Option Investor
Play Updates

In Play Updates and Reviews

HAVING TROUBLE PRINTING?
Printer friendly version

Call Updates

Cameco - CCJ - close: 40.68 change: -0.16 stop: 38.75

We continue to urge caution here with CCJ. The bullish breakout buy signal in the gold and silver index (XAU) that occurred on Tuesday last week has been reversed and the move looks like a bull trap. While CCJ is more of a uranium miner than a gold miner the sell-off in gold stocks is still weighing on the stock. Currently, CCJ still looks bullish with its own breakout that began early last week. However, the stock looks poised to dip back toward the $40 level soon. More conservative traders might want to tighten their stops. At this point we would probably not open new bullish plays until CCJ traded back above $41.25 or $41.50. Our target is the $44.50-45.00 range. FYI: The Point & Figure chart points to a $55 target.

Suggested Options:
We are not suggesting new call plays in CCJ at this time.

Picked on August 22 at $ 40.33
Change since picked: + 0.35
Earnings Date 07/28/06 (confirmed)
Average Daily Volume = 1.9 million

---

Carpenter Tech. - CRS - cls: 99.24 chg: -0.47 stop: 97.45

Our short-term bias on the steel sector is turning. The bullish breakout in the group that began a week ago Monday has reversed. CRS was no exception and short-term technical indicators have rolled over. We strongly considered exiting early in CRS but shares are still holding above support at the 10-dma. We are not suggesting new plays at this time and more importantly more conservative traders may still want to cut their losses now. If the major averages turn lower next week then CRS will no doubt hit our stop loss at $97.45. FYI: CRS' P&F chart is still bullish and points to a $120 target but the stock could fall to $94 and still maintain its buy signal.

Suggested Options:
We are not suggesting new positions in CRS at this time.

Picked on September 05 at $101.10 *gap higher*
Change since picked: - 1.86
Earnings Date 10/23/06 (unconfirmed)
Average Daily Volume = 847 thousand

---

Cymer Inc. - CYMI - close: 42.13 chg: +0.31 stop: 39.95

CYMI has been showing some relative strength this past week. The stock fared a lot better than many of its peers when the SOX semiconductor index led the market lower during the mid-week sell-off. You could argue that CYMI is poised to breakout to new relative highs and traders might want to open new call plays on another rise past the $42.50 level. However, what concerns us is the SOX index. The technical picture for the SOX has turned somewhat negative and its MACD on the daily chart has produced a new sell signal. If you add in that we're in September, which is typically one of the worst months of the year for stocks, it makes us extra cautious and we want to see more strength in our bullish candidates. We're not suggesting new plays at this time but as we mentioned earlier traders could use another breakout over $42.50 as an entry point. Bear in mind that the 200-dma or the 100-dma still overhead could act as resistance. FYI: The P&F chart points to a $59 target.

Suggested Options:
We are not suggesting new plays in CYMI at this time.

Picked on September 06 at $ 42.55
Change since picked: - 0.39
Earnings Date 10/24/06 (unconfirmed)
Average Daily Volume = 1.0 million

---

Emerson Elec. - EMR - close: 81.17 chg: -0.63 stop: 79.99

We have to wave the yellow caution flag here. Thursday's intraday bounce near the 200-dma looked like a new bullish entry point in EMR. Friday's failure to see any sort of follow through higher is bad news! The stock slipped back toward the 200-dma and the MACD indicator on the daily chart has produced a new sell signal. We strongly considered exiting early right here and more conservative traders may want to cut their losses now. We're going to stick it out and see if shares will bounce again from the 200-dma or will they dip and bounce near round-number support around $80.00. We are not suggesting new plays at this time. The P&F chart looks very bullish and points to a $92 target but shares could dip to $78 and still maintain a buy signal.

Suggested Options:
We are not suggesting new plays in EMR at this time.

Picked on September 05 at $ 83.55
Change since picked: - 2.38
Earnings Date 10/31/06 (unconfirmed)
Average Daily Volume = 1.5 million

---

Freeport McMoran - FCX - close: 58.31 chg: -1.00 stop: 57.45 *new*

FCX lost another 1.6% on Friday as the metal and mining stocks continued to pull back instead of bouncing higher like the major market averages. Like the failed rally and bullish breakouts in gold and steel stocks we are worried that the bullish breakout in FCX may continue to reverse. At this time we're going to raise our stop loss to $57.45, which is relatively close to break even. More aggressive traders may want to leave their stop loss under $56 and its 200-dma. Technically FCX should find some support near $58.00 but we skeptical. We are not suggesting new positions at this time.

Suggested Options:
We are not suggesting new plays in FCX at this time.

