Celgene - CELG - cls: 61.13 change: +0.32 stop: 57.49
CELG continued to show relative strength on Friday. The stock broke through resistance at the $61.00 level and closed up on above average volume, which is normally a bullish signal. Our suggested trigger to buy calls was at $61.25 so the play is now active. Our target is the $66.50-67.00 range. As predicted the move over $61.00 has produced a new Point & figure chart buy signal with a $73 target. While we remain bullish on CELG please take into account our expectation for the market to spike lower on Monday morning. If you are looking for a new entry point be patient. CELG might dip back toward $60 or even $59 on Monday before bouncing back.
BUY CALL SEP 60.00 LQH-IL open interest=2748 current ask $4.20
Picked on July 27 at $ 61.25
Diamond Offshore - DO - cls: 103.27 chg: -3.09 stop: 99.75*new*
Friday proved to be another ugly day for oil and energy stocks even though crude oil rose toward record highs. Friday's session in DO was definitely bearish with a failed rally and a 2.9% drop. The five-month trend is still bullish but we're adjusting our plan for future entry points. We expect the market to be down on Monday morning. DO also looks poised to drop on Monday. We would wait and watch for a dip into the $101.00-100.00 range and use the dip as a new entry point to buy calls. DO should find support at the $100.00 mark and its rising 50-dma near $100. We're also going to peel back our stop loss to $99.75 just in case DO cracks the $100 level. We're suggesting two targets. Our conservative target is the $114.00-115.00 range. Our more aggressive target is the $119.00-120.00 range. The P&F chart points to a $137 target. FYI: We are expecting this to be a two or three week play since we plan to exit oil-related stocks when crude eventually corrects.
Picked on July 26 at $106.36
Goldman Sachs - GS - cls: 192.65 change: -2.47 stop: 188.49 *new*
Friday was another rough day for the financials and the brokers were no exception. GS failed to rebound after Thursday's big drop. This definitely throws some cold water on our buy the dip strategy. Fortunately, the $190 level held up as support but we remain concerned. At the moment we're expecting the market to spike down on Monday morning before bouncing. Given the relative weakness in GS and the brokers this stock might hit a new relative low and out stop loss before trying to rebound again. We want to repeat that this is an aggressive, higher-risk play. The brokers have been primary targets for selling due to the sub-prime fears and now the merger-slowing credit crunch. We'd wait and watch for a bounce near $190 before considering new positions. We're going to widen our stop by half a point to give GS a little bit more room. The 200-dma, near $208, should now be overhead resistance. Our target is the $205-208 range. FYI: The P&F chart is incredibly bearish with a $144 target.
Picked on July 26 at $195.12
PACCAR - PCAR - cls: 81.16 change: -1.71 stop: 79.45 *new*
It's the same story with PCAR. The stock was incredibly short-term oversold and Thursday's intraday bounce from $80 looked like a new entry point to capture a short-term bounce. Unfortunately, the markets continued to sink and PCAR lost another 2% and on big volume. The stock looks headed toward $80 and maybe a new relative low. We expect Monday morning to be weak so wait for PCAR to show signs of a rebound before considering new positions. We're inching our stop backward to $79.45 to give PCAR just a little more room to move. Our target is the $89.50-90.00 range. Yes, given the volatility, we would qualify this as a higher-risk, more aggressive play. FYI: The P&F chart is very bearish and points to a $61 target.
Picked on July 26 at $ 82.87
Penn National Gaming - PENN - cls: 57.89 chg: +1.10 stop: n/a
Shares of PENN displayed relative strength on Friday with a 1.9% gain. The stock gapped higher after one analyst firm upgraded the stock. The analyst believes that the all-cash $6.1 billion deal to buy PENN, which would value the stock at $67/share, will get done. Traders may want to reconsider buying calls on PENN. Initially we were suggesting calls because of all the speculation that another bidder would show up with a higher offer. If we can look past the worries over M&A credit and deals falling apart the current buyout plan should push shares of PENN to another $9 gain. The question is how long will it take? We are NOT suggesting new positions at this time but readers have some food for thought if they want to speculate. PENN's original 45-day window to solicit a higher bid should expire this coming week.
