BULLISH Play Updates
Bally Technologies - BYI - close 32.30 change -0.05 stop 31.72 *NEW*
Target(s): 32.95, 33.95, 34.95, 35.70
Key Support/Resistance Areas: 37.50, 36.75, 35.75, 34.00, 32.50
Current Gain/Loss: -5.83%
Time Frame: Several Weeks
New Positions: No
7/30: BYI opened at our stop of $31.84 so we must let the opening range resolve itself prior to executing the stop. This is a stop rule we have utilized in the past and I suggest all readers use. Essentially, when a stock gaps open near or below a predetermined stop let the first 15 or 30 minute opening range close. Then place the protective stop below the range for long positions. For short positions place the stop above the range. This provides a better measure of the true strength or weakness in the stock and often times will keep you in the position looking for a better exit. Considering the current volatile conditions this rule is a must have. It worked perfectly in BYI today and keeps us fighting another day. BYI recovered nicely and our targets should come into play prior to our new stop of $31.72 getting hit, which is below today's low. I've also adjusted the targets slightly. If BYI can find its footing here and equities are strong next week the stock find its way up to the $34.00 level.
7/29: The blood bath has continued in BYI and the stock is approaching our stop which is about 50 cents lower. I am continuing to adjust here and it appears this play will be a loser. $33.00 is an added target which is near an intraday support/resistance area. This is good place to tighten stops to see if we can get more out of the position. The set-up failed so it is prudent to look for the best exit to protect capital, even that is a loss.
7/28: BYI got hammered as a result of IGT's (down -10%) earnings report as mentioned in yesterday's updates. The stock didn't even pause at its $34.00 support level so this has me a little concerned. The stock has now pulled back all the way to its 20-day SMA and tested the backside of the downtrend line that it broke out of on Monday. The stock has support in this area and is a logical place for it turn back higher, but considering today's events it is prudent to stay nimble and adjust. As such, I have added a $33.95 as a target which just below the $34.00 support level. This is a good place to consider tightening stops to protect capital. Exiting positions here would mean a loss but it may be the smart thing to do. I've adjusted the targets above and lowered the stop to $31.84 to account for a gap higher on 7/22. Often times gaps tend to fill and reverse quickly and if BYI is going to do this I don't want to be taken out. Once the stock finds its footing it should trade up towards our targets.
Current Position: Long BYI stock, entry was at $34.30
Options Traders: September $35.00 CALL
Entry on July
Earnings 8/12/10 (unconfirmed)
Average Daily Volume: 1.38 million
Listed on July 26, 2010
ProShares UltraShort 20 YR Treasury - TBT - close 35.85 change -1.10 stop 34.25
Target(s): 36.90, 37.50 (hit), 38.00, 39.25, 40.50, 41.95
Key Support/Resistance Areas: 42.00, 41,00, 39.70, 38.25, 37.55, 34.65
Current Gain/Loss: -1.81%
Time Frame: Several Weeks
New Positions: Yes
7/30: The price action in bonds on Friday has me scratching my head in amazement. Bond yields tanked and bond prices surged (i.e. money was flowing into the bond market as traders were snatching up bonds at ridiculously low yields) which caused TBT to gap lower and close -2.98% on the day. This was an uncharacteristic huge move and is not normal. What's more interesting is that bonds never gave anything back throughout the day as equities surged higher on Friday morning after their gap lower. One of the two following scenarios has got to give here and the tone should be set in trading on Monday. Either money will flow out of stocks and into bonds creating a big sell off in equities (bad for TBT) or money will flow out of bonds and into equities creating a rally in equities (good for TBT). Medium to longer term I am bearish on equities but in the short term I think the latter is going to happen and we will see stocks rally, or at least hold up, with money flowing out of bonds. This will get our position in TBT moving back in the right direction. I really like new positions in TBT at these levels as well. Looking at a longer term weekly chart of bond prices (i.e. /ZN or TLT) one might think bonds have room to run to their fall 2008/spring 2009 highs. But this was the financial crises and money markets were failing and there is simply no crises like that right now. The other side of that argument is that maybe we are on the verge of a crises and we should listen to what the bond market is telling us. While I believe another crises is bound to happen I'm just not buying that argument quite yet. I believe there can be a sell-off in equities without a surge higher in bond prices or drop in yields. Nonetheless, we have to manage the trade and $36.90 is a level readers may want to consider exiting TBT. This would close the gap lower from today while also booking a winning trade. In the end, I think today's sell-off in TBT was an anomaly that will either be corrected early next week or we are on the verge of a bigger sell-off in equities. Unfortunately, today provided us very few clues as to what will happen. The above targets can be used as guide to tighten stops or simply take profits.
7/29: TBT shot right up to its 50-day SMA this morning and then backed off closing nearly unchanged. The $37.50 to $38.00 area is acting as resistance as I have suspected. I remain bullish on TBT and suggest patience as it works its way through these levels. We've also been suggesting taking some profits off the table to book gains and protect capital and today provided another chance. For options traders, call positions could have sold for about $1.75 on the surge higher today which would have represented about +40% gains. Strength in equities will bode well for TBT so if you believe a big sell-off is pending I suggest protecting profits in this position. $37.50 is still a valid target and I recommend protecting profits if TBT trades up there again. If TBT keeps knocking on the door at this resistance level it should eventually open but there is nothing wrong with booking a gain in these market conditions.
7/28: TBT found resistance right at $37.50 as mentioned in last night's updates and this proved to be a good spot to take a portion of your profits off the table. TBT has intraday support at current levels and all the way down to its 20-day SMA which also corresponds to the backside of the broken downtrend line $36.25. The ETF could pullback down to this area and still be considered bullish. I'm comfortable giving this some room to work and am looking for a better reference point to tighten the stop.
Current Position: Long TBT stock, entry was at $36.51
Options Traders: September $37.00 CALL
Entry on July 27, 2010
Earnings N/A (unconfirmed)
Average Daily Volume: 3.8 million
Listed on July 24, 2010
CLOSED BEARISH PLAYS
Crown Holdings - CCK - close 27.83 change +0.29 stop 27.75
Target(s): 27.60(hit), 27.35 (hit), 27.00, 26.80
Key Support/Resistance Areas: 27.35, 27.00, 26.25, 25.90, 25.50, 25.00
Final Gain/Loss: -0.69%
Time Frame: 1 week
New Positions: Closed
7/30: CCK refuses to give up anything and we were stopped out today for small loss. The stock hit our $27.35 target for third time today but CCK simply won't head lower to close the gap I have been targeting. So we have let the position go for a small loss and will take on better opportunities.
7/29: CCK hit our $27.35 target again and I'm surprised the stock held up so well today considering the weakness. I am tightening the stop to $27.75 to see if we get this thing to close the gap higher on 7/22. All of the targets are still valid and I suggest readers begin to protect profits if CCK moves lower from here. On the intraday charts CCK continues to make lower lows and lower highs so a move lower is a good possibility.
7/28: CCK is moving in the right direction for us as small caps have been under pressure. The stock hit our 2nd target and we now have a small gain. I've moved the stop down to $27.96 which is just above yesterday's highs and the primary intraday downtrend line. If the weakness continues as the week comes to an end CCK may head towards closing the gap higher on 7/22 which is near our final target of $26.80. This may happen fast so I suggest placing an order to exit positions unless you are able to monitor them intraday. Tightening stops near $27.00 is also suggested.
Closed Position: Short CCK stock at $27.75, entry was at $27.56
Entry on July 22
Earnings 10/7/10 (unconfirmed)
Average Daily Volume: 1.43 million
Listed on July 21, 2010