Editor's Note:

The S&P 500 narrowly avoided one of its worst weeks in a year but for most of our candidates the profit taking was relatively mild. There were exceptions. BA and UNP did not have a good week.

-James


Closed Plays


None. No closed plays this week.


Play Updates


Boeing Co. - BA - close: 71.28

07/16 update: It was not a good week for BA. The S&P 500 lost over 2%. BA gave up about -5%. The stock has fallen back toward its June lows and is currently testing technical support at its simple and exponential 200-dma. A breakdown from here might be strong enough to also break through round-number, psychological support at the $70.00 mark.

Our risk now is that BA disappoints with its earnings report. The company doesn't report for several more days. The announcement is expected on July 28th, before the opening bell. I would not be surprised to see BA churn sideways in the $71-75 zone until its earnings report. Then again, that can change, if the market's indices accelerate lower. I am still not suggesting new positions at this time. More conservative traders may want to exit early right now.

FYI: We only have small positions open to limit our risk.

- Current Positions -
Apr 27, 2011 - entry price on BA @ 76.50, option @ 4.50
symbol: BA1221A80 2012 JAN $80 call - current bid/ask $ 1.83/ 1.88

Apr 27, 2011 - entry price on BA @ 76.50, option @ 4.95
symbol: BA1319A90 2013 JAN $90 call - current bid/ask $ 2.62/ 2.73

06/25/11 BA dips toward support near $70 and 200-dma as expected.
06/04/11 re-evaluated our risk and moved the stop loss to $69.75 under the simple 200-dma
05/14/11 New stop loss @ 73.90
04/27/11 Play opened. Small positions.

Current Target: $89.00, and $104.00
Current Stop loss: 69.75
Play Entered on: 04/27/11

Originally listed on the Watch List: 03/26/11


Bristol-Myers Squibb Company - BMY - close: 28.97

07/16 update: BMY is holding up pretty well. Shares only lost 15 cents for the week. We are seeing some decay in the technical oscillators but BMY could fare well since drug stocks are normally considered defensive names. I am still not suggesting new positions at these levels since the $30.00 area has been significant resistance in the past. Keep in mind that BMY reports earnings on July 28th. The announcement will come out before the opening bell.

Our long-term target is $32.00. Investors might want to consider turning this trade into a calendar spread or vertical spread to maximize its potential.

- Suggested Positions -
Mar 14, 2011 - entry price on BMY @ 26.14, option @ 1.13
symbol: BMY1221A27.5 2012 JAN $27.50 call - current bid/ask $ 2.37/ 2.41

- or -

Mar 14, 2011 - entry price on BMY @ 26.14, option @ 1.63
symbol: BMY1319A27.5 2013 JAN $27.50 call - current bid/ask $ 3.10/ 3.20

06/25/11 New stop loss @ 26.95
06/04/11 New stop loss @ 25.90

Current Target: $32.00
Current Stop loss: 26.95
Play Entered on: 03/14/11
Originally listed in the New Plays 03/12/11


CACI International - CACI - close: 63.13

07/16 update: CACI gave back almost two and a half points last week with most of the decline on Monday and Friday. Short-term technicals are naturally looking ugly here. Unfortunately I am concerned with the weekly chart, which is showing a three candlestick bearish reversal pattern. Last week I had cautioned readers to expect a dip into the $64-62 area. CACI is nearing technical support at its 50-dma. If that level breaks then it will be a quick drop toward the next level of technical support at the 100-dma, which held up in early June. I am not suggesting new positions at this time.

Earlier Comments:
I do consider this a more aggressive trade and if we keep our position size small we can limit our risk. CACI doesn't have LEAPS so we'll have to use the 2011 September calls.

