Long Play Updates
Archstone-Smith - ASN - close: 35.58 chg: -0.42 stop: 34.85
Be careful here. ASN could be headed for trouble. Thursday's decline just looked like normal every day profit taking within the stock's bullish trend. Friday's decline is starting to look more like a possible bearish reversal, especially with the MACD indicator so close to turning bearish. More conservative traders may want to seriously consider exiting early to avoid any further losses. We're going to keep ASN open. The stock has not yet closed below minor support in the $35.40 region. Plus, ASN should have more round-number support near $35.00. Of course if ASN trades at our stop loss we're out. We are not suggesting new bullish positions at this time.
Picked on May 06 at $36.26
Brookfield Homes - BHS - close: 44.21 chg: -1.21 stop: 42.45
If you haven't already then traders need to turn defensive here. Homebuilders have not been immune to the market declines recently and Friday's drop doesn't look good for the home construction sector index. Meanwhile BHS sold off sharply in the 9:40-10:00 a.m. time frame on Friday and we cannot find any catalyst for the event. Fortunately, traders bought the dip near $43.00 and its 40 and 50-dma's. The bad news is that the decline was fueled by heavy volume. Plus, the breakdown under the $45.00 level does not bode well for BHS. We are not suggesting new bullish plays at this time. More conservative traders may want to consider an early exit to avoid further losses.
Picked on May 05 at $45.05
Caremark - CMX - close: 43.07 chg: -0.46 stop: 40.95
The recent market weakness may prove to be a boon for traders if it pulls CMX back toward broken resistance now new support near $42.00. We would wait to see if CMX does dip toward $42 and use it as a new bullish entry point. Our target is the $47-48 range.
Picked on May 09 at $43.30
First Bancorp - FBP - close: 39.25 chg: -0.29 stop: 37.95
The weakness in the banking sector continues to weigh on shares of FBP. After studying the charts of the BIX and BKX indices we're tempted to exit shares of FBP. Yet the stock seems to be somewhat resilient so we're going to keep the play alive. More conservative traders may want to consider raising their stop loss toward the $39.00 level or the 21-dma near 38.60. We're going to leave our stop just under the $38.00 level. We are not suggesting new bullish positions unless FBP can trade back above the $40.40 mark.
Picked on May 05 at $40.37
Greenhill & Co - GHL - close: 35.01 chg: -0.20 stop: 33.40*new*
GHL continues to show some relative strength with its lack of any serious profit taking. Thus far the stock has managed to cling to the $35.00 level following its high-volume breakout. We remain bullish but if the major averages continue to produce declines we will expect GHL to eventually follow suit. Readers can choose to buy a bounce from the $35.00 level (preferably above 35.50) or to wait for a possible dip toward the $34.00 level and buy a bounce there. Our target is the $37-38 range. We're going to raise the stop loss to $33.40.
Picked on May 09 at $34.11
Humana - HUM - close: 34.69 chg: -1.20 stop: 32.95
The selling pressure in HUM on Friday was a bit steeper than we expected but it could be used to a traders advantage. That is of course if you're brave enough to take it. It would appear that HUM is testing its previous trendline of resistance as new support. We would suggest that readers actually wait for HUM to produce a stronger bounce before initiating new bullish positions. A bounce back above the $35.50 level would look like an attractive bullish entry point.
Picked on May 09 at $36.33
Short Play Updates
A.S.V.Inc. - ASVI - close: 34.20 change: +0.02 stop: 35.31
ASVI came about as close as you can to hitting our trigger without touching it. Shares declined to $34.00 on Friday morning but never hit our entry point to short the stock at $33.99. There was a brief rally Friday afternoon but it failed at the $35.00 level. More aggressive traders may want to enter positions now following the failed rally. We still suggest waiting for a drop to $33.99. A reprint of the Thursday play description follows:
Wow! Investors do not seem to care that ASVI's latest earnings report turned in record numbers. The company beat estimates by 7 cents and raised its 2005 guidance. Yet ever since its earnings the stock has been in decline on above average volume. This weakness has brought ASVI below multi-month support in the $36-37 level and now its Point & Figure chart shows a quadruple bottom breakdown sell signal with a $25.00 target. Today's session produced a 2.4 percent drop but it also produced a bearish engulfing candlestick pattern. This looks like a new bearish entry point following the recent oversold bounce produced early this week. Given the bearish outlook we would consider shorting the stock here, however, we are suggesting that readers use a trigger at $33.99 just to confirm ASVI's direction. Our six-to-eight week target will be the $30.50-30.00 range.
Picked on May xx at $xx.xx <-- see TRIGGER
Ball Corp - BLL - close: 36.91 chg: -0.49 stop: 40.05 *new*
BLL continues to drift lower following its breakdown below its longer-term up trend and its breakdown below support near $40.00 and its 200-dma's. Technicals have turned south and its MACD indicator produced a new sell signal two sessions ago. Thursday saw BLL produce a failed rally and a bearish engulfing candlestick pattern. The $38.00 level should now act as short-term overhead resistance. Our target is the $35.00-34.00 range. We're going to lower the stop loss to $40.05.
Picked on May 05 at $38.98
Biomet - BMET - close: 36.89 chg: +0.42 stop: 39.01 *new*
So far so good. BMET continues to trade within its wide, descending channel. The recent failed rally at the top of the channel did prove to be a new bearish entry point. We were triggered when BMET traded at our entry point of $37.45. Technically the MACD indicator produced a new sell signal a few days ago. The P&F chart remains bearish with $32 target. Investors are worried that the U.S. Senate might pass the "Hospital Fair Competition Act of 2005", which would impact pricing power for medical device makers like BMET. Our target is the $33.00-32.00 range. If BMET bounces back toward the $38.00 level watch for a failed rally and use it as a new bearish entry point. We are lowering our stop loss to $39.01.
Picked on May 10 at $37.45
Catalina Mktg - POS - close: 23.39 chg: -0.25 stop: 24.85 *new*
We are suggesting caution here in POS. The stock rallied pretty strongly on Friday with a 2.8 percent gain on volume well above average. We cannot find any catalyst or news to account of its strength. The rally did stop under its current three-month trend of lower highs but we're concerned that the strength will continue next week. Drilling down to an intraday chart we see a bull flag pattern that points to a $24.70 target. We're going to lower our stop loss to $24.85. This will keep the stop above the very short-term bull flag target and it will keep the stop above its exponential 200-dma. Don't forget that POS is expected to report earnings on Wednesday, May 18th. Unfortunately that date is unconfirmed. We do plan to exit the play on Tuesday afternoon to avoid holding over the earnings report assuming we're not stopped out by then.
Picked on April 22 at $23.80
UST Inc - UST - close: 43.68 change: +0.39 stop: 46.01
UST is a bearish candidate in the tobacco industry. The stock was hammered a few weeks ago on an earnings warning. After two weeks of consolidating above support near the $45.00 level UST broke down again on strong volume. This technical breakdown looks like the beginning of its next leg lower. Currently the P&F chart is very bearish with a $33.00 target. We believe the next level of support will be near the $40.00 level. Thus our target is the $40.50-40.00 range. We would consider new positions at current levels but more patient traders might wait for a bounce back toward the $45 region, which should now act as overhead resistance.
Picked on May 10 at $44.12
Closed Long Plays
Closed Short Plays
Novellus - NVLS - close: 24.93 change: +1.07 stop: 25.01
The technology rally on Friday may have been sparked by the Dell earnings news but it was lead by a 2.8 percent rally in the semiconductor sector. Shares of NVLS broke out from its recent consolidation and hit our stop loss at $25.01.
Picked on April 29 at $23.40