Peabody Energy - BTU - close: 77.74 change: +0.74 stop: 73.92*new*
BTU shot past our first target again. The stock gapped open at $78.27 and surged to $80.90 before eventually succumbing to market weakness. Our first target was the $79.75-80.00 zone. Friday's trading marks the fourth failed rally in four weeks under $81.00. The general trend is still higher but short-term this failed rally is bearish and is suggesting a dip on Monday. BTU has found some support near its 21-dma region so look for a pull back to $75.00-74.50. We are not suggesting new positions at this time. Our second, more aggressive target is the $84.00-85.00 zone. Please note that we're moving the stop loss to $73.92.
Picked on June 01 at $ 73.92 /1st target exceeded 79.75
iShares Russ.2000 - IWM - cls: 73.92 chg: -2.28 stop: 72.95
Ouch! Friday's 3% reversal lower in the IWM completely erased Thursday's gains. The small cap ETF is back under resistance at the $75 level (750 for the RUT) and volume was huge on the reversal. Stepping back the trend in the Russell 2000 small cap index (and the IWM) is still bullish. However, if the DJIA and the S&P 500 keep falling we would expect the RUT to follow. We're not suggesting new positions at this time and after Friday's big drop we would seriously consider an early exit and jump ship. We had a conservative target in the $74.50-75.00 zone but we've been aiming for the $77.00-80.00 range.
Picked on April 28 at $ 72.55 *triggered
Priceline.com - PCLN - close: 132.48 chg: -4.86 stop: 129.90
PCLN erased all of our unrealized gains with a 3.5% drop on Friday. The stock fell to $130.64 on Friday afternoon before bouncing. Odds of an oversold bounce after Friday's big market sell-off are pretty good. We would consider new positions here. However, before you initiate new positions double check just how much risk you are willing to take. This is not a great market for starting new bullish trades. Thus far the Russell 2000 and NASDAQ have been able to maintain their bullish trend in spite of the reversals in the DJIA and S&P 500. If the S&P 500 continues to fall we would expect the NASDAQ to break down and then the tech sector could play "catch up' with the S&P 500. PCLN could plunge toward support near $120. Right now PCLN should have short-term support at $130 so we're leaving our stop at $129.90. We've been targeting the $139.50-140.00 zone.
FYI: Nimble traders may want to already start plotting bearish strategies if PCLN breaks down under its 50-dma or the $127.50 area. We would expect some support at its 100-dma near $120.
Picked on May 27 at $132.75 *triggered
Molson-Coors Brewing - TAP - cls: 58.07 chg: -1.19 stop: 56.45*new*
It's probably splitting hairs but TAP's 2% loss on Friday might be considered relative strength against the 3% drop in the S&P 500. The trend is still up but we would hesitate to open new bullish plays at this time. We are going to try and reduce our risk by raising the stop loss to $56.45. Our target is the $64.00-65.00 range. FYI: The P&F chart is bullish with a $69 target.
Picked on May 23 at $ 58.51 *triggered
Emerging Markets 50 ADR - ADRE - cls: 54.07 chg: -1.72 stop: 56.85
The market weakness reversed yesterday's gains in ADRE. This is a failed rally at its short-term trendline of resistance and a new entry point to buy puts although we should probably expect a bit of a bounce on Monday. We are adjusting our stop loss to $56.05. We are aiming for the $51.00-50.00 zone. FYI: The P&F chart is still bullish.
BUY PUT JUL 55.00 QDF-SC open interest= 10 current ask $3.00
Picked on June 03 at $ 54.69
Electronic Arts - ERTS - close: 47.55 chg: -1.99 stop: 49.75*new*
The widespread weakness fueled a 4% decline in ERTS and the stock broke down from its three-week trading range. The drop under support at $48.00 is good news for the bears. We were suggesting a trigger to buy puts at $47.75 so the play is now open. If you are looking for a new entry then consider waiting for a bounce back toward $48.00, which should now be short-term resistance. Our target is the February lows near $44.50-44.00. We're adjusting the stop loss to $49.75, which is just above the Thursday high.
