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New Plays
Long Plays
Short Plays
HOV CHIC
IGT CMC
  PCP
  TSRA

New Long Plays

Hovnanian - HOV - close: 29.30 change: +1.08 stop: 27.74

Company Description:
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The Company is one of the nation's largest homebuilders. (source: company press release or website)

Why We Like It:
Homebuilders are on the rebound. Investors appear to be buying them with the expectation that all the bad news is already out. The sector has suffered through a rash of earnings warnings. Of course some investors might be buying homebuilders since they look cheap after a 50% to 75% drop from their highs. Another positive for the homebuilders is the expectation that the FOMC will pass on raising rates again this week. If the Fed chooses not to raise rates that will help keep interest rates low so buyers can qualify for mortgages and buy homes. It doesn't hurt that some market pundits are even talking about rate cuts early next year. The rally in HOV has been fueled by some pretty strong volume days. Aggressive traders might want to go long the stock now or look for a move past the 100-dma (near 29.65). We are going to suggest that readers wait for a rally past round-number resistance at $30.00. Our suggested entry point will be $30.11. If triggered our target is the $34.00-35.00 range. Our time frame is six to eight weeks. FYI: Even though our market outlook is less than bullish the homebuilders are so beat up we suspect they will be able to continue the bounce higher.

Picked on September xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 09/06/06 (confirmed)
Average Daily Volume: 1.6 million

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Intl. Game Tech. - IGT - close: 40.26 chg: +1.01 stop: 38.24

Company Description:
International Game Technology is a global company specializing in the design, development, manufacturing, distribution and sales of computerized gaming machines and systems products. (source: company press release or website)

Why We Like It:
We're adding IGT to the play list as a relative strength/momentum play. Granted the stock hasn't seen a lot of momentum this year. Shares have spent the last several months consolidating sideways but the trend has been flat to up with a bullish pattern of higher lows. Friday's breakout over resistance at $39.50 and the $40.00 mark was fueled by an analyst upgrade and strong volume. We are suggesting long positions with IGT at current levels but patient traders may want to wait for a potential dip back toward the $39.50 region. Our target is the $44.00-45.00 range. We do not want to hold over the early November earnings report. Bear in mind that we're worried the market is near a top so traders need to monitor their stop loss and risk pretty closely! FYI: The P&F chart is bullish with a $57 target.

Picked on September 17 at $40.26
Change since picked: + 0.00
Earnings Date 11/02/06 (unconfirmed)
Average Daily Volume: 2.2 million
 

New Short Plays

Charlotte Russe - CHIC - close: 26.00 chg: -1.44 stop: 27.05

Company Description:
In 1975, a clothing retailer dedicated to affordable women's clothing was founded, and its first store was opened in Carlsbad, California. Focused on women ranging from teens to early twenties, the store offered value-priced merchandise that followed understandable fashion trends. During the subsequent 20 years, the Company grew into a 35-store regional chain concentrated in Southern California generating $70 million of annual sales. (source: company press release or website)

Why We Like It:
Retail stocks have been soaring lately on improved consumer confidence, a strong decline in crude oil prices, and tame inflation data. However, the sector now looks overbought and overdue for some profit taking. Meanwhile CHIC has not really been participating in the sector's strength. The stock has been stuck in a $26-28 trading range. Even news that the company raised its earnings outlook in early September was not enough to produce a breakout of the trading range. This last Friday saw CHIC gap lower on news it was pricing some five million shares of stock for sale at $26.25 (minority shareholder sale). We think the selling isn't over yet, especially since five million shares is about 22% of the stock's float. Aggressive traders may want to short CHIC on a drop below Friday's low (25.88). We want to see a breakdown under the 50-dma so we're suggesting a trigger to open plays at $25.65. If triggered our target is the $22.10-22.00 range, which is just above rising technical support at the 200-dma. FYI: The latest (August) data puts short interest at 6.9% of CHIC's 22.2 million-share float.

