Option Investor
Newsletter

Daily Newsletter, Monday, 10/19/2009

Table of Contents

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

Market Wrap

Earnings Reports Continue To Buoy Stocks

by Todd Shriber

Click here to email Todd Shriber
Monday's trade certainly provided an excellent start to the week as all three major indexes reached one-year highs as better-than-expected earnings reports continued to provide the tonic investors needed to bid stocks higher. In a familiar refrain from what I mentioned last Monday, when the S&P 500 made its way to a one-year high, the dollar fell today and commodity prices rose, a combination that served to boost equities as well.

The S&P 500 touched the 1100 mark before peeling back a tad to close at 1097.91. The Dow Jones Industrial Average was working on a triple-digit performance for much of the afternoon before closing up 96.28 points, or 1%, to 10,092.19. The Nasdaq added nearly 20 points to finish the day at 2176.32, though that number is likely to open higher on Tuesday (more on that later).

Stats Table

It would appear that the most recent spate of earnings reports has been good enough to keep the bulls in charge and has more than a few market observers expecting stocks to continue to move higher for the rest of 2009. Forty one S&P 500 members have reported earnings since October 7th and 34 of them have delivered what would be considered ''better-than-expected'' results. And with earnings being the primary driver of stock returns, that makes this week pivotal with 130 S&P 500 companies reporting.

The growth estimates for the S&P 500 in 2009 are still meager, but the bright side of that equation is that it is not all that difficult for good news to be manufactured. According to Bloomberg data, profits at S&P 500 companies have fallen for nine consecutive quarters, but a rebound of 65% is forecast for the fourth quarter.

S&P 500 Growth Estimates

In terms of noteworthy performers during Monday's trade, a couple of consumer discretionary names helped lead the S&P 500, and that may help fuel speculation that the economy is indeed improving. Nordstrom (JWN), the operator of ritzy department stores, saw its price target boosted to $40 from $25 at Barclays. Barclays noted Nordstrom's earnings will improved for the rest of this year as sales recover and inventories remain low. Nordstrom shares closed up $1.43, or 4.15%, to $35.85 after touching a new 52-week high of $36.52 earlier in the day.

Believe it or not, the publishing sector has been pretty hot, and while newspaper circulation and ad revenues remain bad (there is really no other way of describing it), publishing stocks have certainly benefited from the market rally. One of those names is Gannett (GCI), the publisher of USA Today. Gannett, already up more than 50% year-to-date, fit the ''better-than-expected'' bill today. It is a testament to what an earnings surprise is these days when a stock rises more than 8% after the company said profits fell 53% and sales slid 18%.

Gannett, the largest U.S. newspaper publisher, actually missed analysts' profit and sales targets, but the stock touched a new 52-week high apparently on the sentiment that Gannett's lethargic recovery will at least mirror that of the economy at large and that is better than lagging a recovery that is forecast to be fairly anemic.

Give the pressure facing Gannett and its rivals, the chart below illustrates a run for the shares that can only be classified as staggering.

Gannett Chart

Financials in the S&P 500 rose 0.5% as a group, led by gains in Dow component American Express (AXP) and Goldman Sachs (GS). The black mark in the group belonged to regional banking giant BB&T (BBT), which is actually the eighth-largest U.S. bank. BB&T certainly is not afforded the bellwether status in the financial sector that Goldman, J.P. Morgan Chase (JPM) and Bank of America (BAC) receive, but if you watch regional banks, BB&T is a bellwether for that particular subsector.

For months, if not longer, the Street has chattered about the dangers commercial real estate exposure at regional banks like BB&T. Operating primarily in the Southeast, BB&T does have some significant commercial real estate exposure. Considered one of the safer names among the financials, BB&T's third-quarter profit tumbled by 57% as credit losses continued to mount. The company said those losses are nearing a peak, but that peak may still be two or three quarters away.

