Option Investor
Newsletter

Daily Newsletter, Tuesday, 9/8/2009

Table of Contents

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

Market Wrap

Lack of Traction

by Jim Brown

Click here to email Jim Brown

After a monster buildup in the overnight futures the cash market failed to impress as every minor uptick lost traction with a partial slide backwards. It was still a winner at the close and that is all that counts.

Market Stats Table

There was little in the way of economics to interest traders today with Consumer Credit for July the only material report. Consumer credit fell by a record $21.6 billion in July to a total of $2.472 trillion. Nonrevolving credit balances fell sharply while revolving credit balances continued to drop as well. Total credit fell -10.4% with revolving credit falling -7.8%. Nonrevolving credit fell -11.1%.

I have been reporting on banks canceling credit cards and cutting credit card balances for months. We are seeing that in the chart below. Consumers worried about jobs and the economy are also paying down balances as they retreat into a conservation mentality.

Consumer Credit Chart

PS, I heard today that Bank America is cutting credit card limits on anyone who uses the checks they send out in the mail. You know the ones where they send blank checks for balance transfers, special purposes or to spend on yourself. I get them every month from a half dozen credit card companies. Be warned that using one from Bank America will get your open credit line reduced. According to Bank America if you use the check on yourself it suggests you are short of cash and no longer worthy of your current credit line.

Reports due out on Wednesday are Mortgage Applications, Chain Store Sales, Job Openings, Quarterly Services and the Fed Beige Book. The key report in that list is the Beige Book, which is the report on economic activity in each of the Federal Reserve regions. Analysts will be looking for signs of improvement in the economic fundamentals and projections for the future and try to predict the outcome of the September 22nd Fed meeting. At 1:PM there will be another $20 billion of 10-year notes auctioned. Today there were $58 billion in 3&6 month bills auctioned along with $38B in 3-yr notes.

In stock news Bank America (BAC) is still under fire by the New York Attorney General over bonuses to Merrill Lynch employees. Bank America claims they sought the advice of counsel and was told they did not have disclose the bonuses to shareholders. Cuomo said the bank could not use attorney client privilege as a defense for not turning over documents held by the BAC attorneys. Cuomo gave BAC until Sept 14th to provide more information. BAC opened higher but declined to close fractionally negative for the day.

Morgan Stanley semiconductor analyst Mark Lipacis stimulated some broad based buying in chip stocks this morning. He said the current investor belief is that the inventory restocking wave is over and chip stocks have peaked. He believes this is entirely untrue and the restocking cycle hasn't even started. He believes the true restocking wave will last a lot longer and provide positive profit gains for the entire second half.

He upgraded ALTR, XLNX, PMCS and LRCX to overweight because of niche markets with active product cycles these companies service. He downgraded TXN and NVLS to equal weight and STM to underweight. He said these downgrades related to competition, expense control and in the case of TXN the gains in the stock price.

Texas Instruments (TXN) is expected to raise its Q3 sales forecast when it provides mid-quarter guidance on Wednesday. Broadpoint AmTech said TI's September quarter was benefiting from a mild broad based recovery. Wedbush Morgan said margins were improving and they were growing market share. Pacific Crest Securities said the book-to-bill ratio for TI was over 1.0 meaning it has more orders than it can build. However, Morgan Stanley cut their rating on TI to neutral from buy saying all the good news was already baked into the price.

Micron (MU) also received an upgrade from UBS to a buy. UBS said prices for DRAM chips made by Micron would rise in the near future.

The semiconductor index has been in rally mode for the last three days with a breakout to a new 11-month closing high on Tuesday at 316. This is the leading sector for the Nasdaq and as long as chips are moving higher the Nasdaq should follow.

SOX Chart

Even AMD garnered an upgrade from a Barclay's analyst. The analyst must have been out in the sun too long over the weekend. He upgraded AMD to overweight from equal weight and raised his price target to $7 from $4. His reasoning was PC demand was improving, AMD has some new products in the pipeline and a possible improvement in margins. He also cited "legal progress with Intel" as a reason for the upgrade. He said AMD could actually revise estimates higher for the first time in recent memory. BUT, he expects AMD to lose -2.04 in 2009 compared to -1.79 in his prior estimate. For 2010 he expects a loss of -1.10 compared to a prior estimate of -98 cents.

