Closed Plays


None. No closed plays this week.


Play Updates


Bank of America - BAC - close: 7.23

update 09/17: Bloomberg.com made headlines for BAC on Friday when it ran an article regarding a potential Countrywide bankruptcy. Essentially the Bloomberg article suggested that BAC could eliminate most of its troubles and the big overhang on its stock price by letting its Countrywide division file for bankruptcy and removing all (or at least most) of its legal liabilities for all the bad loans made by Countrywide.

There is plenty of opinion on whether or not BAC would actually go through with what the author called the "nuclear option" (as in a nuclear bomb). Just the fact that BAC could have its Countrywide division file for bankruptcy should give them a lot more leverage with creditors making demands on the company and that should be positive for BAC's stock price.

Looking at BAC the stock essentially churned sideways this past week in spite of all the optimism over potential progress in Europe and the U.S. market's big bounce.

At this point I would probably wait for a dip near $6.00 or wait for a close over $8.00 and its 50-dma as potential entry points to buy long-term call options.

- Suggested Positions -
AUG 29, 2011 - entry price on BAC @ 8.10, option @ 0.57
symbol: BAC1221A10 2012 JAN $10 call - current bid/ask $ 0.24/ 0.26
No Stop on this position (at this time)

- or -

AUG 29, 2011 - entry price on BAC @ 8.10, option @ 1.50
symbol: BAC1319A10 2013 JAN $10 call - current bid/ask $ 1.05/ 1.08
No stop loss on this position (at this time)

09/03 no stop loss on this trade at this time.

Current Target: $12.00-to-$15.00
Current Stop loss: --.--
Play Entered on: 08/29/11
Originally listed in the New Plays 08/27/11


Baker Hughes Inc. - BHI - close: 59.15

update 09/17: BHI produced another bounce from the $56-55 zone but it failed to breakout past $60.00 or its neutral pennant pattern of lower highs and higher lows. The U.S. market looks short-term overbought here so we might see BHI retest the $58-56 zone soon. Nimble traders could buy another bounce from $56 but conservative traders may want to wait for a new close over $60.00 before considering new positions. Cautious traders might want to raise their stop toward the $54 or $55 levels.

Earlier Comments:
The plan was to keep our position size small. Our long-term targets are $67 and $74. I do want to caution traders that one of our biggest risks is probably news that BHI will make an acquisition. If BHI does purchase another company, then shares of BHI could gap open lower on us, which is another reason to keep our position size small.

- Suggested Positions -
AUG 29, 2011 - entry price on BHI @ 57.62, option @ 3.85
symbol: BHI1221A65 2012 JAN $65 call - current bid/ask $ 3.65/ 3.75

- or -

AUG 29, 2011 - entry price on BHI @ 57.62, option @ 7.00
symbol: BHI1319A70 2013 JAN $70 call - current bid/ask $ 7.25/ 7.60

Current Target: $67.00 and 74.00
Current Stop loss: 52.40
Play Entered on: 08/29/11
Originally listed in the New Plays 08/27/11


Bristol Meyers Squibb - BMY - close: 30.53

update 09/17: Drug giant BMY has made the jump from our watch list to our play list. The stock displayed relative strength last week and broke out above resistance at the $30.00 level. These are new four-year highs for the stock. Our trigger to open positions was a close over $30.25. Thus, I would still consider new positions now. Technically, Friday's close was our entry point so we'll enter positions on Monday morning at the open. Keep in mind that the market looks short-term overbought so you could wait for a dip back toward $30.00 as your entry point.

I will point out that BMY could have resistance in the $32.00-32.50 zone dating back to mid 2007.

NOTE: BMY is not a very fast moving stock. We will need to be patient.

- Suggested Positions -
SEP 19, 2011 - entry price on BMY @ --.--, option @ -.--
symbol: BMY1319A35 2013 JAN $35 call - current bid/ask $ 1.08/ 1.15

09/16 Friday's close at $30.53 is our trigger to buy calls. Our entry will be Monday morning.

Chart of BMY:

Current Target: $33.50 and 35.75
Current Stop loss: 27.75
Play Entered on: 09/19/11
Originally listed on the Watch List: 09/10/11


Cliffs Natural Resources - CLF - close: 77.94

update 09/17: CLF is still churning sideways. Monday's low was a new higher low while Friday's failed rally near $80 was a new lower high in this sideways consolidation. Any significant market drop should push CLF back towards the $75-74 area. More conservative traders may want to raise their stops toward the $72-73 area. I am leaving our stop loss at $67.00 for now. However, if we see CLF close over $80.00 then we will move our stop loss to $72.20.

