Option Investor

Daily Newsletter, Monday, 10/03/2005

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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

New Long Plays

None today.

New Short Plays

None today.

Play Updates

Updates On Latest Picks

Long Play Updates

Mckesson - MCK - close: 47.72 chg: +0.27 stop: 44.85

Good news! MCK is showing more relative strength. Instead of pulling back as we expected the stock challenged resistance at its August peak on decent volume today. Our target is the $49.75-50.00 range. We will plan to exit ahead of MCK's early November earnings report.

Picked on September 18 at $46.47
Change since picked: + 1.25
Earnings Date 11/08/05 (unconfirmed)
Average Daily Volume: 1.5 million


Motorola - MOT - close: 22.44 change: +0.41 stop: 21.78

Correction - over the weekend we suggested that readers wait to initiate new bullish positions until after MOT had traded over $20.50 again. We meant to wait until MOT traded over $22.50 again. Shares did that today with a high of 22.64 on this morning's spike higher. This does look like a bullish breakout over its short-term trend of lower highs. We would consider new bullish positions here. Our target is the $23.95-24.00 range but we don't have much time. We still plan to exit ahead of MOT's October 10th earnings.

Picked on September 25 at $22.79
Change since picked: - 0.35
Earnings Date 10/10/05 (unconfirmed)
Average Daily Volume: 19.2 million

Short Play Updates

Anheuser Busch - BUD - cls: 42.50 chg: -0.54 stop: 44.77*new*

Ding! Ding! That's the sound of BUD hitting our conservative target at the $42.50 level. We have been suggesting that our more conservative readers consider exiting if BUD trades near $42.50. Our full target is the $40.25-40.00 range but BUD is already looking pretty oversold and may not reach the $40 level before reporting earnings in late October. We do not want to hold over the earnings report and the $42.50 level is near what looks like potential support on BUD's trendline of lower lows. At this time we are lowering the stop loss to breakeven at $44.77.

Picked on July 28 at $44.77
Change since picked: - 2.27
Earnings Date 10/26/05 (confirmed)
Average Daily Volume: 2.3 million


Career Educ. - CECO - close: 35.89 chg: +0.33 stop: 37.51

We remain on the sidelines with CECO. Our suggested strategy is to short the stock on a breakdown below support at the $35.25-35.00 range. Our trigger is $34.99. If triggered our target is the $31.00 level. Remember that our biggest risk is a potential short squeeze given CECO's high short interest.

Picked on October xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/26/05 (unconfirmed)
Average Daily Volume: 1.6 million


Cogent Inc. - COGT - close: 25.14 chg: +1.39 stop: 26.51

Wow! COGT turned in a bullish session with a 5.8% rebound. We could not find any news or catalyst to explain the sudden show of strength, which makes us cautious. It is noteworthy that the rally seemed to run into a wall near $25.40 and could not push past this region (it is very easy to see on an intraday chart). Readers may want to consider new bearish positions if COGT trades under the $25.00 level again.

Picked on September 22 at $25.21
Change since picked: - 0.07
Earnings Date 10/25/05 (unconfirmed)
Average Daily Volume: 874 thousand


Cost Plus - CPWM - close: 18.06 change: -0.09 stop: 20.31

CPWM continues to look weak but it is also interesting to note that today marks the third day in a row that CPWM has bounced from support at the $18.00 level. Readers may want to prepare themselves for an oversold bounce. If CPWM does bounce the stock should encounter resistance at the 10-dma near 18.90 and then again near $20.00. Our target is the $16.50-16.00 range.

Picked on September 20 at $19.78
Change since picked: - 1.72
Earnings Date 11/17/05 (unconfirmed)
Average Daily Volume: 390 thousand


Enzo Biochem - ENZ - close: 14.77 chg: -0.59 stop: 15.51

The first trading day of October proved to be a volatile session for shares of ENZ. News out over the weekend revealed that a federal appeals court has ruled in favor of Gen-Probe in a patent infringement lawsuit between the company and Enzo Biochem. This pushed shares of ENZ to gap lower at $14.36, which was under our suggested entry point to short the stock at $14.49. The move opened the play. What you'll find interesting is that ENZ rallied all the way back to $15.26 to fill the morning gap and then it failed again closing under last week's low. The short-term outlook is bearish given the close under the neckline of its bearish head-and-shoulders pattern. Just remember that we do not have a lot of time left for this play. We plan to exit ahead of ENZ's October 14th earnings report, which is still not confirmed.

Picked on October 03 at $14.36
Change since picked: + 0.41
Earnings Date 10/14/05 (unconfirmed)
Average Daily Volume: 90 thousand


99c Only Stores - NDN - close: 9.67 chg: +0.42 stop: 10.01

Uh-oh! NDN roared back into the plus column on Monday with a big 4.5% rally on volume well above the average today. We could not find any news or catalyst to account for the sudden show of strength so it could just be some bargain hunting. The move has certainly given NDN's technical oscillators a bullish tilt. We expect the $10.00 level to act as overhead resistance and readers can watch for a failed rally under $10.00 as a new bearish entry point.

Picked on September 27 at $ 9.40
Change since picked: + 0.27
Earnings Date 10/20/05 (unconfirmed)
Average Daily Volume: 581 thousand


Nautilus Inc. - NLS - close: 22.07 chg: -0.00 stop: 24.11

We are not seeing much progress with shares of NLS the last few days and we are starting to think that maybe we should just exit early and move on. If that sounds good to you don't wait on us. We're going to give NLS another day or two before calling it quits.

Picked on September 14 at $23.80
Change since picked: - 1.73
Earnings Date 10/25/05 (unconfirmed)
Average Daily Volume: 363 thousand

Closed Long Plays

Deluxe Corp - DLX - close: 38.33 chg: -1.83 stop: 38.99

Hmm?! Monday's session was certainly a surprising one for DLX. It would appear that we have been a victim of a window-dressing inspired bull trap. There was absolutely no follow through on Friday's bullish breakout through the top of its eight-week trading range. Instead shares of DLX gapped down and continue to plummet extremely quickly. We found no news or catalyst to explain this sudden bout of vertigo. We would hope that our readers would have stepped back from initiating new bullish positions given the sharp decline at the open. Unfortunately, we have to record this as a loss! We would have been stopped out at $38.99.

Picked on October 02 at $40.16
Change since picked: - 1.83
Earnings Date 10/28/05 (unconfirmed)
Average Daily Volume: 205 thousand


Quicksilver - KWK - close: 49.09 change: +1.30 stop: 43.49

Target achieved. Actually shares of KWK surpassed our target of 49.00-50.00 with today's high of $50.20. Wall Street continues to stress over rising natural gas prices and this pushed KWK sharply higher on Monday. We'll keep an eye on KWK for a pull back and another bullish entry point since we believe that natural gas will continue to rise through year end.

Picked on September 20 at $43.68
Change since picked: + 5.41
Earnings Date 11/08/05 (unconfirmed)
Average Daily Volume: 844 thousand

Closed Short Plays


Today's Newsletter Notes: Market Wrap by Jonathan Levinson and all other plays and content by the Option Investor staff.


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