Option Investor
Play Updates

Breaking Support

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Play Editor's Note: It proved to be an ugly day with a large number of stocks breaking support levels. It doesn't bode well for tomorrow. Keep your eye on the S&P 500 that settled right on support near its October lows. This is either a set up for new bearish plays on a breakdown or new bullish plays on a bounce. At the moment Intel's comments after hours are pushing futures lower so look for a breakdown.


BULLISH Play Updates

Anadarko Petroleum - APC - close: 35.16 change: -2.64 stop: 34.75*new*

We warned readers last night to expect a drop toward $36.00-35.50 and APC actually overshot to the downside with an intraday low of $34.87. Shares ended the day down about 7%. While APC is testing support near $35.00 I don't have a lot of confidence that it will hold.

More conservative traders will want to exit early immediately. We're raising the stop loss to $34.75 under today's low. The worst case scenario for us tomorrow would be a gap down at the open. We're not suggesting new positions at this time.

Picked on November 10 at $38.36 *triggered/gap higher entry
Change since picked:     - 3.20   			
Earnings Date          11/03/08 (confirmed)    
Average Daily Volume:      10.7 million     


BEARISH Play Updates

Chipotle Mexican Grill - CMG - close: 42.20 change: -2.48 stop: 47.55*new*

CMG is off to a good start with a 5.5% decline. Remember, we're suggesting readers take most of their position off the table at $40.25 since the $40.00 level looks like it could be big support. The way things are shaping up after hours the market could spike down sharply tomorrow morning and CMG could hit our target early on. We are adjusting our stop loss to $47.55.

We're setting a secondary target because until the trend changes CMG forecasting a much lower price. Our secondary target is $35.50.

Important! Traders should note that CMG has a high amount of short interest. The most recent data listed short interest at almost 35% of the 31.9 million-share float. That is a large amount of short interest and a small float, which is traditionally a recipe for a short squeeze.

Picked on November 11 at $44.68 
Change since picked:     - 2.48   			
Earnings Date          02/12/09 (unconfirmed)    
Average Daily Volume:       752 thousand    


Capital One Financial - COF - close: 30.04 change: -2.01 stop: 33.05

Our new play on COF is now open. The stock dipped to $29.52 before paring its losses. Our plan was to short it at $29.75, which is a new multi-year low and a breakdown under significant support at $30.00.

Granted the stock looks extremely short-term oversold but there is nothing to stop it from growing more oversold. Even news that the government might use some of its TARP money for credit card companies failed to fuel any buying in COF.

We have two targets. Our first target is $25.50 because there is some support near $25.00 back in 2003-2002. Our secondary target is the $22.50 mark. More aggressive traders may want to aim for $20.00.

This is a very volatile stock that can see $10 swings in just a couple of days. Readers should consider this a very high-risk play.

chart:
COF

Picked on November 12 at $29.75 *triggered       
Change since picked:     + 0.29   			
Earnings Date          01/22/09 (unconfirmed)    
Average Daily Volume:      12.8 million 


Plains All American Pipeline - PAA - close: 34.39 chg: -2.77 stop: 40.05

As expected shares of PAA continued to fall. The stock lost 7.4% and closed on its lows for the session. We would not chase the stock here. More conservative traders might want to adjust their stops toward $38.00 or $37.50. We're leaving our stop at $40.05 for now.

Our first target is $31.00. Our secondary target is $27.00. This play may take a few weeks to occur.

Picked on November 11 at $37.16 
Change since picked:     - 2.77   			
Earnings Date          02/12/09 (unconfirmed)    
Average Daily Volume:       647 thousand    



CLOSED BULLISH PLAYS

Ameron Intl. Corp. - AMN - close: 41.48 change: -6.31 stop: 44.45

Ouch! AMN delivered a terrible day. The stock gapped down to open at $46.47 and then plunged to a 13.2% loss. We did not see anything specific in the news to account for such a terrible pounding. Shares quickly hit our stop loss at $44.45.

At this point it might pay off to watch AMN for a failed rally near $45.00 and then short it with a target in the $37-35 zone.

chart:
AMN

Picked on November 09 at $48.17 /stopped out 44.45
Change since picked:     - 6.69   			
Earnings Date          01/26/09 (unconfirmed)    
Average Daily Volume:       176 thousand   


Chesapeake Energy - CHK - close: 20.13 change: -2.23 stop: 21.75

It was another ugly day for CHK. The stock quickly broke short-term support near $22.00 and hit our stop loss at $21.75. CHK eventually ended down 9.9% near round-number support at $20.00. If CHK closes under $20.00 it might be a signal that shares are destined to retest their October lows.

chart:
CHK

Picked on November 09 at $23.39 /stopped out 21.75
Change since picked:     - 3.26   			
Earnings Date          10/30/08 (confirmed)    
Average Daily Volume:      36.5 million     


Perdigao S.A. - PDA - close: 29.08 change: -2.17 stop: 29.49

PDA suffered some heavy profit taking on Wednesday with a 6.9% drop and a breakdown under support in the $30.00-29.50 zone. Shares hit our stop loss at $29.49 closing the play. PDA has now produced a short-term bearish head-and-shoulders pattern that is forecasting a decline toward the $25.00 level. A failed rally near $30.00 may be a new entry point for bearish positions.

chart:
PDA

Picked on November 10 at $32.00 *stopped out 29.49   
Change since picked:     - 2.92   			
Earnings Date          10/28/08 (unconfirmed)    
Average Daily Volume:       245 thousand    

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