Option Investor
Play Updates

Tighten your stops, Take some profits!

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Play Editor's Note: The market's crash to new multi-year lows is extremely bearish. We are strongly suggesting readers take profits on all of our bearish plays, even those that have not yet hit our official exit targets. This is not the time to be opening a lot of new bearish positions. We're overdue for a snapback bear-market rally but that doesn't mean we won't see new lows first.


BULLISH Play Updates

Molson Coors Brewing - TAP - close: 42.52 change: -1.24 stop: 40.65

TAP displayed relative strength for most of the session. The stock hit new relative highs over $45.00 and was holding on to the $43.50-43.25 zone until very late in the day when the stock market just went into freefall. We are at risk for a plunge toward what should be support near $40.00. More aggressive traders may want to adjust their stop loss to under $40.00. Alternatively, more conservative traders may want to inch up their stops closer to $41.00. If the S&P 500 continues to crash there is not much that will save TAP from the market-wide panic selling. We are not suggesting new bullish positions at this time. 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.

Picked on November 19 at $43.55 *triggered       
Change since picked:     - 1.03   			
Earnings Date          02/12/09 (unconfirmed)    
Average Daily Volume:       1.8 million  


BEARISH Play Updates

Chemed Corp. - CHE - close: 36.69 change: -1.38 stop: 40.10 *new*

CHE closed on its lows for the day but the stock only lost 3.6%. That's almost half the percentage loss in the S&P 500. This sort of relative strength could make bears a little nervous even though CHE is now moving lower. We are dropping our stop loss to $40.10 and we're not suggesting new bearish positions at this time. My concern is the S&P 500 (the market) is so oversold that it will see a very sharp snapback rally at any time. I am eliminating the secondary target at $31.00 and we'll plan on exiting at our first target of $35.25. More aggressive traders may want to aim lower.

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.

Picked on November 15 at $39.93 
Change since picked:     - 3.18   			
Earnings Date          02/19/09 (unconfirmed)    
Average Daily Volume:       357 thousand    


J.C.Penney - JCP - close: 14.38 change: +0.83 stop: 16.55*new*

Target achieved. Retail stocks continue to slide. Shares of JCP hit an intraday low of $13.95. Our first target to take profits was at $15.05. We do have a secondary target at $11.00 but we strongly suggest readers take a majority of their position off the table. We're moving our stop loss down to $16.55. The weekly chart suggests some support near $14.00-14.50. The Point & Figure chart is bearish and forecasting an $8.00 target.

chart:
JCP

Picked on November 15 at $17.27 
Change since picked:     - 2.89   			
Earnings Date          02/13/09 (unconfirmed)    
Average Daily Volume:       7.4 million     


Juniper Networks - JNPR - close: 13.84 change: -0.20 stop: 15.01 *new*

I am very surprised that JNPR did not show more weakness than it did. The stock gapped open lower at $13.76, dipped to $13.29 and then bounced back. The bounce did fail under resistance at $15.00 but compared to the plunge in the S&P 500 today's session was a win for JNPR. We are dropping our stop loss down to $15.01. We are not suggesting new positions at this time. Our target is only $11.00. The P&F chart is forecasting a drop toward $10.00.

Picked on November 15 at $15.03 
Change since picked:     - 1.19   			
Earnings Date          01/22/09 (unconfirmed)    
Average Daily Volume:      12.9 million     


Pitney Bowes Inc. - PBI - close: 21.68 change: -1.04 stop: 23.15 *new*

PBI gapped open lower and then tried to rally higher a couple of times intraday. Shares eventually settled with a 4.5% loss after the market imploded into the closing bell. I am growing more concerned about the possibility of a widespread snapback, short-covering rally in the market. We are dropping the stop loss to $23.15 and we are eliminating the $18.00 target. We'll plan to exit at $21.00. More aggressive traders may want to continue to aim lower but keep a tight rein on your stops.

Picked on November 15 at $23.37 
Change since picked:     - 0.65   			
Earnings Date          02/05/09 (unconfirmed)    
Average Daily Volume:       2.1 million     


Staples Inc. - SPLS - close: 14.16 change: -1.10 stop: 15.51*new*

Exit alert! It's time to exit our play in SPLS. The stock sank to $14.14 this afternoon. Our exit target is $14.00. We think it's time to take profits and run after a 17% drop in the stock. Odds are very good that SPLS will hit our target at $14.00 tomorrow morning. Just in case it doesn't we're adjusting the stop loss to $15.51.

Picked on November 15 at $17.09 
Change since picked:     - 2.93   			
Earnings Date          12/02/08 (unconfirmed)    
Average Daily Volume:      13.4 million     


UnitedHealth Group - UNH - close: 16.30 change: -1.43 stop: 19.01*new*

UNH is down about 13.7% from our picked price. The stock looks poised to hit our target at $15.15 tomorrow. Just in case it doesn't we're moving the stop loss down to $19.01. More conservative traders may want to start scaling out of their positions right now. We're not suggesting new shorts.

Picked on November 17 at $18.89 
Change since picked:     - 2.59   			
Earnings Date          01/22/09 (unconfirmed)    
Average Daily Volume:      11.4 million     


CLOSED BEARISH PLAYS

iShares Germany - EWG - close: 14.30 change: +0.85 stop: 17.01

Target exceeded. The EWG actually gapped open lower at $15.04 and dropped to $14.55 shortly after the open. The ETF staged a bounce but it failed once it filled the gap. This ETF on the German market eventually settled with a 5.6% drop and hit an intraday low of $14.24. Our target to exit was $15.05.

chart:
EWG

Picked on November 15 at $16.71 /target hit $15.05 (low 14.24)
Change since picked:     - 2.41   			
Earnings Date          00/00/00 
Average Daily Volume:       1.0 million     


iShares S&P SmallCap 600 - IJR - close: 34.33 chg: -2.37 stop: 40.55

Target exceeded. Small caps continued to crash and the IJR slammed through the $35.00 level to close at new lows. Our target to exit was $35.50. The intraday low was $34.33.

chart:
IJR

Picked on November 15 at $40.35 /target hit 35.50
Change since picked:     - 6.02   			
Earnings Date          00/00/00 
Average Daily Volume:       2.9 million     


Northrop Grumman - NOC - close: 34.20 change: -2.60 stop: 41.01

Target exceeded. NOC continued to drop to new lows. The stock hit an intraday low of $33.96. Our target to exit was $35.50. I find it very interesting that volume was less than 20% of normal. If you did not exit we would use a very tight stop loss.

chart:
NOC

Picked on November 15 at $40.34 /target hit 35.50 (low: 33.96)
Change since picked:     - 6.14   			
Earnings Date          01/22/09 (unconfirmed)    
Average Daily Volume:       3.6 million     


Market Vectors Steel ETF- SLX - cls: 20.23 change: -3.14 stop: 27.05

Target achieved. The steel stocks continued to crash and the SLX lost more than 13% to hit new relative lows. The intraday low was $20.19. Our target to exit was $21.00.

chart:
SLX

Picked on November 15 at $27.39 /target achieved 21.00
Change since picked:     - 7.16   			
Earnings Date          00/00/00 
Average Daily Volume:       459 thousand    


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