Cleveland Cliffs - CLF - close: 66.51 chg: -1.74 stop: 61.45
Market weakness on Tuesday weighed on CLF and shares lost 2.5% following yesterday's failed rally at the $70.00 mark. Volume was pretty light today, which might be considered a plus. The sad news is that the major indices still look poised to fall farther. CLF could dip back toward technical support at the 200-dma. If you don't want to endure that kind of move then consider an early exit now. You could always re-enter on a bounce or a new relative high over $70.00. We're not suggesting new positions at this time (unless we see a breakout over $70.00). Our target is the $74.50-75.00 range.
Picked on August 12 at $ 67.30
Chevron - CVX - cls: 82.51 change: 0.06 stop: 79.35
Oil stocks might start showing some strength this week. Tropical storm Dean, in the Caribbean, is heading West and is expected to reach hurricane status. Having any major storm head into the Gulf of Mexico will push oil prices higher. Crude oil rose today and closed over $72 a barrel. Shares of CVX still look poised to dip toward $80 but we'd expect a bullish breakout if the storm intensifies or its trajectory is more clearly mapped toward the Gulf. Wait and watch for a bounce before initiating positions. Our target is the $89.00-90.00 range. FYI: The P&F chart is still very bearish with a $68 target.
Picked on August 12 at $ 83.42
Fluor - FLR - clse: 124.24 change: 0.67 stop: 114.99
FLR continues to out perform the market. The stock rose another 0.5%, which is a positive sign considering yesterday's big bearish failed rally pattern. Technicals continue to look positive. However, we're expecting more short-term weakness in the market so readers may want to wait and watch for another dip in FLR in the $121-122.50 zone as a new entry point. More conservative traders may want to tighten their stops toward the $120 level. We have two targets. Our first target is the $129.75-130.00 range. Our second target is the $134.00-135.00 zone.
Picked on August 13 at $123.25
Penn National Gaming - PENN - cls: 55.67 chg: -1.13 stop: n/a
PENN's upgrade-inspired bounce didn't last very long. Shares plunged almost 2% albeit on low volume. PENN should have support near $54.50 but we wouldn't bet on it. Currently we're planning to drop this stock with August expiration. We are not suggesting new positions at this time. This was a very speculative, high-risk play, which is why there is no stop loss listed.
Picked on June 17 at $ 62.12
XTO Energy - XTO - cls: 55.02 change: -0.79 stop: 54.45
There are no changes from our previous comments. XTO produced a very bearish reversal on Monday. We're not suggesting new positions. The stock looks poised to drop toward $54.00 and probably the 200-dma near $53.25, which means we'll be stopped out soon at $54.45. Readers may want to exit early. News that the Gulf might see tropical storm Dean turn into a hurricane could spark some buying in crude oil and the oil stocks but it probably won't occur in time to save this play.
Picked on August 13 at $ 57.61
(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.)
Daimler-Benz AG - DAI - cls: 84.49 chg: -0.22 stop: n/a
DAI spiked higher this morning to $86.44 but the stock gave back all of its gains to close in the red. We are not suggesting new strangles on DCX at this time. The options in our suggested strangle were the August $95 calls (DAI-HS) and the August $85 puts (DAI-TQ). Our estimated cost was $3.70. Please note that we're running out of time. August options expire in three trading days. Therefore we're adjusting our target to sell the winning side of this strangle to $5.55, which would be a 50% gain.
Picked on July 22 at $ 89.75