If you're really feeling cautious then exit now to lock in a gain! I am not suggesting new positions at this time.

Earlier Comments:
The plan was to use small positions to limit our risk. Our targets are $89.00 and $99.00.

- Suggested (SMALL) Positions -
Aug 18, 2011 - entry price on CLF @ 71.51, option @ 4.25
symbol: CLF1221A85 2012 JAN $85 call - current bid/ask $ 6.50/ 6.65

- or -

Aug 18, 2011 - entry price on CLF @ 71.51, option @ 10.50*
symbol: CLF1319A90 2013 JAN $90 call - current bid/ask $12.95/13.25

09/17 if CLF closes over $80.00 then move stop to $72.20
09/03 look for a dip toward $75.00
08/27 new stop loss @ 67.00
08/20 adjusted stop loss to $64.95.
08/18 *entry on 2013 Jan. $90 call is an estimate. Option did not trade on Thursday.

Current Target: $89.00 and 99.00
Current Stop loss: 67.00
Play Entered on: 08/15/11
Originally listed on the Watch List: 08/13/11


EMC Corp. - EMC - close: 22.76

update 09/17: It was a strong week for tech stocks. EMC rallied from its Monday morning lows under $21.00 to hit $22.99 on Friday morning. The $23.00 level is resistance so do not be surprised if EMC sees a pull back from here. The $22 and $21 levels should remain short-term support.

We are going to go ahead and raise our stop loss to $19.80, just under the August low. More conservative traders may want a stop closer to $20.60, which is under the early September low, or a stop near $20.90, which is under last Monday's low instead.

I am not suggesting new positions at this time.

Earlier Comments:
The plan was to use small positions to limit our risk. Our first long-term target is $25.75. Our second target is $28.50. Aggressive traders could aim higher.

- Suggested (SMALL) Positions -
Aug 18, 2011 - entry price on EMC @ 20.25, option @ 2.20
symbol: EMC1221A20 2012 JAN $20 call - current bid/ask $ 3.55/ 3.65

- or -

Aug 18, 2011 - entry price on EMC @ 20.25, option @ 1.80
symbol: EMC1319A25 2013 JAN $25 call - current bid/ask $ 2.66/ 2.82

09/17 new stop loss @ 19.80

Current Target: $25.75 and 28.50
Current Stop loss: 19.80
Play Entered on: 08/18/11
Originally listed on the Watch List: 07/23/11


McDonalds Corp. - MCD - close: 88.29

update 09/17: MCD spent the week recovering from the Friday sell-off a week ago. Yet the rally only reached as far as the September 8th close. Essentially, MCD has only filled the gap and if it stops here it's a new lower high. While I am longer-term bullish on MCD this pause at short-term resistance at the top of the gap is troubling and I would expect a pull back soon. I would wait for another bounce from the $86-85 area before considering new bullish positions.

Earlier Comments:
The plan was to use small positions to limit our risk. Our first target is $99.00.

- Suggested (small) Positions -
Aug 15, 2011 - entry price on MCD @ 86.82, option @ 2.50
symbol: MCD1221A90 2012 JAN $90 call - current bid/ask $ 3.35/ 3.45

- or -

Aug 15, 2011 - entry price on MCD @ 86.82, option @ 3.90
symbol: MCD1319A95 2013 JAN $95 call - current bid/ask $ 4.95/ 5.10

09/10/11 adjusted stop loss down to $79.50
09/03/11 look for a dip toward the 50-dma

Current Target: $99.00
Current Stop loss: 79.50
Play Entered on: 08/15/11
Originally listed in the New Plays 08/13/11


McDermott Int. Inc. - MDR - close: 14.61

update 09/17: MDR rallied from its Monday morning lows of $12.76 to $14.97 on Friday. That's a +17.3% rise. Odds are good that MDR will see some profit taking soon. Nimble traders might want to consider buying a bounce from the $14.00 level. If you do launch positions I would consider the 2013 calls instead of the 2012s. Cautious investors may want to raise their stop toward the $12.50-12.75 area.

Earlier Comments:
The plan was to use small (half) positions to limit our risk and keep some cash in reserve in case we want to add to positions later. Our long-term targets are $19.50 and $23.50 but the $18 level and $22 level could prove to be tough resistance.

