Chaparral Steel - CHAP - cls: 43.92 chg: -1.01 stop: 41.99
Steel stocks were not immune to the market weakness on Thursday. Shares of CHAP lost 2.2% and closed back under its simple 50-dma. Furthermore the stock closed under short-term support near the $44.00 level. More conservative traders may want to strongly consider an early exit right here to limit any losses. If the market continues lower we would expect CHAP to test support at its rising 100-dma near $41.17, which would hit our stop. At this point in the game it definitely looks like CHAP will try and retest support near $42.00. We're not suggesting new plays at this time.
Picked on January 14 at $ 45.16
iShares China Index - FXI - close: 104.80 chg: -1.45 stop: 99.49
The Chinese markets turned higher today but shares of the Chinese ETF FXI traded lower with what appears to be another failed rally at its simple 10-dma. A bounce from here might be considered a new bullish entry point. However, more conservative traders may want to raise their stop to something in the $102.50-103.50 region to reduce their risk. We are leaving our stop at $99.49 for now. Our target is the $115.00-117.00 range.
Picked on January 14 at $105.40
Lehman Brothers - LEH - cls: 82.30 change: -1.02 stop: 78.95*new*
We need to reiterate our warning that the broker-dealers are seeing a turnaround in their momentum. Three days ago the XBD broker-dealer index produced a failed rally and now we're seeing more profit taking across the group. This morning rival Merrill Lynch (MER) reported earnings that were better than expected and shares sold-off on the news producing a big bearish reversal. LEH followed suit with a bearish engulfing candlestick pattern (bearish reversal). We would expect a dip back toward the $79-80 range, which as broken resistance should now act as support. Please note that we're going to inch up our stop loss to $78.95.
Picked on January 11 at $ 80.25
China Life Ins. - LFC - close: 47.69 change: -0.93 stop: 43.95
LFC suffered some profit taking on Thursday with a 1.9% decline. Traders bought the dip at $47.50 and again at $47.25 later this afternoon. We have been suggesting that readers watch for a dip near $47 or $46 as a potential entry point. The profit taking may not be over yet so tomorrow might offer another entry point. Our target is the $52.50-55.00 range. LFC is a more aggressive, higher-risk play and will tend to gap open every day.
Picked on January 14 at $ 46.86
Lockheed Martin - LMT - cls: 96.80 change: +0.30 stop: 90.95
Defense contractor CACI Intl (CAI) issued an earnings warning last night and the stock crashed today. The news did not appear to have any impact on shares of LMT, which inched up 0.3%. We remain bullish on LMT but repeat our earlier suggestion that more conservative traders lock in a gain right now. With the market showing weakness and due for a more significant correction then LMT might become a target for profit taking with shares near all-time highs. We're not suggesting new positions as we aim for our more aggressive target in the $99-100 range. The stock has already hit our conservative target in the $94.85-95.00 range last week.
Picked on November 29 at $ 90.62
Altria Group - MO - close: 87.95 change: -0.62 stop: 85.75 *new*
Caution! MO produced an intraday failed rally and closed under short-term technical support at its simple 10-dma. The short-term technicals are growing more bearish and we suspect that MO is poised to drop toward the $86.00 region, where it should find additional support. There was some interesting news out today that research shows nicotine levels in cigarettes have been rising steadily over the last ten years. The tobacco industry denied it but the story probably isn't finished yet and it could be weighing on MO shares. We are raising our stop loss to $85.75. We are targeting a rally into the $92.50-95.00 range. The P&F chart currently points to a $114 target. We do not want to hold over the late January earnings report.
Picked on January 04 at $ 87.65
Teleflex - TFX - close: 66.83 chg: -0.42 stop: 64.75
TFX did not escape the market weakness on Thursday and shares dropped 0.6% with what looks like a mini-bearish engulfing candlestick pattern. Right now we'd expect a dip towards the $66.00 level, which should offer some support. Readers can choose to buy a dip near $66 or wait for the dip and signs of a bounce first. Normally we would expect the $70.00 level to act as resistance but looking at TFX's history the stock seems to encounter resistance in the $72.00 region. Our target will be the $71.00-72.00 range.
Picked on January 14 at $ 67.11
eBay Inc. - EBAY - close: 29.51 change: -0.44 stop: 31.26
EBAY lost 1.4% and looks like it's finally done trying to breakout over its 200-dma. The bounce has failed and shares look poised to move lower. We have four trading days left. EBAY is due to report earnings on January 24th after the closing bell. We do not want to hold over the report so we'll exit on Wednesday at the close if the stock doesn't hit our $26.00 target by then.
Picked on January 08 at $ 29.70
(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.)
Blue Nile - NILE - cls: 37.38 chg: -0.92 stop: n/a
Our strangle play in NILE is all but dead unless shares see a very significant move tomorrow. January options expire on Saturday. The options in our suggested strangle are the January $45 call (JWU-AI) and the January $35 put (JWU-MG).
Picked on October 29 at $ 38.92