- Current (small) Positions -
Apr 4, 2011 - entry price on CACI @ 62.04, option @ 3.30
symbol: CACI1117I65 2011 SEP $65 call - current bid/ask $ 1.65/ 1.90

- 2nd Position -

May 31, 2011 - entry price on CACI @ 63.14, option @ 2.65*
symbol: CACI1117I65 2011 SEP $65 call - current bid/ask $ 1.65/ 1.90

06/25/11 new stop loss @ 59.75
06/04/11 Adjustment - new stop @ 58.75
*5/31/11 estimate on the entry point of our 2nd position
05/28/11 New stop loss @ 59.25.
05/28/11 New entry point on the bounce. 2nd position above.
05/07/11 New stop loss @ 57.75

Current Target: $69.00
Current Stop loss: 59.75
Play Entered on: 04/04/11
Originally listed on the Watch List: 02/12/11


Canadian Natl. Railway Co. - CNI - close: 77.91

07/16 update: The long-term trend for most of the major railroad stocks remains very bullish. Yet this last week the group struggled. CNI churned inside the $77-79 area. I would not be surprised to see a dip toward support near $75.00 and its 100-dma. Our biggest concern is CNI's earnings. The company reports on July 25th (a week from Monday). Analysts are looking for $1.25 a share. Cautious traders may want to consider buying some short-term puts prior to the earnings announcement on Monday night (7/25).

I would be tempted to buy calls on a dip or a bounce near $75.00. Keep in mind we have a stop loss at $74.90.

FYI: CNI opened lower on July 11th and the 2012 Jan. $85 call opened at $1.85.

- Current Positions -
Feb 28, 2011 - entry price on CNI @ 72.39, option @ 2.90
symbol: CNI1221A80 2012 JAN $80 call - current bid/ask $ 3.80/ 4.10

- 2nd Position, listed 7/9/11 -

Jul 11, 2011 - entry price on CNI @ 78.49, option @ 1.85
symbol: CNI1221A85 2012 JAN $85 call - current bid/ask $ 1.95/ 2.15

07/09/11 Add a 2nd position (2012 Jan $85 call)
07/02/11 new stop loss @ 74.90
06/25/11 new stop loss @ 72.75
05/21/11 new stop loss @ 71.75
05/05/11 new entry point @ 75.00
04/02/11 New stop loss @ 69.00

Current Target: $89.00
Current Stop loss: 74.90
Play Entered on: 02/28/11
Originally listed in the New Plays 02/26/11


Coach Inc. - COH - close: 65.48

07/16 update: COH spent most of last week churning sideways in a $2.00 range. Shares managed to close above round-number support at $65.00. The mild profit taking is encouraging but I am not convinced the pull back is over. Readers may want to wait for a bounce from $64.00 or better yet a dip or bounce near $62.00 before initiating new positions.

The plan was to keep our position size small to limit our risk.

FYI: COH doesn't report earnings until August.

- Current Positions -
Jun 03, 2011 - entry price on COH @ 61.00, option @ 4.40
symbol: COH1221A65 2012 JAN $65 call - current bid/ask $ 6.30/ 6.50

- or -

Jun 03, 2011 - entry price on COH @ 61.00, option @ 6.80
symbol: COH1319A70 2013 JAN $70 call - current bid/ask $ 8.20/ 8.60

07/09/11 New stop loss @ 59.00, targets are $74.00 & $79.00
07/02/11 Look for some profit taking after the big rally
06/25/11 COH appears to be forming an H&S pattern. Consider an early exit now.
06/18/11 COH looks weak. Readers may want to consider an early exit.

Current Target: $74.00 & $79.00
Current Stop loss: 59.00
Play Entered on: 06/03/11
Originally listed on the Watch List: 05/28/11


Costco Wholesale - COST - close: 79.87

07/16 update: I am urging caution on COST. I warned readers last weekend that COST had produced what looked like a bearish reversal. This past week did not help. Shares have broke down under their 50-dma and have now closed under the $80.00 mark. The MACD indicator on the daily chart has turned bearish. I am expecting a pull back toward technical support near its 100-dma, which will coincide with a drop toward the early June lows.

We have a stop loss at $76.75. More aggressive traders may want to adjust their stop so that it's under the $75.00 level, which should be stronger support. Conservative traders might want to consider an early exit now to lock in a gain. I am not suggesting new positions at this time.

FYI: COST doesn't report earnings again for a couple of months.

