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Daily Newsletter, Wednesday, 04/02/2008

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Table of Contents

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

Market Wrap

New Plays

Most Recent Plays

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New Plays
Long Plays
Short Plays
DD None
NTDOY  

Play Editor's Note: We are still keeping an eye on SPF. Today's move in SPF looks bullish but stop loss placement is going to be a challenge. Bear in mind that SPF is a huge short squeeze candidate with short interest near 63% of the float. Right now we'd be watching for a dip in the $5.20-5.00 zone as a potential entry point.


New Long Plays

DuPont - DD - close: 48.84 chg: +1.09 stop: 45.95

Company Description:
DuPont is a science-based products and services company. Founded in 1802, DuPont puts science to work by creating sustainable solutions essential to a better, safer, healthier life for people everywhere. Operating in more than 70 countries, DuPont offers a wide range of innovative products and services for markets including agriculture and food; building and construction; communications; and transportation. (source: company press release or website)

Why We Like It:
I mentioned DD as a bullish candidate in my Play Editor's note last night. Today's rally past the $48.00 level is a bullish breakout over significant resistance and a clear buy signal for the stock. Volume has been improving on the rally and shares have now cleared technical resistance at its 200-dma as well. The P&F chart is bullish with a $63 target and a move over $49.00 will reinforce this with a new triple-top buy signal. We are suggesting positions now but would prefer to buy a dip near $48.00, which should now be support. There might be a little resistance near $50.50 but our target is the $52.50-54.00 zone. We don't want to hold over the late April earnings report.

Picked on April 02 at $48.84
Change since picked: + 0.00
Earnings Date 04/22/08 (unconfirmed)
Average Daily Volume: 7.2 million

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Nintendo Co - NTDOY - close: 66.75 chg: -0.34 stop: 63.95

Company Description:
Japan-based Nintendo is a video game producer responsible for revolutionizing the video game industry.

Why We Like It:
Shares of NTDOY have been trading under resistance at its 100-dma but with a bullish pattern of higher lows. The stock looks poised to breakout higher. We are suggesting that readers buy NTDOY at $68.01. If triggered our target is the $74.00-75.00 zone. Keep in mind that NTDOY is traded as an ADR here in the United States and shares will gap open up or down every day as they adjust to trading overseas. FYI: Some quote services might ask you to use the symbol NTDOY.PK to pull up data on NTDOY.

Picked on April xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/08 (unconfirmed)
Average Daily Volume: 312 thousand
 

New Short Plays

None today.
 

Play Updates

Updates On Latest Picks

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Long Play Updates

Corning Inc. - GLW - close: 25.00 chg: +0.05 stop: 23.45

GLW spiked to a new three-month high before paring its gains on Wednesday. Overall we remain bullish on GLW. Another dip near $24.50 or its 10-dma can be used as a bullish entry point. More conservative traders might want to consider a tighter stop near $23.65 instead of our suggested stop at $23.45. We're listing two targets. Our first target is the $27.00 level. Our second target is the $29.00 level. We do not want to hold over the late April earnings report.

Picked on March 25 at $25.14
Change since picked: - 0.14
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume: 14.7 million

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Honeywell - HON - close: 57.63 chg: -0.16 stop: 54.49

With the market trading sideways HON struggled to breakout over its 200-dma. The short-term trend is bullish but shares look tired and could dip back toward $57.00-56.50. Our target is the $59.90-60.00 zone. More aggressive traders could aim for the top of the larger range near $62.00. Keep in mind that we do not want to hold over the earnings report in about three weeks.

Picked on March 25 at $56.00
Change since picked: + 1.63
Earnings Date 04/18/08 (confirmed)
Average Daily Volume: 6.7 million

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Hormel Foods - HRL - close: 42.36 change: +0.18 stop: 39.85

HRL posted another gain but failed to breakout past resistance near $42.50. We don't see any changes from our previous comments. Any dips near $41.75-41.50 are probably entry points. More conservative traders might want to wait for a new high over $42.50 before initiating positions. We anticipate holding this stock on the newsletter for about six to eight weeks. The Point & Figure chart is bullish with a $64 target. FYI: HRL declared a quarterly cash dividend of 18.5 cents per share payable on May 15, 2008 to shareholders of record on April 19th. HRL has been paying quarterly dividends for almost 80 years.

