Aetna - AET - close: 79.70 change: +0.03 stop: 76.99
Shares of health insurer AET continue to drift higher and out perform the broader market. It looks like the stock's recent consolidation under the $80.00 level may have finally come to an end with the breakout over its simple 50-dma and the $80.00 mark. The Thursday-Friday push over the $80.00 level did reverse the Point & Figure chart into a new buy signal that now points to a $91.00 target. We remain bullish but our suggested entry point to buy calls is at $80.25, which has not been hit yet. More aggressive traders might want to consider new positions here at $80.10 but we'll wait for our trigger to be touched.
BUY CALL OCT 75.00 AET-JO OI= 656 current ask $6.60
Picked on September xx at $ xx.xx <-- see TRIGGER
Centex - CTX - close: 66.70 chg: -1.16 stop: 63.99
Just as we expected shares of CTX felt some profit taking on Friday and dipped into the $66.00-66.50 range. Fortunately, CTX has already begun to rebound with volume rising during its late afternoon bounce. We see this as a new bullish entry point. The homebuilders are due for a bounce after six weeks of profit taking and CTX has already begun to bounce from its simple 200-dma. The MACD indicator recently produced a new buy signal. If you're feeling less confident then consider waiting for a new relative high over $68.80 before considering new positions. Our target is the $73.00-75.00 range but we do expect some resistance at the simple 50-dma. Our time frame is three to five weeks.
BUY CALL OCT 65.00 CTX-JM OI=2113 current ask $4.70
Picked on September 01 at $
Kerr Mcgee - KMG - close: 88.33 chg: -1.54 stop: 84.90
If you missed the Thursday newsletter shares of KMG did hit our initial target in the $89.50-90.00 range. Our recent strategy updates have been suggesting that traders sell half their position at our initial target near $90 and plan to sell the remaining half once KMG hits our secondary target in the $92.00-92.50 range. If you read this weekend's market wrap then you know our outlook on oil is still bullish and the energy sector has not yet seen its highs for the year. Friday's pull back in shares of KMG is normal. The stock had just tagged resistance at $90.00 and the group was due for some profit taking, which was exaggerated by traders locking in profits ahead of the long Labor day weekend. If KMG doesn't bounce from the $88 level then we'll expect the stock to find support lower near $86.00. If KMG dips toward $86 readers can use it as a new bullish entry point but at this time we are not suggesting new plays.
Picked on August 21 at
MDC Holdings - MDC - close: 75.25 change: -1.15 stop: 71.99
Right on cue, shares of MDC pulled back toward the $75.00 level. We would use this as a new bullish entry point to buy calls for the coming rebound in the homebuilders. However, more conservative traders might feel better waiting for signs of a bounce first (i.e. a move over 76.00 or even $77.00 levels). If MDC surprises us with another decline next week the stock should have stronger support at its 200-dma near $73. Our target is the $83.00-85.00 range.
BUY CALL OCT 75.00 MDC-JO OI= 32 current ask $4.50
Picked on September 01 at $ 77.01
Noble Corp - NE - close: 69.77 change: -1.82 stop: 67.25
After reading this weekend's market wrap then you know that we're still bullish on oil and oil stocks. The impact of Katrina is far from over. That's why traders can probably view Friday's decline in shares of NE as a potential entry point. However, the dip may not be over just yet. We suspect that shares of NE could pull back a bit further toward the $69.00 maybe 68.50. We would wait for the bounce to begin anew before initiating new positions. Our target is the $78.00-80.00 range.
BUY CALL OCT 70.00 NE-JN OI=697 current ask $3.40
Picked on August 31 at $ 71.30
AutoZone - AZO - close: 92.65 change: -0.74 stop: 95.51 *new*
AZO is almost there! The stock dipped to $91.90 on Friday piercing its simple 100-dma on an intraday basis. The bearish trend looks very strong but don't be surprised to see an oversold bounce back toward the $93.50 region. We are going to adjust our target to account for the rising 200-dma. We're moving the target from $91.25-91.00 to $91.50-91.00. Currently the 200-dma is at $91.20 and will probably offer at least some short-term support. We are also lowering the stop loss to $95.51. This close to our target we are not suggesting new bearish positions.
Picked on August 28 at $ 95.45
Carnival Corp - CCL - close: 48.24 chg: -0.28 stop: 51.49
Shares of CCL continue to sink lower and the intraday action on Friday suggests the stock is poised to breakdown under the $48.00 level next week. CCL is nearing our target in the $47.75-47.00 range so traders can be preparing to exit. More conservative traders might want to consider exiting early.
Picked on August 10 at $ 51.79
CDW Corp - CDWC - close: 58.55 chg: +0.09 stop: 62.01
We like CDWC as a candidate to capture the weakness in both retail stocks and technology, which are two sectors that have been struggling lately. Plus, shares of CDWC have been breaking down through multiple levels of support and on rising volume, which suggests more weakness ahead. Currently the P&F chart is bullish but we believe CDWC can pull back to the $55.00-54.00 range before rebounding again. We would consider new positions here at $58.55 or if you prefer look for an oversold bounce toward $60.00 and buy puts on a failed rally there. For an example of a failed rally just look at the intraday action on August 30th or even this Friday, September 2nd, where CDWC failed at $61.00 and $59.00, respectively.