- Current Positions -
Apr 7, 2011 - entry price on COST @ 76.37, option @ 3.80
symbol:COST1221A80 2012 JAN $80 call - current bid/ask $ 4.75/ 4.85

- or -

Apr 7, 2011 - entry price on COST @ 76.37, option @ 5.05
symbol:COST1319A85 2013 JAN $85 call - current bid/ask $ 6.05/ 6.25

07/16/11 Cautious traders may want to exit now
07/09/11 new stop loss @ 76.75
06/25/11 expecting a dip toward the 100-dma
06/04/11 Adjusting our stop to $74.75
05/21/11 Take Profits - Sell Half now! COST @ 83.40.
2012 $80 call @ $7.55 (+98.6%), 2013 $85 call @ $8.30 (+64.3%)
05/14/11 New stop loss @ 75.75
04/30/11 New stop loss @ 73.40

Current Target: $89.50, 99.00
Current Stop loss: 76.75
Play Entered on: 04/07/11
Originally listed on the Watch List: 01/29/11


Dr. Pepper Snapple Group, Inc. - DPS - close: 40.83

07/16 update: DPS was not immune to the market's pull back this past week. Unfortunately, DPS broke down under its simple 50-dma and what should have been stronger support near the $41.00 area. The next level of likely support is the $40.00 mark and the June lows in the $39.70 region. At this point I would be in no rush to launch positions. We can wait for DPS to dip and then look to buy a bounce from support.

FYI: DPS reports earnings on July 27th.

Earlier Comments:
DPS does not have LEAPS so we are using the November 2011 calls.

- Current Positions -
May 11, 2011 - entry price on DPS @ 40.55, option @ 2.85
symbol: DPS1119K40 2011 NOV $40 call - current bid/ask $ 2.55/ 2.75

- or -

May 11, 2011 - entry price on DPS @ 40.55, option @ 1.00
symbol: DPS1119K45 2011 NOV $45 call - current bid/ask $ 0.65/ 0.85

07/02/11 new stop loss @ 39.40
06/25/11 DPS looks poised to correct toward the $38 level.

Current Target: $46.00
Current Stop loss: 39.40
Play Entered on: 05/11/11
Originally listed on the Watch List: 05/07/11


Fiserv, Inc. - FISV - close: 61.37

07/16 update: Ouch! FISV just gave back all of the prior week's gains and more! Shares fell through its 10, 20, 30, 40, and 50-dma in addition to what should have been short-term support near $62.00. Essentially FISV is retreating toward the bottom of its multi-month $60-65 trading range. The July 7th close above resistance at $65 was a fluke or a trap. The next level of support is significant near the $60 level and FISV's simple 200-dma.

I am not suggesting new bullish positions at this time. FISV is due to report earnings on July 26th.

- Suggested Positions -
Feb 14, 2011 - entry price on FISV @ 62.30, option @ 3.20
symbol: FISV1117I65 2011 SEP $65 call - current bid/ask $ 1.90/ 2.00

07/09/11 readers may want to consider a 2nd position.
06/25/11 new stop loss @ 58.95
06/04/11 new stop loss @ 58.45

Current Target: $74.75
Current Stop loss: 58.95
Play Entered on: 02/14/11
Originally listed on the Watch List: 01/29/11
Originally listed in the New Plays 02/12/11


Intel Corp. - INTC - close: 22.37

07/16 update: Semiconductor stocks were significant underperformers last week. Investors were not happy with earnings results or guidance from MCHP and NVLS. Their news helped push the SOX index back toward its June lows. Meanwhile INTC spent the week consolidating sideways but with a trend of lower highs. Shares remain above support at the $22.00 level but that could change pretty quickly. INTC reports earnings on Wednesday, July 20th, after the closing bell. Analysts are expecting a profit of 51 cents a share.

I am not suggesting new positions in front of the earnings report. If INTC does see any profit taking on the report I would expect a dip toward the 200-dma close to the $21 area. Currently we have a stop loss at $20.85.

- Current Positions -
Jun 01, 2011 - entry price on INTC @ 22.00, option @ 1.41
symbol: INTC1221A22.5 2012 JAN $22.50 call - current bid/ask $ 1.50/ 1.53

- or -

Jun 01, 2011 - entry price on INTC @ 22.00, option @ 2.38
symbol: INTC1319A22.5 2013 JAN $22.50 call - current bid/ask $ 2.45/ 2.51

07/09/11 new stop loss @ 20.85

Current Target: $26.00-28.00 zone
Current Stop loss: 20.85
Play Entered on: 06/01/11
Originally listed on the Watch List: 05/07/11


Kaiser Aluminum - KALU - close: 54.24

07/16 update: KALU gapped down on Monday, July 11th, providing us a better entry point. Traders then spent the rest of the week buying dips near the stock's rising 20-dma. Essentially shares are forming a pennant pattern of higher lows and lower highs. This is supposed to be a neutral pattern but normally the prevailing trend resumes.

