Best Buy Co - BBY - close: 47.65 chg: -1.05 stop: 51.01*new*
It has been a rough weak for retailers with several of them issuing earnings warnings for the third quarter. Some are blaming the rising cost of fuel for impacting their consumers' pocketbooks (i.e. Wal-Mart). Shares of BBY have continued to sink as traders take profits from its impressive May through July rally. Friday's 2.15% decline is encouraging because it's a new relative low and it breaks technical support at the simple 50-dma. We're not suggesting new positions currently but if BBY bounces then traders can watch for a failed rally under $49.00 as a new entry point. Our target is the $45.50-45.00 range. We plan to exit before BBY's September earnings report. We are lowering the stop loss to $51.01.
Picked on August 08 at $ 49.31
Building Materials - BMHC - cls: 72.61 chg: +0.52 stop: 75.01
BMHC is another recent high-flyer that has broken its bullish up trend and looks poised for more profit taking. The stock had been following the homebuilders since BMHC is a supplier for the industry. Concerns over rising interest rates and a slow down in the housing market sound like a good excuse for investors to take some money off the table. We like BMHC because shares have broken their trendline of support and technical support at the 50-dma. More recently BMHC has been churning sideways between $68.40 and $74.50. We would only suggest new positions under the $70.00 level but more aggressive traders may want to consider buying puts here with BMHC near resistance. Our target is the simple 100-dma currently at 64.50.
BUY PUT SEP 75.00 BGU-UO OI= 291 current ask $5.50
Picked on August 16 at $ 71.33
Carnival Corp - CCL - close: 50.93 chg: +0.00 stop: 52.51
Shares of CCL were a perfect example of the listless trading on Friday. The stock closed unchanged on the session. The eight-week trend for CCL remains bearish and its P&F chart points to a $39 target but short-term CCL is seeing a bounce. Bulls stepped in to buy the dip toward its trendline of support on its weekly chart (see chart below). We are expecting this bounce to fail near the $52.00 level where its 21-dma, 100-dma and exponential 200-dma all converge as overhead resistance. At this time we would not suggest new bearish positions. Let's wait and see if CCL's bounce will continue into next week. Currently our target is the $47.75-47.00 range. Remember, we plan to exit before CCL's mid September earnings report.
Picked on August 10 at $ 51.79
Federated Dept. Stores - FD - cls: 72.35 chg: -1.85 stop: 75.75
Most of you already know that retailers have not been the strongest bunch this past week. Multiple retailers have issued cautious statements about their third quarter and the group looks set to slide from their late summer highs. FD has not yet issued any bearish guidance yet but the stock's upward momentum has clearly evaporated and shares look poised to turn south. There is a new short-term trend of lower highs. Daily oscillators are bearish and its weekly MACD has produced a new sell signal. A move under $72 for FD should reverse its P&F chart into a new sell signal. It doesn't help the bulls that S&P plans to downgrade FD's credit rating after the company completes its acquisition of MAY. Our suggested entry point to buy puts is at $71.99. If we are triggered our target is the $67-65 range but we do admit that FD is likely to bounce at least once from the $70 level, which is bolstered by the 100-dma. More patient traders may want to consider waiting for that bounce to fail first and then open positions.
BUY PUT SEP 75.00 FD-UO OI= 826 current ask $3.70
Picked on August xx at $ xx.xx <-- see TRIGGER
Fedex Corp - FDX - close: 84.77 chg: +0.08 stop: 86.01
We patiently remain on the sidelines with FDX. The overall six-month trend is a bearish one and rising crude oil and fuel prices have to be hurting the stock despite the health economy both here and in China. The daily chart's MACD has been issuing a sell signal for the past few days and its P&F chart is bearish and points to a $71 target. However, we want to see confirmation that FDX's next leg is indeed down and that's why we're suggesting a trigger to buy puts at $82.99. If triggered we do expect an initial bounce at the $80 mark but our target is the $76-75 range.
Technical traders take note! The trading in FDX has narrowed significantly and shares have been stuck in a trading range between $83 and $86 for the past four weeks. Volatility has evaporated. FDX might be a good candidate for an $85.00 straddle play (buy a call and a put at the same strike). The September $85 call is trading at $1.65 and the September $85 put is trading at $1.80. Such a strategy means you're betting that FDX will move far enough to cover the cost of buying both options and still produce a profit for you. October would work too but the cost is higher. Another alternative might be buying an October $80 put for about $1.00 and an October $90 call for about $1.00. We definitely expect a breakout in FDX (up or down) sooner rather than later. If we were using either of these strategies we would definitely hold over earnings, which can create the sort of volatility we need to make it profitable.
