Cigna - CI - close: 93.25 change: -0.12 stop: 91.99
Considering the market weakness on Wednesday and Thursday this past week we can understand why CI's oversold bounce has stalled. Friday's performance was discouraging. Overall the pattern is unchanged but short-term technical oscillators are deteriorating. The daily chart's MACD is still in a new buy signal and the Point & Figure chart displays a buy signal with a $108 target. We are suggesting that traders wait for a move over $94.50 or $95.00 before considering new bullish positions. Our target remains the $99.75-100.00 range. More aggressive traders may want to aim higher but be aware that the $105 level looks like significant resistance in addition to lining up with the 38.2% Fibonacci retracement of its sell-off from its 2006 highs.
BUY CALL JUN 90.00 CI-FR open interest=3486 current ask
BUY CALL JUL 90.00 CI-GR open interest= 142 current ask $7.00
on May 16 at $ 94.52
Getty Images - GYI - cls: 64.26 chg: +0.47 stop: 62.49
GYI is still consolidating under resistance at the $65.00 level. Thus far we remain on the sidelines. It looks like shares of GYI have produced a bottom with the rebound from the $60 level but we want to see more confirmation before buying calls. That's why we're suggesting a trigger at $65.21. This trigger is above last Tuesday's high of $65.15. It is imperative that readers trade with a stop loss. GYI has produced these bottoming patterns before only to quickly reverse course when it nears technical resistance at its 50-dma. Currently the 50-dma has declined to $69.60 so we are going to adjust our target to $69.00-65.50. More conservative traders may want to put their stop under Thursday's low near $63.00. More aggressive traders may want to consider bullish positions now.
BUY CALL JUN 60.00 GYI-FL open interest= 193 current ask $5.30
Picked on May xx at $ xx.xx <-- see TRIGGER
Omnicom - OMC - close: 91.85 chg: +0.10 stop: 89.99
OMC is a relative strength/momentum play. Unfortunately, last week's market crash really put the breaks on OMC's momentum. Fortunately, the stock resisted any profit taking attempts but shares continue to look overbought and the MACD produced a new sell signal a few days ago. We are not suggesting new plays at this time but more aggressive traders might want to consider opening positions if OMC can hit a new relative high (92.50). Our target is the $97.50-98.00 range. The P&F chart is very bullish with a $113 target.
Picked on May 15 at $ 92.05
Amazon.com - AMZN - close: 33.94 chg: +1.33 stop: 34.35 *new*
Danger! AMZN's failed rally on Thursday got another chance with Friday's rebound from the $32.00 level. Volume came in above average and shares broke through short-term resistance at the 10-dma. The stock stopped right at resistance at its seven-week trendline of lower highs. If shares move any higher we would suggest exiting early. We are going to lower our stop loss to $34.35. Our target has been the $31.00 level. We were trying to hit the trendline of support displayed on the weekly chart below. Looks like we were off by about 50 cents with AMZN testing the 31.50 region twice last week. More conservative traders may want to exit now!
Picked on May 01 at $ 34.85
Apollo Group - APOL - close: 51.26 chg: -0.13 stop: 54.65 *new*
So far so good. Shares of APOL broke down under support at the $52.00 level during last week's market sell-off. The $52 level also happen to be the neckline to APOL's bearish head-and-shoulders pattern. Our trigger to buy puts was at $51.75. Our target is the $47.75-47.50 range near its early March lows. We do expect some support at the $50.00 level so it would not surprised us to see shares bounce around the $50-52 region for a while. The descending 100-dma is overhead resistance so we're going to adjust our stop loss closer to this moving average.
