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Long Play Updates

Amer. Electric - AEP - close: 41.89 change: +0.20 stop: 40.89

After the Wednesday-Thursday reversal in AEP the stock managed a bounce on Friday. Yet the stock remains inside its previous trading range of $41.00-42.00. Considering the stock's bearish turnaround midweek and the potential weakness in the major averages conservative traders may still want to exit early and cut their losses now. However, if AEP can rally past the $42.00 level again readers can use it as a new bullish entry point. As an alternative to exiting early consider tightening your stop loss toward $41.50. We are suggesting that readers wait for a rise past $42.25 before opening new bullish positions. Our short-term target is the $44.90-45.00 range. The P&F chart points to a $50 target. FYI: We do not expect shares of AEP to move very fast so it could take a few weeks to reach our target.

Picked on December 03 at $42.03
Change since picked: - 0.34
Earnings Date 01/30/07 (unconfirmed)
Average Daily Volume: 2.0 million

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ALON USA Ener. - ALJ - close: 30.55 chg: -0.25 stop: 28.85

We remain bullish on crude oil and oil stocks but this next week might see more profit taking or a sideways consolidation. We would wait and watch for a dip in ALJ towards the $30.00 level or its rising 200-dma near $29.75 as a new entry point to go long. More conservative traders can wait for signs of a bounce from either level (30.00 or 29.75). Conservative traders may also want to raise their stops. Keep in mind that the $29 level was support a couple of weeks ago and will soon be bolstered by its 50-dma, which is why we're keeping our stop at $28.85 for now. Our target is the $33.50-34.00 range.

Picked on November 21 at $30.15
Change since picked: + 0.40
Earnings Date 11/07/06 (confirmed)
Average Daily Volume: 504 thousand

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Beazer Homes - BZH - close: 46.14 change: -0.95 stop: 44.25

The sell-off in the homebuilders continued on Friday. Earlier this past week the group broke out higher on positive comments from an executive in the business and again from the homebuilders convention in New York. Yet on Thursday most of those gains evaporated after an analyst firm downgraded the entire sector. The profit taking continued on Friday. The challenge now is do we buy this dip or do we wait and see if BZH will dip toward $45? At the moment we would suggest waiting since a bounce near $45.00 would be a better entry point. Currently our target is the $49.50-50.00 range.

Picked on December 03 at $45.84
Change since picked: + 0.30
Earnings Date 02/06/07 (unconfirmed)
Average Daily Volume: 1.2 million

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Chesapeake Energy - CHK - cls: 33.60 chg: -0.13 stop: 31.49*new*

As expected shares of CHK gapped open lower this morning. We warned readers last night that this might happen. The drop was fueled by news that the company announced an unexpected plan to issue another 30 million shares of stock to be sold at $32.15. Shares dipped to $32.00 before bouncing, which was almost enough to stop us out. If you have already read the market wrap for this weekend then you know that Jim gave a bullish case for CHK. We were already bullish but we're going to make an adjustment to our stop loss. Conservative traders may want to leave their stop where it is under $32.00. We're going to lower our stop to give CHK some room to maneuver. A 10% stop would be at $30.24. We're going to adjust our stop loss to $31.49, which is under the rising 50-dma. Readers can choose to buy this dip or wait for a rally past Friday's high (32.40). Our target is the $38.00-40.00 range. FYI: Technically speaking the big decline is very bearish on multiple time frames and the technical oscillators are obviously turning lower. We're keeping the stock due to our bullish bias on the company and natural gas and oil.

Picked on November 29 at $33.98
Change since picked: - 0.38
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume: 7.5 million

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Carrizo Oil & Gas - CRZO - cls: 32.01 chg: -0.74 stop: 29.75

Warning! CRZO's nine-week bullish trend is in jeopardy. Friday's 2.2% decline has broken its multi-week trendline of support. The three-day pull back has turned the short-term technical indicators negative. Conservative traders may want to cut their losses now. We are keeping CRZO on the play list because we're bullish on oil and the oil stocks. However, CRZO could easily correct back toward the $30.00 level, which would be close to a 38.2% Fibonacci retracement. We are not suggesting new positions at this time. Our target is the $35.50-36.00 range. FYI: The P&F chart's bullish target is $52.

