Long Play Updates
LM Ericsson - ERIC - cls: 37.04 change: +0.44 stop: 34.59*new*
ERIC rallied again on Friday. The stock rose 1.2% and posted its fifth gain out of the last six sessions. Volume has been improving the last couple of trading days but remains below average. Friday's gain was encouraging because ERIC had some potential resistance in the $36.75 region. We are adjusting the stop loss to $34.59. More conservative traders might want to consider a tighter stop closer to $35.00. Another positive from last week was the new bullish signal on the daily chart's MACD indicator. While we remain positive on ERIC the stock does look short-term overbought and due for a pull back. The $36.00 level should be short-term support. Our target is the $37.90-38.00 range. More aggressive traders may want to aim higher like the 200-dma or the $40 zone. FYI: Keep an eye on Sweden's main index the OMXS. Shares of ERIC are following the same pattern in the Stockholm market with a big bounce from its recent test of support.
Picked on August 19 at $35.53
L.B.Foster Co. - FSTR - cls: 38.50 change: +0.60 stop: 34.59
FSTR gave bulls a scare last week with Tuesday's big bearish reversal. Fortunately the stock did not see any follow through lower on last Tuesday's turnaround. Thus far buyers have been stepping in near the rising 10-dma. This remains an aggressive, higher-risk momentum play and we're not suggesting new positions at this time. More conservative traders may want to tighten their stops even further. We have two targets. Our first target is the $39.90-40.00 range. Our second target is the $42.00-42.50 zone.
Picked on August 14 at $37.33
Pediatrix - PDX - cls: 58.99 change: -0.01 stop: 55.90
PDX failed to participate in the market's widespread rally on Friday. This is worrisome and should send up caution flags for the bulls. The larger pattern is still bullish with last week's breakout over $58 and the $59 levels. At this time we would still consider new positions here but nimble traders may want to wait and watch for another dip near $58.00 and its rising 10-dma. More conservative traders may still want to wait for a rally past the April 2007 high at $60.35 as an entry point to avoid potential resistance at $60.00. Our target is the $64.50-65.00 range.
Picked on August 20 at $59.15
Patterson-UTI - PTEN - cls: 21.67 change: +0.46 stop: 20.74
Crude oil futures bounced sharply on Friday and this lifted both the OIX oil index and OSX oil services index. Shares of PTEN participated with a 2.17% rebound. Friday's bounce looks like another bullish entry point to go long the stock given its proximity to significant support near $21.00. We would consider new positions here. However, it's worth noting that PTEN has not broken its bearish trend of lower highs yet. Our first target is the $24.85-25.00 range.
Picked on August 12 at $22.36
Starbucks - SBUX - cls: 27.59 chg: +0.07 stop: 25.95
The rebound in SBUX has not made any progress the last couple of days but thus far investors are buying the midday dips. Shares look poised to challenge resistance near $28.00 again soon. We're not suggesting new positions at this time. Our target is the $28.35-28.50 range. Readers should note that the 100-dma near $28.35 could be overhead technical resistance. More aggressive traders may want to aim higher.
Picked on August 16 at $26.61
Vertex Pharma - VRTX - cls: 37.34 change: +0.96 stop: 33.99
Traders bought the dip near $36.00 again on Friday and VRTX rallied to a 2.6% gain. This looks like another bullish entry point to buy the stock although we would strongly consider raising the stop loss toward the $35.00 level. VRTX does have short-term resistance at $38.00. The P&F chart is bullish with a $66 target. Our target is the $39.80-40.00 range. FYI: We reiterate our suggestion to tighten stop losses. Many of the technical indicators still look bearish after last week's midweek pull back.
Picked on August 19 at $36.87
XOMA Ltd. - XOMA - cls: 2.30 change: +0.03 stop: 1.99
The sideways consolidation in XOMA seems to be coiling more tightly, which suggests a breakout is coming soon. Given the short-term trend of higher lows the breakout should be higher. We would continue to suggest new positions here. However, waiting for a breakout over resistance near $2.35 would still be a good plan. We have a wide stop loss on this aggressive, high-risk play. More conservative traders might be able to get away with a tighter stop near $2.10 or even closer to $2.20. When trading a biotech, traders should remember that there is always headline risk of some unexpected news event sending shares the opposite direction. Our target is the $2.70-2.75 under the 200-dma. Be aware that the 50-dma is falling fast and could be overhead resistance. Plus, the $2.50 level looks like potential resistance. FYI: The latest data shows that short interest is about 9% of the 95 million-share float. That's a high amount of short interest and raises the risk of a short squeeze, which of course would be good news for us!
Picked on August 19 at $ 2.25
Yahoo - YHOO - close: 23.59 change: +0.46 stop: 22.45
Tech stocks enjoyed a strong session on Friday. Shares of beleaguered YHOO rose almost 2% albeit on very light volume. The move on Friday is a small bullish engulfing candlestick pattern, which is normally seen as a one-day bullish reversal signal. We are suggesting new long positions here but some traders may want to wait for more confirmation higher. We are aiming for the $25.85-26.00 range but keep a wary eye on the falling 50-dma, which could be trouble for us. You can also see on the weekly chart that the $25.00 level may be tough resistance so we're setting a conservative target at the $24.95-25.00 range.
Picked on August 19 at $23.54
Short Play Updates
Motorola - MOT - cls: 16.74 change: +0.14 stop: 17.05 *new*
We seriously considered dropping MOT as a bearish candidate. Traders bought the dip near $16.50 on Friday morning and MOT closed near its highs for the day. The stock is now challenging short-term resistance near $16.75 and looks poised to trade near $17.00 soon. More conservative traders may want to go ahead and exit early. We're choosing to tighten our stop loss to $17.05. The larger trend still looks bearish but short-term the rebound looks like it still has some steam left. The technical picture is mixed. We're not suggesting new positions at this time. Our target is the $15.10-14.50 range.
Picked on July 29 at $16.95
Closed Long Plays
Tellabs - TLAB - cls: 10.85 change: +0.54 stop: 9.39
Target achieved. TLAB had been slowly creeping higher all of last week. Then just before 11:00 a.m. on Friday traders bought the dip near $10.18 and TLAB never looked back. The stock broke through technical resistance at its 200-dma and hit an intraday high of $10.91. Shares closed up 5.24%. Our target was the $10.90-11.00 range. Really aggressive traders may want to aim higher (maybe around $11.50) but watch out for resistance near $11 and its 50-dma.
Picked on August 19 at $10.00
Closed Short Plays
Akamai - AKAM - close: 32.86 change: +2.03 stop: 33.05
Ouch! AKAM produced a big 6.5% rally on Friday. Something happened about 15 minutes before noon on Friday and AKAM spiked sharply higher. This lead to what appears to be a short squeeze and AKAM broke through resistance near $32.50. The stock hit our stop loss at $33.05 late on Friday afternoon. We had been targeting the $28.00 level and AKAM almost got there on August 16th.
Picked on August 14 at $32.35