OK, he increased his estimate of losses for both 2009 and 2010 but he raised the price target on the stock. Find that boy some sunburn lotion and make sure he drinks plenty of fluids. His delirium will eventually fade. At this point Intel lets AMD exist only because their demise would turn Intel into a monopoly. Intel lets AMD use their patents and has sold them technology to allow them to survive. AMD stock spiked +14% to $5.19 on the upgrade as shorts rushed to cover. What were they thinking? Any day the market is open is a good day to sell AMD.

AMD Chart

Apple Inc (AAPL) gained +2.62 the day before their big announcement event on Wednesday. This was probably short covering ahead of the announcement and on the price target upgrade by Morgan Stanley. It is widely believed this week that the event will be less than spectacular and many analysts believe the stock will decline after the event. Apple is expected to announce a new iPod line complete with a digital camera. However, as late as today it is rumored they are having some problems with the cameras and that may delay the availability of the new iPods. Normally Apple likes to make new products immediately available but they have announced future deliveries when manufacturing problems existed in the past. The current iPod classic is rumored to have been discontinued. Other rumors include deals for Beatles and Rolling Stones songs. Steve Jobs is now expected to be on stage at the event. Morgan Stanley upgraded Apple's price target to $200.

Apple Chart

Harley Davidson (HOG) rallied +7.2% to $25 after Citigroup cited improving retail trends. Citi raised its rating to hold from sell but shorts could not take the heat and bailed anyway. Citi said channel checks show sales have improved since the second quarter. HOG profits fell -91% in Q2. Harley said it would start selling motorcycles in India in 2010 in an effort to move into the global arena. If Harley sales are improving can the general economy be far behind?

Harley Chart

Oil prices exploded higher with a +$3.30 gain to $71.32 as the dollar imploded and several entities projected $85 oil by year-end. This came the day before the OPEC production meeting on Wednesday. Algeria's oil minister said recent gains in oil prices would hold and begin to rise again in 2010 as demand returned. Goldman Sachs predicted prices would rise to $85 per barrel by year-end. Also, tropical storm Fred strengthened as it heads towards the Caribbean. OPEC is expected to leave production quotas unchanged and focus on enforcing compliance with existing quotas. Analysts claim only a 67% compliance with current quotas that were meant to remove 4.2 mbpd from production. That means current actual production cuts only remove 2.81 mbpd from production.

Crude Oil Chart

The biggest impetus for the rise in oil prices was the sharp drop in the dollar to new 52-week lows. The dollar index fell to just over 77 for the biggest one day drop in months. The dollar was crushed after a report from a United Nations agency was released on Monday calling for a reduced role for the dollar as the world's primary reserve currency. Also over the weekend a Chinese official complained about the Fed's policy of buying bonds to keep rates low. He said that was an inflation trigger that will further undermine the dollar. China and Russia have been very vocal this year about the need to diversify away from the dollar. China has called for the creation of a new global currency backed by the IMF.

Dollar Index Chart

Gold prices rallied over $1000 again in early trading on the same decline in the dollar. However, several gold producers were interviewed by CNBC and all said demand for gold was rising. Barrick Gold (ABX) announced a plan to sell $3 billion in stock (81.2 million shares) at a price of $36.95 per share in order to buy back all their gold hedges. Barrick said it would use $1.9 billion of proceeds to eliminate all of its fixed price hedges within the next 12 months. This is the amount the hedges are underwater. They basically sold their future production short into the futures market at various prices as gold rose but gold kept rising and left them exposed for the difference. ABX will spend another $1.0 billion to eliminate a portion of their floating price hedges. They will take a $5.6 billion charge to earnings in Q3 to account for the change in contracts. Barrick expects to increase annual supply by 2.6 million ounces when several development projects are completed.

