Long Play Updates
Advance Auto Parts - AAP - cls: 34.20 chg: +0.20 stop: 31.89
Shares of AAP hit new three-month highs on Tuesday with a 0.58% gain. Volume came in a little below average. We remain optimistic but we're not suggesting new positions. 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: 31.31 change: +1.11 stop: 27.99
Housing stocks shrugged off bad news yet again. Lennar (LEN) issued another earnings warning but that didn't stop the DJUSHB home construction index from posting a 1.68% gain. Shares of HOV out performed its peers and the broader market with a 3.6% gain on strong (and rising) volume. We are inching up our stop loss to $27.99. Our target is the $34.00-35.00 range.
Picked on September 25 at $30.11
Intl. Game Tech. - IGT - close: 40.74 chg: +0.82 stop: 38.95
The slumbering shares of IGT have awakened. The stock added more than 2% on better than average volume. Today's gain also marks a new two-year high and a breakout over the $40 level again. We had been suggesting that readers use a move over $40.32 as a new entry point to go long. 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: 63.61 chg: +0.38 stop: 61.99
Dow-component UTX posted another gain but honestly we expected more with the DJIA hitting new one-year highs. UTX turned in a relatively volatile session with an intraday dip midday. We remain skeptical of the rally but the pattern in UTX remains bullish. Our target is $66.00.
Picked on September 10 at $63.34
WebEx Comm. - WEBX - close: 38.77 chg: -1.32 stop: 37.45
Shares of WEBX erased a big chunk of yesterday's gains after the stock was downgraded this morning. The stock reacted by plunging toward $38.00 this morning and slowly struggling to rebound. We are not suggesting new bullish positions at this time. 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
Commercial Metals - CMC - close: 19.92 chg: +0.83 stop: 21.05*new*
Reversal alert! CMC has erased all of our potential gains with a big 4.3% rally on Tuesday. It was a common occurrence in the steel sector. CMC and others in the industry were breaking down last week. Monday brought some downgrades for the group, which pushed them, and CMC, to new relative lows. Yet the market's strength on Monday sparked a strong intraday rally and the rebound continued into Tuesday's session. The rally today appears to be a reaction to a positive earnings warning from RS. We warned readers yesterday to expect a bounce toward $20 and we got it today. The three-day candlestick pattern looks like a bullish reversal. More conservative traders may want to adjust their stops toward the 10-dma near $20.22. We're going to move our stop loss to $21.05. If CMC rolls over under the $20 level it could be used as a new entry point for shorts. We do not want to hold over the late October earnings report.
Picked on September
21 at $19.90
We are honestly surprised that HRL did not hit our stop loss today. Yesterday the stock had produced a bullish turnaround and was pressing up against resistance at the $36.50 level. Yet there was no follow through higher on Tuesday. Instead the stock plunged to an intraday low near $35.45. We could not find any news to explain the relative weakness. We're still not suggesting new positions. Our target has been the $35.00-34.50 range.
Picked on August 31 at $36.65
Ladish - LDSH - close: 29.52 change: -0.16 stop: 31.01
We are also surprised by the lack of movement in LDSH on Tuesday. The stock churned sideways in a narrow range. More importantly it failed to participate in the widespread rally. This relative weakness is good news but we're still suggesting that readers wait for a move under $28.65 before opening positions. Our target is the $25.50-25.00 range. We do not want to hold over the late October earnings report. FYI: The latest (August) data puts short interest at 6.5% of LDSH's 14 million-share float. That's not a very big float and might be a reason for concern.
Picked on September 25 at $29.65
Linear Tech. - LLTC - close: 31.89 chg: -0.13 stop: 32.66
Semiconductor stocks under performed the broader market thanks to an earnings warning from PMCS. Shares of LLTC oscillated sideways and closed with a minor loss. The lack of strength is bearish but we would be hesitant to open new short plays in this market. The good news today was a lack of follow through on yesterday's big intraday bullish reversal. We do not want to hold over the mid October earnings report. FYI: The latest (August) data puts short interest at 4% of LLTC's 300 million-share float.
Picked on September 25 at $31.79
NTL Inc. - NTLI - close: 24.90 chg: -0.25 stop: 26.05
The relative weakness in NTLI on Tuesday is bearish but for the most part the stock didn't change much. Shares continued to bounced around the $25.40-24.80 trading range. We'd probably wait for a move under $24.80 or $24.75 before opening new short positions. Our target is the $21.00-20.00 range. More conservative traders may want to exit near $23.00. We do not want to hold over the early November earnings report.
on September 21 at $25.01
Closed Long Plays
Closed Short Plays
Charlotte Russe - CHIC - close: 27.25 chg: +0.93 stop: 27.05
We have been stopped out of CHIC at $27.05. We suspect that the stock's 3.5% gain today is in part due to end of quarter window dressing. We'd keep an eye on the stock. A move over $28.10 might be a bullish entry point while a new decline under $25.50 or $25.00 could be a bearish entry point.
Picked on September 22 at $25.75
CSX Corp. - CSX - close: 32.17 change: +1.53 stop: 31.26
We are dropping CSX as a bearish candidate. Our update yesterday said we expected a bounce today but we didn't expect a 5% rally. The railroads produced a strong session, which contributed to the transports strength. We were suggesting that readers use a trigger at $29.75 to short the stock but CSX never hit our trigger.
Picked on September xx at $xx.xx <-- see TRIGGER
Reliance Steel - RS - close: 33.06 change: +3.84 stop: 31.01
We have been stopped out of RS at $31.01. This morning before the opening bell RS updated its earnings outlook. The company raised its earnings guidance to $1.35-1.40 a share compared to Wall Street's consensus at $1.24. The market reacted strongly and RS gapped open higher at $31.00 and then continued to surge. This looks like a major bullish breakout and the news lifted the entire steel sector.
Picked on September 24 at $29.35
Washington Group Intl. - WGII - cls: 58.62 chg: +1.35 stop: 57.25
WGII is not cooperating and the market strength is fueling a strong bounce in the stock. It was our plan to catch a breakdown under the 200-dma with a trigger to open plays at $55.45. WGII never hit our trigger so we're dropping it as a candidate.
Picked on September xx at $xx.xx <-- see TRIGGER