Chaparral Steel - CHAP - cls: 45.16 chg: +1.24 stop: 41.99
Steel stocks rebounded with the wider market on Friday. Shares of CHAP out performed with a 2.8% bounce. The rebound back above its simple 50-dma and the $45.00 level has given new life to the recent MACD buy signal. Readers can use Friday's bounce as a new entry point to buy calls. However, we remain wary of the market and its lack of direction lately. Traders may want to wait for a rise past $45.75, which would be a new three-week high, before opening new call plays. Our target is the $49.00-50.00 range. The P&F chart points to a $64 target.
BUY CALL FEB 40.00 ZHQ-BH open interest=147 current ask $5.80
Picked on January 14 at $ 45.16
iShares China Index - FXI - close: 106.35 chg: +1.55 stop: 99.49
Entry point alert! Shares of the FXI have broken out above its simple 10-dma. If you study the intraday charts it looks like the FXI has produced a bullish breakout from a bull flag pattern over the last couple of weeks. We're suggesting new call positions on Friday's rise. More conservative traders may want to tighten their stop loss. The FXI can be volatile so we have a wide stop, making this a more aggressive play. Our target is the $115.00-117.00 range. Remember, this is a Chinese ETF and it tends to gap open every day as it adjusts to how the Chinese markets traded the night before.
BUY CALL FEB 100 FJJ-BT open interest= 484 current ask $8.60
Picked on January 14 at $105.40
Lehman Brothers - LEH - cls: 83.15 change: +0.85 stop: 78.95
Friday's 1% rally in LEH is the second bounce in three days near the $82 level. The lack of follow through on Thursday's bearish reversal pattern in LEH is definitely a good sign for the bulls. That doesn't mean that shares won't dip toward $80 or its 10-dma but it's a show of relative strength. We hesitate to suggest new positions at this time. A bounce from support near its 10-dma or the $80 level would be a preferable entry point. We have two targets for LEH. Our conservative target is the $84.85-85.00 range. Our aggressive target is the $89.00-90.00 range. FYI: LEH has a very bullish pattern on its Point & Figure chart called a bullish triangle breakout and it forecasts a $111 target.
Picked on January 11 at $ 80.25
China Life Ins. - LFC - close: 46.69 change: -1.00 stop: 43.95
The Chinese markets continue to rise and are nearing the early 2007 highs. Unfortunately, LFC is failing to rally with its home market. The stock under performed on Friday with a 2.1% decline and on strong volume. The only saving grace for Friday's session was a decent bounce from LFC's lows near $45.00. Aggressive traders may want to buy this bounce. More conservative traders may want to wait for a breakout past its simple 10-dma near $48.00. Our target is the $52.50-55.00 range. We want to remind readers that this is an aggressive, higher-risk play. Most of LFC's technical indicators are bearish and the P&F chart is bearish with a $36 target. If LFC doesn't bounce higher on Monday it might be a good idea to exit early and cut your losses. More conservative traders might want to go ahead and tighten their stops toward $45.00.
BUY CALL FEB 40.00 LFC-BH open interest= 227 current ask $7.40
Picked on January 14 at $ 46.86
Lockheed Martin - LMT - cls: 97.27 change: +0.47 stop: 93.95 *new*
Shares of LMT managed to hit another new all-time high on Friday with an intraday spike to $97.75. The stock has been a relative strength leader over the last couple of weeks. The question now is whether or not LMT will rally higher into its earnings report or will it just consolidate sideways as investors wait for the earnings results. LMT has already hit our conservative target in the $94.85-95.00 range and we're currently aiming for the $99.00-100.00 zone to exit. If you have not exited already more conservative traders may want to lock in a gain now. Due to LMT's fast approaching earnings report on January 25th and its proximity to our target we're not suggesting new positions. We are adjusting our stop loss to $93.95.
