Option Investor
Play Updates

In Play Updates and Reviews

HAVING TROUBLE PRINTING?
Printer friendly version

Call Updates

Cameron - CAM - close: 95.00 chg: +1.36 stop: 89.90

CAM continues to bounce. The stock actually gapped open on Friday and spent the rest of the session consolidating sideways. We remain bullish on CAM but we would not suggest new positions at this time. A dip back toward the $92 region could be used as a potential entry point. Our target is the $99.00-100.00 range. More aggressive traders could aim for $105 but the stock does have pretty clear resistance near $100. Since we're fighting the "trend" in the technical picture we're going to list this as an aggressive, higher-risk play. FYI: CAM is due to split 2-for-1 on December 31st, 2007. It is not uncommon for a stock to have a pre-split run up and then a post-split depression. You may want to consider exiting ahead of the stock split.

Suggested Options:
If CAM provides a new entry point we would suggest the January calls. Keep in mind these expire in four weeks.

Picked on December 18 at $ 91.85
Change since picked: + 3.15
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 2.1 million

---

ConocoPhillips - COP - close: 86.71 chg: +1.48 stop: 81.85

Crude oil is breaking out from a two-week consolidation pattern and that could lift the oil group. The OIX oil index is already breaking out to new all-time highs. COP just broke through resistance at the $85.00 level and looks poised to run toward resistance near $90.00. You can choose to chase COP here or wait for a dip back toward $85.00, which should be new support. Our short-term target is the $89.50-90.00 zone just under resistance at $90.00. The P&F chart is bullish with a $106 target.

Suggested Options:
At this point we'd look for a dip back toward $85. We are suggesting the January calls.

Picked on December 20 at $ 85.23
Change since picked: + 1.48
Earnings Date 01/24/08 (unconfirmed)
Average Daily Volume = 11.4 million

---

Energen - EGN - close: 65.98 change: -0.12 stop: 62.95*new*

The rally in EGN seemed to run out of gas on Friday. Shares failed to participate in the broad market surge higher. There seemed to be resistance near $66.50, which is what we said on Thursday may be a hurdle for the bulls. The overall trend is still bullish but readers may want to wait for a dip and a bounce near $65 again before considering new bullish plays. Our target is the $69.50-70.00 range. We're suggesting a stop under the 50-dma so we're adjusting our stop to $62.95. The P&F chart is bullish with a $74 target.

Suggested Options:
If EGN provides a new entry point we would suggest the January calls. Keep in mind the January options expire in four weeks.

Picked on December 18 at $ 65.32
Change since picked: + 0.66
Earnings Date 01/24/08 (unconfirmed)
Average Daily Volume = 700 thousand

---

Holly Corp. - HOC - close: 52.19 change: -0.11 stop: 47.45

HOC out performed the market almost all week thanks to news that it was raising its stock buy back program and an analyst upgrade to a "buy". Shares paused to catch their breath on Friday. We would watch for a dip back toward $50.00 as a new bullish entry point to buy calls. Broken resistance near $50 should be new support. Our target on HOC is the $54.75-55.00 range but readers will want to keep an eye on the descending 50-dma currently near $55.00 since it will probably be overhead resistance. We may end up adjusting our target to the 50-dma in the next couple of days. FYI: It does look like HOC has put in a bottom and the P&F chart now points to a $65 target. More aggressive traders may want to aim for the $58-60 zone.

Suggested Options:
If HOC provides a new entry point we would suggest the January calls.

Picked on December 03 at $ 50.58 *bad tick/gap open
Change since picked: + 1.61
Earnings Date 02/12/08 (unconfirmed)
Average Daily Volume = 859 thousand

---

Hologic - HOLX - close: 69.49 chg: -0.01 stop: 64.75 *new*

HOLX took a moment to rest on Friday after a big run up earlier in the week. The stock has already hit our initial target in the $69.50-70.00 range. Fueling the move is a technical breakout over its eight-week trend of lower highs and news that HOLX is being added to the NASDAQ-100 index on December 24th. Looking at the trading intraday on Friday, bulls bought the dip near $68 and the stock looks poised to move higher next week. We are raising our stop loss to $64.75. Our more aggressive target is the $74.00-75.00 range. FYI: The P&F chart is bullish and points to an $87 target.

