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None APD None
  LLL  
  LNN  
  MON  

Editor's note: I want to comment on a few stocks I'm watching. PCP broke out higher on Thursday last week. A dip back toward the $100 level might be a new bullish entry point. NOC is another defense stock that looks like it's poised to mover lower. YHOO has pulled back toward its pre-MSFT merger bid prices. This might be a good time to speculate on another big move in YHOO. I was considering a strangle with October options using the $21 call and the $17.50 put.


New Calls

None today.
 

New Puts

Air Products - APD - cls: 91.85 change: -1.81 stop: 94.15

Company Description:
Air Products serves customers in industrial, energy, technology and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services. (source: company press release or website)

Why We Like It:
It looks like the August bounce in APD is running out of gas. Shares failed to rally past the $94.00 level last week, which coincided with the top of its bearish channel. Short-term technicals are turning bearish and this looks like a good spot to buy puts. More conservative traders might want to wait for a breakdown under $90.00 before initiating positions. We are listing two targets. Our first target is $87.00. Our second target is $84.00. The Point & Figure chart is bearish with a $73 target. We do not see any significant amounts of short interest on the stock. If we do not see APD follow through on Friday's reversal we'll try to be quick to close it early. Let's give it two or three days and re-evaluate. Right now a lot of traders expect a market bounce on Monday.

Suggested Options:
September options have a lot more open interest but they expire in three weeks. We're suggesting the October puts. It is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY PUT OCT 90.00 APD-VR open interest= 7 current ask $3.00
BUY PUT OCT 85.00 APD-VQ open interest=24 current ask $1.40

Picked on August 31 at $ 91.85
Change since picked: + 0.00
Earnings Date 10/22/08 (unconfirmed)
Average Daily Volume = 1.8 million

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L-3 Comm. - LLL - close: 103.94 chg: -1.65 stop: 106.65

Company Description:
Headquartered in New York City, L-3 Communications employs over 64,000 people worldwide and is a prime contractor in aircraft modernization and maintenance, C3ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance) systems and government services. L-3 is also a leading provider of high technology products, subsystems and systems. The company reported 2007 sales of $14 billion. (source: company press release or website)

Why We Like It:
The earnings news in July was bullish for LLL. The company beat estimates and guided higher for 2008. This produced a bullish double-bottom pattern and launched the stock into a rally that appears to have topped out on August 18th. The defense sector looks like it is producing a bearish double-top pattern with last week's failed rally. LLL is seeing a similar performance and last week actually set a new lower high as part of its own double-top pattern. We are suggesting aggressive put positions now with a stop loss at $106.65, which is just above the August highs. More conservative traders may want to wait for a drop under $102.00 before considering new positions. Our target is the $97.50 mark, just above the 50% retracement of its July-August rally and currently above its 50-dma. I want to repeat that this is an aggressive play. We're betting on a correction in what has been a strong stock the past several weeks.

Suggested Options:
We are suggesting the October puts.

BUY PUT OCT 105.00 LLL-VA open interest= 429 current ask $3.90
BUY PUT OCT 100.00 LLL-VT open interest= 363 current ask $1.95
BUY PUT OCT 95.00 LLL-VS open interest= 544 current ask $0.95

Picked on August 31 at $103.94
Change since picked: + 0.00
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 1.0 million

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Lindsay Corp. - LNN - cls: 81.91 chg: -2.60 stop: 83.35

Company Description:
Lindsay manufactures and markets irrigation equipment primarily used in agricultural markets which increase or stabilize crop production while conserving water, energy and labor. (source: company press release or website)

Why We Like It:
The trend in LNN is definitely bearish. The stock produced a very clear and very volatile bearish double-top pattern with the April and June peaks. The July oversold bounce stalled out at its 50-dma and shares have been failing under the 50-dma ever since. Now LNN is struggling to hold support near $80.00. Aggressive traders may want to jump in now. We are going to wait for a breakdown under $80.00. Our suggested trigger to buy puts is $79.85. If triggered we have two targets. Our first target is $75.25. Our second target is $71.00. This can be a volatile stock so we're starting the play with a relatively wide (aggressive) stop loss at $83.35.

Suggested Options:
We are suggesting the October puts.

BUY PUT OCT 80.00 LNN-VP open interest=23 current ask $6.70
BUY PUT OCT 75.00 LNN-VO open interest= 3 current ask $4.60

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/08/08 (unconfirmed)
Average Daily Volume = 480 thousand

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Monsanto - MON - close: 114.25 chg: -2.59 stop: 118.55

Company Description:
Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. (source: company press release or website)

Why We Like It:
The oversold bounce in MON has been struggling with resistance at its simple 50-dma for several days now. Technical indicators are rolling over and shares look vulnerable to another leg lower. The stock can be very volatile, which always makes playing MON a higher-risk play. We're suggesting put positions now with Friday's close under its 200-dma and the breakdown under $115. We're use a stop loss at $118.55, which is actually a tight stop for MON. Our target is the $101.00. The $100.00 level should be round-number support.

Suggested Options:
We are suggesting the September puts since this should be a very quick play. Keep in mind that September options expire in three weeks.

BUY PUT SEP 115.00 MFP-UC open interest=1563 current ask $4.60
BUY PUT SEP 110.00 MON-UB open interest=1888 current ask $2.45
BUY PUT SEP 105.00 MON-UA open interest=5056 current ask $1.20

Picked on August 31 at $114.25
Change since picked: + 0.00
Earnings Date 10/08/08 (unconfirmed)
Average Daily Volume = 6.7 million
 

New Strangles

None today.
 

New Play Archives