Ambac Fincl. - ABK - close: 84.61 chg: -0.25 stop: 81.99
ABK did not escape the minor market pull back on Friday and shares closed with a 0.29% decline but volume was light and traders bought the dip at $84.22 on Friday morning. We remain bullish following ABK's breakout over resistance at $84.00 and its 50-dma. The technical picture is positive and its Point & Figure chart points to a $102 target. We don't see any changes from yesterday's play description. Our target is the $88.00-90.00 range. We do not want to hold over the October 25th earnings report.
BUY CALL NOV 80.00 ABK-KP open interest=164 current ask $5.70
Picked on October 04 at $ 84.40
Amgen Inc. - AMGN - close: 74.01 change: -0.72 stop: 69.99
Biotechs turned in a strong week with the BTK index breaking out over resistance at its 200-dma and resistance near the 680 level. Strength in AMGN during the middle of the week really kept the momentum strong. Friday saw shares of AMGN experience a little overdue profit taking. The stock lost close to 1% but we see relative strength in the intraday chart where traders bought the dip twice near $73.50. This could be used as a new entry point to buy calls. Our target is the $79.00-80.00 range. We do not want to hold over the October 23rd earnings. FYI: More conservative traders might want to adjust their stop loss closer to the $72 level.
BUY CALL NOV 70.00 YAA-KN open interest=1743 current ask $5.30
Picked on October 04 at $ 72.97
Deere & Co. - DE - close: 85.29 change: -2.26 stop: 82.99
The rally in shares of DE suffered a setback on Friday. Shares gapped open lower and closed with a 2.58% loss on strong volume. The weakness in DE was due to an earnings warning from Agco Corp. (AG). AG is a rival in the agriculture machinery industry and the company issued an earnings warning due to lower than expected sales. Shares of AG closed down 5.9% at $24.70 but that was an improvement from its lows of the session of $22.47 (-14.4%). The overall pattern in DE still looks bullish but the sharp decline on Friday has produced a kink in the technical indicators. The weekly chart's latest candle now looks like a short-term top. We would suggest waiting for a new move over $85.50 or a bounce near $83.50-84.00 as the next entry point to buy calls. Our target is the $89.50-90.00 range. We do not want to hold over the November earnings report. FYI: The P&F chart points to a $108 target.
BUY CALL NOV 80.00
DE-KP open interest=298 current ask $7.30
Picked on October 04 at $ 85.39
Emerson Electric - EMR - close: 84.77 chg: -0.06 stop: 82.99
EMR spent another session consolidating sideways. The stock spiked back over the $85 level on Friday morning but failed at the same spot as Thursday. The lack of movement, under average volume and mild pull back in the markets left Friday's trading as a neutral session. Thus the overall bullish pattern is still in play. However, we would now wait for a move over $85.25 before initiating new call positions on EMR. The weekly chart and the P&F chart both look pretty bullish. Our target is the $89.00-90.00 range. We do not want to hold over the late October earnings report.
BUY CALL NOV 80.00 EMR-KP open interest=588 current ask $5.90
Picked on October 05 at $ 85.15
Entergy - ETR - close: 80.63 change: +0.27 stop: 77.99
Electric utility stock ETR turned in a strong week with new all-time highs. The breakout over round-number resistance at $80.00 is also a positive sign. We also noticed that traders were buying the dips near $80, which is definitely bullish. Everything appears to be pointing higher for ETR. We would continue to open new plays at current levels. Our short-term target is the $84.00 level. We do not want to hold over the late October earnings report.
BUY CALL NOV 75.00 ETR-KO open interest=
48 current ask $6.30
Picked on October 03 at $ 80.33
Greenbrier - GBX - close: 30.00 change: -0.77 stop: 27.99
Transportation stocks hit a pothole on Friday. The Dow Jones Transportation index slipped 1.3% and the Dow Jones Railroad index fell 1.25%. Some were saying the sell-off was a reaction to UPS who came out with news on Thursday night that it would make some job cuts. We suspect that Friday's session was just profit taking after a strong week. We would use the pull back in GBX as a buying opportunity. The stock bounced near the top of its previous trading range, which is a good sign. Our target is the $33.00-34.00 range. We do not want to hold over the early November earnings report. FYI: The P&F chart is still bearish but it's seeing a strong bounce near support. More conservative traders could always tighten their stops - we'd consider moving ours toward the $29 level.
BUY CALL NOV 25.00 GBX-KE open interest= 1 current ask
Picked on October 05 at $ 30.05
Mettler Toledo - MTD - close: 66.19 chg: -0.36 stop: 64.95 *new*
We are not suggesting new call positions in MTD. The stock does still have a bullish pattern of higher highs and higher lows but the technical indicators are suggesting that MTD is running out of momentum. The trading on Thursday and Friday this past week looks like a short-term top and the MACD indicator is near a new sell signal. More conservative traders might want to consider exiting early to lock in a gain. We're going to adjust our stop loss to $64.95. Our target is the $68-69 range. We do not want to hold over the late October earnings report.
Picked on September 13 at $ 63.66
Omnicom - OMC - close: 94.65 chg: +0.97 stop: 92.95 *new*
After a week of consolidating sideways shares of OMC displayed some relative strength on Friday. The stock broke out over the $94 level again and closed with a 1% gain. The rise lent new strength to the short-term technical indicators and OMC looks poised to breakout past its September highs and make a run toward its June 2006 highs. We are not suggesting new call positions at this time. We are going to try and reduce our risk by raising the stop loss to $92.95, which is under the recent consolidation. More conservative traders may want to think about locking in a profit right here or at least taking some money off the table. Our target is the $96.00-97.00 range. We do not want to hold over the late October earnings. FYI: The P&F chart points to a $131 target.
Picked on September 10 at $ 90.97
Vulcan Materials - VMC - close: 80.18 chg: +0.26 stop: 76.95
On your mark. Get set. VMC displayed relative strength on Friday and crept across the $80.00 level leaving the stock poised to hit our trigger at $80.26 and launch this play. More aggressive traders may want to open positions now. The Point & Figure chart is already bullish with a $93 target. If we are triggered at $80.26 our target will be the $84.50-85.00 range. We do not want to hold over the late October earnings report.
BUY CALL NOV 75.00 VMC-KO open interest= 257 current ask $7.10
Picked on October xx at $ xx.xx <-- see TRIGGER
Maxim Integrated - MXIM - cls: 28.28 chg: -0.08 stop: 29.05*new*
Semiconductor stocks are still under performing the market. Earlier this week the group struggled due to an earnings warning from MRVL. Friday the sector was hit again after Micron (MU) missed Wall Street's earnings estimates when it reported results on Thursday night. Currently shares of MXIM are stuck in a trading range between $29.00 and $27.50. At the moment the technical picture is pretty muddy. We would wait for a new decline under $27.50 before considering new put positions. Please note we're adjusting our stop loss to $29.05. Our target is the $24.00 level.
Picked on September 25 at $ 27.90
FreightCar Amer. - RAIL - cls: 51.58 chg: -0.52 stop: 54.55*new*
Shares of RAIL continue to sink and the stock lost another 0.99% on Friday. RAIL is quickly approaching our first target in the $50.25-50.00 range. We're not suggesting new positions at this time. 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. FYI: Please note we're adjusting the stop loss to $54.55.
on September 21 at $ 54.50
(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.)
Boston Properties - BXP - close: 104.23 chg: -1.23 stop: n/a
After a positive week with a bullish bounce from support near $102 and the bottom of its rising channel traders decided to take some profits on Friday. The stock lost 1.1% on above average volume. The overall bullish trend is still intact but momentum could be struggling here. We're not suggesting new strangle positions at this time. The play was labeled as aggressive and higher risk due to our short three-week time frame. We need to exit before October options expire on October 21st. Our suggested options were the October $105 call (BXP-JA) and the October $100 put (BXP-VT). Our estimated cost is about $1.90. We're suggesting an exit if either option rises to $3.80 or higher.
Picked on October 01 at $103.34
Google - GOOG - close: 420.50 chg: + 8.69 stop: n/a
The rally in GOOG continued into Friday. Bulls bought the dip near $410 and shares hit a new two-month high close to $422 on Friday afternoon. There has been plenty of talk and speculation lately that GOOG is in talks to buy YouTube.com. It would appear from the rise in GOOG's shares that investors are not concerned with the estimated $1.6 billion price tag that GOOG may end up paying. We're not suggesting new strangle plays at this time. The options in our strangle strategy are the November $440 call (GOP-KH) and the November $360 put (GGD-WL). Our estimated cost for this position is about $13.00. Our suggested exit is at $24.00 or higher.
Picked on October 01 at $401.90
Legg Mason - LM - close: 101.25 change: -2.50 stop: n/a
Ouch! LM suffered some sharp profit taking on Friday. The stock under performed the broader market and its peers with a 2.4% decline that erased Thursday's gains. LM looks poised to trade back towards the $100 level. We would use a dip into the $100.50-99.50 region as a new entry point to open strangle positions. The options in our strangle strategy are the November $105 calls (LM-KA) and the November $95.00 put (LM-WS). Our estimated cost is $5.15. We're suggesting an exit if either options rises to $7.25.
Picked on October 03 at $ 99.72
Chipotle - CMG - close: 51.59 change: +1.47 stop: 52.61
We are giving up on CMG as a put candidate. The stock saw a lot of shares traded on Friday with volume coming in almost 15 times the daily average. Most of the volume flooded in during the morning dip in CMG but shares turned around and produced a strong afternoon rally to close up almost 3%. The big churn in shares was due to the McDonalds (MCD) exchange offer that expired on Thursday night. There is still a chance that CMG will reverse under resistance near $52 and its exponential 200-dma but given the market's bullish environment we're suggesting an early exit to cut our losses now.
Picked on September 28 at $ 49.45