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Daily Newsletter, Wednesday, 04/16/2008

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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
None None

Play Editor's Note: We are not going to chase any stocks today after the market's big move. However, there are plenty we want to keep an eye on. NIHD is just now starting to breakout from its multi-month trendline of resistance. A move over $40.00 might be an entry point. PII looks poised to breakout over resistance near $45.00. PTEN, an oil service company, just broke through resistance near $28.00. This bounce in CMC today might be a bullish entry point. Shares of USG are starting to look interesting.


New Long Plays

None today.
 

New Short Plays

None today.
 

Play Updates

Updates On Latest Picks

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Long Play Updates

Chevron - CVX - close: 91.93 chg: +1.76 stop: 88.45

Positive earnings news lifted the market and record high crude oil prices continue to push energy stocks higher. CVX added almost 2% on improving volume. We don't see any changes from our previous comments. Our target is the $94.75-95.00 range. We do not want to hold over the May 2nd earnings report.

Picked on April 15 at $90.17
Change since picked: + 1.76
Earnings Date 05/02/08 (confirmed)
Average Daily Volume: 12.7 million

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DuPont - DD - close: 51.10 chg: +2.17 stop: 48.45 *new*

The market strength was no lost on DD and shares broke through resistance near $50.00. The stock soared 4.4% to new multi-month highs and did so on strong volume. We are raising our stop loss to $48.45. Our target is the $52.50-54.00 zone. We don't want to hold over the late April earnings report. FYI: The Point & Figure chart has a bullish triple-top breakout buy signal and a $63 target.

Picked on April 02 at $48.84
Change since picked: + 2.26
Earnings Date 04/22/08 (unconfirmed)
Average Daily Volume: 7.2 million

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Gerdau S.A. - GGB - close: 37.77 chg: +2.08 stop: 34.64

Commodity-related stocks led the rally today and steel stocks were no exception. GGB posted a 5.8% gain and set a new closing high. We have two targets. Our first target is the $39.75-40.00 zone. Our second, more aggressive target is the $42.00 mark. The P&F chart is bullish with a $57 target. We do not want to hold over the early May earnings report (unconfirmed).

Picked on April 10 at $36.84
Change since picked: + 0.93
Earnings Date 05/03/08 (unconfirmed)
Average Daily Volume: 3.1 million

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iShares Telecom - IYZ - close: 23.74 chg: +0.53 stop: 22.99 *new*

The stock market's widespread strength today lifted the IYZ to a 2.2% gain. While technically this might look like a new bullish entry point we're suggesting caution and raising our stop loss to $22.99. 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: + 0.24
Earnings Date 00/00/00
Average Daily Volume: 429 thousand

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NVIDIA - NVDA - close: 18.84 change: +0.72 stop: 17.59

As expected the positive earnings news from Intel last night fueled a rally in NVDA. Shares of NVDA posted a 4% gain. Unfortunately, the stock gapped open at $18.81 this morning. That would have been our "fill" price, which puts us at a disadvantage. If you are looking for a new bullish entry point wait for a dip to fill the gap near $18.25-18.20. We're leaving our stop at $17.59 for now but we'd be tempted to raise it near $18.00. Our short-term target is potential resistance in the $19.90-20.00 zone. We do not want to hold over the early May earnings report.

Picked on April 15 at $18.81 *gap open/bad entry
Change since picked: + 0.72
Earnings Date 05/08/08 (unconfirmed)
Average Daily Volume: 20.1 million

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Starbucks - SBUX - close: 17.68 chg: +0.36 stop: 16.84

Shares of SBUX rallied with the market and almost kept pace with the S&P 500. We don't see any changes from our previous comments. Our target is the $18.45-18.50 range. More aggressive traders may want to aim for $18.75-19.00. We do not want to hold over the late April earnings.

Picked on April 15 at $17.32
Change since picked: + 0.36
Earnings Date 04/30/08 (unconfirmed)
Average Daily Volume: 13.6 million

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Teleflex Inc. - TFX - close: 52.11 chg: +2.68 stop: 49.49

Shares of TFX just exploded higher today. The stock gapped open at $49.89 and sprinted to a 5.4% gain. Volume came in above average on the rally, which is bullish. Given the violent move higher we were surprised that we couldn't find any news or catalyst that might explain the rally's strength. We can probably assume that another company's earnings report or news may have influenced shares of TFX today. One possible culprit might have been ITW's earnings news today. We had been suggesting a trigger to buy TFX at $51.05 so the play is now open. Our short-term target is the $54.75-55.00 range, which should intersect with the stock's longer-term trendline of lower highs. The long-term trend is still bearish. We're just trying to play the oversold bounce. We do not want to hold over the late April earnings report.