With regards to our current directional play. We do not plan on holding over FDX's late September earnings report so traders should keep that in mind.
BUY PUT OCT 85.00 FDX-VQ OI=2223 current ask $2.75
Picked on August xx at $ xx.xx <-- see TRIGGER
F5 Networks - FFIV - close: 37.84 chg: +0.05 stop: 40.01
The oversold bounce in shares of FFIV appears to have stalled a bit. There hasn't been much movement over the last couple of sessions. At this point FFIV's trend is still bearish. The P&F chart points to a $20.00 target. However, short-term the stock is stuck in the middle between overhead resistance at $40.00 and round-number support near our target at $35.00. We are not suggesting new plays as the latest candlestick on the weekly chart looks like a "hammer" pattern and could be signaling a bullish reversal. We are adjusting our target from $35.00-34.00 to $35.35-35.00. More conservative traders may want to think about taking some profits on any decline under $36.00.
Picked on August 03 at $ 38.76
Google - GOOG - close: 280.00 chg: +0.01 stop: 293.01*new*
Wow! Friday's session is arguably one of the least volatile days that shares of GOOG have ever seen. For the second half of the day GOOG traded in a tight 65-cent range. With the closing price right at $280.00 this smacks of August options expiration. We remain bearish on the stock but would expect a bounce back toward $284-285 to fill the gap down from Thursday before GOOG continues lower. It would make a nice failed rally under the simple 10-dma, which traders could use as a new bearish entry point. The biggest risk here for bears is an announcement that the S&P 500 is adding GOOG to the index. Having just past its one-year anniversary as a publicly traded company on August 19th the announcement could come at anytime. Meanwhile market pundits also suggest that GOOG could and will be added to the NASDAQ-100 index but that probably won't occur until the NDX rebalancing in December. This remains a very aggressive, high-risk play that should only be played with risk capital. Our target is the 100-dma now at $260. We're going to adjust the target to $262-260 for now but keep in mind this will be a moving target. We are going to try and lower our risk a bit by adjusting the stop loss to $293.01, which is above the simple 50-dma.
BUY PUT SEP 290.00 GGD-UR OI= 5527 current ask $14.20
Picked on August 11 at $284.50
Ingersoll Rand - IR - close: 79.06 chg: +0.64 stop: 80.61
IR is a new bearish candidate from the Thursday night newsletter. We see no changes from our strategy so we're reprinting the initial play description:
It looks like the six-week bounce in shares of IR have finally run out of steam. Short-term oscillators like the RSI and stochastics are bearish plus the MACD has produced a new sell signal from overbought levels. We also see similar bearish hooks in the weekly oscillators. However, while the technical picture may have turned bearish we want to see a little more confirmation. That's why we're suggesting a trigger at $77.49, under its simple 200-dma. Our short-term target will be the $72.60-72.40 range but we do expect a bounce at the $75 mark. Please note that IR is due to split 2-for-1 on September 2nd. We do not want to hold over the split. Lately stocks have not seen much post-split depression. That only gives us about two weeks for IR to open and move toward our target.
BUY PUT SEP 80.00 IR-UP OI=685 current ask $2.90
Picked on August xx at $ xx.xx <-- see TRIGGER
KOS Pharma - KOSP - close: 69.52 chg: +0.02 stop: 72.51
KOSP appears to have produced a short-term top with sort of a double-top pattern with the peak in July and then August. The stock has broken its multi-month trendline of support and now shares are poised to breakdown under technical support at its 50-dma. We want to see confirmation that the trend has indeed changed and that's why we're suggesting a trigger to buy puts at $68.25. This would be a new relative low and a decline under $69.00 should produce a new sell signal on KOSP's Point & Figure chart. If we are triggered we're targeting a decline into the $62.00-60.00 range, just above the 100-dma. Keep an eye on the BTK biotech index. A breakdown under the 600 mark for the BTK would be good news for the bears.
BUY PUT SEP 70.00 KQW-UN OI=461 current ask $3.10
Picked on August xx at $ xx.xx <-- see TRIGGER
3M Co. - MMM - close: 72.07 change: +0.15 stop: 74.46*new*
Dow-component MMM produced a bit of an oversold bounce on Friday but the rally quickly failed. We see no changes in our strategy and continue to target the $70.00-68.00 range. However, at this point in the game we are not suggesting new plays. More conservative traders may want to consider exiting early in the $71.25-71.00 range (near its 200-week moving average) as MMM has managed to bounce there about three times in the last week. We are lowering our stop loss to $74.46 near its 50-dma.
