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Call Updates

Cymer Inc. - CYMI - close: 43.91 chg: -0.66 stop: 41.95

The SOX was slipping back toward support at the bottom edge of its rising channel on Friday. The weakness in semiconductors was also felt in shares of CYMI, which declined 1.48% but volume on CYMI's move dropped significantly. Technically the stock looks somewhat overbought and the upward momentum has stalled. The MACD on the daily chart looks poised to produce a new sell signal yet the weekly chart's MACD has just produced a new buy signal. It may not matter but Friday's decline also saw the stock break down under its 10-dma and 200-dma, which is normally bearish yet shares are still holding above their five week trendline of support (rising lows). What does all of this mean? It means that the SOX and CYMI is at a pivotal level and next week should see either a breakdown under support or a bounce higher into the next leg up. We are not suggesting new positions given early October's historical weakness and more conservative traders may want to tighten their stops even further. Our target is the $47.00-48.00 range. We do not want to hold over the late October earnings report.

Suggested Options:
We are not suggesting new positions in CYMI t this time.

Picked on September 06 at $ 42.55
Change since picked: 1.36
Earnings Date 10/24/06 (unconfirmed)
Average Daily Volume = 1.0 million

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General Dynamics - GD - close: 71.67 change: -0.74 stop: 69.94

It's probably a good time to make a new decision on GD as a bullish call candidate. The stock was a winner for the third quarter but our bet that end-of-quarter window dressing would really push the stock significantly higher did not pan out. The overall pattern for GD remains bullish but momentum indicators are starting to falter. Right now our expectation is that the stock will dip back toward the $70.50-70.00 region. Whether or not it bounces from support near $70.00 is the real question. If you don't want to risk it then consider exiting early right now. We're going to keep the play open but we're not suggesting new positions right here. Our target is currently the $75-75 range. We do not want to hold over the mid October earnings report.

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

Picked on September 24 at $ 70.61
Change since picked: 1.06
Earnings Date 10/18/06 (unconfirmed)
Average Daily Volume = 1.3 million

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Mettler Toledo - MTD - close: 66.15 chg: 0.12 stop: 63.45

MTD closed out near its highs for the quarter. There overall pattern is bullish and the P&F chart looks very strong with a triple-top breakout buy signal and an $81 target. However, we are not suggesting new plays. Here's why. First the stock's rally failed last week near $66.30, which was resistance back on June 1st, 2006. Second, intraday indicators are suggesting the next move will be lower. Third, we have to face what is traditionally a weak period for stocks during the first half of October. We do want to remind readers that the $67.50-68.50 region appears to be the forecasted price target of MTD's inverse head-and-shoulders pattern formed from June through August. Currently our target is the $68-69 range. We do not want to hold over the late October earnings report.

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

Picked on September 13 at $ 63.66
Change since picked: 2.49
Earnings Date 10/26/06 (unconfirmed)
Average Daily Volume = 169 thousand

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Omnicom - OMC - close: 93.60 chg: -0.30 stop: 89.89

OMC turned in a strong performance last week with traders buying the dip near support around $90.00. Thursday and Friday saw a little bit of profit taking but it was minimal. The P&F chart continues to point to a $131 target. If the markets remain positive we suspect that OMC will challenge its June highs. However, we would wait for a dip and bounce near $92.00 before considering new positions. The $92 level was short-term resistance about two weeks ago so it's a natural spot to look for new short-term support. Our target is the $96.00-97.00 range. We do not want to hold over the late October earnings.

Suggested Options:
We are not suggesting new positions in OMC at this time. See play details for future entry point suggestions.

Picked on September 10 at $ 90.97
Change since picked: 2.63
Earnings Date 10/24/06 (unconfirmed)
Average Daily Volume = 1.1 million
 

Put Updates

Caterpillar - CAT - close: 65.80 chg: -0.79 stop: 67.36

The DJIA's attempt at a new high got a lot of help from CAT. The stock reversed a bearish sell signal and produced a 4.8% rally last week. Yet in spite of its strength CAT could not breakout past its 50-dma or its bearish trend of lower highs. The P&F chart is still bearish with a $48 target. Friday's session looks like a failed rally near $67.00 and aggressive traders may want to open new put positions here. We are suggesting that readers wait for a new decline under $65.00 or even $64.50 before opening new plays. Our target is the $60.25-60.00 range but more aggressive traders may want to aim lower. We do not want to hold over the late October earnings report.