Picked on April 16 at $51.05 *triggered
Change since picked: + 1.06
Earnings Date 04/29/08 (unconfirmed)
Average Daily Volume: 319 thousand

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Terra Ind. - TRA - close: 46.20 chg: +0.46 stop: 39.74

Hmm.... the relative weakness in TRA is interesting. The agriculture-related chemical and commodity names were the true leaders today and yet TRA under performed. It is something to bear in mind. We are suggesting readers buy a dip in the $42.50-42.00 zone. If triggered our target is the $49.00-50.00 range. FYI: The latest data puts short interest at more than 20% of the 88.8 million-share float. We do not want to hold over the late April earnings report. This industry has seen a lot of volatility so watch your stops carefully!

Picked on April xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/23/08 (unconfirmed)
Average Daily Volume: 4.1 million
 

Short Play Updates

Dell Inc. - DELL - close: 18.72 chg: +0.44 stop: 19.55

Intel's earnings news lit a fire under tech stocks today and even DELL managed a 2.5% gain. Look for a failed rally near $19.00 as a new entry point for shorts. We're suggesting a stop loss at $19.55 but you could try a stop closer to $19.25 or $19.05. The P&F chart already points to a $7.00 target and the move under $18.50 has produced a new triple-bottom breakdown sell signal on the P&F chart. We're going to be aggressive and list two targets. Our first target is the $16.00 mark. Our second target is the $13.50 mark

Picked on April 10 at $18.77
Change since picked: - 0.05
Earnings Date 05/29/08 (unconfirmed)
Average Daily Volume: 29.3 million

---

Freddie Mac - FRE - close: 25.80 chg: +1.85 stop: 27.55

The market-wide rally and some better than expected earnings out of financials fueled a 7.7% short covering rebound in FRE. More conservative traders may want to tighten their stops! We would hesitate to open new positions at this moment. Our first target is the $20.50-20.00 zone.

Picked on April 09 at $24.90 *triggered
Change since picked: + 0.90
Earnings Date 06/12/08 (unconfirmed)
Average Daily Volume: 20.8 million

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Longs Drug Stores - LDG - cls: 38.98 chg: +1.29 stop: 40.16

The trend is still bearish but LDG out performed the markets today with a 3.4% gain. More conservative traders will want to strongly consider an early exit right here to close the position. LDG has already hit our target at $38.25. 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 /1st target hit 38.25
Change since picked: - 2.32
Earnings Date 05/15/08 (unconfirmed)
Average Daily Volume: 596 thousand

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Financial Sector SPDR - XLF - close: 25.46 chg: +0.67 stop: 26.51

The XLF bounced thanks to the better than expected earnings news out of financials. The overall trend is still bearish. Look for a failed rally in the $25.00-26.00 zone as a new entry point for shorts. We'll try and limit our risk with a stop loss at $26.51. Aggressive traders could put their stop above $27.00 and more conservative traders put their stop closer to $26.00. We're setting two targets. Our first target is the $22.50 mark. Our second target is the $21.00 mark.

Picked on April 13 at $25.13
Change since picked: + 0.33
Earnings Date 00/00/00
Average Daily Volume: 139 million
 

Closed Long Plays

Energen - EGN - close: 70.39 chg: +2.54 stop: 63.45

Target exceeded. Natural gas is breaking out higher and EGN soared 3.7% to a new all-time closing high. The stock broke through round-number resistance at $70.00. Our target was the $69.50-70.00 range. The play is closed for us but we'll keep an eye on it for a new entry point down the road.

Picked on April 07 at $64.65 *target exceeded $70.50
Change since picked: + 5.74
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume: 657 thousand

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Coal ETF - KOL - close: 44.00 change: +1.83 stop: 38.69

The KOL ETF is another example of how commodity-related stocks were leaders in today's rally. KOL added 4.3% and broke from its sideways trading range. We had been trying to buy a dip but KOL wasn't cooperating. We would keep an eye on KOL for a rally past $45.00 or a dip down the road as potential entry points to consider long positions.

Picked on April xx at $xx.xx *never opened
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume: 240 thousand

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Agribusiness ETF - MOO - close: 63.80 chg: +3.62 stop: 54.75

Agriculture and commodity-related stocks were the true leaders today. The MOO soared 6% to new all-time highs. We had been trying to buy a dip on it for days but it never cooperated. We would keep an eye on the MOO for a pull back. Broken resistance in the $59-60 zone should be new support.

Picked on April xx at $xx.xx *never opened
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume: 1.0 million

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Nintendo Co - NTDOY - close: 66.89 chg: +0.84 stop: 64.90

We have been stopped out of NTDOY at $64.90. The U.S. ADR shares of Nintendo traded down to $64.70 before bouncing back and posting a gain. The breakdown under the $65.00 level was enough to hit our stop loss at $64.90. We had just moved the stop from $63.95 to $64.90 last night. The sad news is that today's rally in the U.S. markets will most likely spark a rally in the Japanese markets tomorrow (tonight) and NTDOY could rebound sharply tomorrow!

Picked on April 07 at $68.50 */gap open /stopped 64.90
Change since picked: - 2.45
Earnings Date 00/00/08 (unconfirmed)
Average Daily Volume: 312 thousand
 

Closed Short Plays

None
 

Today's Newsletter Notes: Market Wrap by Keene H. Little and all other plays and content by the Option Investor staff.

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