The Andersons Inc. - ANDE - cls: 38.44 chg: -0.56 stop: 38.75
Update: ANDE spiked to $40.44 on Friday morning but the rally ran out of steam like the rest of the market. After reading the Option Investor market wrap this weekend we're not so sure we should be adding bullish call plays at this time. It seems like any spike higher on Monday or Tuesday may end up being a trap. For this reason we're going to adjust our trigger to buy calls on ANDE to $41.85, which is above the descending 50-dma. As the 50-dma descends we'll move the trigger. More conservative traders may just want to pass on adding any new bullish plays even if ANDE hits our trigger. A reprint of our Thursday night play description follows:
The incredibly volatile shares of ANDE have cooled somewhat after the stock's 2-for-1 split in June. The stock can still produce some violent moves and traders may want to use a wider stop loss. We suspect that the next move will be higher. ANDE has produced what appears to be a bullish double-bottom pattern over the last couple of months with support near $35.00. Technicals indicators have turned positive and now ANDE looks ready to breakout over $40.00 and its three-month trendline of resistance (lower highs, see chart). Aggressive traders may want to consider positions now. We're suggesting a trigger to buy calls at $40.51(the trigger is now set to $41.85). There is potential resistance at the 50-dma near $42 but if the markets breakout higher on the jobs report and/or the FOMC meeting then we expect ANDE to push past the 50-dma. Our target is the $46.00-47.00 range.
BUY CALL SEP 40.00 AQA-IH open interest= 60 current
Picked on August xx at $ xx.xx <-- see TRIGGER
Avalonbay Comm. - AVB - close: 118.46 chg: 1.58 stop: 114.90
Update: Our new play in AVB is now open. We cannot find any news or catalyst to explain it but shares of AVB gapped open higher on Friday at $117.70. Our suggested trigger to buy calls was at $117.55 so we would have been triggered at the open. The move is definitely bullish as AVB has now broken out above its multi-day trading range. However, more conservative traders may want to think twice about opening new bullish positions. The market wrap for this weekend outlines why the markets may be more likely to sell the FOMC news on Tuesday. We do not see any changes from our AVB new play description from Thursday and we're reposting it here:
The REIT stocks seem to be doing well and showing plenty of relative strength. AVB is one REIT that is trading near all-time highs. The stock has been consolidating sideways the past few days in a narrow trading range. Thursday's bounce has put AVB on the verge of another bullish breakout. We want to catch the next leg higher so we're suggesting a trigger to buy calls at $117.55. If triggered our target is the $124.00-125.00 range. Currently the Point & Figure chart points to a $132 target. We do expect the $120 level to act as short-term resistance so don't be surprised to see AVB bounce around the $120-117.50 range. Once AVB breaks resistance at $117.50 it should become new short-term support. Please note that the jobs report is due out on Friday morning before the market open. More conservative traders may want to wait and watch how the markets react to the news before considering new plays.
BUY CALL SEP 115.00 AVB-IC open interest= 2 current ask $6.80
OCT 115.00 AVB-JC open interest=1275 current ask $7.80
Picked on August 04 at $117.70 *gap higher*
Cytec - CYT - close: 53.73 change: -0.02 stop: 52.45
CYT still looks like it wants to breakout higher from its current two-month consolidation pattern. However, our market bias is turning bearish and we suspect that the markets will eventually move lower following the FOMC meeting next week. That definitely dampens our enthusiasm for starting new call plays. Yet we can only trade what we see not what we believe. For the time being we're going to keep CYT on the play list but more conservative traders may want to think about not opening new bullish positions. This could be a tough decision if we see some intraday spikes following the FOMC announcement since at the time of any spike we don't know it's a spike yet and only see the rally. Shares of CYT are trading under resistance at the $55.00 level. We want to catch the breakout so we're suggesting a trigger to buy calls at $55.11. If triggered our target is the $59.00-60.00 range. We do expect to see some resistance near $57.50 so expect a pull back but broken resistance at $55 should become new support. The Point & Figure chart is bullish and points to a $64 target. FYI: You can notice how volume has been declining as more and more investors just sit back and wait for Tuesday's FOMC announcement.
BUY CALL SEP 50.00 CYT-IJ open interest= 23 current ask $4.80
Picked on August xx at $ xx.xx <-- see TRIGGER
Femsa Fomento - FMX - close: 90.60 chg: 0.94 stop: 85.85
Our bullish play in FMX is now open. The stock gapped open higher on Friday morning opening at $90.50 and trading to $91.75 before paring its gains. We had been suggesting a trigger to buy calls at $90.05 so we would have been triggered at the open. The breakout over $90.00 is bullish and the move has produced a quadruple-top breakout buy signal on the Point & Figure chart with a $102 price target. We want to remind readers that at the moment our market bias is turning negative and we expect the markets to trend lower following the FOMC announcement (minus any post-announcement spikes) so readers should carefully consider opening new bullish plays. Taking everything into consideration this is still a bullish entry point for FMX. Our target is the $97.00-100.00 range.