Picked on November 29 at $32.15
Change since picked: - 0.14
Earnings Date 11/09/06 (confirmed)
Average Daily Volume: 345 thousand

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D.R.Horton - DHI - close: 26.67 change: -0.54 stop: 24.95*new*

We discussed this past week's movement in the homebuilders in our BZH update (above). Shares of DHI experienced another day of profit taking with Friday's 1.98% decline. We warned readers to look for a dip towards $26.00 but DHI found late day support at the $26.50 level. Readers can choose to buy the dip here or wait and see if the pull back continues next week. The $26.00 mark should be support and is underpinned by DHI's 200-dma. Our short-term target is the $29.90-30.00 range. The P&F chart points to a $36 target. FYI: We're going to inch up our stop loss to $24.95.

Picked on December 03 at $26.59
Change since picked: + 0.08
Earnings Date 01/18/07 (unconfirmed)
Average Daily Volume: 3.7 million

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Florida East Coast - FLA - close: 61.53 change: +0.53 stop: 58.99

Railroad stock FLA out performed its peers on Friday with a 0.8% bounce. Shares erased Thursday's decline and the intraday chart suggests that FLA is poised to move higher. We would consider new long positions here but more conservative traders may want to wait for a new rally past $62.00. The P&F chart is bullish with a triple-top breakout buy signal (formed this week) with a $94 target. Our target is the $67.00-70.00 range.

Picked on December 05 at $62.14
Change since picked: - 0.61
Earnings Date 02/01/07 (unconfirmed)
Average Daily Volume: 120 thousand

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GulfMark - GMRK - close: 38.45 change: +0.15 stop: 36.99

GMRK is another oil-related stock that gapped down earlier this week after announcing a secondary offering of stock. Shares have been range bound since Tuesday's decline and the lack of upward momentum is producing a bearish technical picture. More conservative traders may just want to exit now and cut their losses. We remain bullish on oil and the energy sector so we're keeping GMRK on the newsletter but we do expect more flat to down over the next week. We'd wait for a new rally past $39.00 before considering new bullish positions. We're aiming for the $42.50-43.00 range.

Picked on November 28 at $38.70
Change since picked: - 0.25
Earnings Date 01/31/07 (unconfirmed)
Average Daily Volume: 108 thousand

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Guitar Center - GTRC - close: 46.22 change: -0.09 stop: 43.99

GTRC is still consolidating its gains from earlier in the week. On Tuesday and Wednesday the stock broke out higher on talk that the company made a good target for a leveraged buyout. The bullish breakout pushed through multiple levels of resistance including the $45.00 level, its simple and exponential 200-dma(s) and its multi-month trendline of resistance (see weekly chart). We would wait and watch for a dip to or a bounce form the $45.00 region as a new bullish entry point to buy the stock. Our short-term target is the $49.75-50.00 range but more aggressive traders may want to aim higher.

Picked on December 05 at $46.40
Change since picked: - 0.18
Earnings Date 01/31/07 (unconfirmed)
Average Daily Volume: 600 thousand

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Noble Energy - NBL - close: 52.02 change: -0.86 stop: 49.75 *new*

It looks like shares of NBL are trying to catch up to some of its peers who have been hit with profit taking this past week. The stock lost 1.6% on Friday and the decline produced a bearish engulfing candlestick pattern. Lack of upward momentum over the past week has turned the short-term technical oscillators bearish. We remain bullish on oil and energy stocks but would wait for a dip near $51.00 or maybe the $50.00 level before considering new positions in NBL. We're going to reduce our risk by raising the stop loss to $49.75. The P&F chart looks very bullish with a $76 target. Our target is the $57.50-60.00 range.

