Anadarko Petrol. - APC - close: 90.67 chg: +0.77 stop: 85.98*new*
If you haven't heard yet crude oil hit another all-time high on Friday. This sent the oil/energy sector index to a new high as well but the rest of the market was hit with some profit taking. Some of the oil stocks also found some profit taking on Friday despite the strength in crude. Shares of APC touched a new high Friday morning before turning lower. The effect is a small bearish engulfing candlestick and that is usually interpreted as a bearish reversal. We would look for some more profit taking in APC early next week but the dip can be viewed as a new buying opportunity. We will watch for a bounce in the $87.50-88.00 range. More conservative traders may want to sit back and watch for another new relative high before considering longs. More aggressive traders may want to just widen their stop loss to avoid being stopped out on an intraday spike lower. As a matter of fact, because we believe that the highs in oil haven't been seen yet we are going to widen our stop. We rarely do this (because we hate to) but to give this play a chance APC may need a bit more room to maneuver. We're going to use a 5% stop and that puts it at $85.98. We do note that the recent action has produced a new P&F buy signal (that currently points to a $117 target) plus the MACD indicator on APC's daily chart is very close to a new buy signal as well. We are going to list some suggested calls but wait for the dip and/or bounce before initiating positions. Our short-term target is the $94.75-95.00 range. FYI: keep an eye on crude oil. There is a growing chance that traders may take profits if it hits what could be round-number resistance at $70.00 a barrel and chances get a lot higher if it hits $75.
BUY CALL SEP 85.00 APC-IQ OI=1450
current ask $6.20
Picked on August 11 at $ 90.51
Danaher - DHR - close: 55.92 chg: -0.39 stop: 53.99
DHR is sending out a lot of mixed message. Thursday's gain appeared to break its short-term six-day trend of lower highs but there was no follow through on Friday. The larger picture suggests that DHR is going to consolidate lower and we've been suggesting that readers watch for a dip toward the simple 200-dma near $54.50 as the next potential entry point. The MACD looks bearish but short-term stochastics are positive. The Point & Figure chart is also bullish with a $68 target but shares could retreat to $53 even $52 and still keep a buy signal on its P&F chart. Considering the market's decline on Friday we are going to continue to be defensive here. We would not suggest new plays at this time and traders with positions may actually want to exit and sit out to preserve their capital and wait for a better entry point. Our preferred entry point would be a strong bounce from its 200-dma. An alternative would be a new relative high over $56.50 or $57.00.
Picked on August 03 at $ 56.67
Best Buy Co - BBY - close: 49.61 chg: +0.93 stop: 52.51
Retailers showed some strength on Friday and traders used that as an opportunity to buy the dip in shares of BBY near the $48.00 level. It didn't help that A.G.Edwards reiterated their "buy" rating on the stock this past Friday. Given the rebound we would look for the bounce to continue a bit. Watch for BBY to find some resistance in the $50.50-51.00 region. We'd obviously prefer to see the rally fail at $50.00 but we don't believe that will happen. Traders looking for new positions can wait for the rally to run out of steam and fall back under the $50 level and then initiate new put positions. Our target is the $45.50-45.00 range but we are cautiously watching the simple 50-dma, since it could act as short-term support.
BUY PUT SEP 50.00 BBY-UJ OI= 217 current ask $2.35
Picked on August 08 at $ 49.31
Carnival Corp - CCL - close: 50.46 chg: -0.69 stop: 54.01
So far so good. CCL continues to show weakness after its bearish reversal on Wednesday. Volume has been just above average during the last three sessions. The P&F chart is bearish and points to a $38 target. While CCL appears poised for more weakness next week traders might want to wait. A short-term oversold bounce at the $50.00 level, which is normally round-number, psychological support or resistance (support in this case) should probably be expected. Traders can use another failed rally, this time under $51.00 or 51.50 as a new bearish entry point to buy puts. Our target is the $47.75-47.00 range.
BUY PUT SEP 55.00 CCL-UK OI= 537 current ask $4.90
Picked on August 10 at $ 51.79
Eastman Chemical - EMN - close: 52.33 chg: -1.46 stop: 55.01*new*
We have good news to report on for EMN. The stock did fail at resistance at the $54.00 level as we suggested. The move was a new entry point for traders to buy puts. Friday's 2.7% decline also strengthens the P&F chart sell signal that now points to a $49 target. We are going to lower our stop loss to $55.01. Our target remains unchanged in the $50.50-50.00 range.
BUY PUT SEP 55.00 EMN-UK OI=703 current ask
Picked on August 05 at $ 53.90
Fedex Corp - FDX - close: 84.65 chg: -0.70 stop: 86.01
We are not willing to give up just yet on FDX. We don't believe the transportation sector can continue to shrug off these record high oil prices, which are pushing up fuel costs. It's noteworthy that the bullish breakout on Wednesday quickly failed and now its MACD indicator is edging even closer to a new sell signal. We will continue to suggest that traders use a suggested entry point at $82.99 to open bearish positions on FDX but more aggressive traders might want to jump in early if FDX breaks down under $84.00. If we are triggered at $82.99 our target is the $76 level which should coincide with its trendline of lower lows. The rising challenge for traders in FDX is the upcoming earnings report due out in the second half of September. We will not hold over the report. FYI: if you don't like FDX as a candidate check out the new play in UPS this weekend.