Suggested Options:
If you feel like chasing the move in HOLX we would suggest the January calls and a higher stop loss.

Picked on December 18 at $ 66.22
Change since picked: + 3.27
Earnings Date 01/30/08 (unconfirmed)
Average Daily Volume = 2.8 million

---

Noble Energy - NBL - close: 81.64 chg: +2.00 stop: 75.75 *new*

NBL followed up its breakout over resistance at $78.00 with a breakout over potential round-number resistance at $80.00. The oil group is on the move again and Friday's bullish breakout in crude oil could be the beginning of another leg higher. NBL appears to be one of the leaders. At this point we would wait for a dip back toward $80 or its 10-dma. We are raising our stop loss to $75.75. Our target is the $84.50-85.00 range. The P&F chart is bullish with an $86 target.

Suggested Options:
If NBL provides us another entry point we would suggest the January or February calls.

Picked on December 19 at $ 78.25
Change since picked: + 3.39
Earnings Date 02/26/08 (unconfirmed)
Average Daily Volume = 1.5 million

---

Syntel Inc. - SYNT - close: 37.87 chg: -0.14 stop: 35.75

SYNT failed at resistance on Friday. The stock rallied Friday morning but couldn't breakout past its 50 and 100-dma. That's why we put our suggested trigger at $38.75 because we want to see a breakout. By the way... the intraday high at $38.65 looks like a bad tick. If you look at an intraday chart we don't see SYNT trading over $38.43. Our strategy still stands. If SYNT hits our trigger at $38.75 we are suggesting calls. Our target is the $44.00-45.00 range. The P&F chart has just produced a new buy signal with a $47 target.

Suggested Options:
We are suggesting the January calls. Our suggested trigger to open positions is $38.75. Readers may also want to consider the January $45 call.

BUY CALL JAN 40.00 DUB-AH open interest= 0 current ask $1.10

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 232 thousand
 

Put Updates

Amazon.com - AMZN - cls: 91.26 chg: +0.68 stop: 92.55

The bulls are still putting up a fight in AMZN. The oversold bounce this past week has lifted shares back above $90.00 and its 10-dma, both of which should have been resistance. Honestly, I'm surprised that AMZN did not hit our stop loss at $92.55 on Friday, especially with such a strong market-wide rally. If you look at the intraday chart for Friday it almost looks like a mini double top pattern but that might be wishful thinking. This is a seasonally bullish time of year and odds are good that AMZN will hit our stop next week. If the stock turns lower then look for a new decline under $89.50 or $89.00 as a potential entry point for puts again. AMZN has already hit our initial target in the $85.25-85.00 range. Currently we're aiming for the $81.50-80.00 zone. The P&F chart is bearish with a $74 target.

Suggested Options:
We're not suggesting new positions at this time.

Picked on December 16 at $ 89.08
Change since picked: + 2.18
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 8.8 million

---

Boeing - BA - close: 89.07 change: +1.88 stop: 93.26

The DFI defense index is bouncing from support so it's not a surprise to see BA rebounding. Furthermore BA got a boost after news out late Thursday that the company had won a $700 million contract from NASA. Further spooking the bears was positive analyst comments Friday morning for BA. The short squeeze pushed BA above its 10-dma but the stock should have resistance near $90.00. A failed rally under $90.00 can be used as a new bearish entry point. More conservative traders may want to consider adjusting their stops toward $91.50. We're leaving our stop at $93.26 for now. We have two targets. Our first target is the $85.55-85.00 range. Our second target is the $81.50-80.00 zone. The P&F chart is bearish with a $75 target.