Picked on August 23 at $ 57.51
Change since picked: + 0.80
Earnings Date 10/17/06 (unconfirmed)
Average Daily Volume = 5.1 million

---

Phelps Dodge - PD - close: 91.09 change: -1.41 stop: 87.95 *new*

Copper-miner PD has weathered the pull back in metals a bit better than some of its peers. We told readers to expect a dip toward $90 and that's what PD delivered on Friday. A bounce from current levels could be used as a new bullish entry point to buy calls but we would not be surprised to see the dip continue toward the $89.00 level. We're going to inch our stop loss higher to $87.95. Shares of PD should find additional support near $88.50 with its six-week trendline of higher lows (see chart). Our target is still the $97.50-100.00 range. FYI: We would enter new positions cautiously as the P&F chart shows a "bull trap" pattern following the recent buy signal ($111 target).

Suggested Options:
We would wait for a bounce, probably above Friday's high (92.09) before considering new plays.

BUY CALL OCT 90.00 DBP-JR open interest=14014 current ask $5.90
BUY CALL OCT 95.00 DBP-JS open interest=13805 current ask $3.50

Picked on September 01 at $ 90.55
Change since picked: + 0.54
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 6.7 million

---

United Ind. - UIC - close: 52.89 change: -0.57 stop: 49.99

Unfortunately there are not any changes for our UIC play. As predicted the stock continues to see profit taking following its impressive August rally. The $52 level might offer some support but shares could just as easily slip toward stronger support near $50.00 and its 100-dma and 200-dma. What could help UIC is that the DFI defense index, which broke out over significant resistance last week, is still holding above that resistance level (near 1100). Another rebound in the DFI and shares of UIC might end its consolidation phase. We are not suggesting new positions in UIC at this time. The stock has already hit our primary target in the $54.75-55.00 range. Our secondary target is the $57.50 level.

Suggested Options:
We are not suggesting new plays in UIC at this time.

Picked on August 27 at $ 51.77
Change since picked: + 1.12
Earnings Date 08/01/06 (confirmed)
Average Daily Volume = 198 thousand

---

VF Corp. - VFC - close: 71.42 change: +1.32 stop: 68.95 *new*

After a couple of misfires it looks like the rally in VFC is finally taking off. We almost gave up on it with all the failures but shares never broke down under the $69 level. Friday saw VFC display plenty of relative strength with a 1.88% gain and a new all-time high. Thursday we suggested that the rebound looked like a new entry point and traders might still want to chase it here although feel free to raise your target. The P&F chart points to a $96 target. We are aiming for the $74.00-75.00 range. Please note that we're raising our stop loss to $68.95.

Suggested Options:
We are suggesting the October calls. Remember, we do not want to hold over the October earnings report for VFC.

BUY CALL OCT 70.00 VFC-JN open interest= 25 current ask $3.70
BUY CALL OCT 75.00 VFC-JO open interest= 79 current ask $1.25

Picked on August 30 at $ 70.25
Change since picked: + 1.17
Earnings Date 10/18/06 (unconfirmed)
Average Daily Volume = 567 thousand
 

Put Updates

Boeing - BA - close: 72.80 change: -0.07 stop: 76.26 *new*

BA is still sinking and shares hit a new five-month low on rising volume this past Friday. We remain bearish but the short-term momentum indicators are suggesting that the next move will be higher. We can expect a bounce back toward the $75-76 levels, especially if the major market averages continue to rebound next week. Our Thursday update said we were changing our stop loss to $76.26 but the change was not updated until this weekend. We are not suggesting new positions at this time. Our target is the $70.50-70.00 range.

Suggested Options:
We are not suggesting new plays in BA at this time.

Picked on August 10 at $ 75.75
Change since picked: - 2.95
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 4.2 million

---

Chipotle Mex Grill - CMG - close: 47.92 chg: -1.93 stop: 51.55*new*

It was a rough day for shares of CMG on Friday. The stock dipped to an intraday low of $45.82 before bouncing. Unfortunately, our target is the $45.50-45.00 range so it was close but no cigar (yet). The weakness on Friday certainly pushed the technical indicators strongly back into bearish patterns. The move appeared to be fueled by investor reaction to new out of McDonalds (MCD). MCD, who still owns just over 50 percent of CMG, announced on Friday that it was offering its shareholders the chance to swap all or some of their shares of MCD for shares of CMG. MCD says they plan to sell the rest of its stake in CMG by the end of October. It looks like the reaction in CMG may have been due to MCD offering its shareholders a 10% discount versus the current value of CMG shares. We remain bearish but short-term the bounce may not be over yet so expect CMG to try and rally back toward the $50 level. Please note we're moving the stop loss down to $51.55.

