BP Prudhoe Bay - BPT - close: 73.95 chg: +1.76 stop: 72.49
As of Thursday's close the OIX oil index and OSX oil services index had both fallen to their 100-dma's. Shares of BPT followed suit and tested (actually broke) its 100-dma. This past week the energy sector experienced a very sharp sell-off so Friday's oversold bounce was not a surprise. The real question for traders is whether this is a bounce worth buying. Looking at shares of BPT we see that the stock is rebounding from the bottom of its recent trading range ($70-$80) and this may indeed be a bullish entry point. Until now we've been suggesting that readers buy a breakout over resistance at the $80.00 level, which has kept us on the sidelines. More conservative traders may want to stick to that plan. We're going to suggest a new strategy. We'll suggest longs if BPT can trade over the $75.00 level. Our trigger to buy calls will be $75.05. If triggered we'll target a move into the $79.75-80.00 range. We'll adjust our stop loss to $72.49.
BUY CALL NOV 70.00 BPT-KN OI= 0 current ask $5.10
Picked on October xx at $ xx.xx <-- see Trigger
Broadcom - BRCM - close: 46.47 chg: +0.58 stop: 44.49
Looking back over the past week shares of BRCM displayed great relative strength and only fell lower on Thursday. That dip looks like a new bullish entry point. The stock has a steady trend of higher lows and its Point & Figure chart points to a very bullish $86 price target. We are only targeting a move into the $49.00-50.00 range. Our time frame is down to two weeks as we want to exit ahead of BRCM's October 20th earnings report. If the SOX semiconductor index can rally from the bottom of its trading range then BRCM has a stronger chance of hitting our target. If the SOX breaks down under its 100-dma and the 450 level then BRCM may become a target for profit taking. FYI: technical traders will note that BRCM does show a bearish divergence between its rising stock price and its MACD. Be sure to play with stop losses in place!
BUY CALL NOV 42.50 RCQ-KS OI= 6254 current ask $5.10
Picked on September 25 at $ 45.05
Bear Stearns - BSC - close: 105.25 chg: -1.10 stop: 102.49
It is decision time for traders. Do you stay or do you go? The reversal in shares of BSC has been sharp. The stock broke out to new multi-month highs in late September but was unable to push through the $110 level, which looks like the neckline to an inverse or bullish head-and-shoulders pattern. A crashing stock market this past week didn't help matters and now BSC is down five days in a row. The sell-off has turned BSC's technicals bearish and produced a new MACD sell signal. Plus, shares broke down under what we expected to be short-term support near the $106 level. These seem like good reads to go. The only reason to stay would be to speculate on a bounce. After five declines in a row BSC is in a good spot to produce an oversold bounce, especially from the $105.00 level, which could act as round-number support. So far the Point & Figure chart remains bullish and still points to a $117 target. This alone isn't very compelling but the major averages could produce a stronger oversold bounce next week so we're not ready to give up just yet on shares of BSC. We are not suggesting new plays although more aggressive traders might want to buy a bounce from the $105 level. More conservative types may want to tighten their stop loss toward the $105 level.
Picked on October 02 at $109.75
Cardinal Health - CAH - close: 63.55 chg: +0.49 stop: 59.85
Healthcare stocks tend to be more defensive and this was evident in CAH's relative strength as it weathered the sell-off last week. We remain bullish given its technical breakout over major resistance in the $60.00-61.00 region. The Point & Figure chart is also very bullish with a breakout over resistance and a suggested bullish target of $75.00. We are only targeting a move into the $66-67 range and we plan to exit before the company's October 26th earnings report. Readers may want to consider new bullish positions on another dip to the $62.50 level.
Picked on September 25 at $ 61.95
Cameco Corp - CCJ - close: 52.03 chg: +1.65 stop: 49.49
Uranium miner CCJ continues to produce volatility. The stock dipped toward support near the bottom of its trading range at the $50 level, bolstered by its rising 50-dma on Thursday. Friday witnessed a relatively sharp rebound back toward the middle of its range. At this time we're not suggesting new bullish plays although aggressive traders may want to speculate on the bounce from $50. We are more defensive since Thursday's intraday low produced a new P&F chart sell signal.
