Option Investor
Play Updates

One play triggered on the breakout. The rest still in wait mode.

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Play Editor's Note: The late-day sell-off in stocks only confirms that we're still stuck in a downtrend. I'd love for the market to find a bottom but it looks like stocks may have to retest their lows again. At the very least I would expect a 50% retracement of the bounce.

Check out these stocks:
TYC's failed rally under resistance at $25.00 looks like a bearish entry point.
FCX also has a failed rally under resistance at $30.00, which looks like a bearish entry point.
JNPR has a failed rally under $19.50.
HIG's failed rally is worse with a strong trend of lower highs. If I had more time I would have added HIG as a short with a stop loss at $21.50 and a target of $16.50 (maybe a secondary target even lower).

____________ BULLISH Play Updates ____________

Broadcom - BRCM - close: 16.84 change: -0.91 stop: 14.90 *new*

After out performing the market earlier this week BRCM under performed the market all day today. Shares closed down about 5% and look poised to drop toward the $16.00-15.75 zone. We are upping our stop loss to $14.90. 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: + 0.74
Earnings Date 10/21/08 (confirmed)
Average Daily Volume: 14 million

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Ingersoll-Rand - IR - close: 17.02 change: -0.93 stop: 14.45 IR under performed the market all day and struggled with resistance near $18.00 for the entire session. We are reiterating our plan to buy a dip in the $15.50-15.00 zone. If triggered we have two targets. Our first target is $19.50. Our second target is $22.50.

FYI: More nimble traders could try and short IR right here with a stop loss at $18.05 and a target near $15.00.

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: 36.64 change: +0.54 stop: 24.90

Bulls were probably encouraged to see NUE close with a gain on Wednesday but the stock failed to rally past resistance near $38.00. Aggressive traders might want to consider bearish short positions now with a stop loss at $38.10 and a $31.00 target. We are going to patiently wait for the bullish entry point on a dip in the $28.00-26.00 zone although if we see another bounce in the $31-30 range we might have to alter our strategy. If triggered at $28.00 we have two targets: $34.50 and $39.50.

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: 55.02 change: -0.15 stop: 52.35*new*

Be careful here! WMT broke through resistance near $56.00 and its 200-dma and hit our alternative entry point to buy the stock at $56.25. Unfortunately, the rally topped out at $56.80 and WMT quickly retreated back under resistance. This looks like a failed rally pattern, which is bearish. The newsletter is officially long WMT but given the market volatility I don't have a lot of confidence in the move. I would not be the least bit surprised to get stopped out tomorrow. Trading in this market environment is tough! More conservative traders may want to limit their risk by raising their stops toward the $53.00 region. Our first target is $59.95. Our second target is $63.00.

chart:
WMT

Picked on October 29 at $56.25 *triggered
Change since picked: - 1.23
Earnings Date 11/13/08 (unconfirmed)
Average Daily Volume: 25 million

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____________ BEARISH Play Updates ____________

PetsMart - PETM - close: 19.14 change: +0.87 stop: 20.05

PETM turned in another strong move higher. Shares rallied to $19.91 and almost broke resistance at $20.00 but the market reversed late in the day and PETM followed. The general trend suggests the pattern remains bearish and today's move could be another entry point for bearish positions. Our target is $15.05.

Picked on October 26 at $18.53
Change since picked: + 0.61
Earnings Date 11/19/08 (confirmed)
Average Daily Volume: 3.3 million

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