Suggested Options:
We only have until October 20th. It is estimated that CAT will report earnings on that date and October options expire the next day. Aggressive traders may want to play October puts. We'd prefer Novembers. You, the individual trader, should pick which month and strike price best suits your trading style and risk.

BUY PUT OCT 70.00 CAT-VN open interest= 2801 current ask $4.90
BUY PUT OCT 67.50 CAT-VU open interest= 5899 current ask $2.95
BUY PUT OCT 65.00 CAT-VM open interest=13011 current ask $1.55
BUY PUT OCT 62.50 CAT-VZ open interest=13377 current ask $0.70

BUY PUT NOV 70.00 CAT-WN open interest= 7787 current ask $5.40
BUY PUT NOV 67.50 CAT-WU open interest= 1933 current ask $3.70
BUY PUT NOV 65.00 CAT-WM open interest=14794 current ask $2.35
BUY PUT NOV 62.50 CAT-WZ open interest= 5334 current ask $1.40

Picked on September 21 at $ 64.59
Change since picked: 1.21
Earnings Date 10/20/06 (unconfirmed)
Average Daily Volume = 5.2 million

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Chipotle - CMG - close: 49.67 change: 0.07 stop: 52.61

Shares of CMG traded sideways on Friday but if you look at the intraday chart you'll notice the afternoon rally attempt failed near the $50 level. This looks like a new entry point to buy puts. Last week the stock's bounce from the $50 region stalled under its five-month trendline of resistance. The subsequent breakdown under the 50-dma and the $50 level appeared to be an entry point to buy puts. Our target is the $45.50-45.00 range. We do not want to hold over the late October earnings report.

Suggested Options:
We are suggesting the November puts although Decembers, which have more open interest, would also work well.

BUY PUT NOV 50.00 CMG-WJ open interest=112 current ask $4.00
BUY PUT NOV 45.00 CMG-WI open interest=178 current ask $1.85

Picked on September 28 at $ 49.45
Change since picked: 0.22
Earnings Date 10/30/06 (unconfirmed)
Average Daily Volume = 459 thousand

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Monster - MNST - close: 36.19 change: -0.10 stop: 37.55

There is little change from our previous updates on MNST. We are still waiting for a breakdown under support near $35.00. The pattern remains bearish with a trend of lower highs. Short-term technical indicators are suggesting the next move will be down. Plus, the P&F chart is bearish with a $28 target. We are suggesting a trigger to buy puts at $34.65, which is under the June 2006 low. If triggered our target is the $30.50-30.00 range. If you study the weekly chart you'll notice a long-term trendline of support stretching out just above the $30 level. More conservative traders might want to exit earlier near $31.00. We do not want to hold over the late October earnings report.

Suggested Options:
We are suggesting the November puts but the Decembers, which have more open interest, would also work well.

BUY PUT NOV 40.00 BSQ-WH open interest=666 current ask $4.80
BUY PUT NOV 35.00 BSQ-WG open interest=153 current ask $1.90
BUY PUT NOV 30.00 BSQ-WF open interest= 63 current ask $0.55

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: 0.00
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 1.6 million

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Maxim Integrated - MXIM - close: 28.08 chg: -0.66 stop: 30.05

Bears regained control on Friday. Both MXIM and the SOX index failed to build on their Thursday gains. The failed rally in MXIM under $29 and its 50-dma could be used as a new entry point to buy puts. However, traders may want to wait for the SOX to breakdown from its rising channel before opening new put plays in the industry. There was some chatter on Friday about MXIM getting a delisting letter from the NASDAQ exchange but investors have been shrugging this type of news since a number of companies have delayed their SEC filings, especially now with the ongoing executive options drama. We would keep an eye on the SOX for a drop under 450 or maybe last week's low near 446. Our target for MXIM is the $24.00 level.

Suggested Options:
We would suggest the November puts but right now we'd wait for a drop in the SOX (see comments above).