Picked on September 18 at $ 53.30
Cigna - CI - close: 115.77 change: +0.02 stop: 111.49
Health insurer CI continues to look attractive as a bullish candidate. The stock broke through the top of a multi-week trading range in late September. Shares then rallied to what we expected would be short-term resistance at the $120.00 level. This past week's sell-off has pulled CI back toward rising technical support near its rising 40 and 50-dma's. We see the dip as a new entry point although our readers may want to wait for CI to trade back above $116.50 before initiating new positions. We plan to exit before CI's early November earnings report. Our target is the $124.00 level.
BUY CALL NOV 115.00 CI-KC OI= 132 current ask $4.70
Picked on September 29 at $116.51
Altria Group - MO - close: 72.46 change: -0.29 stop: 69.90
We're moving into crunch time with MO. The company is due to report earnings on October 19th and we do not want to hold over the report. There are usually too many unknown variables to make it worthwhile holding directional option positions. The stock's relative weakness on Friday is a bit discouraging but MO did produce a decent intraday bounce from its lows, which tested support at its rising 40-dma. We only have seven trading days left so we are not suggesting new plays at this time. Our target remains the $78.00 level. More conservative traders may want to think about raising their stop loss toward $70.75, which was support twice last month.
Picked on September 18 at $ 73.14
Black & Decker - BDK - close: 78.69 chg: -1.11 stop: 83.05
BDK is almost there! The stock tried to rally on Friday but failed at short-term resistance near the bottom of its October 5th gap down. The stock then sank to a new five-month low and came within 20-cents of our target in the $78.00-77.00 range. Readers may want to strongly consider exiting right here for a profit. We are not suggesting new plays with BDK so close to our exit.
Picked on September 14 at $ 83.31
Ryland Group - RYL - close: 64.38 chg: +1.03 stop: 68.75
The homebuilding stocks managed a bit of an oversold bounce on Friday but the trend remains bearish. Concerns over the impact of inflation and higher interest rates on mortgage rates and consumer spending sparked a sharp reaction in the sector. The DJUSHB index broke down below its simple and exponential 200-dma's in addition to support near the 900 level. Meanwhile shares of RYL fell through the bottom of its recent trading range to hit new four-month lows. RYL was already trading under its 200-dma's. The P&F chart for RYL is bearish with a $56 price target. We are targeting a move into the $60.50-60.00 range and we plan to exit ahead of the company's October 18th earnings report. That only gives us six more trading days. With such a brief time frame we're not suggesting new positions. However, more aggressive traders may want to consider new bearish positions if RYL produces any sort of failed rally under resistance at the $66.00 level.
Picked on October 05 at $ 65.70
Wynn Resorts - WYNN - close: 42.85 chg: +0.67 stop: 45.11
WYNN 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:
It has taken four days of market wide declines but shares of WYNN have finally joined the pack. Shares broke down from its 12-day sideways trading range and dropped to a new one-year low under its May lows. Volume on today's breakdown was very heavy suggesting more weakness ahead. The Point & Figure chart is already bearish and points to a $33.00 target. Traders have a choice on entry points. The major market averages all look short-term oversold. The late day bounce today suggests that the markets might produce an oversold bounce tomorrow. If that is the case then readers might want to wait and see if WYNN bounces back toward the bottom of its recent trading range near $43.50, which should now act as new resistance. A failed rally near $43.50 could be used as a new bearish entry point. The alternative is to open new bearish put positions while the stock trades under $42.50. We do expect the $40.00 mark to act as round-number, psychological support but we expect it will eventually break down. Our end of October target for WYNN is the $37.50-37.00 range. We will exit ahead of the company's earnings report.
BUY PUT NOV 45.00 UWY-WI OI=191 current ask $3.80
Picked on October 06 at $ 42.18
Whole Foods Mkt - WFMI - cls: 130.97 chg: +2.21 stop: 133.01
The Thursday night newsletter said that if the markets produce an oversold bounce on Friday we would expect WFMI to participate. Well participate it did. The stock rallied 1.7% and closed back above the $130.00 level. This alone isn't so remarkable and the stock remains under the simple 50-dma. However, we suspect that WFMI will continue to show strength next week so we're choosing to exit early and minimize any losses.
Picked on October 05 at $129.62