Given our long-term time frame I would still buy calls now but you could certainly try and time an entry point on a dip near $52.00 or wait for a breakout and a close over $56.00 instead.

Our long-term targets are $64.00 and $69.00 but that might be a little too optimistic since KALU does not have LEAPS. FYI: The Point & Figure chart for KALU is forecasting a long-term target of $65.00.

NOTE: KALU does not have LEAPS so we are choosing to play the 2011 December calls. Unfortunately the spreads are a little wide right now.

- Suggested Positions -
Jul 11, 2011 - entry price on KALU @ 53.56, option @ 2.35
symbol: KALU1117L60 2011 DEC $60 call - current bid/ask $ 1.60/ 2.40

Current Target: $64.00, 69.50
Current Stop loss: 49.75
Play Entered on: 07/11/11
Originally listed in the New Plays 07/09/11


Monsanto Co. - MON - close: 74.06

07/16 update: MON has spent the last week and a half consolidating sideways in the $74-75 region. The lack of profit taking is a show of relative strength but that doesn't mean MON won't see a pull back. I'd wait for a dip or a bounce from the $70 area before considering new bullish positions.

Prior Comments:
Our plan was to keep our position size small to limit our risk since MON can be so volatile at times. Our long-term targets are the $85-90 zone.

- Current (SMALL) Positions -
Mar 15, 2011 - entry price on MON @ 65.50, option @ 6.75
symbol: MON1221A70 2012 JAN $70 call - current bid/ask $ 8.45/ 8.60

- or -

Mar 15, 2011 - entry price on MON @ 65.50, option @ 8.75
symbol: MON1319A75 2013 JAN $75 call - current bid/ask $10.20/10.50

07/02/11 new stop loss @ 64.00
06/25/11 Earnings are June 29th. Consider exiting ahead of the announcement.
06/18/11 Get defensive. Consider raising your stop loss or reducing your position size. Decide if you're willing to hold over the earnings report or if you'll exit early prior to the announcement.
04/09/11 New stop loss @ 61.75, Readers may want to exit early now.

Current Target(s): $85.00
Current Stop loss: 64.00
Play Entered on: 03/15/11
Originally listed on the Watch List: 01/08/11


Targa Resources - NGLS - close: 35.93

07/16 update: NGLS gapped open lower on July 11th placing our entry point at $35.61. There was not much follow through and shares found support north of $35.00. If the market can cooperate NGLS looks poised to rally from current levels. I would still consider new positions in the $35.00-36.50 area but readers may want to hesitate on launching new plays. This week could be a volatile one for stocks due to earnings season and the debt ceiling debate.

NOTE: Something has happened to our 2011 DEC $35 calls. The spreads have blown out. The bid is now $0.35 with an ask of $3.70. I can't explain why. If you choose to trade these I would use a limit order and place it inside the spread. There is no guarantee you'll get filled.

I am adding a secondary target at $44.00. Our first target is $39.75.

FYI: NGLS reports earnings in August.

Earlier Comments:
I do consider this a slightly more aggressive trade. NGLS does not have normal LEAPS. We have to settle for the 2011 December calls. Plus, the spreads are a little bit too wide. We need to keep our position size small to limit our risk.

- Suggested Positions -
Jul 11, 2011 - entry price on NGLS @ 35.61, option @ 2.50
symbol: NGLS1117L35 2011 DEC $35 call - current bid/ask $ 0.35/ 3.70

07/16/11 Spreads on the 2011 DEC calls are now outrageously wide! Do not use market orders

Current Target: $39.75, 44.00
Current Stop loss: 33.75
Play Entered on: 07/11/11
Originally listed in the New Plays 07/09/11


Southwestern Energy Co. - SWN - close: 47.53

07/16 update: Friday's buyout news for Petrohawk (HK) has suddenly made SWN a potential takeover target. Shares of SWN surged +8.8% as investors speculate it too could be acquired as the industry sees more consolidation. The rally past resistance at $45.00 is very bullish but I would not chase it here. Wait for SWN to correct and retest the $45.00 level as new support before considering new positions. Please note that I am raising our stop loss to $41.95. I am setting our first exit target at $52.00. We'll set our secondary target at $57.50.

