Option Investor
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In Play Updates and Reviews

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Long Play Updates

Arch Coal - ACI - close: 49.63 change: +0.90 stop: 44.74

Coal-provider ACI continues to show relative strength but the stock has yet to breakout over round-number resistance at the $50.00 mark. Technicals are bullish and the MACD is nearing a new buy signal. The P&F chart points to a $60 target. We are aiming for a rally into the $54.00-55.00 range. We suspect that as crude oil rises investors will begin betting on alternative energy fuels as well. We would not initiate new longs right here. Wait for a breakout over $50.00 or another dip and bounce from the $48 region.

Picked on May 28 at $47.50
Change since picked: + 2.13
Earnings Date 07/21/06 (unconfirmed)
Average Daily Volume: 3.9 million


Amer. Std. Co. - ASD - close: 42.35 change: -0.29 stop: 41.49

It looks like we may need to grow more defensive with ASD. The stock is currently consolidating above support near $41.50 and its simple and exponential 200-dmas. Unfortunately, ASD is struggling to build on any follow through higher. It is starting to look like last week's failed rally at the 50-dma may have been the extent of ASD's attempt at a rebound and shares could begin a new leg lower. The MACD is hinting at a new buy signal soon but more short-term oscillators are beginning to falter. We would not suggest new long positions at this time. Wait for a move over $43.15-43.25 before considering bullish plays. If ASD trades under $41.00 we might want to go short.

Picked on May 28 at $43.30
Change since picked: - 0.95
Earnings Date 07/19/06 (unconfirmed)
Average Daily Volume: 1.3 million


Brookfield Asset Mgt - BAM - cls: 43.23 chg: +0.73 stop: 40.83*new*

Shares of BAM continued to show relative strength on Friday with a 1.7% gain. Volume came in below average but we are not going to complain. The stock is nearing resistance at $44.00 and our target in the $43.85-44.00 range. We are not suggesting new bullish positions at this time and more conservative traders may want to lock in a profit right here. We are raising the stop loss to breakeven at $40.83.

Picked on May 25 at $40.83
Change since picked: + 2.40
Earnings Date 04/28/06 (confirmed)
Average Daily Volume: 473 thousand


Drew Industry - DW - close: 32.05 chg: -0.10 stop: 30.19

DW is still trying to rally higher but the effort seemed half-hearted on Friday, or at least half the volume. Actually volume came in under half the daily average and the early strength on Friday morning just melted away. The stock looks bullish given the bottom at the $30.00 level and its rising 200-dma. We are going to leave our stop at 30.19 but more conservative types might want to inch theirs higher toward the 10-dma. Our target is the $33.75-34.00 range. FYI: we are fighting against a bearish P&F chart.

Picked on May 25 at $31.62
Change since picked: + 0.43
Earnings Date 05/01/06 (confirmed)
Average Daily Volume: 137 thousand


ImClone Sys. - IMCL - close: 40.17 chg: -0.81 stop: 39.40*new*

Biotech stocks have turned in a strong couple of weeks. The BTK index is up six out of the last seven days. The problem now is that the BTK index is testing technical resistance at its 50-dma and 200-dma. The sector looks short-term overbought and Friday's session produced a small failed rally for the BTK index. IMCL is under performing its peers. Shares spiked to $41.57 on Friday morning and immediately began to sink. The stock's failed rally on Friday was fueled by heavy volume and that's a bad sign. We actually considered exiting early right here and more conservative traders may want to think about it. Instead we're going to raise our stop loss to $39.40. We're not suggesting new positions.

Picked on June 01 at $40.55
Change since picked: - 0.38
Earnings Date 07/16/06 (unconfirmed)
Average Daily Volume: 1.6 million


Murphy Oil - MUR - close: 54.58 chg: +0.93 stop: 49.99 *new*

The standoff with Iran is heating up as is violence in oil-exporter Nigeria. Both geo-political hotspots contributed to crude oil's gain on Friday to over $72 a barrel. Let's not forget that we're nearing the summer driving season. The oil stocks soared last week and MUR turned in a big week with a bullish breakout. The stock added another 1.7% on Friday but it's worth noting that shares are nearing what looks like potential resistance near $55.00. We'd look for a dip, probably back toward the $53 region, as the next entry point. Our target is the $57.50-60.00 range. We're going to raise our stop to $49.99.

Picked on May 31 at $52.55
Change since picked: + 2.03
Earnings Date 07/25/06 (unconfirmed)
Average Daily Volume: 1.3 million

Short Play Updates

K-Swiss - KSWS - close: 27.04 chg: +0.18 stop: 27.65

KSWS is still trying to produce an oversold bounce after four weeks of slow declines. The overall pattern is bearish but we're not suggesting new short positions at this time. If the major averages continue to rebound early next week readers may want to go ahead and exit early before getting stopped out of KSWS. Our target is the $26.00 mark. More aggressive traders may want to aim lower. The P&F chart points to a $19 target.

Picked on May 12 at $27.45
Change since picked: - 0.41
Earnings Date 04/27/06 (confirmed)
Average Daily Volume: 300 thousand


Starbucks - SBUX - close: 35.99 chg: -0.22 stop: 36.65

We are still getting mixed messages from SBUX. Some of the indicators are starting to look bullish while others are bearish. This past Thursday came and went without many fireworks. We were concerned that when SBUX announced its May sales numbers the stock might spike higher on us. It did not. We are not going to suggest new shorts at this time but keep an eye out for a decline under $35.00 as a potential entry point.

Picked on May 23 at $35.59
Change since picked: + 0.62
Earnings Date 08/02/06 (unconfirmed)
Average Daily Volume: 5.7 million

Closed Long Plays


Closed Short Plays

Akamai - AKAM - close: 31.34 chg: -0.76 stop: 32.55

Looks like we should have left our stop loss at $33.01 after all. If we had then Friday's spike to $33.00 would have left us in the play. The stock produced a big failed rally at $33.00 and shares look poised to move lower. Unfortunately, we tried to reduce our risk on Thursday night by lowering the stop to $32.55. We've been stopped out for a loss.

Picked on May 23 at $31.15
Change since picked: + 0.19
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume: 3.2 million

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