Option Investor
Play Updates

In Play Updates and Reviews

Printer friendly version

Long Play Updates

Allstate Corp. - ALL - close: 52.64 chg: -0.57 stop: 51.75

Negative earnings and revenue numbers from rival Progressive (PGR) weighed on the insurance stocks. PGR lost 3.9% and traded down toward short-term support around $18.00. ALL followed PGR lower but only lost 1%. Traders bought the dip in ALL near short-term support around $52.00. We had been waiting for a dip into the $52.50-52.00 zone as our bullish entry point and we got it. Now that the play is open our target is the $57.50-58.00 range or the 200-dma, whichever comes first. More conservative traders might want to wait and see of ALL continues to bounce on Monday morning before initiating positions. ALL appears to have some resistance near $55 and its 50-dma. FYI: Some readers might consider this an aggressive entry point since ALL clearly has stronger support near the $50.50-50.00 zone.

Picked on November 16 at $52.50
Change since picked: + 0.14
Earnings Date 01/30/08 (unconfirmed)
Average Daily Volume: 4.1 million


Cicso Systems - CSCO - cls: 29.94 chg: +0.64 stop: 27.89 *new*

CSCO traded higher on Friday thanks to news that the company's management had authorized another $10 billion for a stock buy back. This brings the current stock buy back program up to $62 billion. This weekend, after giving it more thought, we've decided to suggest new bullish positions here and now. Readers can choose to wait for a rally over $30.50 or its 10-dma or try and buy a dip but we want to jump in now. The U.S. economy may be slowing but CSCO does a lot of its business overseas. Please note that we are going to inch up our stop loss to $27.89. We're also adding a more aggressive target in the $33.50-34.00 range. Our first target is the $31.85-32.00 zone. Our time frame is six to eight weeks.

Picked on November 18 at $29.94
Change since picked: + 0.00
Earnings Date 02/06/08 (unconfirmed)
Average Daily Volume: 50.7 million


CVS Caremark - CVS - cls: 42.21 change: +0.19 stop: 39.85

CVS has been relatively resistant to any profit taking lately. The stock has a bullish trend of higher lows and is trading near all-time highs. Readers can choose to open bullish positions now or wait for a dip (or a bounce) near the $41.75 area. More conservative traders might want to consider a higher stop loss in case the stock does reverse. Our target is the $45.85-46.00 range. Our time frame is year-end.

Picked on November 07 at $42.15
Change since picked: + 0.06
Earnings Date 11/01/07 (confirmed)
Average Daily Volume: 10.5 million


Coca-Cola - KO - close: 62.62 change: +0.67 stop: 59.59

KO continues to rally. Investors bought the afternoon dip on Friday and KO closed at new multi-year highs. We do not see any changes from our Thursday night comments so we're reposting them here: Investors are worried about the U.S. economy and that seems to be driving money into more defensive names like KO. The stock has a bullish trend and traders have been buying the dips near $60.00. KO managed a new multi-year high today on above average volume. We're suggesting long positions now although readers certainly have a choice. You could wait for a new relative high to confirm the breakout from its $59.70-62.00 trading range or you could try and jump in on a dip into the $61.00-60.00 zone. Our end of year target is the $66.00-67.00 range. The bullish P&F chart suggests a $69 target.

Picked on November 15 at $61.95
Change since picked: + 0.67
Earnings Date 01/15/08 (unconfirmed)
Average Daily Volume: 8.3 million


UST Inc. - UST - close: 54.06 change: +0.34 stop: 51.99

We have to hand it to the bulls. They're still trying with UST. There's been a tug-of-war in UST over the past few days as the stock tries to breakout over resistance near $54.00 and its 200-dma. The bears have been putting up a fight. We are bullish with UST above $54.00 but readers will probably want to wait for another rally past $54.50 before initiating new positions. Our target is the $58.00-60.00 range. We would expect some short-term resistance near $56.00. The P&F chart is bullish with a $67 target.

