Option Investor

Daily Newsletter, Sunday, 02/13/2005

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Table of Contents

  1. Market Wrap
  2. New Plays
  3. In Play Updates and Reviews

Market Wrap

Market Wrap

New Plays

Most Recent Plays

New Plays
Long Plays
Short Plays
None None

Play Updates

Updates On Latest Picks

Long Play Updates

Arkansas Best - ABFS - close: 39.62 chg: +0.41 stop: 40.75

We are still in a wait and see mode with ABFS. The play is unopened as we wait for ABFS to breakout through the top of its trading range and technical resistance at its 50-dma. Our trigger is at $42.51. The bad news here is that ABFS has fallen back toward the bottom of its January trading range. If ABFS trades under the $38.50 level readers may want to actually consider short plays. The good news is that the Dow Jones transportation index is in what looks like a somewhat bullish consolidation pattern. Watch the TRAN for a breakout over the 3625 level or if you really want confirmation wait for the TRAN to close over its 50-dma.


Picked on February 2 at $xx.xx <-- see TRIGGER
Gain since picked: + 0.00
Earnings Date 01/27/05 (confirmed)
Average Daily Volume: 259 thousand


American Medical - AMMD - close: 40.47 chg: +1.13 stop: 38.50*new*

We have good news and bad news for AMMD. The good news is that traders bought the dip toward rising support at its 100-dma and AMMD added 2.87 percent to close back above its $40.00 mark. The bad news is that we're running out of time with AMMD's earnings report due out on Thursday, February 17th after the market's close. Right now our plan is to close the play on Wednesday afternoon at the close to avoid AMMD's earnings report. We are raising our stop loss toward Friday's low at $38.50.


Picked on February 1 at $40.55
Gain since picked: - 0.08
Earnings Date 02/17/05 (confirmed)
Average Daily Volume: 286 thousand


Dow Chemical - DOW - close: 51.65 change: +0.07 stop: 49.50

After days of waiting we've finally been triggered in this bullish play. Shares of DOW broke through the $52.00 level on an intraday basis to tag our entry point at $52.01. Unfortunately, there was no follow through on the move and shares remain stuck inside its short-term trading range of $50-52. The upward trend is still intact and the move over $52 did produce a new triple-top breakout buy signal on its P&F chart. Readers may still want to be cautious here. Aggressive traders can buy a bounce from the $50 level. More conservative investors can wait for DOW to produce a more convincing breakout over the $52 level. Our eight-week target is the $56 region.


Picked on February 11 at $52.01
Gain since picked: - 0.36
Earnings Date 01/27/05 (confirmed)
Average Daily Volume: 3.5 million


El Paso Corp - EP - close: 11.36 change: +0.06 stop: 10.99

Natural gas provider EP continues its slow and steady climb higher. We're still targeting a move into the 11.50-11.85 range with a specific exit at $11.70. Readers looking to jump in late can watch for a dip towards $11.10 as a new entry point.


Picked on January 13 at $10.61
Gain since picked: + 0.75
Earnings Date 03/20/05 (unconfirmed)
Average Daily Volume: 3.9 million


Frontier Oil - FTO - close: 29.72 change: +0.57 stop: 28.25*new*

FTO is so close to our target at $29.85 that we would strongly suggest considering an exit here. Granted short-term technical oscillators are bullish and the stock suggests we'll see more strength on Monday so we'll hold on and plan to exit at $29.85. We're not suggesting new positions as FTO looks short-term overbought. We are raising our stop loss to $28.25.


Picked on January 27 at $27.05
Change since picked: + 2.67
Earnings Date 02/17/05 (unconfirmed)
Average Daily Volume: 212 thousand


Waters Corp - WAT - close: 50.13 change: +0.63 stop: 46.95

Friday could have been a pivotal day for WAT. Shares gapped lower and traded under the $49 level but traders quickly bought the dip and pushed the stock back above round-number support/resistance at the $50.00 level. This looks like a new bullish entry point. However, the MACD still looks troubling so conservative traders may want to confirm the bounce by waiting for WAT to trade over the $51 level.


Picked on February 2 at $50.20
Gain since picked: - 0.07
Earnings Date 01/27/05 (confirmed)
Average Daily Volume: 643 thousand

Short Play Updates

Anheuser Busch - BUD - close: 48.38 chg: +0.11 stop: 50.11

Shares of beer-maker BUD continue to under perform the market in spite of some positive comments we heard on CNBC this week. If you read the original play description this play has an eight-to-ten week time frame as we let the prevailing trend of lower highs continue to whittle at BUD's stock price. Long-term BUD is breaking down on multiple levels whether you look at the weekly or monthly chart. The P&F chart points to a $43 target. We're going to target the $43.00-44.00 range.


Picked on February 7 at $48.32
Gain since picked: + 0.06
Earnings Date 02/02/05 (confirmed)
Average Daily Volume: 2.4 million


Infocrossing - IFOX - close: 18.63 chg: +0.27 stop: 19.51

Our somewhat aggressive short the top play is off to a slow start. We listed IFOX on Wednesday after shares failed near the top of its rising channel with a bearish engulfing (bearish reversal) candlestick pattern. The last few days could not be described as follow through so bears may need to be careful here. Conservative traders can wait for IFOX to breakdown under the $18.00 mark before shorting the stock. Our target is near the bottom of its channel near $16.00.


Picked on February 09 at $18.39
Change since picked: + 0.24
Earnings Date 03/14/05 (unconfirmed)
Average Daily Volume: 277 thousand


Smurfit-Stone - SSCC - close: 15.64 chg: +0.37 stop: 16.06

Hmm... on Thursday we warned readers that SSCC was due for a bounce into the 15.50-15.65 range and that's exactly what happened on Friday. The challenge now is that SSCC needs to roll over again and soon or we're going to worry that it's put in a potential bottom at the $15.00 level. Readers can initiate new shorts on a failed rally below the $16.00 mark.


Picked on February 7 at $15.82
Gain since picked: - 0.18
Earnings Date 01/25/05 (confirmed)
Average Daily Volume: 1.7 million

Closed Long Plays

Encore Acquisition - EAC - close: 39.76 change: +0.37 stop: 37.99

Target achieved! EAC not only hit our new target at $39.90 but surpassed our old target at $40.00 with Friday's intraday high of 40.10. The stock continues to look strong but shares are short-term overbought and in need of a pull back.


Picked on January 27 at $36.10
Change since picked: + 3.66
Earnings Date 02/15/05 (unconfirmed)
Average Daily Volume: 173 thousand

Closed Short Plays

None today

Watch List


Body goes here

Today's Newsletter Notes: Market Wrap by Jim Brown, all other plays and content by the Option Investor staff.


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