Long Play Updates
Chipotle Mex.Grill - CMG - cls: 58.42 chg: -0.08 stop: 56.40*new*
We are coming to the end of our play in CMG. The stock made a series of relative new highs last week and we believe there is still a chance that CMG will make a run at the $60 level before the company reports earnings. CMG is due to announce earnings after the closing bell on October 31st. We do not want to hold over the report so we're planning to exit at the close on Tuesday. Right now our biggest concern is the pull back in the major indices on Friday afternoon. The markets are overbought and due for a stronger consolidation and it could easily occur this week. We're not suggesting new plays in CMG at this time. Please note that we're raising the stop loss to $56.40, which is breakeven. Our target is the $59.90-60.00 range.
on October 23 at $56.40
D.R.Horton - DHI - close: 23.75 change: -0.75 stop: 22.99
Homebuilders tumbled on Friday and eliminated most of Wednesday's and Thursday's gains with a 2.6% decline in the DJUSHB index. Shares of DHI lost just over 3% on below average volume. There seems to be some disagreement over the issue concerning a bottom in the housing market. The past few weeks have heard a lot of chatter about homebuilders finally bottoming but new cries that the worst isn't over yet sowed some doubt among investors. The larger pattern in DHI would suggest that the stock has bottomed but a breakdown (and close) under the $23.00 level would definitely be bearish. Aggressive traders can speculate on new long positions with a bounce from $23 or Friday's afternoon rebound from $23.60. We're waiting for a breakout over resistance at $25.50. Currently we're suggesting a trigger to go long at $25.51. Unfortunately, we're running low on time as we need to exit ahead of DHI's mid November earnings report. We would consider this an aggressive play even if DHI hits our trigger at $25.51 because our time frame is short and DHI will probably find technical resistance at the 200-dma nearing $27.50. Our target is the $29.00-30.00 range.
Picked on October xx at $xx.xx <-- see TRIGGER
Randgold Res. - GOLD - close: 21.63 chg: -0.44 stop: 20.99
Gold stocks were unable to avoid the market-wide profit taking on Friday afternoon. The XAU gold & silver index lost 0.8% after testing technical resistance at its 100-dma. Shares of GOLD under performed with a 2% loss on above average volume. The close back under $22.00 is discouraging and short-term technical indicators are starting to falter. Normally we would wait for a bounce back over $22.00 or Friday's high of $22.20 before considering new long positions but we're not suggesting new plays due to our time frame. More conservative traders may want to consider an early exit now. If you look at the weekly chart the latest candle looks like a failed rally/bearish reversal. Don't forget that we plan to exit on Wednesday, November 1st at the closing bell to avoid holding over GOLD's expected earnings report on Nov. 2nd.
Picked on October 25 at $22.35
PDL BioPharma - PDLI - close: 20.88 chg: +0.20 stop: 20.09*new*
The BTK biotech index was one of the very few sector indices to trade higher on
Friday. Yet even then the BTK only closed with a fractional gain and off its
highs of the session. Shares of PDLI followed with a pull back from its best
levels of the day. PDLI still managed to close with a 0.9% gain and a "breakout"
over the top of its three-week trading range but
we're not very optimistic for
this coming week given the weakness in the major averages. We're also running
out of time on with PDLI. The company is expected to report earning on November
2nd after the closing bell. Therefore we plan to exit on Thursday at the close
to avoid the announcement. Our target is the $22.25-22.50 range.
Picked on October 05 at $20.11
W&T Offshore - WTI - close: 32.80 chg: +0.22 stop: 31.19*new*
Oil and gas stocks were unable to escape the market wide profit taking on Friday afternoon even though crude oil futures were inching higher. Shares of WTI displayed some relative strength with a 0.67% gain on Friday but the stock was trading off its highs of the day. The larger pattern in WTI is bullish but short-term the momentum indicators are starting to look more bearish. More conservative traders might want to lock in a profit before WTI sees any more profit taking. We're not suggesting new positions at this time. Our target is the $34.00-35.00 range. Please note that we're raising the stop loss to $31.19.
Picked on October 13 at $30.21
Short Play Updates
INVACARE - IVC - close: 22.25 change: -0.28 stop: 23.11
IVC is a new bearish candidate from the Thursday night newsletter and we don't see any changes from our play description so we're reposting it here:
IVC reported earnings Thursday morning that were two cents better than expected. Unfortunately for shareholders the company guided lower going forward. Shares spiked lower at Thursday's open and the initial bounce stalled near the $23.00 level. The stock is already in a long-term bearish trend and now shares look poised to breakdown under support near $22.00, which is also the bottom of its ten-week trading range. We're suggesting a trigger to short the stock at $21.94, which is under support at $22.00 and under its September 22nd low. If triggered our short-term target is the $20.05-20.00 range. More aggressive traders may want to aim closer to the bottom of its bearish trendline of support (see chart).
Picked on October xx at $xx.xx <-- see TRIGGER
Texas Instruments - TXN - close: 29.90 change: -0.76 stop: 32.05
The Goldman Sachs comments on the drop in motherboards yanked the carpet out from under tech stocks and the semiconductor sector lost almost 2% (SOX index). Shares of TXN, already looking weak after its lackluster earnings report, dropped 2.47% and broke down under support at the $30.00 level. TXN hit our trigger to short the stock at $29.90 opening the play. Now that the play is open our target is the $27.50 level. More conservative traders may want to adjust their stops toward the $31 level, which as broken support should act as new resistance.
Picked on October 27 at $29.90
Closed Long Plays
BJ Services - BJS - close: 31.50 change: -0.75 stop: 29.90
We are running out of time with our BJS play. The company is due to report earnings on the morning of October 31st. We don't want to hold over the earnings announcement. Normally we would exit the day before in this case that would be Monday at the closing bell. However, the market profit taking on Friday this past week hit the oil service stocks pretty hard. The OSX oil services index fell 2.4% Shares of BJS lost 2.3%. The stock looks poised to decline toward the 10-dma near $30.80 or back to the $30 level. We're suggesting an early exit immediately to prevent any losses.
Picked on October 19 at $30.55
IAMgoldCorp - IAG - close: 8.47 change: -0.21 stop: 8.29
We are suggesting an early exit in IAG. The stock displayed more relative weakness on Friday with a 2.4% decline versus a 1.5% decline in the XAU index. Thursday's spike higher looks like a bull trap and the three-day candlestick pattern (Wednesday-Friday) looks like a bearish reversal now. We're suggesting readers bail out now to limit losses. There is a chance that IAG will bounce near its longer-term trendline of support (probably in the $8.40-8.30 region) but we're not willing to risk it.
Picked on October 25 at $ 8.69
Closed Short Plays