Long Play Updates
Kerzner Intl - KZL - close: 60.61 chg: +0.61 stop: 57.99
KZL is a new bullish candidate from our Thursday night newsletter. The stock added another one percent on Friday following Thursday's bullish breakout. The move over $61.00 on Friday hit our trigger to go long the stock so the play is now open. We see no changes from our original play description so we're reposting those comments below:
KZL has been a huge winner for investors back in 2003 and 2004. Yet the stock has spent most of 2005 consolidating those big gains from the previous two years. We suspect that the consolidation is about over. Two days ago the stock produced a small bullish engulfing candlestick above its exponential 200-dma. The candlestick pattern itself wasn't that impressive but volume on the day was very big at over twice the daily average. Today is a follow through on Wednesday's small turnaround. More importantly today's gain is a breakout over technical resistance at its 200-dma, price resistance near $59.00, round-number resistance at the $60.00 mark, more technical resistance at its 100-dma and technical resistance at its six-month trendline of lower highs (see chart). While this looks like a bullish entry point to go long we want to see even more confirmation, especially with the major market averages looking vulnerable to more weakness. Our plan is as follows. We want to use a trigger at $61.01. Our target is the $64.50-65.00 range. What makes this somewhat more risky is that KZL is due to report earnings sometime between August 1st and August 8th and we do not want to hold over the report.
Picked on July 22 at $61.01
Steel Dynamics - STLD - cls: 32.87 chg: +1.23 stop: 27.99
Uh-oh! This is starting to feel like the recent Home Depot (HD) play. Our plan here in STLD was to buy a dip back toward the $30.00 level. It's normally very common for stocks to fall back and retest broken resistance as new support. Thus far shares of STLD have not pulled back at all. The stock has pushed through technical resistance at its 100-dma and its exponential 200-dma. Now shares are nearing our initial target at the simple 200-dma (currently at 34.00). We're not going to exit this play just yet but we do not advise chasing it here. We'll still wait for a dip. Our current suggested entry point is the $30.50-30.00 range.
Picked on July xx at $xx.xx <-- see TRIGGER
Vital Images - VTAL - close: 19.51 change: +0.01 stop: 17.49
We do not have much new to report on for VTAL. The tech sector continues to show strength and VTAL's P&F chart shows an ascending triple-top breakout buy signal with a $29 price target. We like VTAL's recent bullish breakout from its three-week consolidation pattern (see chart). Currently VTAL is churning sideways under round-number resistance at the $20.00 level (much like the NASDAQ under the 2200 level). Our biggest concern is a pull back in the NASDAQ which would probably spark similar profit taking in VTAL. We are not suggesting new plays right here. Watch for a dip back toward the $19.00-18.50 range. Actually we would prefer to wait for the dip and then wait for the rebound to begin and then consider going long the stock. Our target is the $21.00-22.00 range but we plan to exit before VTAL's early August earnings report and that doesn't give us much time.
Picked on July 19 at $18.93
Short Play Updates
ATI Tech. - ATYT - close: 12.95 change: -0.07 stop: 13.41
The SOX semiconductor index continues to defy gravity but the good news here is that ATYT continues to show relative weakness. When the SOX (not if) finally does consolidate lower we expect ATYT to really pick up speed on its decline lower. The drop back under the $13.00 level looks like a new bearish entry point for shorts. Our target for ATYT is the $11.50-11.20 range.
Picked on July 17 at $12.83
Amer. Axl & Mfg - AXL - close: 25.67 chg: +0.25 stop: 27.71
A little bit of an oversold bounce is to be expected in AXL after its sharp reversal lower. The stock tried to rally over the $26.00 level on Friday morning but failed. We would not be surprised to see another bounce attempt toward the $26.50 region. Watch for a failed rally anywhere under $27.00 as a new bearish entry point. Our target is the $23.00 level. The biggest risk here is the time frame. We need to exit ahead of AXL's earnings report on July 28th.