BB&T had a third-quarter loss provision of $709 million and added $263 million to its loss reserves during the quarter. The regional banking earnings docket is full this week with Comerica (CMA) and M&T Bank (MTB) reporting tomorrow and further glum news about non-performing loans, particularly those of the commercial real estate varietal, will likely hamper the performance of these names going forward.

Commercial Real Estate Woes

As I like to say, that is a good segue because there are more than a few noteworthy reports out tomorrow, but I shall start with a pair that reported after the close today that will move technology issues on Tuesday. I will start with the ''minor'' one first. Texas Instruments (TXN), the largest maker of chips for mobile phones, posted third-quarter profits of $538 million, or 42 cents a share, beating the average analyst estimate of 40 cents a share. Better yet if you are a bullish on Texas Instruments, the company had sales of $2.88 billion and that beat analysts' average expectation of $2.82 billion.

The company joined semiconductor giant Intel (INTC) in announcing some bullish fourth quarter guidance. TI said it will earn 42 cents to 50 cents a share on sales of $2.78 billion to $3.02 billion in the fourth quarter. Analysts had been expecting sales of around $2.79 billion. TI also recently raised its dividend, so maybe the recovery in chip demand is legitimate.

Alright, the TI news is all well and fine, but the eyes of the technology world were on Apple (AAPL) after the close today. Apple did what Apple normally does and that is crush Wall Street estimates. Net income rose to $1.67 billion, or $1.82 a share, from $1.26 billion, or $1.14 a share a year earlier. Sales surged to $9.87 billion from $7.9 billion last year. Analysts had forecast profit of $1.42 a share on sales of $9.2 billion, so I do not think I am going out on a limb when I say the Nasdaq will open higher on Tuesday and that Apple is likely open around $200. Apple shares closed up $1.81 to $189.86 today. In after hours trading, the shares were up $12.29 to $201.97

Things were so good at Apple during the third quarter that is actually hard to pinpoint a catalyst. Mac sales were up as Apple shipped 2.6 million during the third quarter, a number that would make any PC maker green with envy. Not surprisingly, the iPhone was huge for Apple. The company sold 5.2 million iPhones during the third quarter compared to 720,000 a year earlier. If you want to nitpick, iPod sales slid by 7% and that means ''only'' 10.2 million of the ubiquitous music-playing devices were sold in the most recent quarter.

Apple is one of the few stocks for which enough superlatives probably do not exist. The iPhone is one thing, but the seemingly unending stream of revenue from iPhone apps sales (1.5 billion apps were downloaded in the third quarter) is simply a boon for Apple's shares.

Apple Unit Sales

At this point, the biggest problem Apple may be facing is meeting or beating investors' expectations. The stock has already doubled this year. Combine that robust performance with the most recent quarter's sterling results and Steve Jobs & Co. may need to download the ''management of expectations'' app. Apple is projecting earnings for the December quarter of $1.70 a share, but analysts have that number pegged at $1.91.

It should be fairly to easy to figure out if Apple is going to deliver another upside earnings surprise and you can even do the research yourself. With the holiday shopping season practically upon us, just take a look at how many of the folks you are shopping for are asking for iPods and iPhones. Then when you head to the mall, take a quick look at the traffic at the Apple store. If Santa delivers a lot of iPods and iPhones, Apple will likely deliver another strong quarter.

Apple Chart

Tuesday will also be a big day on the Dow earnings front with five members of the venerable index reporting third-quarter earnings. Pharmaceuticals giant Pfizer (PFE) is expected to post earnings of 48 cents a share and it will be interesting to see what Pfizer's free cash position is because there has been some talk that the company could raise its previously slashed dividend. Coca-Cola (KO) chimes in as well and analysts are calling for 82 cents a share.

Chemicals giant DuPont (DD) joins the group and the consensus estimate if for 33 cents a share. DuPont is another dividend payer worth watching because the company has shown a firm commitment to its payout despite a payout ratio that rests in a dangerous neighborhood at 231%. Given that controlling costs is such a big part of the chemicals business, DuPont may be able to skate by telling investors they met profit targets by employing costs-cuts, but the Street will also be wanting to see some improved demand for DuPont's products from the manufacturing sector.