Picked on September xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/19/06 (unconfirmed)
Average Daily Volume: 497 thousand

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Commercial Metals - CMC - close: 20.55 chg: -0.15 stop: 21.55

Company Description:
Commercial Metals Company and subsidiaries manufacture, recycle and market steel and metal products, related materials and services through a network including steel minimills, steel fabrication and processing plants, construction-related product warehouses, a copper tube mill, metal recycling facilities and marketing and distribution offices in the United States and in strategic overseas markets. (source: company press release or website)

Why We Like It:
We considered suggesting shorts right here with CMC's failed rally under the 10-dma in the last two days. However, the stock does appear to have round-number, psychological support near the $20.00 level so we're waiting for a breakdown. The stock has a bearish pattern after breaking down under support in mid August. Shares rallied back to retest resistance at the 200-dma in early September. Currently the P&F chart is very bearish with a $13 target. Aggressive traders may want to open positions now. We're suggesting a trigger at $19.90. If triggered our target is the $17.50-17.00 range. We do not want to hold over the late October earnings report.

Picked on September xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/24/06 (unconfirmed)
Average Daily Volume: 1.5 million

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Precision Castparts - PCP - cls: 57.41 chg: -0.22 stop: 58.05

Company Description:
Precision Castparts Corp. is a worldwide, diversified manufacturer of complex metal components and products. It serves the aerospace, power generation, automotive, and general industrial and other markets. PCC is the market leader in manufacturing large, complex structural investment castings, airfoil castings, and forged components used in jet aircraft engines and industrial gas turbines. The Company is also a leading producer of highly engineered, critical fasteners for aerospace, automotive, and other markets. (source: company press release or website)

Why We Like It:
The long-term bullish up trend in PCP that began way back in late 2002 is in jeopardy. The stock has a new bearish trend of lower highs and is poised to breakdown under multiple levels of support. The recent slide has produced a sell signal on the Point & Figure chart that points to a $51 target. Aggressive traders might want to consider shorts on a failed rally under $58 or a new relative low under $55.94. We are suggesting that readers wait for a breakdown under $55.00. Our suggested trigger to short PCP will be at $54.95. If triggered our target is the $50.25-49.75 range (near the June 2006 low). Please note that we do not want to hold over the mid October earnings report.

Picked on September xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/17/06 (unconfirmed)
Average Daily Volume: 978 thousand

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Tessera Tech. - TSRA - close: 31.46 chg: -0.26 stop: 33.01

Company Description:
Tessera Technologies, through its wholly-owned subsidiaries Tessera, Inc., Tessera Israel, and Digital Optics Corporation, is a leading provider of miniaturization technologies for the electronics industry. (source: company press release or website)

Why We Like It:
The semiconductors and the SOX index may have helped lead the NASDAQ higher but shares of TSRA have definitely failed to participate in the rally. Shares of TSRA have been consolidating sideways in a bearish pattern of lower highs (sort of a bearish wedge or pennant). This bearish consolidation is taking place at the top of TSRA's longer-term $25-35 trading range. We expect the next big move will be down toward the bottom of the trading range. We're suggesting that readers use a trigger to short TSRA at $30.95, which is under six-week support at the $31.00 level. If triggered our target is the $26.00-25.00 range. We do not want to hold over the late October earnings report. FYI: Readers should note that the latest (August) data puts short interest at 11.7% of the stock's 42.8 million-share float. That is a relatively high amount of short interest and makes this a higher-risk play.

Picked on September xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/31/06 (unconfirmed)
Average Daily Volume: 634 thousand
 

In Play Updates and Reviews

Long Play Updates

Advance Auto Parts - AAP - cls: 32.47 chg: -0.15 stop: 31.69*new*

Unfortunately, we have nothing new to report on for AAP. Friday's session was more of the same as the stock consolidated flat to down for the third day in a row following Tuesday's big bullish breakout. The pull back isn't necessarily a bad thing. Broken resistance near $32.00 should offer new support so a dip to or a bounce from the $32.00 region can be used as a new bullish entry point to go long the stock. However, traders should consider a few things first before initiating new plays. If you haven't read the market wrap for this weekend go do so now. The market's historical pattern for the next four weeks is pretty bearish and we would hesitate to open new bullish positions at this time. Second, the P&F chart for AAP is still bearish and the stock could have additional resistance at its descending 100-dma. Third, rival AZO is due to report earnings on Tuesday morning (September 19th). Shares of AZO have shown a lot of relative strength lately, potentially due to a positive expectation for their upcoming earnings. What are the odds of a "sell the news" reaction for AZO, which would then put pressure on AAP? In an effort to reduce our risk on AAP we're going to raise our stop loss to $31.69, which is underneath the rising 10-dma. Our target remains the $35.80-36.00 range. We do not want to hold over the early November earnings report for AAP.