- Suggested (small) Positions -
Aug 15, 2011 - entry price on MDR @ 14.67, option @ 2.15
symbol: MDR1221A15 2012 JAN $15 call - current bid/ask $ 1.70/ 1.85

- or -

Aug 15, 2011 - entry price on MDR @ 14.67, option @ 1.15
symbol: MDR1221A17.5 2012 JAN $17.50 call - current bid/ask $ 0.80/ 0.90

08/20/11 adjust stop loss to $11.49

Current Target: $19.50, and $23.50
Current Stop loss: 11.49
Play Entered on: 08/15/11
Originally listed in the New Plays 08/13/11


NVIDIA Corp. - NVDA - close: 15.46

update 09/17: NVDA has made the leap from our watch list to our play list. Shares hit our alternative entry point to buy a close over $15.00 on Wednesday when the stock closed at $15.28. Unfortunately, that means our actual entry point was Thursday morning when NVDA gapped open higher at $15.62.

On a short-term basis the action on Friday looks like a failed rally at resistance near $16.00 and its 100-dma and exponential 200-dma. I would expect a dip back toward $14.50 or even $14.00. Use a dip near these levels as a new entry point to buy calls.

Currently our stop loss is at $12.25. Our exit target is $19.75.

- Suggested (small) Positions -
SEP 14, 2011 - entry price on NVDA @ 15.62, option @ 2.40
symbol: NVDA1221A15 2012 JAN $15 call - current bid/ask $ 2.30/ 2.34

- or -

SEP 14, 2011 - entry price on NVDA @ 15.62, option @ 4.25
symbol: NVDA1319A15 2013 JAN $15 call - current bid/ask $ 4.00/ 4.20

Chart of NVDA:

Current Target: $19.75
Current Stop loss: 12.25
Play Entered on: 09/15/11
Originally listed on the Watch List: 09/10/11


Visa Inc. - V - close: 90.85

update 09/17: Visa delivered a bullish week with a breakout past resistance at $89.00 and the $90.00 level. Shares hit new 2011 highs on Friday at $91.52. The close over $90.00 actually looks like a new bullish entry point. However, I am concerned that the U.S. market's might be short-term overbought and a market pull back could push Visa back toward the $89-88 area. Therefore, I would hesitate to launch new positions at this time.

Conservative traders might want to take some money off the table now, especially with the 2012 calls. Please note our new stop loss at $81.45.

- Suggested (small) Positions -
Aug 18, 2011 - entry price on V @ 80.00, option @ 4.00
symbol: V1221A90 2012 JAN $90 call - current bid/ask $ 7.50/ 7.65

- or -

Aug 18, 2011 - entry price on V @ 80.00, option @ 7.75
symbol: V1319A100 2013 JAN $100 call - current bid/ask $10.00/10.85

09/17 new stop loss @ 81.45. Readers may want to take some profits here with the 2012 calls up +87.5%
08/27 new stop loss at $77.00

Current Target: $94.50, and $99.00
Current Stop loss: 81.45
Play Entered on: 08/18/11
Originally listed on the Watch List: 08/13/11


Walter Energy Inc. - WLT - close: 82.19

update 09/17: WLT spent the entire week drifting sideways inside the $88-82 zone with a bearish trend of lower highs. The big news for WLT last week was Monday's announcement that the Board of Directors had appointed Walter Scheller from president of U.S. operations to chief executive officer.

There is still speculation that WLT is a takeover target but the fever seems to be cooling. The stock certainly underperformed the broader market last week. Two weeks ago the big story was speculation that Anglo American might buy WLT for $120 a share.

I am not suggesting new positions at this time.

Earlier Comments:
WLT can be a volatile stock so I do consider this an aggressive, higher-risk trade. We have a wide stop loss and the option we're using is very out of the money. We definitely want to keep our position size small. Our upside targets are $97.75 and $129.00 (a very long-term target).

- Suggested (small) Positions -
Aug 15, 2011 - entry price on WLT @ 82.82, option @ 6.65
symbol: WLT1221A100 2012 JAN $100 call - current bid/ask $ 6.20/ 6.65

- or -

Aug 15, 2011 - entry price on WLT @ 82.82, option @ 14.05
symbol: WLT1319A100 2013 JAN $100 call - current bid/ask $10.25/12.45

09/10/11 new stop loss @ 73.50

Current Target: $97.75 and $129.00
Current Stop loss: 73.50
Play Entered on: 08/15/11
Originally listed in the New Plays 08/13/11