Amgen Inc. - AMGN - cls: 57.69 change: -0.48 stop: 55.90 *new*
We have to issue a bearish reversal warning on AMGN. The stock has produced both a failed rally at its 200-dma and a bearish engulfing candlestick pattern. Together this looks like a bad spot for the bulls. Readers will want to seriously consider an early exit right now to avoid further losses. We are not suggesting new positions. Please note that we are adjusting our stop loss to $55.90. Should AMGN reverse higher our target is the $64.00-65.00 range, which might be a little too aggressive given our time frame. AMGN is due to report earnings around October 25th and we don't want to hold over the report. It's also worth noting that AMGN's P&F chart is still bearish and it will take a breakout over $60.00 to change it back into a bullish pattern.
Picked on October 11 at $ 58.01
Cummins Inc. - CMI - cls: 140.16 change: +0.14 stop: 134.45
We do not see any changes from our weekend comments. CMI is still inching higher and looks poised to breakout to new highs. If you're feeling conservative then wait for a new relative high before opening positions. Our target is the $149.50-150.00 range. Keep in mind that we do not want to hold over the October 25th earnings report.
Picked on October 11 at $140.85
Deutsche Bank - DB - cls: 129.93 chg: -1.47 stop: 128.99
DB got caught up on the financial sector weakness. Shares broke down under what should have been support at the $130.00 mark. The close under $130 is definitely a negative signal for the bulls. More conservative traders may want to exit early right here to avoid further losses. At this point we would wait for a rebound past $131.50 or $132.00 before considering new bullish positions. There is potential resistance at the 200-dma near $138.70 so we're targeting a rally into the $138.00-140.00 range. The P&F chart is bullish with a $154 target. FYI: The 100-dma near $137 may also be a level of resistance the bulls will have to fight through. Plus, readers should note that we cannot find a confirmed earnings date for DB's earnings report. The only data we can find suggests that DB will report on October 31st. We do not want to hold over the announcement.
Picked on October 01 at $130.79
Diamond Offshore - DO - cls: 118.22 chg: +1.02 stop: 112.45
Oil stocks were generally higher thanks to crude oil crossing $86 a barrel. Shares of DO hit another high at $121.38 before paring its gains. Readers can choose to open positions here or a potentially better move would be to wait for a dip back towards $117.00-115.00. Broken resistance near $115 should be new support. We're going to try and play this with a stop at $112.45. If we had more time we'd put the stop under $110. Time is an issue. DO is due to report earnings in nine trading days. If shares don't hit our target we'll plan to exit on October 24th at the closing bell. Our short-term target is the $124.50-125.00 range. One of our biggest concerns is that a correction in crude oil would spark some heavy profit taking in the oil service stocks. FYI: The P&F chart is bullish with a $173 target.
Picked on October 14 at $117.20
Stryker - SYK - cls: 72.80 change: -1.12 stop: 69.45
Readers may want to exit early now. We only have a couple of days left. Currently the plan is to exit on Wednesday at the closing bell to avoid holding over SYK's earnings report due after the closing on Wednesday. Our target is the $74.90-75.00 range.
Picked on October 02 at $ 70.65
Terex - TEX - cls: 86.56 change: -1.61 stop: 84.75
Traders bought the dip near support at $85.00 but we would hesitate to jump in here. The stock is trying to bounce but it has a short-term pattern of lower highs over the last few days. We're not suggesting new positions. Our target is the $94-95 range although more conservative traders may want to exit near $91.00. We plan to exit ahead of next week's earnings.
Picked on September 25 at $ 86.50
Vulcan Materials - VMC - cls: 92.57 chg: +0.25 stop: 89.90
VMC continued to bounce and traders bought the dip at $91.75. We would continue to open new positions here. Our target is the $99.00-100.00 range. The P&F chart is bullish with a $103 target.
Picked on October 14 at $ 92.32
(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.)