BUY PUT JUN 55.00 OAQ-RK open interest= 385 current ask $4.30
Picked on May 17 at $ 51.75
Franklin Res. - BEN - close: 88.75 chg: +2.01 close: 92.55
Friday morning saw shares of BEN gap higher after UBS upgraded the stock to a "buy". BEN closed with a 2.3% gain, which was better than the sector rebound in the XBD index of 1.5%. We'd like to think this is just a one-day pop but it could be the beginning of a painful bounce back toward resistance in the $92.00-92.50 region, especially if the major market indices follow through on Friday's oversold bounce. If you do not want to endure that kind of bounce then consider exiting early. You can always re-enter on a failed rally. We are not suggesting new positions at this time. Our target remains the $85.00-84.50 range.
Picked on May 14 at $ 89.30
CB Richard Ellis - CBG - cls: 77.41 chg: -1.40 stop: 82.71
Shares of CBG lost 1.77% on Friday but we need to warn readers about a potential bullish reversal. Friday's rebound from its lows looks like the beginning of a short-term bullish reversal and odds are probably pretty good for a follow through if the major averages bounce next week. We would expect a bounce back toward the $80.00-81.25 region. We are not suggesting new bearish plays at this time. We will continue to target the 100-dma, currently at 73.29. To account for our moving target we'll use an exit range of $73.75-73.00.
Picked on May 17 at $ 77.93
IDEXX Labs - IDXX - close: 76.61 chg: -0.21 stop: 78.55 *new*
The good news with IDXX is that shares failed to breakout over its descending 10-dma on Friday and the stock displayed relative weakness with another decline. The bad news is that we suspect shares are poised to move higher. The 10-dma is the nearest overhead resistance and the $78.00 level looks like the nearest price resistance so we're going to lower our stop loss to $78.55. We are not suggesting new put positions at this time. Our target is the $74.00-73.50 just above the simple 200-dma. FYI: the P&F chart points to a $64 target.
Picked on May 11 at $ 77.93
Ipsco Inc. - IPS - close: 94.28 chg: +0.33 stop: 100.26
IPS is a new aggressive (high-risk) put play in the steel sector. Last week steel stocks were getting hammered as traders locked in profits on some of the market's best performers. On Friday shares traded in another wide range ($91.22-96.62). Odds are IPS could bounce back toward $100 before moving lower again. It may be prudent to wait and see where the bounce fails. We would hesitate to open new positions if the major averages are rebounding. Technically IPS looks bearish given the double-top pattern and the high-volume sell-off through multiple levels of technical support. The P&F chart points to an $83 target. We are targeting the $85.50-84.50 range, which is above what we suspect will be support at its rising 200-dma. FYI: while we have a wide stop at $100.26 it may not be wide enough. The 10-dma is at $101.07.
BUY PUT JUN 95.00 IPS-RS open interest=
408 current ask $5.00
Picked on May 18 at $ 93.95
Nucor - NUE - close: 104.95 chg: +0.15 stop: 112.81
NUE is in a similar situation to IPS. The stock was a high-flyer and shares witnessed a lot of profit taking last week that did a lot of technical damage to the stock. Now the stock is hinting at an oversold bounce. NUE could easily bounce back toward the $110 level and still look bearish. If the markets are green next week we would expect a rally back toward $108-110. A failed rally under $110 could be used as a new entry point. If the stock closes over $110 we might choose an early exit. We are targeting the $95.50-95.00 range, which is above what could be technical support at the rising 100-dma. The P&F chart is bearish and points to an $82 target.
Picked on May 17 at $105.40
(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)
Fedex - FDX - close: 109.34 chg: +0.09 stop: n/a
FDX dipped to $107.44, which pushed the June $110 puts (FDX-RB) to a high of $4.20 before the stock pared its losses. Both FDX and the Dow Transportation index look pretty short-term oversold and considering the recent weakness in crude oil we suspect the transports will bounce next week. We are not suggesting strangle positions at this time. The options involved in our strangle are the June $120 calls and the June $110 puts. This is a bet that FDX will trade significantly north of $120 or under $110 by June option expiration. Our estimated cost was about $2.60. We would plan on exiting if shares of either option rose to $4.50 or more.
Picked on April 30 at $115.13