Picked on November 29 at $ 90.62
Altria Group - MO - close: 87.26 change: -0.69 stop: 85.95 *new*
A Friday morning downgrade pushes shares of MO to a 0.7% decline. The relative weakness over the last few days has turned the short-term technicals bearish. You'll notice that the MACD on the daily chart has produced a new sell signal. It might be time to consider an early exit. However, MO still has a supporting trendline near the $86.00 level and there is still a chance for a rebound from support. If you're looking for a new entry point we'd watch for a bounce from current levels near $87.00 or a bounce near $86.50. Please note we are inching up our stop loss to $85.95. Don't forget that MO reports earnings on January 31st and we do not want to hold over the report. We are targeting a rally into the $92.50-95.00 range. The P&F chart currently points to a $114 target.
Picked on January 04 at $ 87.65
Teleflex - TFX - close: 66.67 chg: -0.16 stop: 64.75
TFX did not move much on Friday and the selling pressure failed to break short-term technical support at its simple 10-dma. A bounce from here could be used as a new entry point but we still suspect a dip closer to $66 is in the stock's near future. Broken resistance near $66 should be new support. Chart readers will note that volume has dried up the last couple of days, which is what you would want to see on a pull back or consolidation. 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 is the $71.00-72.00 range. FYI: The P&F chart points to an $81 target. We plan to exit ahead of the mid February earnings report.
BUY CALL FEB 65.00 TFX-BM open interest= 26 current ask $2.75
Picked on January 14 at $ 67.11
Celgene Corp. - CELG - close: 54.98 change: -0.00 stop: 57.01
Shares of CELG closed unchanged on Friday. We do not see any changes from our new play description from Thursday night so we are reposting an updated version of it here:
It looks like the BTK biotech index is in the process of forming a bearish double top. If the pattern does appear then we should look for the sector to see some renewed selling soon. With tech stocks already experiencing profit taking it's not a stretch of the imagination to expect biotech to follow suit. CELG is already under performing its peers and the rest of the market. The recent oversold bounce has failed near its 10-dma and 50-dma and now the stock looks poised to drop. We are suggesting put positions with CELG under $56.00 (the 10-dma). Our target is the $50.50-50.00 range, near its rising 100-dma. We do not want to hold over the February 1st earnings report so we have eight trading days.
BUY PUT FEB 60.00 LQH-NL open interest= 597 current ask $5.50
Picked on January 18 at $ 54.98
eBay Inc. - EBAY - close: 29.66 change: +0.15 stop: 31.26
Strategy change! Shares of EBAY tried to bounce on Friday but failed on Friday afternoon at the $30.00 level. The action in EBAY over the last few days and actually the last couple of months definitely looks like shares want to head lower. Short-term technicals are aiming lower and the weekly chart's MACD is near a new sell signal. Please note we're making a strategy change. Normally we always exit ahead of an earnings report. There are too many variables that can go wrong with a company's earnings announcement and guidance. However, this time we strongly suspect that EBAY will sell-off after its report, which is due out on Wednesday, January 24th after the closing bell. We are going to hold the play open over the announcement. More conservative traders are strongly suggested to exit early instead. We're also going to adjust our target to the $26.00-25.00 range.
BUY PUT FEB 32.50 XBA-NZ open interest= 7854 current ask $3.40
Picked on January 08 at $ 29.70
Whole Foods - WFMI - close: 43.96 chg: -1.59 stop: 46.55
Our new put play in WFMI is now open. The stock spiked lower on Friday morning and quickly broke down under support near $45.00 and hit our suggested trigger to buy puts at $44.85. Volume on the technical breakdown was strong, which is definitely bearish! The catalyst for Friday's decline were negative comments from a Banc of America analyst who believes that WFMI's profit margins are likely to narrow in the first quarter. Now that the play is open our target is the $40.25-40.00 range. We do not want to hold over the early February earnings report. FYI: The P&F chart points to a $26 target.
BUY PUT FEB 50.00 FMQ-NJ open interest= 4405 current ask $6.10
Picked on January 19 at $ 44.85
Blue Nile - NILE - cls: 37.66 chg: +0.28 stop: n/a
We are closing our strangle play on NILE with a loss. 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