FYI: There is an ongoing story here with ERTS and its attempt to buy rival TakeTwo Interactive (TTWO). Late last week TTWO said they were in (serious) talks with another suitor. Releasing this news may have been an attempt to get ERTS to up its stake for TTWO. If ERTS does raise its bid the stock will probably continue lower as investors worry about overpaying for TTWO.
BUY PUT JUL 50.00 EZQ-SJ open interest=4349 current ask $3.70
Picked on June 06 at $ 47.75 *triggered
3M Co. - MMM - close: 74.86 chg: -2.64 stop: 77.65 *new*
A 400-point drop in the DJIA inspires a lot of momentum and Dow-component MMM gave in with a 3.4% decline. The stock finally broke support near $75.00 and hit our suggested trigger to buy puts at $74.95. The play is now open. We have two targets. Our first target is the $70.25-70.00 zone. Our secondary target is the $67.00-65.00 range. The P&F chart is bearish with a $69 target. Please note we're adjusting our stop loss to $77.65, which is just a few cents above Thursday's high. After such a big downdraft on Friday a bounce back to $75.00 or $75.50 could be used as a new entry point for puts. FYI: If you are aiming for the $67 target then you might want to consider the October puts.
BUY PUT JUL 80.00 MMM-SP open interest=3996 current ask $5.70
Picked on June 06 at $ 74.95 *triggered
(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.)
Amgen Inc. - AMGN - close: 44.24 chg: -0.69 stop: n/a
After nearly two weeks of gains AMGN held up pretty well on Friday with a 1.5% loss versus the S&P 500's 3% loss. Even though the stock is showing relative strength if you have the June options you may want to consider an early exit to just cut your losses. We only have two weeks left for June strikes before they expire and the erosion is going to pick up speed. We are not suggesting new positions at this time. We have suggested a July strangle and a more aggressive June strangle. The options in the July strangle are the July $45 calls (AMQ-GI) and the July $40 puts (AMQ-SH). Our estimated cost for the July strangle was $1.65. We want to sell if either option hits $3.50. The options in the June strangle are the June $45.00 calls (AMQ-FI) and the June $40.00 puts (AMQ-RH). Our estimated cost on the June strangle was $0.56. We want to sell if either option hits $1.10 or more.
Picked on May 22 at $ 42.77
McDonald's - MCD - close: 56.95 chg: -1.10 stop: n/a
Shares of MCD continue to sour. The stock lost 1.89% on Friday, which was better than the market averages, but the stock was already in a downtrend. It looks like MCD could tag technical support at its 200-dma near $56.45 soon. Traders may want to exit near $56.50 even if the June puts fail to hit our target at $1.65. The June $57.50 puts hit an intraday high of $1.30 and are currently trading at $1.25bid/$1.35 ask. We are not suggesting new positions. The options we suggested were the June $62.50 calls (MCD-FZ) and the June $57.50 puts (MCD-RY). Our estimated cost was $1.10. We want to sell if either option hits $1.65 or higher. Keep in mind that June options expire in two weeks and will see their premium erode more quickly.
Picked on May 18 at $ 60.53
Tyco Intl. - TYC - close: 44.01 change: -1.25 stop: n/a
Hmm.... we find it interesting that as the DJIA and the S&P 500 were accelerating their losses into the closing bell on Friday shares of TYC were not. The stock dropped early Friday morning and then traded sideways near its exponential 200-dma. We are not suggesting new strangle positions in TYC at this time. The options we suggested were the July $47.50 calls (TYC-GW) and the July $42.50 puts (TYC-SV). Our estimated cost was $1.30. We want to sell if either option hits $1.95 (50% gain).
Picked on June 03 at $ 44.89
Valero Energy - VLO - close: 46.33 change: -3.31 stop: 47.99
Wow! On Thursday night I decided to stick my neck out on the refiners as they bounced from what should have been support. Rising crude oil prices just cut my head clean off. Thursday's $5 jump in oil was a record-breaking move. No one thought that it would be crushed by a $10 gain the very next day. Rising oil pushes the crack spread lower and refiners make less money. VLO just plunged right through support and quickly hit our stop at $47.99.
Picked on June 05 at $ 49.64 /stopped out $47.99