Suggested Options:
If BA provides a new bearish entry point we would suggest the January or February puts.

Picked on December 04 at $ 91.43 *triggered/gap down
Change since picked: - 2.36
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 7.0 million

---

Genentech - DNA - close: 67.90 chg: -0.06 stop: 70.85

DNA suffered an initial spike higher but the rally ran out of steam under $69.40. Shares closed back in the red, which is pretty bearish considering the widespread market rally. This could be the failed rally under $70 we've been looking for. If you prefer to see more momentum then wait for a new decline under $66.75 to open positions. Our target is the $62.50-60.00 range. The main hurdle for the bear is potential support near the early December lows. The P&F chart is very bearish with a $54 target. FYI: Any time we play a biotech stock it should be considered high risk. You never know when news will come out about some successful or failed clinical trial or some FDA decision that could send the stock gapping one way or the other.

Suggested Options:
We would suggest the January puts.

Picked on December 16 at $ 68.43
Change since picked: - 0.53
Earnings Date 01/10/08 (unconfirmed)
Average Daily Volume = 4.3 million

---

Garmin - GRMN - close: 102.50 chg: +2.39 stop: 107.25

GRMN's oversold bounce just marked its third gain in a row. The stock plunged on Tuesday and exceeded our first target in the $96-95 zone. Unfortunately, there was no follow through. We warned readers that GRMN has a lot of bullish fans and recent news that GPS sales have been soaring this holiday season gave the stock another boost late in the week. The rebound has reached a critical test. The stock is now trading just under technical resistance at its combined 50 and 100-dma. A failed rally from here (and a drop back under $100) would look like a new entry point for puts. More conservative traders may want to adjust their stops down toward $105 or even $104, just above those moving averages. Our second more aggressive target is the $91.00-90.00 range. The P&F chart is bearish with an $86 target but the P&F chart also shows potential support near $91.

Suggested Options:
If GRMN offers a new entry point we would suggest the January puts.

Picked on December 11 at $104.78
Change since picked: - 2.28
Earnings Date 02/14/08 (unconfirmed)
Average Daily Volume = 6.2 million

---

Ralph Lauren Polo - RL - cls: 62.02 change: -0.17 stop: 66.26

In an up market like Friday all we can really hope for in our bearish plays is under performance. RL delivered that under performance with another decline. The stock has probably been suffering from tax loss selling and that could continue into next week. Shares broke down from its trading range a few days ago and definitely look poised to continue lower. The Point & Figure chart produced a quadruple bottom breakdown sell signal and points to a $55 target. We are suggesting puts with RL under $64.00. Our target is the $58.00-57.00 range although odds are good the stock will see an oversold bounce near $60.00.

Suggested Options:
We would suggest the January puts.

Picked on December 19 at $ 63.11
Change since picked: - 1.09
Earnings Date 02/07/08 (unconfirmed)
Average Daily Volume = 1.5 million

---

Sears Holding - SHLD - cls: 102.00 chg: -0.48 stop: 110.55

Target exceeded! SHLD continued to under perform on Friday and shares hit an intraday low of $99.95. Our first target was the $100.50-100.00 range. This sort of relative weakness during the market's big rally on Friday is a good sign for the bears. However, SHLD is now at round-number, psychological support and after a two-week, 15-point decline you have to expect some sort of oversold bounce from here. We are not suggesting new bearish positions at this time. If you did not exit completely we strongly recommend that you lock in some profits here. Our second more-aggressive target is the $92.50-90.00 zone. The P&F chart is bearish with a $78 target.

Suggested Options:
We are not suggesting new positions at this time.

