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Auto parts and Automakers

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Play Editor's Note:
I wanted to point out that UHAL looks like a bearish candidate. I had written a put play on it only to find that there is almost no open interest and almost no volume on this stock so I cancelled it as a play. More aggressive traders willing to deal with such light volume may want to consider bearish positions on a breakdown under $30.00 or the October low at $28.93.


AutoZone - AZO - close: 133.06 change: -2.80 stop: 138.05

Why We Like It:
When AZO decided to bounce from its November low there was no stopping it. The stock just skyrocketed higher until it ran into prior resistance in the $140-142 zone. Now shares look extremely overbought and due for a serious correction. The P&F chart is very bullish with a $217 target but AZO could drop several points before putting that bullish signal in jeopardy. The recent consolidation has struggled with the $137.00 level. We're going to give AZO a little more room and put a stop loss at $138.05. This is still a relatively tight stop for a stock like AZO. Our target is $125.25, just above the 200-dma around $122.50.

Suggested Options:
We are suggesting the February puts.

BUY PUT FEB 135.0 AZO-NG open interest= 265 current ask $9.80
BUY PUT FEB 130.0 AZO-NF open interest=1448 current ask $7.60
BUY PUT FEB 125.0 AZO-NE open interest= 679 current ask $5.80

Annotated Chart:
AZO Autozone

Picked on January 10 at $133.06
Change since picked:     + 0.00
Earnings Date          02/26/09 (unconfirmed)
Average Daily Volume =      1.2 million  

Toyota Motor Corp. - TM - close: 66.53 change: -1.85 stop: 68.55

Why We Like It:
I think the short-term up trend is in serious danger of breaking. However, you could argue that it has not broken quite yet and that makes this a more aggressive play. On the other hand in our favor the last three days have produced a bearish reversal pattern. I am suggesting bearish put positions now. More conservative traders may want to wait for a drop under the 50-dma around $65.50 first before initiating positions.

I do expect a bounce in the $64-63. Our first target is $61.50. We'll consider a secondary target as the play progresses.

Suggested Options:
We are suggesting the February puts but plan to exit ahead of TM's early February earnings report.

BUY PUT FEB 70.00 TM-NW open interest= 171 current ask $6.60
BUY PUT FEB 65.00 TM-NM open interest= 259 current ask $4.10
BUY PUT FEB 60.00 TM-NY open interest= 387 current ask $2.45

Annotated Chart:
TM Toyota Motor

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked:     + 0.00
Earnings Date          02/05/09 (unconfirmed)
Average Daily Volume =      1.1 million  

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