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Long Play Updates

Burlington N. Santa F. - BNI - cls: 57.90 chg: +0.61 stop: 53.95

Railroad stock BNI continues to show relative strength and pushed to yet another new all-time high on Friday. Traders were there to buy the dip on Friday morning at $56.34. Our target is the $59.75-60.00 range but the Point & Figure chart points to an $83 target. If the markets produce a relief rally on Monday-Tuesday we would not be surprised to see BNI hit our target.

Picked on September 20 at $56.75
Change since picked: + 1.15
Earnings Date 10/25/05 (unconfirmed)
Average Daily Volume: 2.0 million


Quicksilver - KWK - close: 42.55 change: -1.09 stop: 39.99

Shares of KWK were caught up in the oil-sector sell-off on Friday. News that hurricane Rita was weakening and that it would probably miss the Houston area sparked some weakness in crude prices, which was also reflected in oil stocks. Yet we believe this is a temporary decline. A large chunk of oil production, natural gas production and refining is offline in the gulf coast due to both hurricanes Katrina and Rita. Industry experts are concerned that the shortages we already face with natural gas are only getting worse and natural gas prices will continue to rise. That makes this pull back in KWK, an energy company with a lot of exposure to natural gas, look like a new bullish entry point. However, instead of buying the dip we would suggest waiting for signs of a bounce to begin. That could happen here at near $42.00 and its 50-dma. Or KWK could bounce near the 100-dma closer to round-number support at $40.00. Our target is the $49-50 range, compared to the Point & Figure chart, which points to a $56 target. Will we exit the play before KWK's early November earnings report.

Picked on September 20 at $43.68
Change since picked: - 1.13
Earnings Date 11/08/05 (unconfirmed)
Average Daily Volume: 844 thousand


Mckesson - MCK - close: 45.79 chg: +0.04 stop: 44.85

The consolidation in shares of MCK is narrowing. The tighter the stock coils the closer we get to a breakout. The stock has broken its April-August up trend but has been rather resilient to any profit taking. Currently MCK has support at the $45.00 level. Some of our readers might want to consider buying a bounce from the $45 level. We are suggesting that readers wait for a new breakout over the $46.50 level before initiating longs. Our target is the $49.75-50.00 range. If the market produces a hurricane relief rally on Monday watch for MCK to follow.

Picked on September 18 at $46.47
Change since picked: - 0.68
Earnings Date 10/20/05 (unconfirmed)
Average Daily Volume: 1.5 million


Rowan Cos - RDC - close: 35.86 chg: -0.69 stop: 35.25

Oil service stocks have been hit with some profit taking the last couple of days. A decline in crude sparked some selling in the sector. Shares of RDC are testing some short-term levels of support. We are fundamentally bullish on RDC but the stock could see more selling if crude continues to fall next week. We're not suggesting new plays at the moment. Our target is the $39.50-40.00 range.

Picked on September 14 at $36.31
Change since picked: - 0.45
Earnings Date 11/01/05 (unconfirmed)
Average Daily Volume: 2.1 million

Short Play Updates

Arctic Cat - ACAT - close: 20.25 chg: +0.04 stop: 21.11

News out Thursday night after the closing bell that ACAT was voluntarily recalling about 700 ATVs due to potential brake failures may have accounted for the Friday morning weakness. Shares spiked down to $19.64 hitting our trigger at $19.79 opening the play. Unfortunately, ACAT quickly rebounded and was trending higher into the closing bell. We'd like to think that the afternoon rally stalled at the $20.50 mark (and it did) but if the stock market produces a relief rally on Monday we would expect ACAT to participate. Longer-term we're bearish on ACAT. Rising fuel costs and rising heating bills are going to impact consumers ability to buy and run ACAT's products. Yet short-term we may be vulnerable to more late September volatility. We would not suggest new positions until ACAT trades back under $19.75.

Picked on September 23 at $19.79
Change since picked: + 0.46
Earnings Date 10/20/05 (unconfirmed)
Average Daily Volume: 107 thousand


Anheuser Busch - BUD - cls: 44.03 chg: -0.00 stop: 46.01

Is it time yet? We've been watching BUD for weeks now and in the last few days its MACD has rolled over into a new sell signal. Is it finally time for the next stair step lower? The longer-term trends remain very bearish. We warned readers that when we initiated this play that the stock would move very slowly. Yet BUD has gone beyond our expectations as far as slow movement. We are not going to suggest new positions at this time but our readers do have alternative entry points. One would be another failed rally under $44.50. Another potential entry point is a new low under $43.50. Our target is the $40 region but odds are growing that BUD won't make it there before the company reports earnings in late October. We will not hold over the earnings report.

Picked on July 28 at $44.77
Change since picked: - 0.74
Earnings Date 10/26/05 (confirmed)
Average Daily Volume: 2.3 million


Cogent Inc. - COGT - close: 24.04 chg: -1.17 stop: 27.26

COGT is off to a good start. The stock lost another 4.6% on Friday with volume hitting about twice its daily average. Part of the move was due to an analyst initiating coverage with an "under perform" rating. If COGT bounces watch for the $26.00-25.50 region to act as overhead resistance. We're reprinting our initial play description here:

COGT is what you might call a "homeland security" stock. Unfortunately for shareholders the returns over the past few weeks have not been very patriotic. The stock produced a bearish reversal in early August and its been a steady trend of lower highs ever since. We like today's breakdown as a new bearish entry point. COGT broke support near $26.00 and its simple 100-dma on above average volume. Technical indicators are naturally bearish. Oddly enough the weekly chart for COGT is painting a very big neutral wedge-like pattern of lower highs and higher lows. We are going to target the bottom trendline of support near $22.00-22.50. We will plan to exit before COGT reports earnings in late October. Looking at the intraday chart it appears that COGT could rebound back toward broken support now new resistance at $26.00. A failed rally near $26 could be used as a new bearish entry point.

Picked on September 22 at $25.21
Change since picked: - 1.17
Earnings Date 10/25/05 (unconfirmed)
Average Daily Volume: 874 thousand


Cost Plus - CPWM - close: 19.62 change: +0.07 stop: 21.31

Retail stocks managed a bounce on Friday but it's probably short-lived. Even if the sector rallies next week it may prove to be just another opportunity to get short. Rising gasoline prices and what will surely be sky-high heating bills this winter will significantly impact the consumer. Currently CPWM is trading under broken support now resistance at the $20.00 mark. A failed rally here (or under the $20.50 level) could be used as a new entry point. Our target is the $16.50-16.00 range.

Picked on September 20 at $19.78
Change since picked: - 0.16
Earnings Date 11/17/05 (unconfirmed)
Average Daily Volume: 390 thousand


Nautilus Inc. - NLS - close: 22.80 chg: +0.61 stop: 25.11

Exercise equipment catalog/mail order retailer has been displaying a lot of volatility since it broke down from its two-year rising channel two weeks ago. The stock did look a bit oversold so Friday's bounce is not too much of a surprise. We would watch for NLS to bounce toward the 10-dma, which should act as new resistance near $24. A failed rally near the 10-dma can be used as a new entry point. We are targeting a drop toward the $20.50-20.00 range. We will not hold over the late October earnings report.

Picked on September 14 at $23.80
Change since picked: - 1.00
Earnings Date 10/25/05 (unconfirmed)
Average Daily Volume: 363 thousand

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