Picked on November 29 at $53.11
Change since picked: - 1.09
Earnings Date 01/31/07 (unconfirmed)
Average Daily Volume: 1.3 million

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ONEOK Inc. - OKE - close: 43.64 change: +0.09 stop: 41.35

The consolidation in OKE over the past four days has turned many of the technical indicators bearish. Yet in spite of the pull back the stock just recently hit its 10-dma on Friday morning. The trend remains bullish but the profit taking may not be over yet. Readers can watch for a dip near $42.50-42.00 as a potential entry point to begin new long positions. Our target is the $45.00-46.00 range.

Picked on November 28 at $42.25
Change since picked: + 1.39
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume: 547 thousand

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Rowan Cos. - RDC - close: 35.45 change: +0.40 stop: 34.45

RDC has been struggling to breakout past resistance at the 200-dma and the $37.00 level. We are bullish on oil and energy stocks and suspect that RDC will eventually push higher from here. However, it may take a few more days to garner up enough steam to do so. In the meantime we don't mind waiting. Currently we're suggesting a trigger to buy the stock at $37.05. If we are triggered at $37.05 our target will be the $41.00-42.00 range. More conservative traders may want to exit early near $40.00, which might be round-number resistance.

Picked on December xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/30/07 (unconfirmed)
Average Daily Volume: 3.4 million

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Raytheon - RTN - close: 52.17 change: -0.18 stop: 49.85

Shares of RTN suffered a second day of profit taking. The stock was setting new all-time highs earlier in the week so a little consolidation is not a big surprise. We would watch for a dip near its 10-dma (around $51.55) or for a dip near $51.00 as a new entry point to go long the stock. The defense sector still looks poised to move higher and RTN has been a leader in the group. Our target is the $54.50-55.00 range.

Picked on November 29 at $51.05
Change since picked: + 1.12
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume: 1.5 million

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Worthington Ind. - WOR - close: 18.74 chg: +0.04 stop: 17.99

WOR is still consolidating sideways. Shares tested support at $18.50 and its 10-dma and 100-dma on Friday morning. A bounce from here can be used as a new entry point. However, the intraday chart suggests that WOR might be poised to test the $18.50 level again soon. The trend in WOR is still bullish but lack of upward momentum this past week has turned the short-term technicals bearish. We would hesitate to open new bullish plays if the major averages are weak. Our target is the 19.85-20.00 range.

Picked on November 19 at $17.96
Change since picked: + 0.73
Earnings Date 12/19/06 (unconfirmed)
Average Daily Volume: 868 thousand
 

Short Play Updates

Cheesecake Factory - CAKE - cls: 26.70 chg: +0.12 stop: 27.01

There is still no change from our previous updates on CAKE. The stock looks poised to move lower with the December 1st breakdown. Unfortunately, there has been no follow through. The stock has churned sideways all week long. We are waiting for a breakdown under support near $26 and its 100-dma. Currently we're suggesting a trigger to short the stock at $25.65. If triggered at $25.65 our target is the $22.25-22.00 range. We do expect some support near $24.00 but given the bearish technicals on the weekly chart we think any bounce at $24 would be temporary. The P&F chart currently points to a $4.00 target. FYI: The most recent (November) data puts short interest at 11.8% of CAKE's 73.7 million-share float. That is relatively high short interest and could raise the risk of a short-squeeze if CAKE manages to rally.

Picked on December xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/30/06 (confirmed)
Average Daily Volume: 1.3 million

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Imperial Sugar - IPSU - close: 22.90 change: +0.01 stop: 23.55

Shares of IPSU have spent the last three and a half days trading sideways. The range has been growing more and more narrow, which would suggest that a breakout is coming quickly. Currently IPSU has a bearish trend of lower highs and that suggests the breakdown will be lower but nothing is guaranteed. Traders can choose to open new short positions here or wait for a new decline under $22.60. More conservative traders might want to consider a tighter stop loss near $23.26. Our target is the $20.05-20.00 range.

Picked on December 03 at $22.00
Change since picked: + 0.90
Earnings Date 01/27/07 (unconfirmed)
Average Daily Volume: 248 thousand
 

Closed Long Plays

None
 

Closed Short Plays

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