United Technologies (UTX) is another Dow name stepping into the earnings confessional tomorrow and the expectation there is for a profit of $1.12 a share. All of those Dow reports aside, the one that the market is likely to focus on the most is that of Caterpillar (CAT), the world's largest maker of construction equipment.

Caterpillar shares were up more than 6% on Monday and touched a new 52-week high, perhaps indicating investors are poised to hear some bullish news from the company before the bell tomorrow. Caterpillar already juiced expectations earlier this month when it said it would raise prices for most of its equipment starting early next year.

The average analyst estimate is seven cents a share on sales of $7.49 billion. Investors will likely demand more than a beat that is attributable to cost cuts, but a lot of the near-term performance will rest with any 2010 guidance Caterpillar delivers, particularly concerning when its machinery unit will return to profitability. That is the Caterpillar unit that makes mining, forestry and construction equipment.

Of course, some bullish news about sales in emerging markets (read: China) would be a positive catalyst for a stock that is already up 30% year-to-date. Any bullish hints about China and 2010 could spark Caterpillar shares even higher on Tuesday.

Caterpillar Chart

Looking at the charts, the Dow has broken through some uptrend resistance and as I outlined earlier, there is plenty of ammunition to help the index make its way higher tomorrow. The Dow did trade as high 10117.96 on Monday before settling at 10092.19. There is some room to run to the next resistance point, which is likely 10318.50, but with five member companies reporting earnings tomorrow, a solid flow of good news and corresponding strong volume could lift the Dow to a minor resistance point at 10200.

If most of those earnings reports fail to inspire and the Dow starts to make it way downward, a couple of closes below 10000 could have investors worried about support at 9850.

Dow Chart

The S&P 500 finally traversed 1100 today, albeit barely, and failed to close there so that still remains the primary resistance point the index needs to contend with. As is the case with the Dow, the catalysts exist for the S&P 500 to finally cross 1100 and stay there as early as tomorrow. Just above 1100 looms a resistance point at the 50% Fibonacci retracement line and the S&P 500 currently borders on overbought when looking at the RSI, but that has been a familiar refrain that has been ignored.

A breakdown would take the S&P 500 to support at 1050 and any further downside could bring the 975-985 range into play.

S&P 500 Chart

The Nasdaq story on Tuesday is going to be penned by Apple and whether Apple on its own can lift the Nasdaq to 2200 on its own remains to be seen. The Nasdaq has cleared resistance in the 2167 area, but there is likely to be a fight at 2200, a level the Nasdaq has not seen in more than a year. If 2150 fails to hold as support, a breakdown to 2063 could be in the offing.

Nasdaq Chart

Tomorrow should be a telling day for the near-term performance of stocks as the Nasdaq absorbs Apple's good news and the Dow has the potential for a triple-digit day in either direction. Beyond those catalysts, there are several marquee financials reporting including Bank of New York Mellon (BK) and State Street (STT) those names will have their say in the S&P 500's daily result. With more than 75% of the companies in the S&P 500 beating estimates, it is hard to bet on a down day tomorrow.


New Plays

Getting Crowded

by James Brown

Click here to email James Brown

Editor's Note:

The market continues to show strength and managed to hit new highs for the year. However, the S&P 500 was unable to close above the 1100 level, which is currently overhead, round-number resistance. The small cap Russell 2000 and the Transportation index are both still under resistance and until these last two breakout they're facing bearish double tops.

Apple Inc.'s (AAPL) earnings tonight were very strong and TXN also delivered better than expected results. Both stocks were up strongly in after hours. This could carry over tomorrow morning and lift the market but I would remain cautious. Even if the S&P 500 closes over 1100 the 1120 level is the 50% retracement of the bear market decline and for many investors it's their target to lock in profits (a.k.a. sell).

My bias is bullish but I hesitate to add more bullish plays to a newsletter that is already overweight with bullish candidates.



