NEW BULLISH Plays
Petroleo Brasileiro SA - PBR - close 37.10 change +1.00 stop 35.45
Petroleo Brasileiro S.A. (Petrobras) is an integrated oil and gas company. The Company operates in five segments: exploration and production; refining, transportation and marketing; distribution; gas and power, and international. The exploration and production segment includes oil and gas exploration, development and production in Brazil. The refining, transportation and marketing segment includes downstream activities in Brazil, including refining, logistics, transportation, oil products and crude oil exports and imports, petrochemicals and fertilizers. The distribution segment includes distribution of oil products through the BR retail network in Brazil. The gas and power segment includes gas transportation and distribution, electric power generation using natural gas and renewable energy sources. The international segment includes exploration and production, refining, transportation and marketing, distribution and gas and power operations outside of Brazil.
Target(s): 39.25, 39.95
Key Support/Resistance Areas: 37.45, 36.25
Time Frame: 1 week
Why We Like It:
PBR is has been forming an ascending triangle on its hourly and daily chart since June 1st. The pattern could also be considered a bull flag. I believe the stock is poised to break out to the upside for a quick profitable trade. I suggest readers use a trigger to enter long positions if PBR trades up $37.52 which would be a breakout of the triangle. More aggressive traders could initiate positions at current levels or on weakness and use a tight stop if it fails. Our stop is $35.45 which is below the low where the ascending triangle begins. Investors are treating oil and gas stocks like they will never be able to drill oil again and I believe they are poised to bounce from here. In addition, PBR shouldn't be affected more than it already has from the domestic headline risk in the US.
Suggested Position: Long PBR stock if it trades up to $37.52
Suggested Position: Buy July $37.00 CALL, current ask $2.22, estimated ask at entry $2.37
Entry on June xx
Earnings Date 8/13/10 (unconfirmed)
Average Daily Volume: 19.6 million
Listed on 6/8/10
NEW BEARISH Plays
Bank of Nova Scotia Halifax - BNS - close 46.70 change +0.58 stop 49.15
The Bank of Nova Scotia is a financial institution, active in both Canadian and international markets. The Bank offers a range of products and services, including retail, commercial, corporate and investment banking to almost in some 50 countries worldwide. The Bank has three business lines: Canadian Banking, International Banking and Scotia Capital. Canadian Banking provides a range of banking and investing services to more than 7.4 million customers across Canada, through a network of 1,019 branches and 2,964 automated banking machines (ABMs), and 101 Wealth Management offices, as well as telephone and Internet banking. International Banking encompasses the Bankâ€™s retail and commercial banking operations in more than 40 countries outside Canada. Scotia Capital is the wholesale banking arm of the Scotiabank Group. In March 2010, the Company completed the acquisition of Royal Bank of Scotland Group plc's wholesale banking operations in Colombia (RBSC).
Target(s): 44.85, 44.05, 42.50
Key Support/Resistance Areas: 49.00, 48.30, 48.00, 47.50, 46.00, 45.00
Time Frame: 1 to 2 weeks
Why We Like It:
BNS is in a downtrend and I am looking for the stock to rally up near its 20-day SMA in the coming days and make another lower high. The stock is finding buyers near the $45.00 area but this will should eventually wane after the market bounces. The stock has barely been hanging on to its 200-day SMA and I expect BNS to eventually break it and trade down to new lows. I would like to use a trigger to enter short positions if BNS trades up near $47.40. This is near a prior support/resistance area dating back to December that I think will hold. Our stop is $49.15 which is above the highest closing price since May 17th. Readers may also consider initiating short positions at current levels or if the stock trades below $46.00 but this is a decision to be made intraday depending on market conditions.
Suggested Position: Short BNS stock if it trades up near $47.40
Suggested Position: Buy July $45.00 PUT, current ask $1.60, estimated ask at entry $1.35
Entry on June xx
Earnings 8/26/2010 (unconfirmed)
Average Daily Volume: 685,000
Listed on June 8, 2010