Option Investor
Play Updates

Semis sink, meanwhile two new plays are triggered

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Play Editor's Note: I would be cautious here. A large number of stocks and indices produced bearish engulfing candlesticks after Friday's inside day. The afternoon bounce was encouraging but overall Monday has painted a bearish shadow on the week.

BULLISH Play Updates

Ameron Intl. Corp. - AMN - close: 48.55 change: +0.38 stop: 44.45

Action in AMN mirrored the market. The stock gapped higher, faded lower throughout most of the day and eventually bounced in the last hour. Fortunately for AMN the stock displayed some relative strength and closed with a gain. While we don't see any changes from our previous comments it might pay off to wait and watch for a dip into the $46.00-45.00 zone as a new entry point before initiating positions.

We are setting two targets. Our first target is $54.50. Our second target is $57.50. The stock has an extremely small float and while short interest isn't too big at 5% of the float it could be a catalyst if bears decide to cover.

Picked on November 09 at $48.17 
Change since picked:     + 0.38   			
Earnings Date          01/26/09 (unconfirmed)    
Average Daily Volume:       176 thousand   

Anadarko Petroleum - APC - close: 38.15 change: +1.82 stop: 33.99

We were expecting APC to move higher but we were not expecting the stock to gap open at $38.36. Our suggested entry point to buy APC was at $37.25. The play would have opened first thing this morning.

Driving oil stocks higher was a very volatile day in crude oil, which also gapped higher, dipped to a new low and then bounced back again. The Chinese stimulus news drove oil higher on thoughts Chinese might see an increase in demand. That eventually faded.

Overall APC displayed a lot of relative strength. The intraday dip found support at $36.85, very near the prior resistance and what should now be support at $37.00.

We would consider new bullish positions here but you may want to tighten your stop loss. Our stop is at 33.99 for now.

We have two targets. Our first target is $39.95. Our second target is $42.50 or the simple 50-dma, whichever one the stock hits first.

FYI: Monday's move over $37.00 produced a brand new Point & Figure chart buy signal with a $54.00 target.


Picked on November 10 at $38.36 *triggered/gap higher entry
Change since picked:     - 0.21   			
Earnings Date          11/03/08 (confirmed)    
Average Daily Volume:      10.7 million     

Chesapeake Energy - CHK - close: 23.67 change: +0.28 stop: 21.75

CHK continues to see a bullish pattern of higher lows. Traders bought the dip twice today albeit on low volume. We don't see any changes from our weekend comments.

Our target is $27.75. More aggressive traders may want to aim for $30.00 or its 50-dma. Traders should take note of the trendline of resistance currently near the simple 40-dma. You may want to tighten up your stop loss as CHK nears that trendline.

Picked on November 09 at $23.39 
Change since picked:     + 0.28   			
Earnings Date          10/30/08 (confirmed)    
Average Daily Volume:      36.5 million     

FMC Corp. - FMC - close: 44.02 change: -0.13 stop: 40.85

FMC held up reasonably well after the morning gap higher faded away. Our concern today is the new lower high. If we redraw the trendline and ignore the September 19th spike then FMC just produced a failed rally at resistance, which is bearish. Traders may want to tighten their stop loss significantly. If you are looking for a new entry point then wait for a dip to and bounce from the $42.50 region.

Our target is $48.85. More aggressive traders may want to aim higher but the $50.00 mark and its 50-dma could be tough resistance to break. FYI: The Point & Figure chart is bullish with a $90 target.


Picked on November 09 at $44.15 
Change since picked:     - 0.13   			
Earnings Date          10/28/08 (confirmed)    
Average Daily Volume:       1.8 million     

Corning Inc. - GLW - close: 9.95 change: -0.46 stop: 9.75

In "Monty Python and the Holy Grail" there is a scene where the knights all cry out, "Run away!" That's what today's action in GLW is screaming, "run away!" The stock gapped higher and then crashed back to earth painting yet another bearish engulfing candlestick pattern. The stock came close but did not break support at $9.80.

More conservative traders, if you opened positions today, may very well want to run away and cut their losses. We are going to hold on and see if support will stick. If GLW breaks down under $9.80 then readers might do well to consider bearish strategies and target the $8.00 or $6.00 levels.

I would wait for a new move over $10.25 before considering new bullish positions. Our first target is $11.70. We'll set a secondary, more aggressive target at $13.00 but the $12.00 region could be rough level for the stock to break.

Picked on November 09 at $10.41 
Change since picked:     - 0.46   			
Earnings Date          10/29/08 (confirmed)    
Average Daily Volume:      23.7 million     

Perdigao S.A. - PDA - close: 33.31 change: -0.99 stop: 29.49

Our plan was to buy a dip in PDA in the $32.00-30.00 zone and shares complied. The stock slipped to $31.50 before paring its losses. More conservative traders may want to inch up their stops closer to the $30.00 level. We don't see any further changes from our weekend comments.

Our first target is $36.00. Our second target s $39.50. We'll need to keep an eye on the 50-dma, which may be overhead resistance. FYI: The Point & Figure chart is bullish with a $54 target.


Picked on November 10 at $32.00 *triggered on the dip
Change since picked:     + 1.31   			
Earnings Date          10/28/08 (unconfirmed)    
Average Daily Volume:       245 thousand    


Lam-Research - LRCX - close: 19.94 change: -1.10 stop: 19.95

The SOX semiconductor index continued to sink to new two-week lows and LRCX followed suit. The stock fell through what should have been round-number, psychological support at $20.00 and hit our stop loss at $19.95. At this point readers will want to watch for failed rallies as potential bearish entries with a target of the October lows.


Picked on November 06 at $22.00 *triggered     	
Change since picked:     - 2.06	  
Earnings Date          10/22/08 (confirmed)
Average Daily Volume:       4.0 million   

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