Suggested Options:
We are not suggesting new positions in CMG at this time.

Picked on August 09 at $ 50.28
Change since picked: - 2.36
Earnings Date 10/30/06 (unconfirmed)
Average Daily Volume = 414 thousand

---

EOG Resources - EOG - close: 60.89 chg: -2.11 stop: 65.31 *new*

Another drop in crude oil futures helped pull shares of EOG to a 3.3% decline on Friday. We expect the slide to continue. The summer driving season is over. Oil inventories are at very high levels. At the moment there seems to be a lull in the West-versus-Iran drama. Don't be surprised if EOG manages a bounce from the $60 level but we continue to target the $57.50-55.00 range. We're going to adjust our stop loss to $65.31, which is just above the simple 10-dma. We would not open new positions at the moment but a failed rally under $64 could be used as a new entry point. Remember, the biggest risk we see to this play is any escalation with the U.S. and Iran.

Suggested Options:
We are not suggesting new positions in EOG at this time.

Picked on September 06 at $ 63.85
Change since picked: - 2.96
Earnings Date 10/31/06 (unconfirmed)
Average Daily Volume = 3.3 million

---

Johnson Controls - JCI - close: 69.90 chg: +0.53 stop: 75.51

JCI did manage something of an oversold bounce on Friday. Overall the pattern remains bearish. We were a little bit surprised by the spike in volume on Friday since the stock didn't move that much. We're not suggesting new positions right here but readers can watch for a failed rally under $72.00 or $72.50 as a potential entry point. More conservative traders might want to tighten their stops toward $73.00. Our target is the $68.50-67.50 range. The P&F chart points to a $59 target.

Suggested Options:
We are not suggesting new positions in JCI at this time.

Picked on August 22 at $ 72.96
Change since picked: - 3.06
Earnings Date 10/19/06 (unconfirmed)
Average Daily Volume = 1.3 million

---

Radian Group - RDN - close: 58.60 chg: -0.50 stop: 61.51

RDN displayed some relative weakness on Friday. The stock lost 0.8% and dropped back under the $59.00 level. We were suggesting that readers wait for another decline under $59.00 as a new entry point to buy puts. These last couple of weeks has seen RDN breakdown from a bearish head-and-shoulders pattern, breakdown under $60.00, breakdown under its 200-dma and exponential 200-dma, and do it with a steady pattern of lower highs. Our target is the $55.15-55.00 range. The P&F chart points to a $50 target.

Suggested Options:
We are suggesting the October or November puts.

BUY PUT OCT 60.00 RDN-VL open interest= 58 current ask $2.65
BUY PUT OCT 55.00 RDN-VK open interest= 86 current ask $1.00

BUY PUT NOV 60.00 RDN-WL open interest=310 current ask $3.40
BUY PUT NOV 55.00 RDN-WK open interest=402 current ask $1.45

Picked on September 06 at $ 58.99
Change since picked: - 0.39
Earnings Date 10/18/06 (unconfirmed)
Average Daily Volume = 722 thousand
 

Strangle Updates

None
 

Dropped Calls

Allegheny Tech. - ATI - cls: 59.05 chg: -1.13 stop: 56.95

Watch out - danger ahead! The sector-wide rally in steel stocks early last week has failed. Most of the market turned lower on Wednesday and Thursday last week but managed a bounce on Friday. Not so for the steel stocks, which continued to decline. The bullish breakout in ATI that caught our attention on Tuesday has reversed. Friday's close under the $60 level looks like bad news. Aggressive traders might want to consider hanging on but we're exiting early to cut our losses now. The P&F chart for ATI is still bullish so we would keep an eye on the stock for another rebound above its 50-dma, near $61.17.

Picked on September 05 at $ 62.32
Change since picked: - 3.27
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 3.3 million

---

AstraZeneca - AZN - close: 61.35 change: -0.81 stop: 61.95

We have been stopped out of AZN at $61.53. We had hoped that the sell-off in AZN would stop near support at $62.00 but on Friday morning Citigroup downgraded the stock to a "hold" and shares fell lower for the fourth day in a row. Unfortunately, AZN gapped open lower at $61.53, which is under our stop loss at $61.95. The four-day sell-off has erased most of the August rally in AZN and it will be interesting to see if shares can rebound from technical support at the 50-dma, which is where the stock stalled on Friday.

Picked on August 20 at $ 62.99
Change since picked: - 1.64
Earnings Date 10/26/06 (unconfirmed)
Average Daily Volume = 1.1 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

Play Update Archives