Picked on July 19 at $ 74.29
Simon Prpty Grp - SPG - close: 75.06 chg: -0.18 stop: 77.26
SPG is a new bearish candidate from the Thursday night newsletter. We see no changes from our original play description so we're reposting it here:
REIT stocks have been big winners for the bulls over spring and summer but now it looks like the group is seeing some profit taking. Investor concerns over rising inflation and bond yields is putting pressure on the REIT industry. While SPG still has a strong 3.9% dividend yield rising interest rates make REITs less attractive. Plus, there was a recent article in Barron's suggesting there could be a speculative bubble in the group. We like SPG because the stock has clearly broken its four-month up trend and the oversold bounce from the initial sell-off has already begun to fail. We're suggesting that traders buy puts here with a target at the $70.75-70.00 range near its 100-dma. More conservative traders might want to wait for SPG to decline under the $75.00 level again, which has been acting as minor support for the last couple of sessions.
BUY PUT OCT 80.00 SPG-VP OI= 81 current ask $5.00*
*We were unable to confirm these prices as the current ask. Double-check with your broker!
Picked on August 18 at $ 75.24
United Parcel Svc - UPS - cls: 71.48 chg: -0.30 stop: 74.21
UPS is another play on the Transportation sector that is bound to be suffering from the sky-high prices in crude oil and thus fuel, both truck and jet. The bounce from July has failed near $74 and after four-weeks of churning between $72 and $74 shares of UPS are finally turning lower. Daily and weekly technical indicators either have or are close to turning bearish. We used a trigger at $71.99 to open the play and our target is the $68-67 range, near the bottom of its wider trading range. We would open new positions at current levels. You'll notice that there has been a big increase in the October 70 puts over the last week.
BUY PUT OCT 75.00 UPS-VO OI= 3104 current ask $4.00
Picked on August 17 at $ 71.99
Wynn Resorts - WYNN - close: 49.35 chg: -1.58 stop: 54.01
Our bearish play on WYNN has now been opened. We noticed a few days ago that WYNN has broken its three-month trendline of support but was still trading above round-number support near the $50.00 level. We suggested that readers use a trigger at $49.95 to open the play to confirm the next leg down. WYNN did just that on Friday with a 3.1% decline on above average volume. Looking more closely at the intraday chart there appeared to be a surge of selling on Friday afternoon, which bodes well for Monday morning. Our target is the $45.25-45.00 range.
BUY PUT SEP 55.00 UWY-UK OI=1803 current ask $6.10
Picked on August 19 at $ 49.95
Danaher - DHR - close: 54.41 chg: -0.10 stop: 53.99
We've patiently waited for shares of DHR to pull back and test support at its simple 200-dma but we're not seeing any signs of a bounce. Given the short-term outlook on the DJIA and S&P 500 we're choosing to exit DHR early. More aggressive traders may want to consider holding on as DHR still has some support near $54.00 with its simple 50-dma. We'd rather cut our losses here and move on.
Picked on August 03 at $ 56.67
Eastman Chemical - EMN - close: 50.27 chg: -0.65 stop: 54.01
Target achieved. The Friday bounce in crude oil could have been the extra push EMN need to sink toward the $50.00 level. As a chemical producer rising oil means higher costs for EMN. Shares have sunk toward what we believe could be short-term round-number, psychological support at the $50.00 level. Our target was the $50.50-50.00 range. Readers can watch for a bounce from here and aggressive players might want to open new bearish plays again if the bounce fails under $54 but keep in mind the P&F chart only points to a $49 target.
Picked on August 05 at $ 53.90
Lehman Brothers - LEH - cls: 105.11 chg: +0.22 stop: 107.01
We are throwing in the towel on LEH. The stock has refused to consolidate lower and now bears are facing another risk. The big brokers like LEH tend to rally into their earnings report and LEH is due to report again in mid September. Nimble traders may actually want to consider bullish positions if LEH can trade above $107.00.
Picked on July 21 at $105.13
Neurocrine Bio. - NBIX - cls: 47.11 chg: +0.92 stop: 48.51
NBIX has tried for a week to breakdown through support at the $45.00 level and now at the rising 50-dma. It would seem that the selling pressure has been alleviated and buyers are tempted to move in again. Technicals are mixed but given NBIX's relative strength on Friday we are choosing to exit early! The rising volume on the two-day rebound doesn't give us much confidence as a bear. This is beginning to look like an entry point for bulls with a target near the July highs.
Picked on August 07 at $ 47.30