Barrick said they were seeing "continuing robust supply/demand ratios" and had an "increasingly strongly positive outlook." Barrick said it wanted to be fully leveraged to the ongoing price of gold. Reportedly Barrick has about 9.5 million ounces hedged at lower than current market prices. One analyst said this was probably shareholder driven since Barrick shares were not receiving credit for the rising price of gold. Another analyst said this could be seen as the last short getting out of the market. At one time there was more than 100 million ounces hedged by the gold producers and everyone else has already closed those positions. Time will tell if Barrick made the right call. The announcement was made after the close so the stock price has not yet reacted to the news.

Barrick Gold Chart

At 3:AM this morning I was watching the overseas markets and the Dow futures were up over 100 points and the S&P futures were trading over 1025. The U.S. markets appeared poised for a monster rally at the open. Traders sold into that rally at the open and the S&P struggled to hold that 1025 level all day. There were four separate attempts to sell the market throughout the day and the dips were bought but on light volume. The S&P closed right on that 1025 level and a +9 point gain for the day.

However, I did not view the market action as bullish. Current resistance is around 1035 and the SPX could not get over 1025 on multiple tries. I was glad to see the gains but I remain skeptical. Odds are very good that we will remain in a range bound market for the next several weeks from 980-1040. I would love to be proved wrong with a breakout to the upside.

The rally today was driven by commodities and industrials after Goldman Sachs said they were seeing improvements in the manufacturing sector. The financials closed down for the day and that was the main drag on the market. If the financials are not having a good day it is very difficult for the broader market to move higher. Were it not for the strong gains in energy and metals the outcome would have been entirely different.

For the rest of the week the market has more risk to the downside than the upside. Breaking out over strong resistance in September would be a major accomplishment. Falling back to support at 980 would be the move everyone expects. That is probably why we could creep higher because nearly everyone is expecting a decline. The markets typically move in opposition to what traders are expecting.

S&P-500 Chart

S&P-500 Chart - 5 min

The Dow is facing the same strong resistance at 9600 as the S&P at 1035. This level held for two weeks in August and dates back to November 2008. If by chance the Dow fails to exceed the 9500 close the rest of the week we could be setting up again for another head and shoulders pattern with 9500 as the right shoulder.

The key point to this rally is the overall reluctance of traders to accept it. I have been calling it the denial rally for months because even the bulls are a always worried it is going to roll over and fall into a correction. This denial sentiment continues to feed the climb as traders rush to buy every dip when it appears the dip is ending. I attribute today's rally to the various items I described in the preceding paragraphs as well as the influx of new month end retirement contributions. Funds had to put that money to work and this is the first real week in September. Last week was an extra week for August for all practical purposes plus it was a holiday week. Today is when that month end money was put to work.

I don't know what is going to push the Dow over 9600 this week unless it is the return of strength in the financials. Until some event appears to trigger short covering at that level I fear we are going into hold mode between 9100-9600.

Dow Chart

I have said for a couple weeks that the Nasdaq worried me. It appears the Nasdaq was listening and is attempting to put my mind at ease. The tech index rallied +19 points to close just shy of resistance at 2040. This is exactly where it failed in late August and a breakout here would be bullish especially if it can get past the 50% retracement level at 2063.

We can thank the chip sector upgrade for the rally and Apple's 2.6 point gain did not hurt. BIDU tacked on +14 points and FSLR +13 to help push the composite index back to resistance. The current range for September is 1960 to 2040 and hopefully that is not the track that we will be stuck with the rest of the week.

Nasdaq Chart

There is little in the way of economics to keep the market moving the rest of the week. The Beige Book is the only material report left. Texas Instruments is expected to give their mid-quarter guidance on Wednesday and that could help/hurt the Nasdaq chip rally. Other that that the markets are going to be focused on the dollar, crude and gold. I will be pleasantly surprised if the rally continues but I am not going to be shocked if it fails. I am long so I am rooting for a breakout but will be stopped out if it does not appear.