Dow Jones Industrial Avg. - DJX - cls: 139.85 chg: -1.08 stop: n/a
We only have three trading days left! Readers may want to abandon ship right now. The DJX is a European style option and trading will cease after Thursday even though the option doesn't expire until Saturday. We are not suggesting new positions on the October version of our strangle. The options listed for our October strangle were the October $137 calls (DJY-JG) and the October $132 puts (DJW-VB) with an estimated cost of $4.75. We want to sell if either option hits $6.00.
Picked on September 16 at $134.43
NASDAQ 100 trust - QQQQ - cls: 53.12 chg: -0.41 stop: n/a
Tomorrow the earnings parade should begin to hit full speed. Reaction to the earnings news and comments about the fourth quarter should produce some big moves in the NDX. We want to exit this strangle if either side hits $1.50 or higher. This is somewhat aggressive since we're using October options, which expire in four days. You could do the same play using November options but you'll pay more and have to adjust your exit price. The options we suggested in our October strangle were the October $54 calls (QQQ-JB) and the October $53 puts (QQQ-VA). Our estimated cost was $0.76.
Picked on October 14 at $ 53.53
Biogen Idec - BIIB - cls: 82.51 chg: +13.08 stop: 67.63
Target exceeded. We hit the lottery with BIIB. As reported over the weekend BIIB announced after the close on Friday that they were putting the company up for sale. Shares soared after hours and we told readers that if the strength holds that BIIB would likely gap open higher. The stock opened at $83.35 this morning and hit $84.75 before pulling back. Kudos to any of the aggressive traders out there who took our suggestion to exit in the $84-85 zone. Our adjusted target was $80.00 but we would have exited at the opening trade.
Picked on October 07 at $ 67.63
Citigroup - C - clos: 46.24 change: -1.63 stop: 46.64
It was a rough day for the financial stocks. The markets did not respond well to the news that several banks were joining together to repackage some debt that they've been unable to sell. Meanwhile Citigroup reported earnings and managed to beat the recently lowered expectations but the company did not have anything positive to say about the fourth quarter. Citigroup's comments about troubles continuing in the fourth quarter in the credit markets were partly to blame for today's market weakness. The stock hit our stop loss at $46.64.
Picked on September 16 at $ 46.64
Caterpillar - CAT - cls: 78.84 change: -1.46 stop: 78.59
We were expecting some Monday morning follow through on Friday's rebound in CAT. Instead the stock spiked lower and broke down under technical support at its 100-dma. Shares quickly hit our tight stop loss at $78.59. Nimble traders may want to keep CAT on their radar screens and buy a bounce from here. Shares were inching higher after consolidating near $78 all day long.
Picked on October 14 at $ 80.30
Ceradyne - CRDN - cls: 74.19 change: -1.49 stop: 73.95
It turned out to be an ugly day for CRDN. The early morning rally reversed lower under its 10-dma and shares eventually broke down under $75.00 and traded under $74 intraday. The stock hit our stop loss at $73.95. Today's move is both a failed rally pattern and a bearish engulfing candlestick, which would suggest the next move will be lower.
Picked on September 25 at $ 74.61
Kohl's - KSS - close: 58.54 change: -2.08 stop: 57.90
KSS really under performed the market and the retail sector with a 3.4% decline yet we could not find anything specific in the news to account for the weakness. If you look at an intraday chart you will see that traders bought the dip more than once near support at $58.00 and that the low today was $58.00. That means the intraday low at $56.50 was a bad tick. We have been choosing to play the bad ticks since they are a real hazard in the market. Thus, technically, we've been stopped out at $57.90.
Picked on October 11 at $ 62.01
Lehman Brothers - LEH - close: 62.33 change: -2.30 stop: 61.99
The broker-dealers took the brunt of the financial sector weakness today. Shares of LEH dipped under support at $62.00 and hit our stop loss at $61.99. The short-term technicals are starting to turn bearish and the MACD has just produced a new sell signal.
Picked on October 11 at $ 65.25