United States Oil Fund - USO - cls: 70.47 chg: -1.88 stop: 68.59
Last night we warned readers that the USO looked poised for a dip and sure enough Friday saw the ETF slip 2.59% toward support at $70.00 and its rising 100-dma. The USO has two levels of support. One at $70.00 and the next in the $68.75-69.00 zone. Look for signs of a bounce and use it as a bullish entry point to buy calls again. Our short-term target is the $74.50-75.00 range. More aggressive traders could easily aim for the $77.50-79.00 region.
Picked on January 24 at $ 70.93
Ambac Fincl. - ABK - cls: 13.20 change: +1.56 stop: n/a
It has been one week since we added ABK as a high-risk, speculative put play and what a rocky week it has been. The stock experienced double-digit percentage moves almost daily. We listed this play with the expectation that this company was going out of business. The situation has changed dramatically, especially with the progress being made on a bailout plan on Friday. I suggest you read tonight's market wrap as Jim discusses the bond insurer scenario more in depth. We do not have a stop loss on this play. It was a lottery-ticket strategy. However, if you want to use a stop consider a stop loss above $15.50 or above the $16.50-17.00 region. Of course if ABK rallies that sharply these deep out of the money puts won't be worth much. ABK looks like it has resistance at $15.50, 16.50, and then $20.00. We are not suggesting new positions at this time. FYI: Most of the credit rating agencies have hinted that they're willing to hold off a couple of weeks before downgrading these companies. It could be a very volatile couple of weeks.
Picked on January 27 at $ 11.54
MBIA Inc. - MBI - close: 16.36 change: +0.86 stop: n/a
MBI is the other big bond insurer that was on the verge of going under and still might but the stock is bouncing sharply on hopes that a bailout plan will work. We added MBI last Sunday with the expectation this company was going under. MBI reported earnings this past Thursday and tried to inspire some confidence with strong words that they don't see any circumstances that would force the company into bankruptcy. We do not have a stop loss since this was a lottery-ticket style of play but if you wanted to play one consider putting your stop above resistance near $17.50 or above $18.00. There are a lot of forces at work to try and save ABK and MBI and it looks like the various institutions might just get a rescue plan done in the nick of time. We are not suggesting new put positions. FYI: Most of the credit rating agencies have hinted that they're willing to hold off a couple of weeks before downgrading these companies. It could be a very volatile couple of weeks.
Picked on January 27 at $ 14.20
Polo Ralph Lauren - RL - cls: 61.23 chg: +0.55 stop: 62.55*new*
We only have two days left for this play on RL. The company reports earnings on Wednesday morning, February 6th. We do not want to hold over the announcement. Our plan is to exit on Tuesday afternoon at the closing bell. However, the situation is not looking very good for the bears and you may want to exit early. Thus far RL has held under resistance near its 50-dma. Yet the bulls could argue that the trading over the last couple of weeks is shaping up to be a bull flag pattern. With earnings just two days away I suspect that RL will just trade sideways as investors wait on the news but that may not happen if the market moves big one way or the other. We are going to try and reduce our risk by placing the stop loss at $62.55.
Picked on January 27 at $ 59.19
(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.)
DJIA 1/100 Index - $DJX - cls: 127.43 chg: +0.93 stop: n/a
The DJIA (and $DJX) continued to rally on Friday. The $DJX is now just over the $127 mark and the call side of our strangle is in the money - at least for now. We have two weeks left before February options expire. We are not suggesting new strangle positions at this time. The options we suggested were the February $127 calls (DJW-BW) and the February $122 puts (DJW-NR). Our estimated cost was $3.36. We want to sell if either option hits $4.85 or more. FYI: The intraday high for the call was $2.40.
Picked on January 29 at $124.80
Google - GOOG - close: 515.90 chg: -48.40 stop: n/a
Last night GOOG reported earnings and missed estimates. This sent shares to an after hours (Thursday night low) of $507.45 but the stock had recovered to $525 late Thursday night. Then Friday morning news comes out that Microsoft (MSFT) is making a hostile bid for Yahoo (YHOO) to better compete with GOOG. This helped reinforce the downdraft in GOOG and shares lost $48 or 8.5%. The intraday low on Friday was $5.10 and I'm surprised that the $500 put only traded to $15.20 at its best levels of the day. There does seem to be a lot of support for GOOG in the $510-515 zone but the oversold bounce in GOOG was already failing Friday afternoon and shares were headed lower. The $500 level should be support so if GOOG hits $500 we would be looking to exit even if the option price doesn't hit our target, especially since we only have two weeks left on February options. However, I have to note that technically speaking all trends remain bearish and GOOG has broken its very long-term trendline of support dating back to its IPO, which is very bearish. Aggressive traders may want to hold on to their puts. We are not suggesting new strangle positions at this time. The options we suggested were the February $600 calls (GOO-BT) and the February $500 puts (GOP-NO). Our estimated cost is $17.00. We want to sell if either option hits $27.00 or more.
Picked on January 30 at $548.27
Perrigo Co - PRGO - close: 31.28 change: +0.44 stop: 32.11
We are out of time with PRGO. The company is due to report earnings on Tuesday morning, February 5th and we do not want to hold over the announcement. More aggressive traders could wait until Monday's closing bell to exit. The stock has been trading in a range the last several days between $29.75 and $31.50. Instead of exiting now you could put your stop loss just above $31.50 but we would still exit ahead of earnings. Wall Street expects earnings of 34 cents a share. FYI: Friday afternoon PRGO announced a $150 million stock buy back program.
Picked on January 28 at $ 29.85 *triggered
Teleflex Inc. - TFX - close: 60.87 chg: +1.75 stop: 60.01
The bulls remained firmly in control with TFX on Friday. The stock powered through resistance at tits 50-dma and the $60.00 mark. Shares added 2.9% albeit on below average volume. TFX hit our stop loss at $60.01.
Picked on January 30 at $ 57.65