Jim Brown


New Plays

More than 500 stores in over 40 states

by James Brown

Click here to email James Brown


NEW BULLISH Plays

Cracker Barrel - CBRL - close: 31.24 chg: +1.40 stop: 27.90

Why We Like It:
I listed CBRL as a stock to watch in my editor's note above the new plays this past weekend. The rally continues for this restaurant stock and shares have broken through resistance near $30.00 and its 100-dma. It looks like CBRL might be a little bit extended. I'm suggesting traders buy the dip at $30.15 but we can really use the $30.15-29.00 zone as an entry point. If triggered our first target is $32.75. Our second target is $34.90. Our time frame is six to eight weeks.

Annotated chart:

Entry on September xx at $xx.xx <-- TRIGGER @ 30.15
Change since picked:     + 0.00   			
Earnings Date          10/27/09 (unconfirmed)    
Average Daily Volume:           thousand
Listed on September 08, 2009    



In Play Updates and Reviews

Triggered On The Gap

by James Brown

Click here to email James Brown


BULLISH Play Updates

Agrium Inc. - AGU - close: 50.80 change: +1.19 stop: 47.40

Well that didn't take long. AGU immediately rallied past resistance at $50.00. Shares actually gapped open higher at $50.65. I would still open positions here or on a dip back toward $50.00. Our first target is $54.75. Our second target is $59.75. Currently the Point & Figure chart is bullish with a $59 target.

FYI: Agrium (AGU) is trying to buy rival firm CF Industries (CF) but CF keeps rejecting the offer calling it too low. At the same time CF is trying to buy Terra Industries (TRA) and TRA keeps rejecting the offer calling it too low. Eventually one of these companies is going to give up or they're finally going to make a big enough offer or somebody else might step in and start bidding. There is a risk that someone bids too much and the market could think they overpaid, which might push the stock lower. This M&A dance has been going on for months and it will probably continue for months so I'm not expecting it to have much short-term impact on the stock.

chart:

Entry on September 08 at $50.65 /gap higher entry  
Change since picked:     + 0.15   			
Earnings Date          11/05/09 (unconfirmed)    
Average Daily Volume:       1.9 million 
Listed on September 05, 2009    


Citigroup - C - close: 4.68 change: -0.17 stop: 4.29

The action in C today is a little ominous. Shares rallied to $5.00 and failed and produced a bearish engulfing candlestick pattern. You need to be sure you're comfortable with how much volatility you're willing to stomach here. C can easily dip back toward $4.30. and possibly the $4.20 level. More aggressive traders might want to adjust their stops down to $4.19-4.15. I'm not suggesting new bullish positions at this time. Let's see where C can bounce first. Keep an eye on the $4.50-4.60 zone. Due to the volatility I'm suggesting very small position sizes.

Our first target to take profits is at $5.40. Our second target to exit is $5.95.

Entry on September 03 at $ 4.87 /gap higher entry
                             /listed at $4.77
Change since picked:     - 0.19   			
Earnings Date          10/16/09 (unconfirmed)    
Average Daily Volume:       1.0 billion    
Listed on September 03, 2009    


China Mobile Ltd. - CHL - close: 51.07 chg: +0.85 stop: 47.90

The Chinese stock markets continue to rally and CHL gained 1.6%. Technicals are starting to improve on the rebound. Our first target is $54.00. Our second target is $58.00. Our time frame is several weeks.

Entry on    August 31 at $48.73 /gap down entry point
Change since picked:     + 2.34   			
Earnings Date          00/00/?? (unconfirmed)    
Average Daily Volume:       2.3 million 
Listed on  August 29, 2009    


Capstone Turbine - CPST - close: 1.36 change: +0.03 stop: 0.98

We might be too optimistic hoping for another dip in CPST. Aggressive traders could try a breakout trigger over $1.45. Currently our plan is to buy CPST on a dip at $1.15. This remains a very aggressive play.

CPST's P&F chart is bullish with a $2.88 target. I'm setting our first target to take profits at $1.50. We'll tentatively set a second target at $1.85. Remember, just because the stock is "cheap" don't go overboard.