BUY CALL SEP 85.00 FMX-IQ open interest=
13 current ask $9.00
BUY CALL OCT 90.00 FMX-JR open interest=132 current ask $7.20
Picked on August 04 at $ 90.50 *gap higher*
Target achieved! The jobs report data pushed bond yields to spike lower on Friday morning and that fed the rally in financials and broker stocks. The XBD spiked to 220 but the rally failed and the XBD index closed under technical resistance at its 100-dma. The Friday morning spike in shares of GS hit an intraday high of $156.29. Our main target for the stock was $154.00. We were suggesting that readers exit the majority of their position at $154 and only consider holding a small play open with an aggressive target at $157.50. The overall pattern in GS looks bullish but Friday's action is a short-term bearish reversal. The next move might be a drop towards $150. We're not suggesting new plays and we are adjusting our stop loss to $146.95.
Picked on July 25 at $148.05
Petroleo.Brasiliero - PBR - cls: 93.66 chg: -0.79 stop: 89.49
In the U.S. markets oil stocks were mixed as crude oil dipped under $75 a barrel. The OIX oil index churned sideways and closed with a fractional gain on Friday. The OSX oil services index was hit with some profit taking and a 2.5% decline. Shares of PBR managed to spike over resistance at $95.00 and hit $95.98 before seeing some end of week profit taking after a decent move over the last few days. Our bias on PBR is still bullish given its breakout over resistance above $90.00 but the next move could be lower. Shares might dip toward short-term technical support at its 10-dma near 91.70 or back to the $90 level. Broken resistance at $90.00 should act as new support. A bounce from either level, $90.00 or the 10-dma, could be used as a new bullish entry point. Our target is the $99.50-100.00 range. We do not want to hold over the mid-August earnings report. FYI: The Point & Figure chart is forecasting a $116 target.
Picked on July 30 at $ 92.72
US Airways - LCC - close: 44.95 chg: -1.61 stop: 47.51
Another day of positive July traffic numbers and another day of declines in crude oil were not enough to sustain the rally in airline stocks. The XAL index fell 1.1% and shares of LCC dropped 3.4%. Investors appeared to focus on cautious comments from British Airways talking about a tougher third and fourth quarter in 2006. Friday's move in LCC looks like a bearish reversal/failed rally under its 10-dma. The drop back under $45.00 and its simple 100-dma looks like a new entry point We would consider new puts right here but more conservative traders may want to see a decline under $44.00, near Friday's low before opening positions. We suspect that the $40 level might offer some support for LCC so we're setting our short-term conservative target at $40.25. We're also setting a more aggressive target at $36.00. FYI: The P&F chart points to a $35 target.
BUY PUT SEP 45.00 LCC-UI open interest= 727 current ask $3.60
Picked on August 01 at $ 43.54
Manpower Inc. - MAN - close: 58.75 chg: -0.82 stop: 60.76
The Friday morning rally in MAN failed right at its simple 21-dma and shares closed with a 1.3% loss. The move is also a failed rally/bearish reversal near round-number resistance at $60.00. The move looks like a new bearish entry point to buy puts. Please note that on Thursday we adjusted our target to $55.75-55.50 to account for the rising 200-dma, which we suspect will act as technical support. The P&F chart currently points to a $48 target. FYI: It is worth noting that the weekly chart's most recent candlestick does look somewhat like a "hammer" pattern, which is usually seen as a bullish reversal.
BUY PUT SEP 60.00 MAN-UL open interest=210 current ask $3.10
Picked on July 20 at $ 59.42
(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.)
Bausch Lomb - BOL - close: 46.78 change: -0.36 stop: n/a
After several weeks shares of BOL finally broke down under support at the $47.00 level on Friday. We suspect that the stock did not see a stronger decline because investors are still in a wait-and-see mode ahead of Tuesday's FOMC meeting. The pattern in BOL has definitely turned bearish and we're not suggesting new strangle plays. We have two weeks left before August options expire and need to see a bigger move in BOL soon. Our estimated cost on the strangle was $2.15. Our goal will be to sell if either option rises to $3.25 or more. The options in our suggested strangle are the August $50 call (BOL-HJ) and the August $45 put (BOL-TI).
Picked on July 23 at $ 47.40
L-3 Comm. - LLL - close: 71.50 chg: -0.77 stop: n/a
LLL continues to display relative weakness. On Friday the stock produced a bearish engulfing candlestick pattern with a 1% decline on average volume. The stock closed at new seven-month lows and is quickly approaching potential support at its December 2005 low and the $70 level. There are two weeks left before August options expire and we need to see LLL move towards the $68 region. We're not suggesting new strangle plays at this time. Our estimated cost for the strangle was $1.35. We will plan to sell if either option rises to $2.25 or more. The options in our LLL strangle are the August $80 call (LLL-HP) and the August $70 put (LLL-TN).
Picked on July 23 at $ 75.26
3M Co. - MMM - close: 69.45 change: 0.17 stop: n/a
We have two weeks left before August options expire and shares of MMM are still hovering around the $70.00 level. We suspect that the markets, and MMM, will finally move after the FOMC announcement on Tuesday. We're not suggesting new plays but MMM is definitely offering traders a new entry point to buy a strangle. If you choose to open a new play we'd suggest the September options. Our estimated cost for our August strangle was $0.75. We are planning to exit if either options rises to $1.50 or more. The options in our strangle are the August 65 put (MMM-TM) and the August 75 call (MMM-HO).
Picked on July 23 at $ 70.72