FYI: SWN is due to report earnings on July 28th.

Earlier comments:
We wanted to keep our position size small to limit our risk.

- Current (SMALL) Positions -
Apr 7, 2011 - entry price on SWN @ 40.50, option @ 2.90
SWN1221A45 2012 JAN $45 call - current bid/ask $ 5.80/ 5.95

- or -

Apr 7, 2011 - entry price on SWN @ 40.50, option @ 5.85
SWN1319A45 2013 JAN $45 call - current bid/ask $ 8.90/ 9.35

07/16/11 new stop loss @ 41.95, targets adjusted to $52.00 & 57.50
07/02/11 SWN has reversed higher and stalled at resistance near $44.
06/25/11 SWN looks poised to drop toward support near $40.00.
05/28/11 new stop loss @ 39.45
05/07/11 New stop loss @ 37.75

Current Target(s): $52.00, 57.50
Current Stop loss: 41.95
Play Entered on: 04/07/11
Originally listed on the Watch List: 04/02/11


Union Pacific Corp. - UNP - close: 100.74

07/16 update: It was not a good week for UNP. After breaking down through support near $105 the prior week UNP continued to correct lower. Shares have fallen toward psychological support near $100 and technical support at the 100-dma. Now the simple 100-dma has been consistent support for months and its 2011 history would suggest this is a good spot to launch new bullish positions. However, UNP is due to report earnings on Thursday, July 21st. The announcement is before the opening bell and Wall Street is expecting a profit of $1.58 a share.

It's possible that UNP merely churns sideways as investors wait for the earnings report. Then the stock could see a big surge or a breakdown on the earnings news. We already have a stop loss at $97.00. Cautious traders could tighten that a little bit. The low on Friday was $99.07. I am not suggesting new positions in front of the earnings report. Conservative traders might want to consider buying some short-term puts before the close on Wednesday just in case UNP delivers a disappointing earnings report.

- Current Positions -
May 5, 2011 - entry price on UNP @ 100.15, option @ 5.00
UNP1221A110 2012 JAN $110 call - current bid/ask $ 3.45/ 3.50

- or -

May 5, 2011 - entry price on UNP @ 100.15, option @ 6.00
UNP1319A120 2013 JAN $120 call - current bid/ask $ 5.35/ 5.70

05/28/11 New stop loss @ 97.00

Current Target(s): $119.75-134.00
Current Stop loss: 97.00
Play Entered on: 05/05/11
Originally listed on the Watch List: 04/30/11


Zimmer Holdings, Inc. - ZMH - close: 63.68

07/16 update: Profit taking in ZMH last week was pretty mild but the action was still bearish. The midweek rally failed at resistance near $65 and under its 50-dma. Now some of the technical indicators on the daily chart are starting to deteriorate (again). I would not be surprised to see ZMH retreat toward support near $60.00. I am not suggesting new bullish positions at this time. ZMH is due to report earnings on July 28th. We'll wait and see how the market reacts to their earnings news before considering new positions.

Earlier comments:
Healthcare stocks had been one of the market's strongest sectors. When this market correction is over I expect healthcare to remain popular with investors. I like ZMH since an aging baby boomer population is going to see rising demand for ZMH's replacement joints and implants.

- Current Positions -
Jun 10, 2011 - entry price on ZMH @ 63.00, option @ 4.00
ZMH1221A65 2012 JAN $65 call - current bid/ask $ 4.40/ 4.60

- or -

Jun 10, 2011 - entry price on ZMH @ 63.00, option @ 5.50
ZMH1319A70 2013 JAN $70 call - current bid/ask $ 5.90/ 6.50

07/09/11 Look for a dip or a bounce near $63 as an entry point.
06/25/11 We are still expecting a dip toward $60.00. Wait for a bounce from this level before considering new positions.

Current Target(s): $78.50 & 88.50
Current Stop loss: 58.90
Play Entered on: 06/10/11
Originally listed on the Watch List: 04/30/11