Picked on June 17 at $ 62.12
Terex - TEX - cls: 83.15 change: -0.72 stop: 79.49
We are making some adjustments to the TEX play. One change is the suggested entry point. We expect the markets to be weak on Monday morning. Therefore we'd look for a new bullish entry point in TEX on a dip into the $81.00-80.00 zone. Shares should find support near $80 bolstered by its rising 100-dma. The $90.00 looks like overhead resistance. Thus we are using two targets. Our first target is the $89.50-90.00 range. Our second target is the $94.00-95.00 range.
Picked on July 26 at $ 83.87
Harley Davidson - HOG - cls: 56.40 change: -0.90 stop: 60.26
HOG is extending its losses with a new relative low on Friday. The stock closed near its low for the session and look poised to continue lower on Monday. More conservative traders might want to consider tightening their stop loss toward the simple 10-dma. We're not suggesting new positions at this time. Our target is the $52.50-50.00 range. The P&F chart already points to $42.00.
Picked on July 23 at $ 57.75
Ryanair Holdings - RYAAY - cls: 36.21 change: -0.83 stop: 40.15
Airlines stocks continued to breakdown and RYAAY is beginning to catch up to them. Shares of RYAAY lost 2.19% on Friday and broke down under support near $37.50. Shares look poised to dip toward $35.00 on Monday so be prepared to exit. Our target is the $35.05-34.00 range, which is near the November 2006 gap. The P&F chart is already bearish and its target has moved from $26 to $22 this past week.
Picked on July 22 at $ 38.13
(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.)
Advanced Micro - AMD - cls: 13.87 chg: -0.86 stop: n/a
Semiconductor stocks plunged again on Friday. Shares of AMD lost 5.8% and broke down under a couple more levels of support. Volume was very high on AMD's decline, which is usually bearish. We're not suggesting new strangle plays at this time. The August options we suggested were the August $16 call (AMD-HQ) and the August $15 put (AMD-TC). Our estimated cost was $1.18. We want to sell if either option hits $1.85 or higher. Aggressive traders could aim for $2.40. FYI: Currently the August $15 put is trading at $1.34bid/$1.41ask.
Picked on July 15 at $ 15.43
DaimlerChrysler - DCX - cls: 88.57 chg: -0.34 stop: n/a
DCX continues to look vulnerable and poised for more weakness. We are not suggesting new strangles on DCX at this time. The options in our suggested strangle were the August $95 calls (DCX-HS) and the August $85 puts (DCX-TQ). Our estimated cost was $3.70. We want to sell if either option rises to $6.45.
Picked on July 22 at $ 89.75
Lexmark - LXK - cls: 41.79 change: -0.42 stop: n/a
LXK lost another 1% and looks poised to drop toward $40.00 soon. We are not suggesting new strangle positions in LXK at this time. The options in our strangle were the August $50 calls (LXK-HJ) and the August $40 puts (LXK-TU). Our estimated cost was $0.75. We want to sell if either option rises to $1.50.
Picked on July 22 at $ 45.43
Intel - INTC - cls: 23.54 change: -0.46 stop: n/a
Target achieved. Semiconductors continued to fall on Friday and INTC broke down under technical support at the simple 50-dma. Contributing to INTC's weakness may have been news that the European Union was filing an antitrust case against the company. We were suggesting that traders exit if either option in our strangle hit $1.65 or higher. The August $25 put (INQ-TE) is trading at $1.66bid/1.70ask. INTC looks poised to move lower on Monday morning. Aggressive, more nimble traders may want to try and squeeze another 25-30 cents out of that option before exiting. FYI: Our estimated cost was $0.96.
Picked on July 15 at $ 25.97
Manpower - MAN - close: 79.81 chg: -6.14 stop: n/a
Target exceeded. MAN collapsed on Friday with a 7% decline on huge volume. This move sent MAN past support near $85 and its 100-dma and straight toward potential support near $80 and its 200-dma. The options in our strangle were the August $100 call (MAN-HT) and the August $90 put (MAN-TR). Our estimated cost was $3.35. We want to sell if either option hits $5.75 or higher. On Friday the August $90 put (MAN-TR) closed at $9.60bid/$10.50ask. We're going to use the suggested $5.75 exit price.
Picked on July 15 at $ 94.60