In Play Updates and Reviews

New Highs for 2009

by James Brown

Click here to email James Brown

Several of our bullish candidates have closed at new highs for the year.


BULLISH Play Updates

Apartment Investment & Mgmt - AIV - cls: 15.25 chg: +0.18 stop: 13.95

AIV managed a bounce this morning but slowly drifted lower the rest of the day. I wouldn't be surprised to see another test of support near $15.00 tomorrow.

Our first target to take profits is at $16.50. Our second target is $18.50 but we may not have time. The plan is to exit ahead of the October 30th earnings report.

Entry on   October 07 at $14.72 /gap open higher
                            /originally listed at $14.52
Change since picked:     + 0.53   			
Earnings Date          10/30/09 (confirmed)    
Average Daily Volume:       3.6 million 
Listed on   October 07, 2009    


Airgas Inc. - ARG - close: 50.65 change: +0.20 stop: 46.90

ARG tagged another new high for the year but struggled with the $51.00 level. I'm not suggesting new positions at this time. Keep an eye on the $49.00 and $48.00 levels as support.

Our first target is $52.45. Our second target is $54.85. More aggressive traders could aim higher. The Point & Figure chart is bullish and predicting a $77 target.

Entry on September 25 at $47.25
Change since picked:     + 3.40  			
Earnings Date          10/29/09 (confirmed)    
Average Daily Volume:       1.5 million 
Listed on September 19, 2009    


BE Aerospace - BEAV - close: 21.12 change: +0.03 stop: 19.25

BEAV failed to participate in the market rally on Monday. The stock just continued to drift sideways under resistance.

Our first target is $22.25 and I'd exit about 75% of our position there. We'll put a second target at $24.00. Keep in mind that we'll exit ahead of the October 27th earnings report.

Entry on September 12 at $19.19 
Change since picked:     + 1.93   			
Earnings Date          10/27/09 (confirmed)    
Average Daily Volume:       834 thousand
Listed on September 12, 2009    


Sotheby's - BID - close: 18.66 change: +0.17 stop: 16.80

BID managed to keep pace with the rally in the S&P 500 with both adding 0.9% on the session.

I would use small positions (about 1/2 to 1/4 your normal trade size) to limit risk. Our first target is $19.95 since the $20.00 mark could be round-number resistance. Our second target is $22.00. Currently the Point & Figure chart is bullish with a $30 target. We do not want to hold over the early November earnings report.

Entry on   October 13 at $18.21 
Change since picked:     + 0.45   			
Earnings Date          11/05/09 (unconfirmed)    
Average Daily Volume:       861 thousand
Listed on   October 13, 2009    


Cracker Barrel - CBRL - close: 36.52 chg: +0.14 stop: 34.40

Gains in CBRL were muted. The stock is still churning sideways above the $36.00 level. If you open new positions I would make them small positions. More conservative traders may want to cut their position size.

The $35.00 level should offer some support. Wait for a bounce from $35.00 before considering new bullish positions. Our first target is $39.75. The Point & Figure chart is forecasting a $57 target.

Entry on   October 10 at $36.00 
Change since picked:     + 0.52   			
Earnings Date          11/24/09 (unconfirmed)    
Average Daily Volume:       322 thousand
Listed on   October 10, 2009    


Compania Cervecerias - CCU - close: 36.79 change: +0.40 stop: 34.90

CCU managed a 1.0% gain. I don't see any changes from my weekend comments. This is going to be a short-term trade as earnings are coming up in a week or two. Our first target is $39.90. The P&F chart is very bullish with a quadruple top bullish breakout buy signal and a $48 target.

Entry on   October 17 at $36.39 
Change since picked:     + 0.40   			
Earnings Date          10/26/09 (unconfirmed)    
Average Daily Volume:           thousand
Listed on   October 17, 2009    


Check Point Software - CHKP - cls: 30.08 change: +0.48 stop: 28.90 *new*

The move in CHKP looks bullish. This is the first close over $30.00 in several years. We only have two days left so I'm raising our stop loss from $27.90 to $28.90. CHKP is expected to report earnings on Thursday morning. We need to exit on Wednesday at the closing bell (or earlier). I'm not suggesting new positions at this time.

