NEW BULLISH Plays

Chesapeake Energy - CHK - close: 29.81 change: +0.67

Stop Loss: 28.90
Target(s): to be determined
Current Gain/Loss: unopened

Entry on May -- at $--.--
Listed on May 10, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 8.5 million
New Positions: Yes, see below

Company Description

Why We Like It:
CHK is in the basic materials sector. The company produces natural gas, oil and natural gas liquids (NGL). The company is one of the largest independent energy companies in the U.S. with significant domestic production. The company just reported earnings this past week and CHK delivered a profit of 59 cents a share, beating Wall Street's 48 cent estimate. CHK's Q1 revenues rose +47% to $5.05 billion, which was well above analysts' estimates. CHK's management raised their 2014 cash flow guidance.

The earnings results were good news but wait there is more. CHK also said that the S.E.C. had ended its investigation into the company and its former CEO Aubrey McClendon. The SEC said they "did not intend to recommend any enforcement action" (source: Reuters). With all this good news shares of CHK soared to new 52-week highs and now look poised to breakout past round-number resistance at $30.00.

We are suggesting at trigger to open bullish positions at $30.15 with a stop loss at $28.90. I'm not setting an exit target yet but the Point & Figure chart for CHK is bullish with a $34.00 target.

Trigger @ $30.15

Suggested Position: buy CHK stock @ (trigger)

- (or for more adventurous traders, try this option) -

Buy the Jul $30 call (CHK140719C30)* current ask $1.39

*I've provided the more standardized option symbol format.
symbol-year-month-day-call-strike

Annotated chart:

Weekly chart:



NEW BEARISH Plays

Prothena Corp. - PRTA - close: 19.38 change: +0.65

Stop Loss: 20.15
Target(s): to be determined
Current Gain/Loss: unopened

Entry on May -- at $--.--
Listed on May 10, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 682 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
PRTA is in the healthcare sector. The company is a clinical stage biotech firm. Regular readers of the Premier Investor newsletter know that we consider biotech stocks to be aggressive trades. They can be volatile and prone to gap opens (up or down). PRTA definitely fits the bill with big swings. Enthusiasm for the company's prospects reversed sharply in late April. PRTA published data on its NEOD001 treatment in development and investors sold the stock hard following this news. There has been almost no bounce as PRTA tried to hold support near $20.00 and its 300-dma.

Now we see PRTA breaking down to new lows for the year. I'm going to say it again. This is a higher-risk trade. One headline could send shares soaring (or plunging). The most recent data does not list any significant short interest but some of the moves in PRTA definitely look like short covering.

Tonight we're suggesting small bearish positions if PRTA trades at $18.40. You could use options to try and limit your risk but the option spreads are so wide we do not want to play them.

Trigger @ $18.40 *small positions*

Suggested Position: short PRTA stock @ (trigger)

Annotated chart: