Editor's Note:

It was another ugly week for stocks. The oversold bounce that began on September 22nd failed on Tuesday. It was all downhill from there.

A handful of candidates managed to post gains for the week but the trading action was still bearish.

-James


Closed Plays


None. No closed plays this week.


Play Updates


Bank of America - BAC - close: 6.12

update 10/01: BAC lost 19 cents or about 3% for the week. That's not bad considering the market's recent weakness. Shares are back to testing support near $6.00. Unfortunately the recent failed rally is another new lower high in a bearish trend of lower highs. While plenty of analysts consider BAC to be super cheap it can always get cheaper. I am worried that if BAC breaks support at $6.00 it could drop toward the $4.00-3.00 zone.

We will raise our stop loss to $5.75. Currently this stop loss only applies to the September 26th position.

- Suggested Positions -
AUG 29, 2011 - entry price on BAC @ 8.10, option @ 0.57
symbol: BAC1221A10 2012 JAN $10 call - current bid/ask $ 0.12/ 0.13
(no stop loss on this position)

- or -

AUG 29, 2011 - entry price on BAC @ 8.10, option @ 1.50
symbol: BAC1319A10 2013 JAN $10 call - current bid/ask $ 0.76/ 0.78
(No stop loss on this position)


2nd Position, listed 09/24/11, opened on 09/26/11

SEP 26, 2011 - entry price on BAC @ 6.48, option @ 0.66
symbol: BAC1221A7.50 2012 JAN $7.50 call - current bid/ask $ 0.56/ 0.57
Stop loss @ 5.75

- or -

SEP 26, 2011 - entry price on BAC @ 6.48, option @ 1.00
symbol: BAC1319A10 2013 JAN $10 call - current bid/ask $ 0.76/ 0.78
Stop loss @ 5.75

10/01 raising our stop loss on the Sep. 26th position to $5.75
09/24 adding 2nd position, stop loss at $5.40
09/03 no stop loss on this trade at this time.

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


BMC Software - BMC- close: 38.56

update 10/01: BMC only lost 29 cents for the week but the action was bearish with a failed rally under $41.00 near the top of the gap down. Shares are headed back toward $38.00 and look like they could drop toward their August lows near $37.20. Technical indicators on the daily chart are turning bearish. More conservative traders may want to abandon ship and exit early now. Currently we have a stop loss at $36.90. I am not suggesting new positions at this time.

- Suggested Positions -
SEP 22, 2011 - entry price on BMC @ 39.74, option @ 2.05
symbol: BMC1221A45 2012 JAN $45 call - current bid/ask $ 1.15/ 1.90

- or -

SEP 22, 2011 - entry price on BMC @ 39.74, option @ 5.40
symbol: BMC1319A45 2013 JAN $45 call - current bid/ask $ 3.90/ 4.90

10/01 Readers may want to exit early now! BMC @ $38.56
09/24 new stop loss @ 36.90
09/22 play opened at $39.74 (gap down)
09/17 adjusted entry point to buy the dip at $40.25, stop 37.40
09/17 adjusted option strikes to 2012 and 2013 Jan $45s.

Current Target: $46.50, 49.75
Current Stop loss: 36.90
Play Entered on: 09/22/11
Originally listed on the Watch List: 08/20/11


Bristol Meyers Squibb - BMY - close: 31.38

update 10/01: BMY was one of the few stocks to post a gain for the week. The stock hit new multi-year highs intraday on Friday (@ 31.91). While the trend is up for BMY I am not suggesting new positions at this time. If the market breaks down under the August lows it will likely drag BMY with it and that could pull shares back down toward the $29.00 area.

I am not suggesting new positions at this time.

Earlier Comments:
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 @ 30.53, option @ 1.20
symbol: BMY1319A35 2013 JAN $35 call - current bid/ask $ 1.71/ 1.80

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

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


EMC Corp. - EMC - close: 20.99

update 10/01: EMC also posted a gain for the week but shares are well off their highs set on Tuesday morning near $22.25. The stock appears to be struggling with technical resistance at its descending 40-dma. Currently, given the market's pull back, EMC looks headed for a retest of support near $20.00. Nimble traders could buy another dip near $20.00. I am growing concerned that if the S&P500 or NASDAQ breaks down under their August lows then we'll see EMC break down as well. Currently we have a stop loss at $19.49. Should EMC close under $20 then I would expect a sell-off toward $18 or even $16 going forward.