BUY PUT OCT 60.00 DWQ-VL OI= 831 current ask $3.30
Picked on August 31 at $ 58.99
Electronic Arts - ERTS - close: 57.42 change: -0.52 stop: 60.01
We have some good news to report on with ERTS. After seeing the Wednesday-Thursday bounce we were expecting ERTS to challenge resistance near its 50-dma and the $59.00 level before rolling over again and heading lower. Fortunately, it looks like the stock has produced a new failed rally on Friday at $58.43 after the company announced that its president and vice president for its Worldwide studios were both leaving. Investors don't like to hear sudden changes in management (unless of course Wall Street doesn't like the management and blames them for the stock's poor performance) so the reaction to the news could pick up more steam on Tuesday once the news is more widely absorbed and traders come back from their holiday weekend. Technically speaking Friday's decline put ERTS back under its simple 200-dma again. We see this as a new bearish entry point to buy puts. The P&F chart looks pretty bearish with a $50.00 target and we agree. Our target is the $51.00-50.00 range.
BUY PUT OCT 60.00 EZQ-VL OI=1196 current ask $4.10
Picked on August 30 at $ 56.41
Fedex Corp - FDX - close: 80.51 chg: -0.04 stop: 85.01
The transportation sector has been trending lower in a narrow channel for about four weeks now and Friday's action displays a clear failed rally at the 3700 level for the $TRAN index. Shares of FDX mirror the weakness in the $TRAN over the last couple of weeks but FDX appears to be falling at a steeper rate. Next week could be exciting. We've been expecting FDX to decline to the $80.00 level and bounce. Yet the action lately is starting to suggest that FDX may not bounce that hard at the $80 level and may keep on falling. That's good news for us. Currently the Point & Figure chart for FDX points to a $71 target. We are targeting a decline into the $76-75 range. Readers can choose to open new positions on a decline beneath the $80.00 mark or June's low of 79.55. If FDX does rebound instead the simple 10-dma at 81.89 is the first line of defense for the bears. Essentially a failed rally under $82 could be used as alternative entry point.
BUY PUT OCT 85.00 FDX-VQ OI=2312 current ask $5.30
Picked on August 23 at $ 82.99
Illinois Tool Works - ITW - cls: 85.63 chg: +0.08 stop: 86.51
This is it! It's do or die time for the current rebound in shares of ITW. We initiated the play several days ago as the stock began to falter and decline under resistance at the top of its descending channel. The sell-off was working great until a Katrina-inspired rebuilding rally was ignited under anything related to construction. It's important to note that the rally seems to have stalled on Friday near the top boundary of its descending channel, which, if you're bearish, is where the rally is supposed to stall. This may prove to be a new bearish entry point. However, we would not suggest new plays until shares of ITW traded back under $85.00 or even $84.50. The descending channel on the daily chart looks bearish but ITW is giving mixed signals with a bullish P&F chart.
on August 23 at $ 85.05
KOS Pharma - KOSP - close: 66.56 chg: -0.70 stop: 70.51
KOSP continues to under perform its peers in the biotech sector and the stock is sinking lower in a trend of lower highs and lower lows. The recent failed rally on Thursday looks like a new bearish entry point to buy puts. Our target is the $63.00-62.00 level but we'll adjust that to the 100-dma if it rises above $63.00. Currently the 100-dma is at 62.69.
BUY PUT OCT 70.00 KQW-VO OI= 43 current ask $5.60
Picked on August 22 at $ 68.25
3M Co. - MMM - close: 71.50 change: +0.64 stop: 72.01
MMM produced a bit of an oversold bounce on Friday but the stock remains under minor technical resistance at its 21-dma. We've been targeting the $70.00 level but lately have been suggesting traders consider an exit in the 70.50-70.00 range. Now that MMM is hinting at a potential bounce from this new trading range our readers might want to seriously consider taking some profits right here. We are not suggesting new plays at this time.
Picked on July 19 at $ 74.29
United Parcel Svc - UPS - cls: 68.98 chg: -0.67 stop: 74.21
UPS continues to under perform its rival FDX and the stock is breaking down to new relative lows. The sell-off appears to be picking up speed now that UPS has broken through the $70.00 level. Investors seem to be growing more worried over the impact of higher fuel costs on UPS' fleet of trucks and planes even through UPS just announced an increase in its fuel surcharge for some of its premium services. Our target is the $68-67 range.
Picked on August 17 at $ 71.99
Urban Outfitters - URBN - cls: 54.00 chg: +1.40 stop: 57.01
Right on cue. URBN did produce an oversold bounce on Friday just as we predicted. The stock erased less than half of Thursday's decline however we're not sure the bounce is over. URBN could still rally toward the 54.50 region or try and retest resistance near its 100-dma at 54.75. Readers can watch for a failed rally under $55.00 as a new bearish entry point. The Point & Figure chart points to a $49.00 target but we are targeting a move into the $50.25-50.00 range just above technical support at its 200-dma.
BUY PUT OCT 60.00 URQ-VL OI= 14 current ask $7.00
Picked on August 31 at $ 54.25
Wynn Resorts - WYNN - close: 48.60 chg: -0.25 stop: 50.25
We do not have anything new to update on WYNN. The current trend is bearish. The P&F chart points to a $33.00 target. The weekly and daily charts have painted what looks like a bear wedge pattern. The recent oversold bounce back toward round-number support/resistance at the $50.00 level might be used as a new bearish entry point even through short-term oscillators are starting to turn bullish because they had reached oversold conditions. Our target is the $45.25-45.00 range.
BUY PUT OCT 50.00 UWY-VJ OI= 93 current ask $3.40
Picked on August 19 at $ 49.95
Google - GOOG - close: 288.45 chg: +2.20 stop: 290.51
GOOG's display of relative strength on Friday has finally put the kibosh on our bearish play. Actually we've been suggesting that readers exit bearish positions for the last few days. Shares of GOOG do still have overhead resistance at the $290 level and its simple 50-dma but the stock has broken through its multi-week trendline of resistance. Plus there is the very high risk of an announcement that GOOG will be added to the S&P 500 index.
Picked on August 11 at $284.50