Long Play Updates
AllState - ALL - close: 65.52 change: +0.31 stop: 63.49
The S&P IUX Insurance index managed to close in the green on Monday. Shares of ALL were contributing to the sector's strength with a 0.47% gain and another new high. We remain bullish on the stock above $65.00. Our target is the $69.00-70.00 range.
Picked on December 15 at $65.25
Florida East Coast - FLA - cls: 60.69 chg: -1.21 stop: 59.89
Transports continued to look weak on Monday in spite of a drop in crude oil prices. Shares of FLA fell 1.9% on Monday following Friday's bearish reversal. It looked like shares were trying to bounce near $60 late in the session but the move wasn't strong enough to make it convincing. We remain very cautious here and we repeat our suggestion from the weekend that more conservative traders may want to exit early. We're not suggesting new plays.
Picked on December 05 at $62.14
ONEOK Inc. - OKE - close: 42.99 change: -0.51 stop: 42.25 *new*
The XNG natural gas index sank almost 3% on Monday so OKE's 1.1% decline might be considered relative strength. However, we have been cautious on the stock for a few days now and the lack of upward momentum has turned the technicals bearish. We're not suggesting new plays at this time and more conservative traders may want to exit early or tighten their stops. We're adjusting our stop loss to $42.25.
Picked on November 28 at $42.25
Raytheon - RTN - close: 52.99 change: +0.33 stop: 49.85
RTN is still inching higher. Shares ignored the weakness in the DFI defense index and RTN managed to tag a new all-time high today. We remain somewhat cautious given the weakness in the major market indices and are not suggesting new positions. Our target is the $54.50-55.00 range.
on November 29 at $51.05
St.Paul Travelers - STA - cls: 53.97 change: +0.41 stop: 51.95
Insurance stocks continued to show relative strength and STA rose 0.7% to hit another new high. We do not see any changes from our weekend play description. Our target is the $57.50 level. The P&F chart is bullish with a $76 target.
on December 17 at $53.56
Short Play Updates
Cheesecake Factory - CAKE - cls: 25.09 chg: -0.77 stop: 27.01
Our bearish play in CAKE is now open. Shares of CAKE finally broke down under support near $26.00 and its 100-dma. We were suggesting a trigger to short the stock at $25.65. Chart readers will note that volume was pretty strong on today's breakdown, which is good news for the bears. 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 18 at $25.65
Colonial Prop. - CLP - close: 46.60 change: -0.11 stop: 48.26
CLP produced a failed rally under its 10-dma and exponential 200-dma on Monday morning. Readers can use the move as a new entry point for shorts. We do not see any real changes from our weekend play description. Our target is the May 2006 lows but we will plan to exit at $42.75. We do not want to hold over the late January earnings. FYI: Traders should know that in the past few months CLP has been noted as a potential takeover/acquisition target in the real estate sector. If a deal is announced it could be very painful for shorts but we haven't heard anything further on the subject. Meanwhile short interest is about 3% of the 43.4 million-share float.
Picked on December 17 at $46.71
New Century - NEW - close: 34.00 change: -0.18 stop: 36.55
After a week of consolidating sideways NEW finally broke down under support at the $34.00 level. Yet the stock managed to rally back to broken support by the closing bell. We remain bearish on NEW and traders can choose a breakdown under $34 or a failed rally under $35.50 as a new entry point. Our target is the $31.00-30.00 range. FYI: The most recent (November) data put short interest at 22% of the company's 50 million-share float. That is a very high degree of short interest and it does raise the risk of a short squeeze if NEW reverses sharply higher.
Picked on December
10 at $34.47
NTL Inc. - NTLI - close: 24.96 change: -0.14 stop: 26.01
NTLI is still struggling under its bearish trendline of lower highs. We would still consider new bearish entries here but more conservative traders may want to tighten their stops. An alternative entry point would be to wait for a drop under the 10-dma (near $24.70) or a drop under the $24.00 mark. The Point & Figure chart points to a $9.00 target. We will target a decline into the $21.00-20.00 range. FYI: The most recent (November) data put short interest at 3.5% of the company's 324 million-share float.
Picked on December 10 at $24.44
21st Century - TCHC - close: 24.92 change: -0.18 stop: 26.01
The bears appear to still have the upper hand with TCHC but shares witnessed a rebound late in Monday's session. The stock tends to be volatile but more conservative traders may want to tighten their stop loss anyway. The intraday drop under $25.00 or $24.84 looked like a new entry point for shorts but the last hour bounce is a bit unnerving. Our target is the $21.50-20.00 range. The most recent (November) data puts short interest at over 6% of TCHC's 6.4% float. That's a very small float so 6% might be enough short interest to really increase the risk of a short squeeze should TCHC reverse higher. Bear that in mind when considering positions as you may want a tighter stop loss.