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 $ 2.45/ 2.49

- or -

Aug 18, 2011 - entry price on EMC @ 20.25, option @ 1.80
symbol: EMC1319A25 2013 JAN $25 call - current bid/ask $ 2.02/ 2.18

09/24 new stop loss @ 19.49
09/17 new stop loss @ 19.80

Current Target: $25.75 and 28.50
Current Stop loss: 19.49
Play Entered on: 08/18/11
Originally listed on the Watch List: 07/23/11


Hewlett-Packard - HPQ - close: 22.45

update 10/01: HPQ managed to end the week with a gain but the gap open higher on Monday means our entry point is $22.59, leaving our position at a minor loss. The stock failed twice near $24.50 and looks like it's ready to retest support near $22.00 soon. I would wait for a new bounce off the $22 area before considering new bullish positions.

Please note that I'm switching our stop losses. Last week I listed two different options with two different stop losses. We want the tighter stop loss on the short-term trade. I've made the corrections below.

- Suggested (SMALL) Positions -
Short(er)-Term Trade
Sep 26, 2011 - entry price on HPQ @ 22.59, option @ 2.69
symbol: HPQ1221A22.5 2012 JAN $22.50 call - current bid/ask $ 2.71/ 2.77
Stop Loss @ 19.70

- or -

Longer-term Trade
Sep 26, 2011 - entry price on HPQ @ 22.59, option @ 3.75
symbol: HPQ1319A25 2013 JAN $25 call - current bid/ask $ 3.70/ 3.85
Stop Loss @ 19.45

Current Target: $29.50
Play Entered on: 09/26/11
Originally listed in New Plays: 09/24/11


Kraft Foods Inc. - KFT - close: 33.58

update 10/01: KFT remains stuck in its trading range. The stock failed at resistance in the $35.00-35.50 zone and is rolling over again. The 200-dma and 200-ema might offer some technical support but I doubt they will hold if the S&P500 continues to sink. We should expect KFT to retest its lows near the $32.50 level. With the market in flux I am not suggesting new positions tonight.

NOTE: KFT is a very slow moving stock. It will take months to make any progress. Once a position is open readers may want to turn these into calendar spreads (a.k.a. vertical spreads).

- Suggested (SMALL) Positions -
Sep 22, 2011 - entry price on KFT @ 32.71, option @ 2.35
symbol: KFT1319A35 2013 JAN $35 call - current bid/ask $ 2.65/ 2.90

Current Target: $38.00
Current Stop loss: 31.75
Play Entered on: 09/22/11
Originally listed on the Watch List: 09/17/11


Coca-Cola Co - KO - close: 67.56

update 10/01: The action in KO last week was short-term bearish with a failed rally near $70 and a new lower high. The stock managed to close with a gain for the week but only because Friday's session ran out of time. Another few minutes would have erased its minor gain. The close under its 100-dma is not bullish. Previously I have cautioned readers that KO could see a correction back into the $65-64 zone if the market sells off. While the $66 level and the simple 200-dma might offer some support I would wait for a dip or a bounce in the $65-64 zone before considering new positions.

FYI: KO is due to report earnings on October 18th. Investors may want to wait until after we see the market's reaction to earnings before considering new trades.

Earlier comments:
Remember, this is a slow-moving stock. It's going to take months for KO to make significant headway but the trend is up. Our plan is to keep positions small to limit our risk.