Entry on    August xx at $xx.xx <-- TRIGGER @ 1.15
Change since picked:     + 0.00   			
Earnings Date          11/09/09 (unconfirmed)    
Average Daily Volume:       4.8 million 
Listed on  August 29, 2009    


Carpenter Tech. - CRS - close: 22.57 change: +1.65 stop: 19.75

Wow! The strength of the rally in CRS on Tuesday was a little more than I expected. Shares gapped open higher at $21.45 and soared past resistance near its exponential 200-dma and the $22.00 level. The stock closed with a 7.8% gain. I wouldn't chase it here if you didn't jump in this morning. Wait for a dip near $22.00 or for CRS to fill the gap near $21.00. Our first target is $24.90. More aggressive traders may want to aim higher.

Entry on September 05 at $21.45 /gap higher entry
                             /originally listed at $20.92
Change since picked:     + 1.12   			
Earnings Date          10/28/09 (unconfirmed)    
Average Daily Volume:       536 thousand
Listed on September 05, 2009    


Darden Restaurants - DRI - close: 34.15 chg: -0.26 stop: 32.45

DRI gapped open higher and we've adjusted our entry point. Unfortunately the rally stalled at $35.00 and shares fell back toward short-term support near $34.00. A bounce from here or a dip near $33.00 can be used as a new entry point. It depends on how nimble you are and how much risk you want to take. More conservative traders can wait for a move over $35.00. Our first target is the $39.40 mark.

FYI: DRI is not a fast moving stock. Getting to $39.40 could take several weeks. Another restaurant stock that's on the move is CBRL. Readers may want to check it out.

Entry on September 05 at $34.82 
                              /originally listed at $34.41
Change since picked:     - 0.67   			
Earnings Date          09/29/09 (unconfirmed)    
Average Daily Volume:       2.6 million 
Listed on September 05, 2009    


Ford Motor Co. - F - close: 7.30 change: -0.13 stop: 7.39

Shares of Ford are still suffering under a multi-week trend of lower highs. I don't see any changes from my prior comments. I'm suggesting we stay with the two strategies already listed.

We have a breakout trigger to buy F at $7.85 with a stop at $7.39.

We have a buy the dip trigger at $6.50 with a stop at $5.99. We want to trade small positions no matter what trigger F hits.

If triggered at $7.85 our first target is just under the old highs at $8.80. Our second target is $9.40.

Entry on    August xx at $xx.xx <-- TRIGGER @ 7.85 or $6.50
Change since picked:     + 0.00   			
Earnings Date          11/05/09 (unconfirmed)    
Average Daily Volume:        90 million 
Listed on  August 27, 2009    


IDEX Corp. - IEX - close: 28.14 change: +0.48 stop: 25.75

IEX is showing some relative strength with a 1.7% gain. The stock is nearing what could be tougher resistance in the $28.25-28.50 zone. I'm not suggesting new positions at this time. Our first target is $29.85. My time frame is six to eight weeks. We might want to add a second target in the $32.00-33.00 zone. The P&F chart is forecasting a $39 target.

Entry on    August 17 at $26.10 *triggered         
Change since picked:     + 2.14   			
Earnings Date          07/20/09 (confirmed)    
Average Daily Volume:       570 thousand
Listed on  July 25, 2009    


J.P.Morgan Chase - JPM - close: 42.54 change: +0.20 stop: 39.90

Some of the short-term technicals on JPM remain bearish. I'd prefer to buy the stock on another bounce from $41.00 or a move over $43.50 again. Our plan was to use smaller position sizes (1/2 to 1/4 our normal size). Our target is $47.40. My time frame is about six weeks.

Entry on    August 21 at $43.50 *triggered (1/2 to 1/4 normal size)
Change since picked:     - 0.96   			
Earnings Date          07/16/09 (confirmed)    
Average Daily Volume:        55 million 
Listed on  July 18, 2009    


Kirby Corp. - KEX - close: 38.44 change: +1.35 stop: 35.25

KEX saw some huge volume today due to the changes in the S&P indices I mentioned over the weekend. The stock gapped open higher at $37.70, which was above our trigger at $37.60 so the play was opened immediately. If you missed the entry point then consider waiting for a dip back toward the $37.20-37.00 zone. Our first target to take profits is at $39.95. Our second and final target is $42.40. FYI: The P&F chart is bullish with a $57 target.