Picked on July 21 at $25.60
FirstFed Financial - FED - cls: 63.80 chg: +1.20 stop: 65.05
Our very aggressive short in FED is not off to a good start. The stock rebounded on Friday and erased half of Thursday's decline. Friday's bounce also put it back into its trading range. We would not suggest new bearish positions until FED traded back under $62.50. We are reprinting the original play description below:
Wow! If you look at the long-term weekly chart of FED it's pretty impressive. The stock has been a big performer over the past few years. Yet at the moment we suspect the rally has run out of steam. This is an aggressive, high-risk short. Not only are we shorting a stock near its all-time highs but the stock only has a float of about 16 million shares. FED's rally has been struggling with resistance near the $65.00 level for the past ten days and in doing so built a small trading range between $65.00 and 63.25. Today's high-volume reversal is also a breakdown below this short-term trading range. Technical oscillators are naturally overbought and its MACD just produced a new sell signal. We're only looking for a short-term consolidation lower as there are no doubt a crowd of bulls just waiting to buy the dip. Another important element in our strategy is the time frame. FED is due to report earnings next week on July 28th. We do not want to hold over. If FED does not show some follow through on today's sell-off we will quickly bail out to minimize our losses. Our initial target is $58.50.
Picked on July 21 at $62.60
Intl Game Tech. - IGT - cls: 27.96 chg: +0.72 stop: 29.01
The rebound on Friday in IGT looks like some short-covering before the weekend. It may prove to be a new bearish entry point as we suggested on Thursday that a failed rally near the $28.00 level could be an attractive entry. However, we would look for IGT to trade under $27.75 before initiating new positions. In the news IGT was downgraded again by another broker. We are reposting the original play update from Thursday night below:
IGT reported earnings today and the results were better than expected but that didn't stop investors from "selling the news" anyway. The high-volume sell-off pushed IGT through technical support at its 50 and 100-dma's in addition to price support in the $27.75-28.00 region. It almost looks like a head-and-shoulders pattern on the daily chart. We're going to suggest bearish positions at current levels and we'll target the April lows near $24.00 (24.50-24.00). Traders may want to wait and see if there is an oversold bounce tomorrow and use a failed rally under $28.00 as a more attractive entry point. IGT's P&F chart is bearish and points to a $13 target.
Picked on July 21 at $27.21
Juniper Networks - JNPR - cls: 23.84 chg: -0.06 stop: 25.61
JNPR is a new bearish candidate from our Thursday night newsletter. We see no changes from our original play so we're reposting it here:
JNPR is another stock that is suffering despite a positive Q2 earnings report. Results came out on July 19th and investors are "selling the news". Volume has been very high both today and yesterday at more than twice the daily average. Technically JNPR looks pretty negative as well. The stock has broken the neckline of a clear head-and-shoulders pattern that points to a $21 target. Today's decline is also a breakdown under technical support at its simple and exponential 200-dma's. While we are suggesting shorts at current levels some traders may want to wait and see if JNPR produces an oversold bounce soon. A failed rally under $24.50 could be used as a new entry point. We'll set our target in the $21.50-21.00 range. The bearish P&F chart points to a $9.00 target.
Picked on July 21 at $23.90
Par Pharma. - PRX - close: 29.01 chg: +0.01 stop: 31.51
PRX hit yet another new 52-week low on Friday. The stock continues to look weak. That's good news for us because we are running out of time. PRX is due to report earnings on July 28th and we want to exit before the report. Due to our time frame we're not suggesting new positions here. Plus, we're going to lower our stop loss to $30.26. Our target is the $27-26 range.
Picked on July 14 at $29.96
Sina.com - SINA - close: 27.45 change: -0.32 stop: 28.51
Unfortunately, we have little to report on for SINA. The stock continues to look weak but remains stuck in a trading range between $27.00 and $28.50. The P&F chart, which eliminates a lot of daily noise, continues to point lower with a $2.00 target. We would probably not suggest new bearish positions until SINA traded under $27.00 again. Our target is the $25.75-25.50 range (April lows).
Picked on June 30 at $27.90
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