Picked on November 14 at $54.41
Change since picked: - 0.35
Earnings Date 01/24/08 (unconfirmed)
Average Daily Volume: 1.0 million


Xilinx - XLNX - close: 22.97 change: -0.07 stop: 22.59

Both the SOX semiconductor index and the SMH holders hit new relative lows on Friday. The SMH managed a bounce back into the green by the closing bell. The SOX wasn't so lucky. Overall things are not shaping up well for the semis and XNLX is still stuck in a bearish trend. Bulls and bears are fighting it out as XLNX drifts toward support in the $22.70-22.60 range. Aggressive traders willing to take the risk will be tempted to buy this dip. We would suggest waiting for a breakout over the 10-dma near $23.35. We would consider this an aggressive, higher-risk play since XNLX is still in a short-term down trend. We would expect some resistance near $24.00. Our short-term target is the $24.90-25.00 range. More aggressive traders may want to aim higher. FYI: If you look at the weekly chart it almost looks like a bearish head-and-shoulders pattern, which is just another reason why we'd consider this higher-risk.

Picked on November 13 at $23.48
Change since picked: - 0.44
Earnings Date 01/17/08 (unconfirmed)
Average Daily Volume: 5.6 million

Short Play Updates

Amgen - AMGN - close: 55.49 change: +0.70 stop: 57.76

Hmm... AMGN displayed a little bit more relative strength than we were expecting. The rebound pushed shares almost to $56.00 before fading. A failed rally from here could be used as a new entry point but readers might want to wait for a drop under $55.00 as the actual entry for new shorts. More conservative traders may want to tighten their stops. Our target is the $50.15-50.00 mark. More aggressive traders could aim for the August lows. Our stop is a little bit wide, which makes this higher risk. Furthermore any time you play a biotech company there is a higher level of risk. You never know when there will be a positive or negative press release about some drug, some clinical trial or some news from the FDA or a rival that could send shares of a biotech stock gapping either direction.

Picked on November 11 at $54.28
Change since picked: + 1.21
Earnings Date 01/24/08 (unconfirmed)
Average Daily Volume: 10.4 million


Microchip Tech. - MCHP - cls: 30.76 change: +0.06 stop: 32.11*new*

Bears might want to turn a little bit more defensive here. MCHP has essentially traded sideways for four days in a row. This is starting to look like a potential short-term bottom. The overall trend is still bearish and the semiconductor sector is still hitting new relative lows. We warned readers that the $30.00 level is probably round-number support. We are going to adjust our stop loss to $32.11. We are not suggesting new shorts at this time. Our target is the $28.50-28.00 level. The P&F chart is bearish with a $19 target.

Picked on November 11 at $31.51
Change since picked: - 0.75
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume: 3.1 million


NVIDIA - NVDA - cls: 32.45 change: +0.71 stop: 35.05

After a week we're back to zero with NVDA. The weekly technicals have turned bearish but the short-term technicals suggest more of a bounce ahead. At the same time the semiconductor index and the SMH hit new relative lows on Friday. NVDA should have resistance in the $33-34-35 zone but if the NASDAQ can rebound we would expect NVDA to follow it. A failed rally near $34.00 or its 10-dma near $33.70 could be used as a new bearish entry point. NVDA Can be a volatile stock and we would consider this higher-risk. Conservative traders may want to use a tighter stop loss. Our target remains the 200-dma, currently near $27.50.

Picked on November 12 at $32.45
Change since picked: - 0.00
Earnings Date 11/08/07 (confirmed)
Average Daily Volume: thousand

Closed Long Plays

WMS Ind. - WMS - close: 33.54 chg: +0.15 stop: 32.39

We are suggesting readers exit early and cut their losses in WMS. The stock did bounce and it did rebound from Thursday's lows. Thus more aggressive traders might want to give WMS one more day to rebound and then exit. We would keep an eye on the stock for a breakout over $36 down the road.

Picked on November 08 at $36.11
Change since picked: - 2.57
Earnings Date 10/25/07 (unconfirmed)
Average Daily Volume: 630 thousand

Closed Short Plays


Premier Investor Play Update Archives