Picked on March 31 at $41.83 *triggered/gap open
Change since picked: + 0.53
Earnings Date 05/22/08 (unconfirmed)
Average Daily Volume: 513 thousand

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iShares Telecom - IYZ - close: 23.95 chg: -0.24 stop: 22.49

It was a quiet session for the IYZ. The ETF traded sideways under technical resistance at its 50-dma. If you're looking for a new bullish entry point wait for a dip near the $23.50 region. We have two targets. Our 1st target is the $25.85-26.00 range. Our second target is the $27.85-28.00 zone.

Picked on March 25 at $23.50 *triggered
Change since picked: + 0.45
Earnings Date 00/00/00
Average Daily Volume: 429 thousand

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JA Solar - JASO - close: 20.20 change: +1.33 stop: 17.75 *new*

Target exceeded! Positive press from a solar-energy conference in Germany today along with an eight-year deal announced by Train Solar (TSL +15%) fueled another day of gains for solar stocks. JASO rallied more than 7% and hit an intraday high of $20.54. Our initial target was the $19.95 mark. The rally in JASO could continue but we're not suggesting new positions. Readers should consider taking a large chunk of their position off the table and cashing in. Our second, more aggressive target is the $22.25-22.50 zone. We are raising our stop loss to $17.75.

Picked on March 25 at $17.13 /1st target exceeded 19.95
Change since picked: + 3.07
Earnings Date 05/15/08 (unconfirmed)
Average Daily Volume: 8.1 million

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Meritage Homes - MTH - close: 21.96 chg: +0.81 stop: 17.75 *new*

The short covering in MTH continued into Wednesday. The stock added another 3.8% on top of its recent gains. Shares closed at a new multi-month high. Volume was almost twice the daily norm, which is bullish. We would strongly consider taking some profits right here but our target remains the $25.00-27.00 zone. We are raising our stop loss to $17.75.

Picked on March 24 at $18.60 *triggered
Change since picked: + 3.36
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume: 893 thousand
 

Short Play Updates

Cognizant Tech - CTSH - cls: 29.69 chg: -0.48 stop: 30.75 *new*

As expected shares of CTSH produced a bearish failed rally pattern under its 100-dma. This looks like a new entry point for shorts. We are adjusting our stop loss to $30.75, which is 10 cents above today's high. Our first target is the 26.25-26.00 zone. Our second, more aggressive target is the $24.25-24.00 range. The P&F chart is bearish with an $18 target.

Picked on March 30 at $29.18
Change since picked: + 0.51
Earnings Date 05/01/08 (unconfirmed)
Average Daily Volume: 5.1 million

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Longs Drug Stores - LDG - cls: 41.71 chg: -1.49 stop: 43.55

Retail stocks posted another gain today but the rebound in LDG suffered a setback. Shares of LDG lost 3.4% and are flirting with a breakdown under its trendline of higher lows. The move under $42.00 looks like a new entry point for shorts. Our first target is the $38.25-38.00 zone. Our second target is the $35.25-35.00 zone. The P&F chart is bearish with a $29.00 target.

Picked on March 30 at $41.30
Change since picked: + 0.41
Earnings Date 05/15/08 (unconfirmed)
Average Daily Volume: 596 thousand
 

Closed Long Plays

Excel Maritime - EXM - close: 28.05 change: -1.95 stop: 28.39

We can't find any news to explain EXM's relative weakness today. Most of the shippers were trading lower but EXM under performed with a 6.5% sell-off and on above average volume. The stock broke down under some short-term technical support levels and hit our stop loss at $28.39 closing the play. Many of the technical indicators are suggesting further weakness ahead.

Picked on March 31 at $30.30 *triggered /stopped 28.39
Change since picked: - 2.25
Earnings Date 05/22/08 (unconfirmed)
Average Daily Volume: 902 thousand
 

Closed Short Plays

None
 

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

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