Allegheny Tech - ATI - cls: 102.40 change: -3.32 stop: 98.49
The last couple of hours in the market on Friday were very ugly. We are definitely expecting more broad-based weakness ahead and that should make readers think twice about opening new bullish positions even this one in ATI. Shares of ATI lost 3.1% on Friday and look poised to fall toward what should be support near $100.00 and its rising 200-dma. We are going to stick with the strategy for now. Markets and stocks don't normally move in a straight line so there is still an opportunity to buy a bounce in ATI but this is becoming more speculative and higher-risk given the environment. Currently we're suggesting traders buy calls on ATI if the stock dips into the $100.50-100.00 range. The better play would be to wait for the bounce to begin first after ATI tests the $100 level. If we are triggered then our target will be the $104.85-105.00 range, which is an adjustment from our original strategy. More conservative traders may want to use a tighter stop loss.
BUY CALL SEP 100 ATI-IT open interest=409 current ask $8.40
Picked on July xx at $ xx.xx <-- see TRIGGER
Lam Research - LRCX - cls: 54.82 chg: -2.41 stop: 53.90
On Friday the Semiconductor Industry Association (SIA) said that semiconductor sales slipped last quarter. This news contributed to the weakness in the sector and the SOX index slipped 2.5%. Shares of LRCX under performed its peers with a 4.2% decline and a breakdown under short-term support at $56.00 and again at $55.00. We had been suggesting a trigger to buy calls on a dip into the $55.10-54.00 range so the play is now open. However, if you're looking for a new entry point we would wait. The SOX looks very weak and is heading lower toward what should be technical support at the rising 200-dma. This will probably pull LRCX toward the $54.00 level. LRCX does have potential support at its 50-dma around $54.15 so we would wait for a dip into the $54.25-54.00 range before considering new bullish positions. Although in reality we would hesitate to open any bullish positions at this time. Now that our play is open we're going to focus on just the one target in the $59.75-60.00 range and disregard our more aggressive target.
Picked on August 3 at $ 55.10
PACCAR - PCAR - cls: 80.66 change: -3.09 stop: 79.70 *new*
Watch out! The bounce in PCAR is already failing. The market's widespread sell-off on Friday afternoon pulled PCAR to a 3.6% decline. The stock is headed lower to retest support near $80.00. We are inching up our stop loss to $79.70, just under the July 26th low. If PCAR breaks down under $79.50 then nimble traders may want to consider buying puts and targeting a decline around $75.00 and its 200-dma. We are not suggesting new bullish positions at this time.
Picked on July 26 at $ 82.87
Penn National Gaming - PENN - cls: 57.19 chg: +0.01 stop: n/a
We have two weeks left before August options expire. Right now the situation looks grim. The stock should be trading near its buyout price around $67. The fact that it's not would suggest that the market doesn't believe this deal will get done - at least not in its current form or price. PENN's 45-day window to solicit a higher bid has expired. We're not suggesting new positions at this time.
Picked on June 17 at $ 62.12
Sears Holding - SHLD - cls: 131.58 chg: -4.94 stop: 127.49
Friday was a very rough day for the retailers. The RLX index lost 3.9% closing at 468. The bad news is that the RLX doesn't appear to have any support until the 450 region. Meanwhile SHLD continues to plunge. We see some support near $130 and have been suggesting that readers buy a dip into the $133.00-130.00 range to capture any oversold bounce. The stock is extremely oversold with a three-month fall from the $190 region and a $40 drop in just the last four weeks. On Friday SHLD hit our entry zone so the play is now open. However, we strongly suggest that readers looking to open new positions wait! SHLD closed on its low for the day and that suggests more weakness on Monday. Odds are very high that SHLD will trade near $130 on Monday. Wait and watch for a bounce near $130 before considering new positions. Our target is the $139.50-140.00 range.
Picked on August 3 at $133.00
Terex - TEX - cls: 82.40 change: -4.06 stop: 79.74 *new*
The situation is not looking good for TEX. The stock under performed the markets on Friday with a 4.7% decline on big volume. All of last week looks like a big bearish reversal. Most of TEX's technical indicators have turned bearish. More conservative traders may just want to abandon this play early. The only reason we're hanging on is because TEX should have support near $80 and its rising 100-dma. We're inching up our stop loss to $79.74. If TEX hits our stop loss then nimble traders might actually want to jump into bearish put positions and target the $72.50-70.00 region. We're not suggesting new call positions at this time. The stock has already hit our first target in the $89.50-90.00 range. Our second target is the $94.00-95.00 range.
Picked on July 26 at $ 83.87
Baker Hughes - BHI - cls: 75.84 change: -2.22 stop: 80.05*new*
Oil and oil service stocks dropped sharply again on Friday. BHI closed with a 2.8% loss on big volume. The intraday low was $75.30. Our target is the $75.25-74.00 range. We suggest that readers prepared to exit. We are adjusting our stop loss to $80.05.
Picked on July 29 at $ 79.43
Harley Davidson - HOG - cls: 55.20 change: -1.77 stop: 60.26
HOG sank more than 3% on Friday and broke down from its recent $58-56 trading range. Shares closed at their low for the session, which is a bearish sign for Monday's open. We're not suggesting new positions at this time. More conservative traders may want to tighten their stops toward the $58.00 level. 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
Lubrizol - LZ - cls: 59.94 change: -1.43 stop: 64.15 *new*
LZ hit another relative low and broke down under its rising 100-dma on Friday. Shares also closed under what could have been round-number support at the $60.0 level. We are adjusting our stop loss to $64.15 as the $64.00 level should be overhead resistance. Our target is the $57.00-55.00 range. $57.00 is near the top of the April gap and $55.00 is near technical support at its 200-dma. If you want to aim for the $55 region then this looks like a new entry point for puts.
Picked on July 29 at $ 61.62
(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.)
DaimlerChrysler - DCX - cls: 89.12 chg: -2.06 stop: n/a
Shares of DCX spiked midday on Friday as news hit the wires that the company had completed its sale of Chrysler to Cerebus. The rally was very short-lived and the stock eventually closed with a 2.2% loss. DCX is still trading in its $88-92 trading range but we suspect the stock will break down to new relative lows soon. 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
Celgene - CELG - cls: 59.46 change: -0.96 stop: 57.49
The bounce in biotech stocks appears to be rolling over much like the rest of the market. CELG is still out performing its peers but the rally is struggling and the stock has closed under what should have been support near $60.00. There is chance that support near $59.00 and $58.00 will continue to hold. However, given the market's widespread weakness and where we are on the calendar we are suggesting an early exit. We'd rather cut our losses now and wait for a potential dip in CELG near technical support at its rising 200-dma, which could be a new bullish entry point. More aggressive traders may want to stay with it.
Picked on July 27 at $ 61.25
Lexmark - LXK - cls: 37.76 change: -2.17 stop: n/a
Target exceeded. It was a good day for LXK puts. The stock plunged more than 5.4% and closed at new multi-year lows. The put side of our strangle was the August $40 LXK-TU put. Our estimated cost was $0.75. Our target to exit was $1.50. The LXK-TU put hit an intraday high of $2.70 and is currently trading at $2.45bid/$2.75ask.
Picked on July 22 at $ 45.43