Long Play Updates
Hovnanian - HOV - close: 29.34 change: -0.76 stop: 28.45*new*
Warning! The pull back in the homebuilders is growing more dangerous. The group's (and HOV's) September bullish breakout is in trouble. Broken resistance at $30.00 should have been new support for the stock. Even Thursday's bounce near $29.50 and the 10-dma looked okay. Yet now shares have closed below Thursday's low. We expect the dip to continue towards $29.00 and probably the 28.50 region. Longer-term we think the action over the past couple of months looks like a significant bottom. However, short-term the group and HOV could see a lot more profit taking. It wouldn't surprise us to see HOV dip back towards the 50-dma currently near $27.50. We're going to try and reduce our risk by raising the stop loss to $28.45. More conservative traders might want to think about cutting your losses early right here. We're not suggesting new positions at this time.
Picked on September 25 at $30.11
Intl. Game Tech. - IGT - close: 41.50 chg: -0.16 stop: 39.49*new*
We remain cautiously optimistic on IGT. We suspect that last week's rally got a lot of help from some end-of-quarter window dressing. The risk this week is that the stock sees some undressing. The overall pattern is positive and the P&F chart points to a $57 target. Yet short-term we would bet on a dip back toward the $40.00 level, which should act as support. Wait and watch for a dip and bounce near $40 before considering new bullish positions. Please note the stop loss is being adjusted to $39.49. Our target is the $44.00-45.00 range. We do not want to hold over the early November earnings report.
Picked on September 17 at $40.26
WebEx Comm. - WEBX - close: 39.02 chg: -0.96 stop: 37.45
The volatility in WEBX continues. Thursday's failed rally over $40 got some follow through on Friday with a 2.4% decline. Volume came in pretty low on Friday's loss so it's hard to put a lot of conviction behind it. WEBX seems to be churning sideways with a slight bullish tilt of higher highs and higher lows. If this pattern holds we should see the stock bounce in the $38.50-37.50 region. So short-term WEBX appears to be headed lower. Wait for the bounce before considering new positions. Please note that the trading over the last couple of months does look a bit like a bear wedge pattern so playing with a stop loss is essential. 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: 20.33 chg: +0.09 stop: 20.76*new*
The September 21st bearish breakdown (sell-signal) in CMC was thwarted by a bullish reversal during the September 25-26th rebound. Yet bulls struggled to push CMC any further and the stock has been consolidating sideways in a narrow range for the last three sessions. The overall, larger pattern remains bearish and CMC is still trading inside its six-week descending channel. The technical picture is mixed but the P&F chart is bearish with a $13 target. We are suggesting that readers wait for another decline under $19.90 or $19.70 before considering new short positions. We are going to adjust our stop loss to $20.76. More conservative traders may want to tighten theirs toward $20.65. The top of last week's trading range is $20.64. 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 $19.90
Hormel Foods - HRL - close: 35.98 chg: -0.22 stop: 36.51
HRL's attempt at a rebound and bullish breakout over resistance at $36.50 seems to be fading. However, it's worth noting that volume came in pretty low the last few days so it's hard to interpret any real meaning behind the moves. Friday's close under $36.00 and its 100-dma is certainly improvement for the bears - volume or not. We are still not suggesting new positions. We are adjusting our target to $35.30.
on August 31 at $36.65
Ladish - LDSH - close: 28.88 change: +0.57 stop: 30.01
LDSH bounced again on Friday adding just over 2% but volume was below average on the move. We suspect it was just speculative bargain shopping since the $27.50 level has been support in the past. Overall the pattern on LDSH remains negative. The mid September rebound failed with a bearish engulfing candlestick on September 21st. LDSH appears to be testing a very short-term trendline of resistance so a drop under $28.50 could be used as a new entry point. However, if the markets rally next week we'd expect LDSH to bounce towards the $30 level, which should also be overhead resistance. We are aiming for the $25.50-25.00 range. The P&F chart is more pessimistic with an $18 target. We do not want to hold over the late October earnings report. More conservative traders may want to pass on this play or be extra cautious. We have two reasons for concern. First LDSH might have produced a (bullish) double-bottom pattern with the September lows. Second, the stock's short interest was last seen at 6.5% of the stock's 14 million-share float, which is a relatively high amount and increases the risk of a short squeeze.
Picked on September 25 at $29.65
Linear Tech. - LLTC - close: 31.12 chg: -0.84 stop: 32.41*new*
LLTC displayed a lot of relative weakness on Friday. The stock lost 2.6% although it's worth noting that volume came in pretty low. Readers can use Friday's move as a new entry point for shorts but we have to warn you that the SOX is still trading inside its rising, bullish channel. You may want to wait for the SOX to breakdown (watch the 450 level or the 446 level). Or you could wait for LLTC to breakdown under $31.00. Then again we only have a short-term target in the $30.10-30.00 range. More aggressive traders may want to aim lower since the P&F chart points to a $25 target. Our more aggressive target would be the July lows near $28. We do not want to hold over LLTC's earnings report due on Oct. 17th. Please note the adjusted stop loss at $32.41. FYI: The latest (August) data puts short interest at 4% of LLTC's 300 million-share float.
Picked on September 25 at $31.79
Closed Long Plays
Advance Auto Parts - AAP - cls: 32.94 chg: -0.71 stop: 31.89
Ouch! Friday's 2.1% decline erased all of our potential gains in AAP. The move on Friday also puts the stock's bullish trend in jeopardy. AAP produced a failed rally at near $34 and closed under potential support at $33.00, the 10-dma and 100-dma. Friday's session was also a bearish engulfing candlestick pattern (a.k.a. bearish reversal). We are suggesting that readers exit early right now to stem any losses. AAP looks poised to drop toward the $32.00 level, which should be support.
Picked on September 12 at $32.93
Closed Short Plays
NTL Inc. - NTLI - close: 25.43 chg: +0.17 stop: 26.05
We are giving up on NTLI. While the early morning strength on Friday did eventually reverse we don't like the short-term pattern of higher lows. Therefore we're suggesting an early exit immediately. More aggressive traders may want to let the play stand with a stop above short-term resistance near $26.00.
on September 21 at $25.01