Long Play Updates
Smithfield Foods - SFD - close: 27.88 change: +0.27 stop: 26.35
The rally continues for SFD and the stock bucked the bearish trend in the markets on Friday with another gain. Technical traders will note that SFD's strength failed as it tested the simple 100-dma and exponential 200-dma near $28.30. We would expect a dip now toward the $27.50 region and maybe the $27 level, which should now act as support. SFD is a new play from the Thursday night newsletter so we're reprinting the original play description here:
We normally try to avoid playing the post-earnings reaction but the technical developments in SFD make it too tempting to pass up. The company reported earnings this morning that were down from a year ago but inline with analysts' expectations. The stock rallied higher on positive comments for the current quarter and looking ahead to 2006. We like today's breakout because it breaks the six-month trendline of lower highs (see chart). Plus, it's a rebound off its longer-term rising trendline of support on its weekly chart (see below). While we will suggest new plays here near $27.50 more patient traders might want to wait for a possible pull back tomorrow toward the $27.00 level and its simple 50-dma, which should now act as support. Our target is going to be the simple 200-dma in the $29.25-29.50 range.
Picked on August 25 at $27.61
Short Play Updates
Assured Guaranty - AGO - close: 22.02 chg: -0.05 stop: 22.55*new*
The recent action suggests that AGO is about to breakdown through the bottom of its two-week trading range. The stock has produced a new lower high and a new lower low. While we would consider new positions here our more conservative readers may want to wait for a drop under the $21.80 level first. We're going to tighten our stop loss to $22.55. Our target is the $20.50-20.00 range.
Picked on August 10 at $22.39
Anheuser Busch - BUD - cls: 44.15 chg: -0.10 stop: 46.25
The sideways consolidation in shares of BUD is narrowing and we suspect the stock is poised to breakdown under support at the $44.00 level. We're suggesting bearish positions following the post-earnings sell-off and its long-term negative trends. Our goal is the $40.00 region before its October earnings report. Since BUD doesn't move very fast we don't expect to produce a lot of updates on this play.
Picked on July 28 at $44.77
Costco Wholesale - COST - close: 43.12 chg: -0.29 stop: 44.60
Retail related stocks continue to weaken as investors worry over the impact of higher fuel costs on the American consumer. COST's oversold bounce from mid August has failed and the stock is heading lower. The MACD is close to producing a new sell signal and its short-term oscillators are already bearish. The Point & Figure chart points to a $33.00 target. We are targeting a decline into the $40.50-40.00 range. Remember, we're trying to keep a relatively tight stop loss because our biggest hurdle as bears is the weekly trendline of support (see chart). A breakdown under this trendline would be very bearish indeed.
Picked on August 24 at $43.33
Hansen Natural - HANS - close: 45.30 chg: +0.14 stop: 47.01*new*
The weekly chart for HANS may be showing signs of weakness and the Point & Figure chart might points to a $30.00 target but short-term looks iffy for the bears. There has been no follow through on the August 9th & 10th bearish reversal and double-top pattern. Instead HANS has been consolidating sideways above the $42 level. Now, this past week, S&P announced that they're going to add HANS to the SmallCap 600 index on a date yet to be announced, which is definitely bad news if you're a bear. All the funds that try and track the small cap index will buy shares of HANS. The good news is that there has been no follow through on Thursday's announcement. Of course the markets were bearish on Friday, which probably stymied any buying interest. Unfortunately, some of the short-term technical indicators are starting to look bullish. We would not suggest new plays here and more conservative traders may want to cut their losses now. We're going to lower our stop loss to $47.01. We might choose to exit early if HANS trades back over the $46.00 level.
Picked on August 10 at $43.37
Intl Game Tech. - IGT - cls: 26.94 chg: +0.32 stop: 28.01 *new*
IGT might have spooked the bears a bit on Friday with a small pop over short-term resistance at the $27.00 level. Fortunately, IGT failed to hold that level and turned lower near the closing bell. The overall trend remains bearish for IGT but we're going to tighten our stop to $28.01. Looking at the weekly chart we see that IGT's macd there is very close to producing a new sell signal. Readers might want to consider new positions here. More conservative traders might want to use a tighter stop near $27.50. We are targeting the $24.50-24.00 range compared to the bearish P&F chart, which points to a $13.00 target.
