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New Long Plays

Duke Energy - DUK - close: 26.89 change: +0.44 stop: 25.99

Company Description:
Duke Energy is a diversified energy company with a portfolio of natural gas and electric businesses, both regulated and unregulated, and an affiliated real estate company. Duke Energy supplies, delivers and processes energy for customers in the Americas. (source: company press release or website)

Why We Like It:
Utility stocks were some of the better performers today and the group looks poised to hit new relative highs. Not only will DUK benefit from a rally in utilities the company still has a natural gas business and should benefit from the rally in natural gas. We believe the stock may also attract buyers looking to put some of their Christmas bonus to work since DUK is currently offering a 4.7% dividend yield. Technically the stock is climbing higher in a six-week old rising channel. Of course if you're feeling pessimistic you could probably call it a big bear flag pattern. Currently DUK is bouncing from support at the bottom of its rising channel. The company announced a merger agreement to buy Cinergy (CIN) back in May of 2005 but we don't expect that to affect the stock short-term. Our target is the top of the channel, which should intersect with the 200-dma near $28.00. We'll use a target of $27.95-28.00. Our stop will be under last week's low at $25.99.

Picked on December 13 at $26.89
Change since picked: + 0.00
Earnings Date 02/01/06 (unconfirmed)
Average Daily Volume: 3.9 million

New Short Plays

New River Pharma. - NRPH - close: 45.99 chg: -1.62 stop: 50.01

Company Description:
New River Pharmaceuticals Inc. is a specialty pharmaceutical company focused on developing novel pharmaceuticals that are generational improvements of widely prescribed drugs in large and growing markets. (source: company press release or website)

Why We Like It:
It looks like NRPH has topped. The stock's July to November rally is ending and shares have produced a classic (bearish) head-and-shoulders top. The neckline of support is in the $46.00 region. The stock broke that level on an intraday basis today and volume spiked to twice the norm. Speaking of the norm, we normally don't like to trade a stock with such low daily average volume. That makes this play a bit more aggressive. Plus, we're dealing with a drug/biotech company and you never know when the company might announce some new discovery or test results, so that increases the risk level here, especially since we're suggesting a short. We're going to use a trigger at $45.45 to open the play. If triggered we'll target a drop to the $40.00 level. There is potential support at the 100-dma near $45 so don't be surprised to see an oversold bounce. If you're the patient type then wait for the bounce and what should be a failed rally under $46.00-47.00 before initiating positions. Currently the P&F chart points to a $39 target, which more closely coincides with the H&S pattern target.

Picked on December xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/14/05 (confirmed)
Average Daily Volume: 86 thousand

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