Play Editor's Note: The market's sell-off is picking up speed and there is a growing camp of investors and analysts that do not believe the October lows will hold this time. While we agree with this view we would use today's decline as an opportunity to start taking profits in our bearish plays. Several are getting very close to our targets. We have tighten stops on all of our remaining short plays.
Molson Coors Brewing - TAP - close: 43.76 change: +0.73 stop: 40.65
TAP continues to show relative strength. The stock broke out over resistance and hit our trigger to get long at $43.55. Even more impressive the stock actually closed with a gain. While we are encouraged by this show of strength we would hesitate to open bullish positions in this market environment but if we had to this would be a good candidate. We still suggest readers trade small.
Our target is the $49.50 mark. However, we have to point out that the 100-dma and the exponential 200-dma could be overhead resistance. Currently the Point & Figure chart is bullish with a $56.00 target.
Chemed Corp. - CHE - close: 38.07 change: -1.86 stop: 41.75 *new*
CHE broke down under its remaining moving averages and closed on its lows of the day with a 4.6% loss. We don't see any changes from our previous comments except for a new stop loss at $41.75.
We have two targets. Our first target is $35.25. Our second target is $31.50.
FYI: It is important for traders to note that CHE's short interest is about 9.5% of the 21.4 million-share float. That is a relatively high amount of interest and a very small float. Together they raise the risk of a short squeeze. Consider this a higher-risk play.
iShares Germany - EWG - close: 15.15 change: -1.25 stop: 17.01 *new*
The German market ETF lost 7.6% and is very close to our target at $15.05. Close enough that we would start exiting the position now. We're adjusting the stop loss to $17.01. We would not open new positions.
The October low was $14.75. We're aiming for $15.05. More aggressive traders may want to aim lower.
iShares S&P SmallCap 600 - IJR - close: 36.70 chg: -3.23 stop: 40.55*new*
The small cap stocks continue to under perform the rest of the market. The IJR lost more than 8% to close at new multi-year lows. We are adjusting the stop loss to $40.55. Readers will want to seriously consider some profit taking right here. We're not suggesting new shorts.
Our target is $35.50. The Point & Figure chart is bearish with a $17.00 target.
J.C.Penney - JCP - close: 15.21 change: -1.25 stop: 18.25*new*
JCP lost more than 7.5% today and shares are down more than 10% from our picked price. The retailers continue to get crushed as investors worry about how severe the recession will be. We are dropping our stop loss to $18.25. At this time we strongly suggest readers start taking some money off the table. We're not suggesting new positions.
We have two targets. Our first target is $15.05 since the $15.00 mark might offer some psychological support. Our second, much more aggressive target is $11.00. Again, the $10.00 level could offer round-number support. The weekly chart suggests some support near $14.00-14.50. The Point & Figure chart is bearish and forecasting an $8.00 target.
Juniper Networks - JNPR - close: 14.04 change: -0.62 stop: 15.75 *new*
JNPR wasn't hammered as hard as the NASDAQ or the NWX networking index but the trend was definitely bearish. Traders quickly sold the late afternoon bounce and JNPR closed on its lows. We are adjusting our stop loss to $15.75. We would not open new positions at this time. Our target is only $11.00. The P&F chart is forecasting a drop toward $10.00.
Northrop Grumman - NOC - close: 36.80 change: -2.31 stop: 41.01 *new*
The DFI defense sector index sank to new multi-year lows. Shares of NOC were helping lead the sector lower. NOC lost 5.9% and closed under its October intraday low. The sell-off is definitely picking up speed. Please note that we're adjusting the stop loss to $41.01. We're not suggesting new positions at this time. Our target is $35.50. More aggressive traders may want to aim lower.
Pitney Bowes Inc. - PBI - close: 22.72 change: -0.86 stop: 24.25 *new*
The sell-off in PBI seemed a little bit more orderly than the movement witnessed in the indices. The trend remains unchanged. We're adjusting our stop loss to $24.25. Unlike most of the stocks on the newsletter tonight we would still consider new shorts here. The Point & Figure chart is extremely bearish with a $6.00 target.
Our first target is $21.00 and we suggest that readers exit the majority of their position here. We are setting an aggressive, secondary target at $18.00.
Market Vectors Steel ETF- SLX - cls: 23.37 change: -2.71 stop: 27.05*new*
The SLX steel sector ETF lost more than 10% and closed at new all-time lows. We are adjusting the stop loss to $27.05. We are strongly suggesting that readers start taking profits here immediately. Don't wait for the SLX to hit our target at $21.00. The P&F chart is bearish with an $18.00 target.
Staples Inc. - SPLS - close: 15.26 change: -1.68 stop: 17.75*new*
The sell-off in SPLS is definitely picking up speed. The MACD on its daily chart produced a new sell signal following today's 9.9% decline. We're moving our stop loss down to $17.75. Our target is $14.00. The October lows were near $13.60.
UnitedHealth Group - UNH - close: 17.73 change: -1.30 stop: 20.51*new*
There was a little bit of follow through on yesterday's afternoon bounce but the rally attempt stalled out near the $19.50 zone. Shares eventually closed under short-term support at $18.00. We are adjusting the stop loss to $20.51. Our target is the $15.15 mark. The October low was $14.51 and the $15.00 level might offer some support.