Long Play Updates
Advance Auto Parts - AAP - cls: 33.31 chg: +0.49 stop: 31.89
AAP displayed relative strength on Friday with a bounce from its rising 10-dma and a 1.49% gain. Volume was a little light on Friday's session but we're not complaining. The pattern for AAP continues to look bullish but shares are facing resistance directly overhead at its descending 100-dma. Plus, we're concerned about market direction over the next few weeks so we'd hesitate to open new long positions now. Our target remains the $35.80-36.00 range. We do not want to hold over the early November earnings report for AAP.
Picked on September 12 at $32.93
Hovnanian - HOV - close: 29.28 change: +1.17 stop: 27.74
We will admit that we're impressed that the homebuilders can rally on bad news. On Thursday night KBH became the latest in a long line of homebuilders to issue a profit warning in the sector. Yet the DJUSHB home construction index added 1.9% and HOV rebounded with a 4.1% gain. We suspect the real strength in homebuilders was due to the plunge in bond yields, which pushes down the interest rates on mortgages. Aggressive traders might want to speculate in HOV right now with the big bounce on Friday. However, bear in mind that the sector might see some selling this week as fund managers do some window dressing to dump their losers. We're going to stock to our plan and wait for a breakout over $30.00. Our suggested entry point to go long is at $30.11. If we're triggered at $30.11 our target is the $34-35 range. Our time frame is six to eight weeks.
Picked on September xx at $xx.xx <-- see TRIGGER
Intl. Game Tech. - IGT - close: 39.24 chg: -0.25 stop: 38.95*new*
We considered cutting our losses right here in IGT but the stock is still holding above short-term support at $39.00 and its intermediate support with the six-week trendline of higher lows. More aggressive traders may still want to consider long positions here but we'd rather wait for a show of strength and a move over $40.32 before initiating new positions. We're still cautious on the market direction so we're going to raise our stop loss to $38.95. Our target is the $44.00-45.00 range. We do not want to hold over the early November earnings report. FYI: The P&F chart points to a $57 target.
Picked on September
17 at $40.26
United Tech. - UTX - close: 62.30 chg: -0.60 stop: 61.99
Traders need to turn defensive here. The trading this past week in UTX has been bearish with a failed rally and a reversal in some of the technical indicators. Friday's decline helped the MACD produce a new sell signal. The stock has found support near $62.00 in the past so we're expecting a bounce but if the major averages show any weakness early next week then we'd expect to be stopped out. We would hesitate to open new plays even on a bounce from $62.
Picked on September 10 at $63.34
WebEx Comm. - WEBX - close: 38.41 chg: +0.18 stop: 35.99
We are still urging caution with WEBX. The upward momentum in the NASDAQ is waning and the momentum indicators for the INX Internet index have already produced new sell signals. The MACD indicator for WEBX is nearing a new sell signal. In spite of the recent market weakness WEBX has been holding in a rough trading range between $37.40 and $39.50. More conservative traders may want to tighten their stops toward the bottom of this range. We're not suggesting new positions at this time. There is the possibility that WEBX will surprise us next week with another rally. This is the last week before the third quarter ends and fund managers will be selling their losers and buying more of the winners to dress up their portfolios. WEBX, as something of a winner this past quarter, could see more buying interest. Our target remains the $42.50-44.00 range. The P&F chart is very positive with a bullish triangle breakout buy signal.
Picked on September 12 at $38.49
Short Play Updates
Charlotte Russe - CHIC - close: 25.77 chg: -0.12 stop: 27.05
News that CHIC received another analyst "buy" rating on Friday was not enough to stop the stock from breaking down further. Shares have closed under support at the $26 level and its 50-dma. We had a trigger to short the stock at $25.75 and CHIC hit that trigger on Friday so the play is now open. We believe that the 200-dma will offer technical support near the $22 level so we're aiming for a decline into the $22.10-22.00 range. We also expect to see a bounce from what is likely to be short-term support near $24 and its 100-dma. We do not want to hold over the mid October earnings report. FYI: The latest (August) data puts short interest at 6.9% of CHIC's 22.2 million-share float.
Picked on September 22 at $25.75
Commercial Metals - CMC - close: 19.14 chg: -0.86 stop: 21.55
The sell-off in metal and steel-related stocks continued on Friday. Shares of CMC lost another 4.3% on top of Thursday's breakdown under support at the $20 level. Volume came in above average on Friday's decline, which is another bearish sign. If you're looking for a new entry point traders have a choice to either chase it here or wait for a potential bounce. We do see potential support on the weekly chart with a trendline extending toward Friday's low. It might pay off to wait for a bounce before initiating new positions. Broken support at $20.00 should now act as new resistance. Our target is the $17.50-17.00 range. We do not want to hold over the late October earnings report.