Our target is $32.50, which given our new time frame is probably too optimistic.

Entry on   October 06 at $29.19 
Change since picked:     + 0.89   			
Earnings Date          10/22/09 (confirmed)    
Average Daily Volume:       2.4 million 
Listed on   October 06, 2009    


Capstone Turbine - CPST - close: 1.41 change: +0.03 stop: 1.24

CPST is still stuck in its week-long consolidation but the lows are edging higher and the stock looks poised to breakout. Readers may want to wait for a move over $1.45 to initiate positions. Our first target is $1.75. We don't want to hold over the November earnings report. FYI: The Point & Figure chart is bullish with a $2.75 target.

Entry on   October 10 at $ 1.40 
Change since picked:     + 0.01   			
Earnings Date          11/09/09 (unconfirmed)    
Average Daily Volume:       3.7 million 
Listed on   October 10, 2009    


Carpenter Tech. - CRS - close: 24.37 change: +0.67 stop: 21.90

CRS out performed the market with a 2.8% gain but shares are still under resistance at $25.00. We want to exit ahead of the October 27th earnings report. I'm not suggesting new positions at this time.

CRS has already hit our first target. Our secondary target is $27.40.

Entry on September 05 at $21.45 /gap higher entry
                             /originally listed at $20.92
Change since picked:     + 2.92
                             /1st target hit @ 24.90 (+16.0%)
Earnings Date          10/27/09 (confirmed)    
Average Daily Volume:       536 thousand
Listed on September 05, 2009    


DELL Inc. - DELL - close: 15.36 change: +0.08 stop: 14.75

DELL is still out performing but managed a 0.5% gain. I am not suggesting new positions at this time.

Our first target to take profits is at $16.95. Our second target is $19.75. DELL doesn't move super fast so this play could take several weeks. We'll plan to exit ahead of the mid November earnings report.

Entry on   October 06 at $15.51 
Change since picked:     - 0.16   			
Earnings Date          11/19/09 (unconfirmed)    
Average Daily Volume:      25.6 million 
Listed on   October 06, 2009    


F5 Networks - FFIV - close: 42.95 change: +0.32 stop: 39.75

We only have a couple of days left. If FFIV doesn't hit our target at $44.00 we'll exit at the close on October 21st to avoid earnings after the bell.

Entry on   October 07 at $40.63 
Change since picked:     + 2.32   			
Earnings Date          10/21/09 (confirmed)    
Average Daily Volume:       1.2 million 
Listed on   October 07, 2009    


Gold Fields Ltd - GFI - close: 14.44 change: -0.09 stop: 12.99

I am surprised by the relative weakness in GFI today. Gold was up. The mining indices were up. Yet GFI closed in negative territory. The bounce from its rising 30-dma looks like a bullish entry point but you may want to wait for some confirmation.

Our first target is $15.75. Our second target is $19.75 but that may be a little optimistic given our time frame. We plan to exit ahead of the late October earnings report. The Point & Figure chart is very bullish with a $21 target.

Entry on September 30 at $13.78 
Change since picked:     + 0.66   			
Earnings Date          10/29/09 (unconfirmed)    
Average Daily Volume:       7.7 million 
Listed on September 30, 2009    


HMS Holdings - HMSY - close: 42.39 change: +1.09 stop: 38.80

The rally continues for HMSY. Shares actually gapped open higher at $41.55. The stock is quickly approaching potential resistance at its July 2009 highs. Our target is $44.90. We'll plan to exit ahead of the October 30th earnings report.