FYI: Standard & Poor's moving ARG from the midcap 400 index to the S&P 500 index. It's moving KEX from the small cap 600 to the midcap 400 to replace ARG. This move is supposed to take place after the close of trading on Tuesday, September 8th.

hart:

Entry on September 08 at $37.70 /triggered/gap higher entry
Change since picked:     + 0.74   			
Earnings Date          10/29/09 (unconfirmed)    
Average Daily Volume:       310 thousand
Listed on September 05, 2009    


Altria Group Inc. - MO - close: 18.52 change: +0.02 stop: 17.90

The action was pretty subdued in MO today. If you're the patient type then we might see an entry point near $18.25-18.15. I'm suggesting bullish positions now with a stop at $17.90. Our first target is $19.90. The P&F chart is bullish with a $23.00 target. Our time frame is several weeks. Make sure you have the patience for this one before jumping in.

Entry on September 05 at $18.50 
Change since picked:     + 0.02   			
Earnings Date          10/22/09 (unconfirmed)    
Average Daily Volume:      15.5 million 
Listed on September 05, 2009    


Microsoft - MSFT - close: 24.82 change: +0.20 stop: 22.95

MSFT showed some strength today with an 0.8% gain. If you're willing to buy the bounce then consider a tighter stop closer to $23.75. MSFT moves slowly so there's no big rush to jump in. Currently our target is $27.75.

Entry on      July 27 at $23.00
Change since picked:     + 1.82   			
Earnings Date          07/23/09 (confirmed)    
Average Daily Volume:        58 million 
Listed on  July 23, 2009    


Playboy Ent. - PLA - close: 2.69 change: +0.02 stop: 2.45

The early morning rally stalled at the exponential 200-dma. I'm still bullish on the rebound in PLA and would still enter new positions here.

Our first target to take profits is at $3.30. Our second target is $3.95. FYI: The Point & Figure chart is bullish with a $7.50 target.

Entry on September 01 at $ 2.65
Change since picked:     + 0.04   			
Earnings Date          11/05/09 (unconfirmed)    
Average Daily Volume:       370 thousand
Listed on  August 29, 2009    


Raytheon Co. - RTN - close: 46.29 change: -0.27 stop: 46.40

RTN is still showing relative weakness. We may want to watch for a bearish entry point instead of a bullish one. Currently the plan is to buy RTN on a breakout higher with a trigger at $48.65. If triggered our first target is $52.50. Our second target is $54.85.

Entry on    August xx at $xx.xx <-- TRIGGER 48.65
Change since picked:     + 0.00   			
Earnings Date          10/22/09 (unconfirmed)    
Average Daily Volume:       2.7 million 
Listed on  August 22, 2009    


Ship Finance Intl. - SFL - close: 12.01 change: -0.38 stop: 11.70

Uh-oh! The tone in SFL just took a turn for the worse. The rally stalled near its 30-dma and exponential 200-dma. With a 3% decline today SFL was clearly under performing the market. More conservative traders may want to abandon ship right now! I'm not suggesting new bullish positions at this time. Our first target is $14.80. Our second target is $17.00. Our time frame is several weeks. FYI: The Point & Figure chart is bullish with a $28 target.

Entry on    August 27 at $12.80 *triggered
Change since picked:     - 0.79   			
Earnings Date          11/27/09 (unconfirmed)    
Average Daily Volume:       499 thousand
Listed on  August 25, 2009    


Schlumberger - SLB - close: 58.10 change: +2.23 stop: 53.85

The U.S. dollar fell to its lowest levels of the year. This lifted crude oil to a 5% gain and the energy sector rallied. SLB gapped open higher at $56.93 and surged to short-term resistance at $58.00. If you didn't buy the rally this morning then look for a dip back toward $56.00 as an entry point. I am adjusting our targets. Our first target is $62.50. Our second target is $67.50. FYI: The P&F chart is bullish with a $73 target.

