit taking is over. While this play is open readers may want to go ahead and wait before launching new positions. We might get a better entry point near $36.00 or the $35.00 area before the month ends.

Previous Comments:
We are using a stop loss at $34.75. Our long-term target is $49.00. FYI: NTAP is due to report earnings on August 18th.

Aug 12, 2010 - entry price on NTAP @ 37.50, option @ 3.00
symbol: NTAP1122A40 2011 Jan $40 call - current bid/ask $ 3.15/ 3.30
-stop loss on NTAP @ 34.75

- or -

Aug 12, 2010 - entry price on NTAP @ 37.50, option @ 4.00
symbol: NTAP1221A45 2012 Jan $45 call - current bid/ask $ 4.15/ 4.45
-stop loss on NTAP @ 34.75

Chart of NTAP:


PEPSICO Inc. - PEP - close: 65.56 change: +0.38

PEP is holding up pretty well, probably because the stock is somewhat of a safe haven play. It's a large, safe, big cap stock with a decent yield. I would still expect a correction toward $64.00 and probably toward the 200-dma closer to $63. 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 $6.75/6.90
-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: 54.15 change: +0.26

After a huge rally two weeks ago RIG experienced some normal profit taking with a pull back to the 38.2% Fib retracement of the August run up. Shares of RIG will remain sensitive to big movements in the OSX oil services index and the price of oil but overall I still believe the bottom is in. Traders looking for a new entry point can wait for a dip or a bounce near the $50 level and its 50-dma. More conservative traders may want to raise their stop loss 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 $ 8.75/ 8.95
-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 $ 8.55/ 8.70
-stop loss on RIG @ 41.80

Chart of RIG: