Option Investor
New Plays
HAVING TROUBLE PRINTING?
Printer friendly version
New Plays
Long Plays
Short Plays
ET None
SNP  
USAK  

New Long Plays

E*Trade - ET - close: 23.25 change: +0.50 stop: 21.90

Company Description:
The E*TRADE FINANCIAL family of companies provides financial services including trading, investing, cash management and lending for Retail and Institutional customers. (source: company press release or website)

Why We Like It:
Financial stocks were a big part of Friday's rally and leading the way was a bullish breakout in the XBD broker-dealer index, which pushed through its 50-dma and 200-dma. Now that the brokers look ready for another leg higher we want some exposure to the group. Shares of ET broke out from its bearish trend of lower highs and its own 50-dma and 200-dma several days ago. Since then the stock has been consolidating sideways under resistance at the $23.50 level but with a somewhat bullish pattern of higher lows. We expect that an upward breakout in ET is imminent. Thus we're suggesting a trigger to go long at $23.55. More conservative traders may want to see more confirmation and wait for a move over $23.75. There is potential resistance at its 100-dma near $24 but our target is the $25.90-26.00 range. Technical traders will note that ET's P&F chart is still bearish and will remain bearish for a while.

Picked on July xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/19/06 (confirmed)
Average Daily Volume: 5.3 million

---

China Petro & Chem. - SNP - cls: 56.95 chg: +1.34 stop: 54.75

Company Description:
Sinopec is an integrated energy and chemical company. The scope of its business mainly covers oil and gas exploration, development, production and marketing; oil refining; production and sales of petrochemicals, chemical fibers, chemical fertilizers and other chemical products; storage and pipeline transportation of crude oil and natural gas; import, export and import/export agency business of crude oil, natural gas, refined oil products, petrochemicals, chemicals, and other commodities and technologies; research, development and application of technology and information. It is a state-owned company invested by the State, functioning as a state-authorized investment institution in which the State holds the controlling share. (source: company press release or website)

Why We Like It:
The market wrap this weekend mentioned how oil stocks could be headed for trouble. The summer driving season is going to be over in about four weeks and so far the season has been hurricane free and we don't see any on the horizon that might threaten the Gulf of Mexico area. Yet oil stocks traded higher on Friday in spite of a drop in crude oil futures. Shares of SNP really out performed its peers with a 2.4% gain. The stock has broken out above its trendline of resistance and above its simple 50-dma. The technical picture is relatively bullish and if SNP can trade over $58.00 it will reverse its P&F chart into a new buy signal. We are suggesting that traders considering going long the stock with SNP above $55.50. More conservative traders may want to wait for a move over $58.00, which looks like short-term resistance, or the simple 100-dma still overhead near $58.90. Our target is the $62.00-63.00 range. We don't want to hold over the late August earnings report.

Picked on July 30 at $56.95
Change since picked: + 0.00
Earnings Date 08/23/06 (unconfirmed)
Average Daily Volume: 295 thousand

---

USA Truck - USAK - close: 19.98 change: +0.83 stop: 18.99

Company Description:
USA Truck is a medium haul, dry van truckload carrier transporting general commodities throughout the continental United States and into and out of portions of Canada. We transport general commodities into Mexico by allowing through-trailer service on our trailers through our facility in the gateway city of Laredo, Texas. We also provide third-party logistics and freight brokerage services for a diverse customer base. (source: company press release or website)

Why We Like It:
It looks like the bearish trend in USAK is almost over. The stock has spent the last ten weeks building a base in the $17-20 range. Now shares look poised to breakout over round-number resistance at $20.00 and begin a new leg higher. The P&F chart has already turned positive with a triple-top breakout buy signal that points to $25 target. We are a little worried that the Dow Jones Transportation index is still stuck in a decline but the good news here is that USAK has been showing relative strength against its peers in the last several days. We're going to suggest a trigger to go long USAK at $20.35, which is above Friday's high. If triggered our target is the $22.50-23.00 range. Our time frame is about six weeks.

Picked on July xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/20/06 (confirmed)
Average Daily Volume: 124 thousand
 

New Short Plays

None today.
 

Premier Investor New Play Archives