PUT OCT 85.00 FDX-VQ OI=2139 current ask $2.95
Picked on August xx at $ xx.xx <-- see TRIGGER
F5 Networks - FFIV - close: 37.39 chg: +0.37 stop: 40.01 *new*
Networking stocks have continued to be weak after CSCO warned for the next quarter. Yet shares of FFIV, while not bouncing with the market on Thursday, are not sliding under the $36 region either. At this point the trend is still bearish but we would look for an oversold bounce back toward the $39-40 region. Such a bounce could be used as a new bearish entry point but wait for signs that the rally is fading first. We are going to lower our stop loss to $40.01. Our target is the $35-34 range.
BUY PUT OCT 40.00 FLK-VH OI=3064 current ask $4.60
Picked on August 03 at $ 38.76
Google - GOOG - close: 289.72 chg: +5.67 stop: 300.01
Right on cue! Actually shares of GOOG traded sideways for the first half of Friday's session but then a surge of buying interest pushed the stock up toward the $289-290 level in a late day flood of volume. Yesterday we predicted that GOOG might rebound back toward $290 in an oversold bounce. The question now is whether or not shares fail at $290 or continue to retest overhead resistance in the $295-300 level again. Remember, this is a speculative, high-risk play due to GOOG's volatility. The up trend appears to have been broken but the bulls aren't giving up without a fight. Inspiring some traders might be speculation that GOOG could be added to the S&P 500 and that the announcement could come as early as next week after GOOG's one-year anniversary as a publicly traded company. While many investors may have already bought shares assuming this will occur such an announcement could easily send GOOG gapping higher. It is a risk traders need to seriously consider. We are adjusting our target to be the $260.00-255.00 range to account for potential technical support at the simple 100-dma.
BUY PUT SEP 300.00 GGD-UT OI= 4456 current ask $15.80
Picked on August 11 at $284.50
KOS Pharma - KOSP - close: 73.12 chg: -0.45 stop: 72.51
Thus far we remain on the sidelines with a trigger to buy puts at $68.25 for KOSP. The company reported earnings on August 4th and spiked higher but the rally quickly failed. The lack of follow through combined with what looks like a double-top pattern near $77.50 are definitely signs that the rally may be over. This last Wednesday more news came out with the company's 10Q filing that unveiled news that KOSP's sales and marketing practices are being looked at by the feds. That's usually not a good sign but we wanted to see some confirmation that the stock has actually reversed. That's why we're suggesting a trigger to open the play. If KOSP can trade under the $68.00 mark it will also produce a new P&F chart sell signal. More conservative traders may want to wait for KOSP to trade under $68.00 or even the simple 50-dma currently at 67.65 before opening bearish positions. Our target is the $62-60 range.
BUY PUT SEP 70.00 KQW-UN OI=397 current ask $2.15
Picked on August xx at $ xx.xx <-- see TRIGGER
Lehman Brothers - LEH - cls: 104.76 chg: -1.61 stop: 107.01
There is no change in our strategy with LEH but traders holding the August $100 puts are running out of time. This was initially a speculative play to buy some cheap August $100 puts and bet that LEH will drop to $100 (or less) before August expiration. Well now there are just five trading days left before August options expire. We still suspect that LEH could hit the $100 level but it may take a couple of weeks or more. Traders may want to roll out to the September $100 puts for $0.85. One challenge even if you do buy September puts is LEH's next earnings report expected around September 13th. We would not hold over the report.
BUY PUT SEP 105.00 LES-UA OI=1230 current ask $2.40
Picked on July 21 at $105.13
3M Co. - MMM - close: 71.94 change: -0.42 stop: 75.11
We don't have much new to report on for MMM. There has been no signs of a bounce in MMM this past week and shares look poised to move lower heading into next week. Technical indicators remain bearish and its P&F chart points to a $63 target. We are targeting a decline into the $70.00-68.00 range. If MMM does surprise us with an oversold bounce we'd watch the $74 level to act as short-term resistance. FYI: technical traders should note that MMM's 200-week moving average is trading near $71.25. This could prove to be technical support and readers may want to consider exiting early or taking some profits near this moving average, especially since this appears to coincide with the July low.
Picked on July 19 at $ 74.29
Neurocrine Bio. - NBIX - cls: 45.11 chg: -0.86 stop: 48.51*new*
Believe it or not we would have expected a strong oversold bounce in NBIX by now but shares continue to show relative weakness. The trend of lower highs appears ready to push NBIX under round-number support at its $45 level and technical support at its 50-dma. If NBIX surprises and does produce an oversold bounce watch for the stock to find resistance at its simple 10-dma near $47.50. Such a bounce could be used to consider new bearish positions. At the moment we would not open new plays. We're going to adjust our target from the $43.00-42.00 range to $43.25-42.00 to account for potential technical support at its 200-dma near $43.00. We are lowering the stop loss to $48.51.
Picked on August 07 at $ 47.30
Fannie Mae - FNM - close: 51.17 chg: -0.83 stop: 56.01
Target achieved. There has been no reprieve for shares of FNM, which sank to another new relative low on Friday. More importantly for us the stock traded into our target range of $51.50-50.00. The strong volume on the declines and intraday trends continue to suggest more weakness ahead but FNM is looking very short-term oversold and due for a bounce. Be careful if you haven't exited yet.
Picked on July 27 at $ 56.49