Picked on September 12 at $32.93
Change since picked: - 0.46
Earnings Date 11/02/06 (unconfirmed)
Average Daily Volume: 1.4 million

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Akamai Tech. - AKAM - close: 47.18 chg: +1.30 stop: 42.05*new*

The post-analyst day rally continues for AKAM. Shares surged another 2.8% on Friday with another strong session of volume. The stock hit an intraday high of $47.40 and is currently up more than 12% from our picked price. We would strongly suggest that readers consider locking in profits right here. We're not suggesting new positions and raising our stop loss to $42.05. Our target remains the $47.50-50.00 range.

Picked on September 11 at $42.05
Change since picked: + 5.13
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume: 3.8 million

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Brookfield Asset Mgt. - BAM - cls: 44.61 chg: +0.06 stop: 42.95

We remain cautious on BAM. The stock is still trading in a bullish trend of higher highs and higher lows but the upward momentum has stalled. Now consider that the markets are entering a very dangerous four-week period with a history of weakness and you can see why we would be reluctant to open new bullish plays right here. We're still suggesting that more conservative traders consider cutting their losses early right here or at least consider tightening their stops (maybe 43.49). We're not suggesting new positions. Our target is the $49-50 range.

Picked on August 22 at $44.82
Change since picked: - 0.21
Earnings Date 08/03/06 (confirmed)
Average Daily Volume: 393 thousand

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eBay Inc. - EBAY - close: 27.85 chg: -0.20 stop: 27.49

A breakout seems imminent for EBAY. The stock's sideways consolidation is narrowing between overhead resistance at the 100-dma and rising support at the 21-dma. The technical indicators are turning bearish and that suggests the next move will be down. EBAY's relative weakness on Friday also suggests the next move is lower. More conservative traders may want to exit early right now. We're not suggesting new positions. Currently our plan is to sell part of the position at $28.75 and the rest at $29.90.

Picked on August 24 at $26.25
Change since picked: + 1.60
Earnings Date 10/18/06 (unconfirmed)
Average Daily Volume: 19.6 million

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Elk Corp. - ELK - close: 29.25 change: +0.35 stop: 27.95 *new*

ELK continues to show relative strength. The stock rebounded from a dip near its rising 10-dma. The overall pattern continues to look bullish although one could certainly argue that ELK is growing short-term overbought. We're concerned that the market's next move may be down for the next few weeks. Therefore traders may want to seriously consider exiting early right now for a gain. We're going to raise our stop loss to $27.95 and adjust our target to $29.60-30.00, which takes into account for potential resistance at the exponential 200-dma (near 29.60). We're not suggesting new positions.

Picked on August 22 at $27.10
Change since picked: + 2.15
Earnings Date 08/17/06 (confirmed)
Average Daily Volume: 245 thousand

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Regal Beloite - RBC - close: 44.18 change: -0.24 stop: 42.49

Be careful here! This looks like a false start/bull trap. Shares of RBC rallied over resistance at the $45.00 level on Friday morning to hit an intraday high of $45.18. Our suggested trigger to go long the stock was at $45.11 so the play is now open. Unfortunately, RBC quickly reversed lower and closed back under resistance. We are not suggesting new positions at this time unless RBC hits a new relative high over $45.25. FYI: The next move looks like a dip towards $43. Conservative traders, if you are long RBC at $45.11, might want to cut their losses now with a 2% loss and wait for a new relative high.

