Option Investor
Play Updates

Stops, stops and more stops

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Play Editor's note: Gosh, it was only yesterday that I warned we were at a severe risk for a short-covering rally. That's all today was - short covering. It's a bear-market rally. Trade defensively and trade with smaller positions. Generally speaking, traders need to spend more energy on managing our risk than anything else. I'm not adding any new plays tonight but I'll be watching with an expectation for the rally to fizzle here in a day or two.

---------------------- BULLISH Play Updates ----------------------

Broadcom - BRCM - close: 17.75 change: +1.36 stop: 14.49

BRCM was already out performing the market and today shares soared almost 8.3%. The stock is up more than 10% from our picked price. It might be time for readers to start taking some money off the table. We're not suggesting new positions at this time. Our target is $19.50.

Picked on October 24 at $16.10 *triggered 10/24
Change since picked: + 1.65
Earnings Date 10/21/08 (confirmed)
Average Daily Volume: 14 million

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Ingersoll-Rand - IR - close: 17.95 change: +1.94 stop: 14.45

It was a frustrating day for our IR play. Our plan was to buy a dip at $15.50. The stock slipped to $15.54 and then rallied more than 15% off its lows. At this point it looks like we may have missed the move. We're not suggesting readers chase this gain. If IR's rally continues tomorrow we'll re-evaluate our strategy.

Picked on October xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/24/08 (confirmed)
Average Daily Volume: 4.8 million

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Nucor - NUE - close: 36.10 change: +4.46 stop: 24.90

We've seen this movie before. NUE dips toward $30.00 and then rallies 20% off its lows of the day. Actually this is the second time in less than a week that NUE has produced these kinds of moves. We wanted to buy an even more attractive entry point around $28.00. Looks like that may not happen any time soon. More aggressive traders may want to consider buying a breakout over $37.50. We are going to wait and watch instead of trying to chase this move.

Picked on October xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/22/09 (unconfirmed)
Average Daily Volume: 9.7 million

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Wal-Mart - WMT - close: 55.17 change: +5.50 stop: 41.95

With Monday's close under the $50.00 level, the first time in months that has happened, odds of WMT testing support in the $44 zone were growing sharply. That may have ended today. The stock screamed higher Tuesday afternoon with an 11% gain. Shares rallied right to resistance near $55 and its 200-dma. We had two entry points. One was to buy WMT at $45.00. Our second was to buy WMT at $56.25 on a breakout higher. Shares might hit entry #2 tomorrow. If triggered at $56.25 our stop will be $52.35. Our first target will be $59.95. Our second target will be $63.00.

Picked on October xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/13/08 (unconfirmed)
Average Daily Volume: 25 million

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---------------------- BEARISH Play Updates ----------------------

PetsMart - PETM - close: 18.30 change: +0.78 stop: 20.05

If today's 10% rally in the markets wasn't enough to put a bear on the defensive the action in PETM has created a "hammer" style bullish reversal pattern. The stock dipped to $16.73 before bouncing back on decent volume. More conservative traders will want to strongly consider an early exit right here. We are not suggesting new positions. The question is whether or not PETM can rally through resistance near $19.00 and again near $20.00. Our target is $15.05.

Picked on October 26 at $18.53
Change since picked: - 0.23
Earnings Date 11/19/08 (confirmed)
Average Daily Volume: 3.3 million

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---------------------- CLOSED PLAYS ----------------------

Expeditors Intl. - EXPD - cls: 30.29 change: +2.83 stop: 30.15

The extremely widespread short-covering rally lifted EXPD more than 10% and the stock hit our stop loss at $30.15 ending this play. Believe it or not, in spite of today's move, the trend and pattern remains bearish.

chart:
EXPD

Picked on October 26 at $28.19 /stopped out 30.15
Change since picked: + 2.10
Earnings Date 11/04/08 (confirmed)
Average Daily Volume: 3.0 million

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GameStop - GME - close: 28.91 change: +3.70 stop: 26.85

The consumer confidence numbers came in at their worst levels in history and yet retailers rallied sharply. GME actually gapped open higher at $25.97 and hit our stop loss at $26.85. The overall trend remains bearish. Wait to see where this rally fails.

chart:
GME

Picked on October 27 at $25.97 /gap open entry/stopped out 26.85
Change since picked: + 3.70 /originally listed at 25.21
Earnings Date 11/20/08 (unconfirmed)
Average Daily Volume: 3.3 million

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Marvel Enter. - MVL - close: 30.74 chg: +2.14 stop: 30.25

Shares of MVL were upgraded this morning, which helped the stock gap open higher. Yet the trend was down and MVL hit new relative lows before the market's short-covering rally began. Shares eventually hit our stop loss at $30.25.

chart:
MVL

Picked on October 26 at $29.07
Change since picked: + 1.67 /stopped out 30.25
Earnings Date 11/04/08 (confirmed)
Average Daily Volume: 880 thousand

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Pantry Inc. - PTRY - close: 19.84 change: +1.73 stop: 18.65

The good news is we avoided the huge spike higher in PTRY this afternoon. The bad news is we avoided it because shares hit our stop loss at $18.65 early this morning. We had a tight stop on purpose. The stock actually opened at $18.30 so our loss is even less.

chart:
PTRY

Picked on October 27 at $18.11 /stopped out 18.65
Change since picked: + 1.73
Earnings Date 11/20/08 (unconfirmed)
Average Daily Volume: 591 thousand

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Wal-Mart - WMT - close: 55.17 change: +5.50 stop: 54.15

Right about now we're wishing we'd taken some money off the table yesterday. Our WMT short was up more than $4.00. That quickly reversed today. Shares gapped open at $51.00 and eventually soared to an 11% gain. The rally in WMT stalled right at resistance near $55.00 and its 200-dma. Brave traders may want to consider new shorts with a stop loss just above $56.00. The stock ended our play when it hit our stop loss at $54.15.

chart:
WMT

Picked on October 19 at $53.77
Change since picked: + 1.40 /stopped out 54.15
Earnings Date 11/13/08 (confirmed)
Average Daily Volume: 25.5 million

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