Picked on July 21 at $27.21
Juniper Networks - JNPR - cls: 22.97 chg: -0.37 stop: 24.01 *new*
Good news! The market weakness on Friday helped push JNPR to new three-month lows under support at the $23.00 level. Volume came in higher than what we've seen over the last few weeks. This could be the start of its next leg lower after the recent four-week consolidation. The head and shoulders pattern formed in May, June and July points to a $21.50 target, which coincides with our own target for JNPR. We're going to lower the stop loss to $24.01.
Picked on July 21 at $23.90
Jos. A. Bank - JOSB - close: 38.19 change: -0.83 stop: 40.01
The good news here is that there was no follow through on Thursday's rebound. Bears got a little spooked on Thursday after JOSB announced plans to open 46 new stores by the end of the year. With short interest about 30% of the float the danger for us is a short-squeeze. The failed rally near $40.00 still looks like a new entry point for shorts. Readers might want to consider new positions here. Investors are worried that higher fuel prices will impact the consumer and that worry isn't like to fade any time soon. Our target is the $35.50-35.00 range but we're considering an adjustment toward the exponential 200-dma near $35.70.
Picked on August 16 at $39.95
O M I Corp - OMM - close: 16.91 change: -0.30 stop: 18.01
Oil tanker stocks continue to slide and some of them like VLCCF, OSG, and TK are breaking support at the exponential 200-dma. OMM is a bit weaker than its peers having broken below its exponential 200-dma weeks ago. Wednesday saw an oversold bounce back toward resistance at the exponential 200-dma, which proved to be a new entry point for shorts. The P&F chart for OMM is very bearish with a $12.50 target. We're targeting a move into the $15.25-15.00 range. Our time frame is before the mid October (18th) earnings report.
Picked on August 14 at $17.20
Royal Caribbean - RCL - cls: 43.69 chg: -0.33 stop: 46.01*new*
Shares of cruise liner RCL broke down to new three-month lows on Friday. We would probably look for a decline toward the $43.00 level before seeing the next oversold bounce. RCL appears to be forming a little descending channel. Our target is the $41.25-41.00 range. We are lowering the stop loss to $46.01.
Picked on July 27 at $45.50
Sonic Corp - SONC - close: 31.56 chg: +0.41 stop: 32.01
We are still urging caution here and not suggesting new plays. Wednesday's high-volume breakdown under technical support at the exponential 200-dma and its four-week trendline of support was reversed on Thursday. Thursday morning an analyst firm up graded SONC to a "buy" rating. It appears there was still more buying interest on Friday as the stock bucked the overall weakness in the market. Currently SONC does have a negative, descending channel starting at its March peak but SONC could hit our stop loss at $32.01 and still stay inside its bearish channel. Should SONC continue higher than traders might want to consider bullish positions on a move over $32.50. FYI: the P&F chart is bearish and points to a $25 target.
Picked on August 24 at $30.39
Wal-Mart - WMT - close: 45.70 change: +0.41 stop: 48.01
We warned readers to be ready for a bounce in Wal-mart and we got one on Friday. Previous support at $46.00 acted as resistance on Friday. We suspect that the bounce isn't over yet so traders may want to take a patient approach to initiating new bearish positions. A failed rally near its simple 10-dma could be used as a new entry point. The P&F chart currently points to a $37 target but we are targeting a move into the $42.25-42.00 range over the next six to eight weeks. In the news on Saturday WMT said its August same-store sales rose about 3.3%, which is near the low end of its 3% to 5% guidance.
Picked on August 24 at $45.95
Xilinx - XLNX - close: 26.87 chg: -0.39 stop: 28.01
Weakness in technology stocks helped XLNX fall back below its various moving averages. One could argue that XLNX has formed a brief bear flag pattern and Friday's 1.4% decline was the breakdown from that flag pattern. If this is the case then the flag pattern points to a $25.50 target. Meanwhile the P&F chart looks pretty bearish for XLNX and points to a $19 target. Our target is the $26.10-26.0 range. We aren't suggesting new plays at this time.
Picked on August 04 at $27.91
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