Picked on September 25 at $ 27.90
Change since picked: 0.18
Earnings Date 11/03/06 (unconfirmed)
Average Daily Volume = 5.4 million

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FreightCar Amer. - RAIL - close: 53.00 chg: -0.01 stop: 56.32

RAIL tried to climb higher most of the day on Friday but then suddenly collapsed late in the day. Overall the pattern continues to look bearish. The stock failed to participate in the market's rally and broke down on Thursday. We would still consider new positions at this time. Right now we're suggesting two targets because RAIL appears to have some support near $50.00. We suggest selling half or more of your position at our first target in the $50.25-50.00 range. Sell the rest at our second target in the $46.00-45.00 range. The P&F chart points to a $42 target.

Suggested Options:
We are suggesting the November puts. Please remember that we do not want to hold over the late October earnings report.

BUY PUT NOV 55.00 RQN-WK open interest= 9 current ask $4.10
BUY PUT NOV 50.00 RQN-WJ open interest=429 current ask $2.50

Picked on September 21 at $ 54.50
Change since picked: - 1.50
Earnings Date 10/26/06 (unconfirmed)
Average Daily Volume = 353 thousand

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SanDisk - SNDK - close: 53.54 chg: 0.49 stop: 56.06 *new*

SNDK produced a bit of an oversold bounce on Friday but the rebound stalled at the $54.00 level. Overall the pattern continues to look bearish with the breakdowns and failed rallies over the past couple of weeks. We recently adjusted our target toward the $52 level (52.00-51.00) due to potential support at its rising 50-dma. With SNDK relatively close to our target we're not suggesting new plays at this time. More aggressive traders may want to aim lower since the P&F chart points to a $45 target. Be advised that the $50 level has proven to be support in the past. We are adjusting our stop loss to $56.06 since the $56.00 level appears to be short-term resistance. Don't forget that earnings are due out around Oct. 19th.

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

Picked on September 22 at $ 56.69
Change since picked: - 3.18
Earnings Date 10/19/06 (confirmed)
Average Daily Volume = 9.9 million

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U.S.Steel - X - close: 57.68 chg: 0.58 stop: 60.05

It has been an interesting couple of weeks for shares of X and the rest of the steel sector. X and a good portion of the steel industry were trending lower, breaking down under support, and producing new sell signals several days ago. The move was partially fueled by some downgrades and bearish analyst comments about rising inventories. Yet this weakness reversed after RS raised their earnings guidance. Later the same day RS raised guidance another company in the group (WOR) reported earnings, missed the estimates, and issued cautious (bearish) comments about future profits. This helped drain some of the buying interest in the group as did the media's follow up attention on the rising inventory story. Currently we are cautiously bearish on X. Shares have moved from sell signal to bullish reversal to failed rally in the last several days. The larger pattern is still bearish with a steady trend of lower highs and technical resistance at the 50-dma overhead. Aggressive traders may want to consider new positions here. We would prefer to wait for a new decline under $56.00 before opening new plays. Cautious traders may want to tighten their stop loss a point or two. Our target is the $50.25-50.00 range.

Suggested Options:
We would suggest the November puts if X turns lower again. However, don't forget that we plan to exit ahead of the late October earnings.

Picked on September 22 at $ 55.95
Change since picked: 1.73
Earnings Date 10/31/06 (confirmed)
Average Daily Volume = 4.4 million
 

Strangle Updates

None
 

Dropped Calls

None
 

Dropped Puts

Nucor - NUE - close: 49.49 change: -0.09 stop: 50.01

We have been stopped out of NUE at $50.01. The stock has been trading, and failing, under resistance at the $50 level for over a week but Friday morning saw shares spike to $50.44 before reversing course lower again. The move looks like another failed rally in its long-pattern of failed rallies dating back to May 2006. After reviewing the chart one could argue that our stop loss may have been a little too tight. We would keep an eye on this stock for future play possibilities. Another decline under $48 or $46 could be used to buy puts while a move over $52.00-52.50 could be used to buy calls.

Picked on September 25 at $ 45.95
Change since picked: 3.54
Earnings Date 10/19/06 (unconfirmed)
Average Daily Volume = 4.2 million
 

Dropped Strangles

None
 

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