Picked on December 11 at $110.28
Change since picked: - 8.28
Earnings Date 10/27/07 (unconfirmed)
Average Daily Volume = 3.3 million

---

Shire Plc - SHPGY - close: 68.22 change: +0.50 stop: 71.01

After more than a week of consolidating SHPGY still can't breakout over short-term resistance near $68.50. We keep expecting a move higher because of its short-term trend of higher lows. Any breakout would run into additional resistance in the $69.50-70.00 zone so we've been suggesting readers wait for a failed rally under $70.00 as a new entry point. Our initial target is the $65.25-65.00 range and we have decided to add a second, more aggressive target in the $62.00-60.00 zone. FYI: Any time we play a biotech or even a drug stock we're dealing with a higher-risk situation. We are at risk that some FDA decision or some clinical trial news could send the stock gapping one direction or the other.

Suggested Options:
If SHPGY provides a new entry point we would suggest the January puts.

Picked on December 13 at $ 68.07 *triggered/gap down entry
Change since picked: + 0.15
Earnings Date 02/00/08 (unconfirmed)
Average Daily Volume = 956 thousand
 

Strangle Updates

(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.)

---

Encana - ECA - close: 68.15 chg: +0.63 stop: n/a

ECA is a new strangle play from our Thursday night newsletter. The stock does look like it's trying to breakout higher from its sideways consolidation pattern. Yet overall we don't see any changes from our previous comments so we're reposting them here:

ECA is part of the oil sector and we're fundamentally bullish on the group. However, shares of ECA have been trading sideways for almost five weeks and in a very narrow range for the last two weeks. Odds are good the stock will see a break out one way or the other pretty soon. My personal bias is bullish but shares could truly go either way so we're suggesting a strangle. Let me be up front here. This is pure speculation. I could not find any specific event or catalyst in the near future to spark a move and ECA could easily trade sideways for the next month. We're listing the $60 put and $75 calls but you could easily do a strangle with the $65 put and $70 calls. I repeat, this is an aggressive, high-risk, lottery-ticket style of play. We'd use the $68.50-66.50 zone as an entry point. FYI: The P&F chart is bullish with a $92 target.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put. We're suggesting January options, which expire in four weeks. The options we suggested were the January $75 calls (ECA-AO) and the January $60 puts (ECA-ML). Our estimated cost is $0.65. We want to sell if either option hits $1.85 or higher. Remember, for a truly neutral strangle you'll want to try and keep your investment as close to evenly divided across both the calls and puts.

Picked on December 20 at $ 67.52
Change since picked: + 0.63
Earnings Date 02/14/08 (unconfirmed)
Average Daily Volume = 2.7 million
 

Dropped Calls

China Security - CSR - close: 22.16 change: +0.44 stop: 19.99

We expected more out of CSR this past week. Friday's 2% gain was a move in the right direction but the upward momentum is stalling. We're suggesting an early exit now. This was an aggressive play so readers may want to let it right and just ratchet up your stops toward $21.50 instead. We'll keep an eye on CSR for a breakout over $23.50 as a potential entry point down the road. Our first target was $26 and our second target was $29. The P&F chart is bullish with a $34 target.

Picked on December 16 at $ 23.25
Change since picked: - 1.09
Earnings Date 01/24/08 (unconfirmed)
Average Daily Volume = 525 thousand

---

Energizer - ENR - close: 113.72 chg: +0.18 stop: 109.95

It was a tough decision to drop ENR. The stock's long-term trend is still bullish and the Point & Figure chart looks very bullish with a triangle breakout pattern and $157 target. However, we've been warning readers that short-term technicals were decaying. On Friday the stock failed to truly participate in the market's rally so we're cutting it loose. ENR came pretty close to our target on Wednesday, December 12th when it hit $118.88. We were aiming for the $119-120 zone. We'll keep an eye on ENR for a pull back toward $110 and its 100-dma and see if it can bottom again.

Picked on November 26 at $112.75 *triggered
Change since picked: + 0.97
Earnings Date 01/28/08 (unconfirmed)
Average Daily Volume = 511 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

Play Update Archives