Picked on September 15 at $45.11
Change since picked: - 0.93
Earnings Date 10/26/06 (unconfirmed)
Average Daily Volume: 291 thousand

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SafeNet Inc. - SFNT - close: 18.79 chg: +0.36 stop: 18.15*new*

We are hesitant to open new bullish plays given our market outlook for the next four weeks. Yet the pattern in SFNT continues to look bullish. Aggressive traders might want to buy Friday's bounce, which was near the rising trendline of support (higher lows). Our official strategy still calls for us to wait for a breakout over the $19.50 region. Our entry point will be a trigger to go long at $19.60. Normally we'd be wary of the $20.00 mark as round-number resistance but the trading in SFNT has marked the $19.50 region as the level of resistance to beat. If triggered our target is the $22.00 level. More conservative traders may still want to wait for a rally over $20.00 before opening plays.

Picked on September xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/26/06 (unconfirmed)
Average Daily Volume: 300 thousand

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United Tech. - UTX - close: 64.61 chg: +1.61 stop: 61.99

Dow-component UTX helped lead the rally higher. The stock added 2.55% on above average volume to breakout over the $64.00 level. The rise was fueled by news that the company was reaffirming their earnings outlook and raising their stock buy back program by $500 million to $2 billion. We remain bullish and continue to target the $66.00 level. The P&F chart has produced a double-top breakout buy signal with a $73 target, that could grow higher.

Picked on September 10 at $63.34
Change since picked: + 1.27
Earnings Date 10/17/06 (unconfirmed)
Average Daily Volume: 3.5 million

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WebEx Comm. - WEBX - close: 38.71 chg: +0.76 stop: 35.74 *new*

Strength in software and Internet stocks helped WEBX power higher with a 2% gain on Friday. Volume came in relatively strong, which is another bullish condition. Overall shares look poised to move higher and the stock is hitting new five-year highs. We would continue suggesting new plays here but bear in mind our market outlook is not very positive. Traders should closely monitor their stops (more so than normal). We're going to raise the stop loss to $35.74. Our target remains the $42.50-44.00 range. The P&F chart is very positive with a bullish triangle breakout buy signal.

Picked on September 12 at $38.49
Change since picked: + 0.22
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume: 625 thousand
 

Short Play Updates

Hormel Foods - HRL - close: 35.76 chg: -0.41 stop: 36.65

After two weeks of consolidating sideways, with support at its rising 100-dma, shares of HRL finally broke down. The stock dipped to an intraday low of $35.31 before bouncing back and even the bounce began to fade lower into the closing bell. Volume came in above average on the breakdown, which is bearish. Our target remains the $35.00-34.50 range.

Picked on August 31 at $36.65
Change since picked: - 0.89
Earnings Date 11/23/06 (unconfirmed)
Average Daily Volume: 331 thousand

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Patterson-UTI - PTEN - cls: 23.08 change: -0.41 stop: 26.05

Oil services stock PTEN continues to sell-off on big volume. Shares lost another 1.7% on Friday, which is a display of relative weakness compared to the bounce in the OSX oil services index. PTEN is quickly approaching our target in the $22.75-22.50 range but since crude oil is looking pretty oversold at this point and produced a bounce from its lows on Friday it might be a good idea to consider taking some money off the table in PTEN. We're not suggesting new positions.

Picked on September 10 at $25.28
Change since picked: - 2.20
Earnings Date 11/02/06 (unconfirmed)
Average Daily Volume: 2.8 million
 

Closed Long Plays

Knight Cap. Grp - NITE - cls: 17.22 chg: -0.96 stop: 16.74

It's time to let go of NITE. The stock can't seem to build on its bullish trend and Friday's session saw a sharp 5.2% decline on big volume that wiped out any potential gains we had. The bearish reversal on Friday was sparked by news that NITE's average trading volume in August was down more than 11% from a year ago. We are suggesting an immediate exit. Nimble traders might actually want to consider shorts on a breakdown below $16.75 or the $16.00 level and its 100-dma. We would target support near the 200-dma around the $14 level.

Picked on August 22 at $17.36
Change since picked: - 0.14
Earnings Date 07/18/06 (confirmed)
Average Daily Volume: 1.5 million
 

Closed Short Plays

None
 

Premier Investor New Play Archives