Entry on September 05 at $56.93 /gap higher entry
                             /originally listed at $55.87
Change since picked:     + 1.17   			
Earnings Date          10/23/09 (unconfirmed)    
Average Daily Volume:       8.7 million 
Listed on September 05, 2009    


TEVA Pharmaceuticals - TEVA - close: 51.38 change: +0.22 stop: 48.95

Tuesday was a quiet day for TEVA. The stock churned sideways in a narrow range outside of the initial spike this morning. I don't see any changes from my weekend comments. Our first target is $54.75. Our second target is $59.50. Our time frame is eight to ten weeks.

Entry on    August 17 at $50.50 *triggered                
Change since picked:     + 0.88   			
Earnings Date          11/05/09 (unconfirmed)    
Average Daily Volume:       5.3 million 
Listed on  August 05, 2009    


Ultra(Long) Financials - UYG - close: 5.44 change: +0.08 stop: 4.90

Financials are edging higher but the bounce still looks weak. UYG is nearing resistance in the $5.50 region. Look for a move over $5.55 or $5.60 to launch positions.

Our first target to take profits is at $6.00. Our second target is $6.50. This can be a very volatile security. It's not for the faint of heart.

Entry on September 03 at $ 5.29 
Change since picked:     + 0.14   			
Earnings Date          00/00/00 
Average Daily Volume:      47.8 million 
Listed on September 03, 2009    


BEARISH Play Updates

Akamai Tech. - AKAM - close: 17.32 chg: -0.15 stop: 18.60

AKAM's early morning strength failed at $17.73. More conservative traders may want to lower their stops closer to $18.00. I am not suggesting new positions at this time. Our first target is $16.25. More aggressive traders may want to aim lower.

Entry on    August 11 at $18.44 
Change since picked:     - 1.31   			
Earnings Date          10/29/09 (unconfirmed)    
Average Daily Volume:      10.4 million 
Listed on  August 11, 2009    


Electronic Arts - ERTS - close: 18.93 change: +0.42 stop: 19.55

No, that's not a typo. ERTS gained 42 cents again. Shares are nearing resistance around $19.00. Watch for the bounce to roll over and use it as a new entry point. Our first target to take profits is at $17.05. Our second and final target is at $16.15. FYI: The P&F chart is currently bearish with a $14 target.

Entry on    August 29 at $18.31 /gap down entry
                              /originally listed at $18.76
Change since picked:     + 0.62   			
Earnings Date          10/29/09 (unconfirmed)    
Average Daily Volume:       9.3 million 
Listed on  August 29, 2009    


Goodrich Petrol. - GDP - close: 22.84 change: +1.32 stop: 24.25

The dollar weakness fueled a big rise in oil and the energy-related stocks rallied. GDP gained 6.1%. The stock is nearing short-term resistance at 422.00. We can look for a failed rally near $23.00 or $24.00 as a new entry point.

The Point & Figure chart is bearish with a $10 target. I'm setting our first target at $20.25. Our second target is $18.50.

Warning - Readers need to be aware that I'm not the only one that thinks GDP is going lower. The most recent data listed short interest at more than 25% of the 24 million-share float. That's a lot of interest and a small float, which equals high-risk! Instead of trying to short GDP you might want to consider put options, which have limited risk.

Entry on September 01 at $22.44 
Change since picked:     + 0.40   			
Earnings Date          11/04/09 (unconfirmed)    
Average Daily Volume:       524 thousand
Listed on September 01, 2009    


Northwest Pipe Co. - NWPX - close: 32.92 change: +0.79 stop: 34.10

The oversold bounce continues. Shares are stalling near resistance at $33.00. Look for this bounce to roll over as a new entry point for bearish positions. Our first target is $28.00. Our second target is $25.50. The P&F chart is bearish with a $25 target. FYI: Instead of trying to short NWPX readers may want to consider buying put options, which have limited risk.

Entry on September 01 at $31.42 /gap down entry
                             /originally listed at $31.73
Change since picked:     + 1.50   			
Earnings Date          10/22/09 (unconfirmed)    
Average Daily Volume:        57 thousand
Listed on September 01, 2009