Option Investor
New Plays

Toys, REITs, and Defense

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Play Editor's Note: The market's bounce looks pretty seductive. You probably have a 50/50 chance of throwing darts at a board of stocks and coming up with something looks bullish. Don't forget the fact that we are still in a bear market. We can have tradable bullish moves in a bear market as evidenced by the last couple of weeks but the prevailing trend is still down. We need to remain on the defensive. Keep our position size and risk small and be ready to take a profit when we get one.


Hasbro Inc. - HAS - close: 27.84 change: +0.87 stop: 26.25

Why We Like It:
It looks like toymaker HAS has finally turned the corner this past week. Maybe investors have finally priced in what the worst Christmas shopping season in 20 years looks like. Of course we won't know that until after the holidays are over. Shares retested support at $25.00 and finally broke through resistance near $27.50. The stock was setting new three-week highs on Friday. There might be some technical resistance at the 50-dma but the short-term trend is up. We're suggesting readers buy HAS here or on a dip near $27.00. We'll place our stop under Friday's low. We have two targets. Our short-term target is $29.90. Our multi-week target is $32.25.

Annotated chart:

Picked on December 06 at $27.84 
Change since picked:     + 0.00   			
Earnings Date          02/09/09 (unconfirmed)    
Average Daily Volume:       2.6 million     

ProLogis - PLD - close: 4.88 change: +1.26 stop: 3.85

Why We Like It:
PLD is a REIT, a real estate investment trust, and the stock has been downgraded into the single-digits by equity analysts and the credit-rating agencies. It looks like the stock finally bottomed a couple of weeks ago. Friday saw an impressive breakout over resistance near $4.00 and volume was double the norm on the big move higher. Aggressive traders may want to jump in now. We are going to wait for a dip.

Our suggested entry point to buy PLD is the $4.40-4.00 zone. We'll try and limit our risk with a stop loss at $3.85. If triggered we have two targets. Our first target is $5.40. Our second target is $6.45. FYI: The Point & Figure chart has turned bullish with a $10 target. I have to label this an aggressive play because the stock can make some huge percentage moves throughout the day.

Annotated chart:

Picked on December xx at $xx.xx <-- see TRIGGER  
Change since picked:     + 0.00   			
Earnings Date          02/05/09 (unconfirmed)    
Average Daily Volume:      10.9 million     

Raytheon - RTN - close: 49.55 change: +1.27 stop: 46.65

Why We Like It:
Some of the defense stocks have made some impressive moves and I think RTN has some potential here as a bullish play. The stock produced a higher low two weeks ago when the rest of the market was hitting new lows. Now, on top of its pattern of higher lows, RTN has broken through its 50-dma. Short-term and long-term technicals are improving. The P&F chart is bullish with a $61 target.

We are suggesting that readers buy RTN here or on a dip near $48.00. We'll use a stop loss under Friday's low. Our target is $54.50.

Annotated chart:

Picked on December 06 at $49.55 
Change since picked:     + 0.00   			
Earnings Date          01/29/09 (unconfirmed)    
Average Daily Volume:       4.4 million     

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