Picked on September 21 at
CSX Corp. - CSX - close: 30.57 change: +0.02 stop: 31.26
Friday saw CSX dip toward its 200-dma near $30 and bounce. Shares closed virtually unchanged. We do not see any changes from our Thursday night new play description so we're posting it here:
In spite of plunging oil prices the Dow Jones transportation sector has been unable to breakout over resistance in the 4475-45.00 region and its 200-dma. Thursday the transport index lost 1.5% and broke down under its 50-dma. The Dow Jones railroad index produced a similar decline and breakdown. Shares of CSX followed with a 2.3% loss and its own slide under the 50-dma. Several railroad stocks, including CSX, had produced a pretty impressive bullish breakout just two weeks ago but that rally has reversed and shares of CSX look poised to begin a new leg lower. We want to see a breakdown under round-number support at $30.00 and its 200-dma before initiating positions. Thus we're suggesting a trigger to open bearish plays at $29.75. If triggered our target is the $27.00-26.00 range. We do not want to hold over the mid October earnings report so that gives us about four weeks.
Picked on September
xx at $xx.xx <-- see TRIGGER
Hormel Foods - HRL - close: 36.02 chg: -0.23 stop: 36.51
We have nothing new to report on for HRL. The stock's oversold bounce appears to be rolling over under its 21-dma. The technical picture is mixed with the various time frames showing both bullish and bearish signals. We are not suggesting new positions at this time and we continue to aim for the $35.00-34.50 range where HRL is likely to find support near its 200-dma.
Picked on August 31 at $36.65
NTL Inc. - NTLI - close: 24.98 chg: -0.03 stop: 26.05
We do not see any changes from our Thursday night new play description so we're reposting it here:
Several days ago NTLI broke down from a narrow five-week trading range. The recent bounce has failed at old support/new resistance near $26.00. This looks like a relatively low risk entry point to short the stock. We're going to stick our stop loss just above resistance (26.05) and we'll aim for a decline toward support in the $21.00-20.00 range. More conservative traders may want to exit near $23.00 (see chart). We do not want to hold over the early November earnings report.
Picked on September 21 at $25.01
Tessera Tech. - TSRA - close: 31.90 chg: +0.36 stop: 32.81
TSRA is not cooperating. The stock is seeing a battle occur between the bulls and the bears as it jerks back and forth between support and its overhead trendline of resistance. The SOX semiconductor index turned lower on Friday and actually closed under what should have been support at the 450 level. The SOX is also on the verge of breaking down under its two-month trendline of support. Yet this weakness in the sector index failed to have an impact on TSRA. The stock bounced from its lows near $31.15 in an uncharacteristic show of strength. This lack of follow through lower on Thursday's bearish reversal/failed rally could be a warning sign. We are suggesting that readers wait for another decline under $31.00 before considering new positions. Our target is the $26.00-25.00 range. FYI: Readers should note that the latest (August) data puts short interest at 11.7% of the stock's 42.8 million-share float. That is a relatively high amount of short interest and makes this a higher-risk play.
Picked on September 19 at $30.95
Washington Group Intl. - WGII - cls: 56.51 chg: +0.53 stop: 57.25
Well it doesn't get much closer! WGII dipped to $55.46 on Friday near its 200-dma before bouncing back to close with a gain. We have a suggested trigger to short the stock at $55.45 so we're still sitting on the sidelines. Our market bias is not bullish and we expect that WGII will breakdown further but short-term shares may bounce toward their 10-dma. We're reposting our Thursday night new play description here:
The rally from WGII's June lows has run into trouble with resistance near $60.00. The stock has struggled with resistance in the $60 region since it first climbed to this level back in January 2006. Now the momentum indicators are suggesting that WGII has run out of gas and the next move will be lower. The stock has already broken its 3 1/2 month trendline of support and its 50-dma so more aggressive traders may want to open positions right now. We are suggesting that readers wait for a breakdown under its 200-dma. Therefore we're using a trigger at $55.45. You may want to wait for a decline under $55.00. Our target is the $51.00-50.00 range. We do not want to hold over the November earnings report.
Picked on September xx at $xx.xx <-- see TRIGGER
Closed Long Plays
Regal Beloite - RBC - close: 42.95 chg: -1.09 stop: 42.85
We have been stopped out of RBC at $42.85. We warned readers on Thursday that the stock has produced a bearish engulfing candlestick pattern and another failed rally near $45 and that the next move was probably lower. The stock's pattern is beginning to form more of a sideways trading range between $42 and $45.
Picked on September 15 at $45.11
Closed Short Plays