- Suggested Positions -
Sep 22, 2011 - entry price on KO @ 67.00, option @ 2.25
symbol: KO1221A70 2012 JAN $70 call - current bid/ask $ 2.45/ 2.48

- or -

Sep 22, 2011 - entry price on KO @ 67.00, option @ 3.00
symbol: KO1319A75 2013 JAN $75 call - current bid/ask $ 3.15/ 3.30

09/22/11 play opened at $67.00
09/17/11 stocks are showing strength. New entry point at $67.00, stop at $63.49
09/10/11 adjusted entry point to $64.50, stop loss to $61.45
09/03 adjusting buy-the-dip trigger to $66.50
09/03 removing the secondary entry point
08/27 Adding a secondary entry point to buy $75 calls if KO can close over $70.50. stop loss at $66.40.

Current Target: $80.00
Current Stop loss: 63.49
Play Entered on: 09/24/11
Originally listed on the Watch List: 08/13/11


McDonalds Corp. - MCD - close: 87.82

update 10/01: MCD ended the week up 45 cents and hugging its 50-dma. Unfortunately the trading activity looks bearish with a failed rally near its all-time highs in the $91 area. If the stock market continues to sink we'll probably see MCD retesting its 100-dma soon.

Please note that I am changing my mind on our stop loss strategy. MCD should have decent support near $82 and the $80 level, plus its 200-dma just above $80.00. Yet we're going to move our stop loss from $79.50 to $84.75. I'd rather get stopped out and preserve some capital so we can re-enter positions on a bounce from $80 should the market see a significant breakdown.

Keep in mind that MCD is due to report earnings in about three weeks. I would hesitate to launch new positions in front of the report.

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 $ 3.70/ 3.85

- or -

Aug 15, 2011 - entry price on MCD @ 86.82, option @ 3.90
symbol: MCD1319A95 2013 JAN $95 call - current bid/ask $ 5.70/ 5.85

10/01/11 new stop loss at $84.75
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: 84.75
Play Entered on: 08/15/11
Originally listed in the New Plays 08/13/11


NVIDIA Corp. - NVDA - close: 12.51

update 10/01: Ouch! It was another ugly week for NVDA and many of the semiconductor stocks. Shares of NVDA lost more than -9%. The close under $13.00 is very bearish and if the stock market continues to sink this week then we'll probably see NVDA hit our stop loss at $12.25. More aggressive traders may want to put their stop under the August lows (near 11.65).

I am not suggesting new positions at this time.

- Suggested (small) Positions -
SEP 14, 2011 - entry price on NVDA @ 15.62, option @ 2.40
symbol: NVDA1221A15 2012 JAN $15 call - current bid/ask $ 0.89/ 0.90

- or -

SEP 14, 2011 - entry price on NVDA @ 15.62, option @ 4.25
symbol: NVDA1319A15 2013 JAN $15 call - current bid/ask $ 2.50/ 2.58

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: 85.72

update 10/01: The big headline for this industry last week was news that Bank of America (BAC), the country's biggest bank, will start charging a $5.00 monthly fee to customers that use their debit cards. We don't know yet how this will affect Visa, if it affects them at all. Some consumers will stop using their (Visa) debit card through BAC and avoid the $5 fee by using credit cards instead. Of course Visa makes money when they use their credit cards too. There's always the option of using a prepaid card, where Visa still makes money. Of course some consumers might just switch to using more cash or checks instead. Big picture, consumers are still making more and more transactions using their cards instead of cash or checks and that trend is unlikely to change.

For the week shares of Visa are down almost 5%. We currently have a stop loss at $84.45. If the market sell-off continues then there is a very good chance that Visa while hit our stop loss.

- Suggested (small) Positions -
Aug 18, 2011 - entry price on V @ 80.00, option @ 4.00
symbol: V1221A90 2012 JAN $90 call - current bid/ask $ 5.65/ 5.80

- or -

Aug 18, 2011 - entry price on V @ 80.00, option @ 7.75
symbol: V1319A100 2013 JAN $100 call - current bid/ask $ 9.15/ 9.85

09/24 new stop loss at $84.45
09/20 1st target hit at $94.50
bid 2012 Jan $90 call @ $9.80 (+145%)
bid 2013 Jan $100 call @ $11.10 (+43.2%)
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: 84.45
Play Entered on: 08/18/11
Originally listed on the Watch List: 08/13/11