Picked on December 10 at $24.84
World Accpt. - WRLD - close: 45.74 change: -0.07 stop: 47.75
The financials and banking stocks were inching higher thanks to big strength in shares of Citigroup. Yet shares of WRLD continue to under perform. WRLD produced another failed rally under $47.00 and a new short-term relative low. We would continue to open new bearish positions at current levels. More conservative traders may want to wait for a decline under 44.40. Our target is the $40.50-40.00 range. We're going to set a relatively tight stop just above the December high. FYI: It is important for investors to note that the latest (November) data puts short interest at almost 15% of WRLD's 17.1 million-share float. That is a high degree of short interest and definitely raises the risk of a short squeeze if the stock suddenly turns higher.
Picked on December 18 at $45.81
Closed Long Plays
Amer. Electric - AEP - close: 42.13 chg: -0.31 stop: 41.89
We have been stopped out of AEP at $41.89, our newly revised stop loss from this weekend newsletter. Utility stocks were unable to avoid the profit taking that hit most of the market on Monday. Shares of AEP dipped under what should have been support near $42.00 and hit an intraday low of $41.89.
on December 03 at $42.03
Beazer Homes - BZH - close: 46.08 change: +0.08 stop: 44.75
The homebuilder confidence numbers came out today. Industry experts are confident that the sector will see a rebound in the second half of 2007. Unfortunately, short-term the group is still poised for more weakness. Most of the homebuilders traded lower today. After days of waiting for a significant bounce from the $45.00 level we're going to abandon the play and suggest an early exit. More aggressive traders may want to keep the play alive since there is still a chance that the $45.00 level will hold as support just be aware of potential technical resistance at the 200-dma.
on December 03 at $45.84
Complete Prod. - CPX - close: 21.75 chg: -0.25 stop: 21.49
A sharp decline in crude oil futures undermined any strength in energy stocks and the group suffered some heavy profit taking. Shares of CPX fared better than some of its peers but Monday's session was a volatile one with an intraday high over $22.50 and a dip towards short-term support near $21.50. Monday's move does reflect a failed rally pattern although aggressive traders might be tempted to buy the late afternoon rebound. We're choosing an early exit to cut our losses. Lack of follow through on last Thursday's breakout from the consolidation pattern is not good news for the bulls.
on December 14 at $22.26
D.R.Horton - DHI - close: 26.81 change: -0.31 stop: 25.95
The homebuilders continue to struggle and today's confidence numbers did not inspire any new buying. Shares of DHI produced another failed rally near $27.50. We're suggesting an early exit to avoid future losses. More aggressive traders might want to keep the play alive since the $26.00 level still looks like potential support underpinned by its 200-dma.
Picked on December 03 at $26.59
Grant Prideco - GRP - close: 41.19 chg: -2.75 stop: 42.69
We have been stopped out of GRP at $42.69. Oil service stocks tend to be more volatile than their oil-producing brethren and GRP was a good example of that today. We didn't see any company-specific news but shares slipped 6.2% and broke down under technical support at the 200-dma.
Picked on December 14 at
Guitar Center - GTRC - close: 44.39 change: -1.29 stop: 44.89
We have been stopped out of GTRC at $44.89. The stock tried to rally this morning but failed at the $46.00 level. The stock quickly broke down under support near $45.00 and its 200-dma.
Picked on December 05 at $46.40
Noble Energy - NBL - close: 49.91 change: -2.88 stop: 49.75
The profit taking in the oil sector is getting pretty rough, especially following today's decline in crude oil futures. NBL suffered a rough session after hitting new all-time highs last Thursday. Shares lost 5.4% today and closed under what should have been round-number support at the $50.00 level. We're suggesting an early exit to cut our losses.
Picked on November 29 at $53.11
NATCO - NTG - close: 33.88 change: -2.06 stop: 34.65
As an oil service stock shares of NTG suffered a beating on Monday. Shares lost 5.7% and closed under short-term support before finally coming to rest near its 50-dma and 100-dma. We were on the sidelines waiting for a breakout but given today's relative weakness we're dropping NTG as a bullish candidate. Our suggested trigger was at $36.51 was never hit.
Picked on December xx at $xx.xx <-- see TRIGGER
Rowan Cos. - RDC - close: 35.33 change: -1.94 stop: 34.75
We are abandoning the RDC play. Oil stocks, especially oil service stocks, really suffered some heavy profit taking following a sharp reversal in crude oil. RDC dropped over 5% and closed back under its 200-dma. Today would qualify as a bearish reversal so we want to exit immediately.
Picked on December 14 at $37.05
Closed Short Plays