Entry on   October 17 at $41.55 /gap open higher 
                           /originally listed at $41.30
Change since picked:     + 0.84   			
Earnings Date          10/30/09 (confirmed)    
Average Daily Volume:       227 thousand
Listed on   October 17, 2009    


Starwood Hotels - HOT - close: 36.06 change: +0.68 stop: 32.90 *new*

HOT set a new closing high for the year. We've only got two days left. The company is due to report earnings on Thursday morning. We'll exit on Wednesday at the close to avoid earnings if HOT hasn't hit our second target by then. I am raising our stop loss to $32.90. Our second target is $39.00.

Entry on   October 01 at $31.00
Change since picked:     + 5.06   
                             /1st target hit @ 34.75 (+12%)
Earnings Date          10/22/09 (confirmed)    
Average Daily Volume:       3.4 million 
Listed on September 19, 2009    


Jacobs Engineering - JEC - close: 46.05 change: -0.12 stop: 43.40

It was a quiet session for JEC. The relative weakness is a bit disappointing. Readers may want to watch for a new bounce from $45.00 as a new entry point. Our first target is $49.50. Our second target is $53.00 but we'll plan to exit ahead of the mid November earnings report.

Entry on   October 15 at $45.88 
Change since picked:     + 0.17   			
Earnings Date          11/17/09 (unconfirmed)    
Average Daily Volume:       1.2 million 
Listed on   October 15, 2009    


Microsoft - MSFT - close: 26.36 change: -0.14 stop: 24.75

AAPL's earnings report tonight was very strong and suggested the company could be stealing market share from MSFT in the computer department. I don't see any changes from my weekend comments.

MSFT reports earnings on Friday morning, October 23rd. If MSFT doesn't hit our target to exit a $27.75 we'll plan to exit on Thursday (Oct. 22nd) at the closing bell to avoid holding over earnings.

Entry on      July 27 at $23.00
Change since picked:     + 3.36   			
Earnings Date          10/23/09 (confirmed)    
Average Daily Volume:        58 million 
Listed on  July 23, 2009    


NII Holdings - NIHD - close: 32.13 change: +0.95 stop: 29.45

NIHD rallied to new highs for the year with a 3% gain. There is no change from my prior comments.

NIHD is due to report earnings on October 22nd before the market opens. That means we'll need to exit on Wednesday at the close to avoid holding over the announcement. More conservative traders may want to place their stop closer to $30.00. I'm not suggesting new positions at this time. Our target to exit is $33.75. The plan was to use small position sizes (1/2 to 1/4 normal size) to limit risk.

Entry on   October 08 at $30.60
Change since picked:     + 1.53   			
Earnings Date          10/22/09 nconfirmed)    
Average Daily Volume:       3.4 million 
Listed on September 23, 2009    


Petrobras - PBR - close: 51.41 change: +1.04 stop: 44.75

As expected PBR has managed to breakout through the $50 region and is setting new 2009 highs. I'm not suggesting new positions at this time.

Our first target is $52.50. Our second target is $59.00. The P&F chart is bullish with a $63 target.

Entry on   October 08 at $46.80
Change since picked:     + 4.61  			
Earnings Date          11/13/09 (unconfirmed)    
Average Daily Volume:      12.8 million 
Listed on   October 07, 2009    


Patriot Coal - PCX - close: 13.55 change: +0.26 stop: 10.90

PCX produced another failed rally under $14.00 today. I wouldn't be surprised to see a dip toward $11.75-11.50 instead. I'm not suggesting new positions at this time.

PCX has already hit our first target at $13.90. We're currently aiming for $16.75 but we'll exit ahead of the October 27th earnings report.

Entry on   October 05 at $12.14 /gap open higher
                            /originally listed at $11.78
Change since picked:     + 1.41   	
                          /1st target hit @ 13.90 (+14.5%)
Earnings Date          10/27/09 (confirmed)    
Average Daily Volume:       6.4 million 
Listed on   October 05, 2009    


Pride Intl. Inc. - PDE - close: 32.64 change: +0.93 stop: 29.49

Strength in oil continues to fuel a rally in oil service stocks and PDE hit new highs for the year.

Our first target is $34.75. We'll plan to exit ahead of the late October earnings report.

