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New Plays

Most Recent Plays

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New Plays
Long Plays
Short Plays
UNG C
UWM CI
  CRS
  IPI
  WMT

Play Editor's Note: Volatility remains at record levels. I still think the best play here is to sit out on the sidelines. However, as traders we get paid to take risks. The challenge is controlling that risk as best we can. I remain wary of loading up too many bearish positions. The market is so oversold it could see another short-covering rally at any time. Thus, while it does look like stocks are headed lower the less risky bet might be to wait to buy the dip near the October lows instead of trying to short stocks down toward their lows.


New Long Plays

U.S. Nat.Gas - UNG - close: 30.68 chg: +0.58 stop: 28.89

Why We Like It:
The UNG is an exchange traded fund (ETF) that mimics the performance of natural gas futures. The UNG has been relatively successful in producing what appears to be a bottom over the last couple of weeks with its sideways trading range and bullish breakout from that range. We're suggesting readers buy Friday's move in the UNG with a stop loss at $28.94, under the recent trading range. We would expect some resistance around the $32.50 region but our target is $34.00-34.50.

Picked on October 19 at $30.68
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume: 8.5 million

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Ultra(long)Russ.2000 - UWM - cls: 25.03 chg: -1.35 stop: 19.45

Why We Like It:
The UWM is the Ultra (Long) Russell 2000 ProShares, which is an exchange-traded fund that normally moves about twice the daily performance of the Russell 2000 index. It looks like the Russell 2000 and the UWM are headed lower to test their October lows. Nimble traders might want to short the UWM and cover near $21.00-20.50. We considered a bearish play but didn't like where we'd have to put our stop loss (above today's high). A dip toward the $20 region would be another bullish entry point. We're suggesting readers buy the UWM as a bullish play in the $20.65-20.00 zone with a stop loss at $19.45. If triggered we're setting two targets. Our first target is $26.00. Our second target is $33.00. The first target could be hit in a few days. The second target might take a few weeks.

Picked on October xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume: 3.3 million
 

New Short Plays

Citigroup - C - close: 14.88 change: -1.02 stop: 16.20

Why We Like It:
Financial giant C reported earnings on Thursday, October 16th and the results failed to inspire any new buying. I realize there is a large group of investors buying financials like Citigroup or at least they're claiming to buy financials with the expectation that they'll be much higher a couple of years from now. That may be true but short-term the trend in C is down. We've got lower highs and a very steady pattern of lower lows. I'd be tempted to look at bullish plays on C around $10.00 but right now I'm betting it's going lower. I do think that bears have some headline risk if C suddenly comes out sharply ahead in the fight over who gets to buy Wachovia (WB) but this will remain an unknown variable for the time being. Our play could be complete before we hear anything else on the WB deal. Our strategy tonight is to short C with a target of $12.15. More aggressive traders could try to squeeze a little more out and aim for $11.50-11.00. We're suggesting a stop loss at $16.20. FYI: The most recent data listed short interest at 2.4% of the float.

Picked on October 19 at $14.88
Change since picked: + 0.00
Earnings Date 10/16/08 (unconfirmed)
Average Daily Volume: 137 million

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Cigna - CI - close: 25.22 change: -0.52 stop: 27.05

Why We Like It:
Shares of healthcare provider CI delivered a nice failed rally at its simple 10-dma on strong volume today. The trend is down and CI appears set to retest its October lows near $21.25. We're suggesting bearish positions now with a stop at $27.05. Our target is $21.50. More aggressive traders may want to aim for $20.00. We do not want to hold over the late October earnings report. FYI: The most recent data listed short interest at 1% of the float.

Picked on October 19 at $25.22
Change since picked: + 0.00
Earnings Date 10/30/08 (confirmed)
Average Daily Volume: 2.8 million

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Carpenter Tech. - CRS - cls: 20.18 chg: -0.14 stop: 21.90

Why We Like It:
Shares of CRS have been collapsing with the rest of the metals industry for months now. The recent rally attempts have stalled into new lower highs. We're suggesting readers open bearish positions now on Friday's failed rally with a stop loss at $21.90. Our target is $17.55. More aggressive traders may want to aim lower (maybe the $15 region). We do not want to hold over the late October earnings report. Traders need to be aware that there is some headline risk this week as earnings season picks up steam and there are several companies in the metals industry reporting. Good news from a rival in the sector could send CRS higher. The opposite is also true. Negative earnings news from rivals could send CRS much lower. FYI: The latest data put short interest at less than 3% of the float.

Picked on October 19 at $20.18
Change since picked: + 0.00
Earnings Date 10/28/08 (confirmed)
Average Daily Volume: 1.0 million

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Intrepid Potash - IPI - close: 18.02 change: -0.73 stop: 20.05

Why We Like It:
Denver-based Intrepid Potash is part of the fertilizer industry. These stocks have been just crushed in recent weeks and most of them have produced a bear-flag consolidation pattern in October. This sort of pattern suggests a continuation of the bear trend. IPI broke down from its bear-flag pattern on Thursday and Friday's session saw the oversold bounce fail at $19.43. The whole group looks poised to go lower. We're suggesting readers open bearish positions now with a stop loss at $20.05. More conservative traders might want to place their stop closer to $19.50 instead. We're listing two targets. Our first target is $15.05 and we suggest readers cover the majority of their position there. Our secondary target is $12.50. Please note that this is the heart of earnings season and some of IPI's rivals will be reporting earnings. Their results and guidance could have a big impact on how IPI trades. One of the leaders in the sector, POT, is due to report on Oct. 23rd before the market's open. FYI: The most recent data listed short interest on IPI at just under 6% of the small 34-million share float.

Picked on October 19 at $18.02
Change since picked: + 0.00
Earnings Date 11/11/08 (unconfirmed)
Average Daily Volume: 2.3 million

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Wal-Mart - WMT - close: 53.77 change: -0.85 stop: 55.55

Why We Like It:
Retail giant WMT has not been immune to the market volatility or the sell-off in share price. WMT had been trading at multi-year highs just a few weeks ago but now investors are selling the rallies. The stock broke support in the $56-55 zone in addition to technical support at its 200-dma. WMT has had trouble trying to rebound back above these levels. Concerns over the recession and a slowdown in consumer spending could send WMT much lower even though the company will probably out perform through this economic storm. We have WMT listed as a bullish candidate with an entry point to buy it at $44.50. In the mean time we're going to try and capture some of the decline. We're suggesting bearish positions now with a stop loss at $55.55. Our target is $48.00.

Picked on October 19 at $53.77
Change since picked: + 0.00
Earnings Date 11/13/08 (confirmed)
Average Daily Volume: 25.5 million
 

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