Long Play Updates
Basic Energy Services - BAS - cls: 28.10 chg: -1.13 stop: 27.59
News that hurricane Gustav had weakened as it approached the coast and that the storm may not have done as much damage as previously expected sent oil and natural gas plunging lower. When the market opened this morning all the energy stocks either spiked or gapped lower. BAS was no exception except the selling stalled near support around $28.00-27.75 and its 100-dma and 50-dma. This support might hold or it might be a speed bump on the way down. At this point it looks like oil is headed lower and that should have more conservative traders looking for an early exit right here. We are not going to exit just yet but we're not suggesting new bullish positions either. Our target on BAS is $31.50. FYI: The most recent data listed short interest at 7% of the small 21.7 million-share float.
Picked on August 26 at $28.34
Kansas City South - KSU - close: 51.02 change: -0.41 stop: 49.95*new*
Railroad stocks rallied this morning with the rest of the market and then plunged with the rest of the market. Today's move in KSU is bearish but if we can find a silver lining it was bulls buying the dip near $50.50 this afternoon. We are raising our stop loss to $49.95. We would buy this dip. Our target is the $54.90-56.00 range. FYI: The P&F chart is still bearish from the August correction. Calendar note: KSU is due to present at an investor conference on September 4th.
Picked on August 28 at $51.41
Monster Worldwide - MNST - cls: 19.97 chg: +0.43 stop: 18.94
Believe it or not MNST continues to show relative strength. Traders bought the midday dip near $19.60 and MNST almost closed over round-number resistance at $20.00. We are not suggesting new positions. The technical picture is actually mixed and not much help at the moment. We do have two targets. Our first target is $20.80, just under the August resistance. Our second target is $21.75.
Picked on August 20 at $19.11
Short Play Updates
Genuine Parts - GPC - cls: 42.62 chg: +0.20 stop: 44.01
It was a volatile day in the markets and GPC was no exception. The stock gapped open higher with the market but the rally stalled at resistance near $44.00 and then reversed lower. This definitely looks like a bearish double-top pattern but readers may want to wait for a new decline under $42.00 before initiating new short positions. After the bell GPC announced it was buying Drago Supply Company but we didn't see any significant after hours reaction to the news. Our target is the $38.50 mark. More aggressive traders may want to aim lower. The P&F chart is bearish with a $28 target. We don't see any significant levels of short interest.
Picked on August 31 at $42.42
Kimberly-Clark - KMB - cls: 62.88 chg: +1.20 stop: 63.51
KMB rallied to technical resistance near its exponential 200-dma and its previous August peak and then ran out of gas. Aggressive traders might consider shorts here. We are sticking to our plan. We are suggesting a trigger to short KMB at $60.75. More conservative traders may want to use a stop loss above last Thursday's high of 62.84. If we are triggered at $60.75 our target is the $56.00 mark. We do not see any significant short interest. The Point & Figure chart is bearish with a $54 target.
Picked on August xx at $xx.xx <-- see TRIGGER
Merck - MRK - close: 34.83 change: -0.84 stop: 36.85
Concerns that Vytorin might be linked to an increase in cancer was not good news for MRK. Shares dropped 2.3% and look poised to move lower. We don't see any changes from our weekend comments and could still consider new bearish positions here. We're suggesting a stop loss a $36.85. More aggressive traders may want to use a stop loss above the 100-dma near $37.00. Our target is the $32.00 level. More aggressive traders may want to aim for $30.00. The P&F chart is bearish and points to a $23 target. We don't see any significant amounts of short interest.
Picked on August 31 at $35.67
Rockwell Autom. - ROK - close: 47.14 chg: -0.07 stop: 50.05
ROK was unable to avoid the market volatility. Shares gapped open, spiked to $48.92 and then gave it all back. We don't see any changes from our weekend comments. However, more conservative traders may want to place their stop loss above today's high near $49.00. More conservative traders may want to wait for a breakdown under short-term support near $46.00 as a new entry point. If we don't see a break under $46.00 soon we'll abandon the play early. Our target is $43.00. More aggressive traders may want to aim lower ($41-40). The P&F chart is actually still bullish from the summer rebound. Short interest is at 2.2% of the float.
Picked on August 31 at $47.21
Closed Long Plays
AMR Corp. - AMR - close: 11.50 change: +1.17 stop: *see details*
We are giving up on AMR as a bullish play for now. It was our plan to buy a dip in AMR near $8.00 and then ride the bounce higher. If crude oil had risen more sharply ahead of hurricane Gustav last week we probably would have done okay. Of course Gustav could have strengthened and hit the oil facilities a lot harder over the weekend and then oil could have soared higher instead of cratered and that would have been bad news for the airlines. As it stands now oil is falling and the airlines are set to climb. Nimble traders might want to try catching a dip in the $10.75-10.50 zone as a possible bullish entry point. We are dropping AMR as a bullish candidate with the play unopened. FYI: Today's move looks like a breakout from a bull flag pattern.
Picked on August xx at $xx.xx *never opened
CNX Gas - CXG - cls: 29.26 chg: -1.08 stop: 29.90
It was a rough day for energy stocks as crude oil and natural gas got hammered. Shares of CXG gapped open lower at $29.42. This was under our suggested stop loss at $29.90 so the play would have been closed at the open.
Picked on August 21 at $31.05 *stopped out/gap open lower 29.42
Hornbeck Offshore - HOS - cls: 38.79 change: -5.27 stop: 41.45
Ouch! Shares of HOS had been creeping higher last week ahead of hurricane Gustav. The company was expected to be a beneficiary as oil companies called on HOS to help rebuild from the damaging storm. Over the weekend we were led to believe that Gustav did not do as much damage as anticipated. Crude oil plunged on the news. HOS gapped open lower at $42.84 and then crashed to a new relative low losing almost 12% on the session. The stock hit our stop loss at $41.45. There are currently three more hurricanes currently headed our direction over the next couple of weeks so keep an eye on HOS.
Picked on August 26 at $43.10 /stopped out 41.45
Closed Short Plays
NYSE Euronext - NYX - cls: 40.40 chg: -0.19 stop: 41.51
The NYX ended the day in the red but that didn't help us. This morning's widespread market bounce fueled a pop in NYX. The stock opened at $41.39 and hit $42.30 before reversing. Our stop loss was at $41.51 so the play has been closed. The long-term trend in NYX is still bearish so we'd keep an eye on it.
Picked on August 25 at $39.41 /stopped out 41.511