Entry on   October 08 at $31.15
Change since picked:     + 1.49   			
Earnings Date          10/29/09 (confirmed)    
Average Daily Volume:       3.7 million 
Listed on September 12, 2009    


Playboy Ent. - PLA - close: 3.65 change: +0.05 stop: 2.95

There is no change from my prior comments. I still think readers will want to seriously consider taking some profits off the table right here! I'm not suggesting new positions at this time. Traders may want to consider raising their stops closer to $3.20.

Our second and final target is $3.95. FYI: The Point & Figure chart is bullish with a long-term $7.50 target.

Entry on September 01 at $ 2.65
Change since picked:     + 1.00 
                            /take profits 09/16/09 (+17.7%)
Earnings Date          11/05/09 (unconfirmed)    
Average Daily Volume:       370 thousand
Listed on  August 29, 2009    


Market Vectors: Steel - SLX - close: 58.32 change: +0.91 stop: 53.75

The profit taking didn't last long. If the material and metal stocks rally tomorrow the SLX could hit our final target. I'm not suggesting new positions at this time.

SLX has already hit our first target. We're aiming for $59.50.

Entry on   October 01 at $50.25 *triggered
Change since picked:     + 8.07   			
                            /1st target hit @ 54.75 (+8.9%)
Earnings Date          00/00/00 
Average Daily Volume:       309 thousand
Listed on September 19, 2009    


Stryker Corp. - SYK - close: 46.15 change: +0.79 stop: 44.85 *new*

Tomorrow is our last day. We plan to exit on Tuesday at the closing bell to avoid holding over earnings. I'm raising our stop loss to $44.85. Our target is $47.75.

Entry on   October 06 at $44.54 *new entry 
Change since picked:     + 1.61  			
Earnings Date          10/20/09 (confirmed)    
Average Daily Volume:       3.2 million 
Listed on   October 03, 2009    


Tractor Supply Co. - TSCO - close: 52.85 change: +0.48 stop: 49.90

TSCO is beginning to bounce from its rising 10-dma. I am not suggesting new positions at this time. Our target to exit is $54.40. We plan to exit on Wednesday at the closing bell to avoid holding over earnings.

Entry on   October 06 at $50.56 
Change since picked:     + 1.81   			
Earnings Date          10/21/09 (confirmed)    
Average Daily Volume:       384 thousand
Listed on   October 06, 2009    


VisionChina Media - VISN - close: 10.08 change: +0.35 stop: 7.85

VISN displayed some relative strength with a 3.5% gain. I am not suggesting new positions at this time. This is a very aggressive trade and we want to keep our positions small.

Our first target is $10.90. Our second target is $13.75. The Point & Figure chart is bullish with a $15.00 target. My time frame is several weeks (maybe year end).

Entry on   October 07 at $ 8.53 
Change since picked:     + 1.55   			
Earnings Date          10/29/09 (unconfirmed)    
Average Daily Volume:       407 thousand
Listed on   October 07, 2009    


BEARISH Play Updates

Avis Budget Group - CAR - close: 11.62 change: -0.04 stop: 12.60

The action in CAR was good news for our bearish play. Shares failed under the $12.00 level and closed in negative territory versus gains in the major averages. If this relative weakness holds up we should do okay. Just remember that it's going to be tough to make money on bearish plays with the market in breakout mode.

I am suggesting readers use a trigger to open bearish positions at $11.25. Our target is $9.25. We'll have to keep an eye on the rising 100-dma as potential support. FYI: The P&F chart is forecasting an $8.50 target.

NOTE: CAR has a high amount of short interest, about 9% of the 101 million-share float. That raises the risk of a short squeeze. Readers may want to consider using put options to limit risk. A stop loss doesn't always work.

Entry on   October xx at $xx.xx <-- TRIGGER @ 11.25
Change since picked:     + 0.00   			
Earnings Date          11/02/09 (confirmed)    
Average Daily Volume:       3.8 million 
Listed on   October 17, 2009