*Currently we do not have any call plays*
Bard CR - BCR - close: 80.92 change: -0.84 stop: 85.25 *new*
The trend in BCR continues and shares under performed compared to the market's late afternoon bounce. A failed rally in the $82-83 zone could be used as a new entry point for puts. We are lowering the stop loss to $85.25.
The Point & Figure chart is bearish with a $69.00 target. Our target is $75.50.
Capital One Financial - COF - close: 29.25 change: -0.62 stop: 35.01
COF sank to new relative lows under $27.00 before paring its losses to close with a 2% decline. Watch for another failed rally in the $31.00-32.50 zone as a new entry point for put positions. We don't see any additional changes from our previous comments.
COF appears to have some support near $25.00 dating back a few years ago. We're targeting a drop to $25.50. The Point & Figure chart is very bearish with a $15.00 target.
iShares Brazil - EWZ - close: 33.21 change: -0.59 stop: 36.55
The Brazil ETF continued to slip lower but managed to pare its losses with a minor bounce at the closing bell. We would watch for another failed rally near $35.00 as a new entry point to buy puts.
At a minimum I would expect the EWZ to retest its lows near $28.50. The Point & Figure chart is bearish with a $23.00 target. Our target is $29.00 target.
Readers should consider this an aggressive play. The EWZ can be very volatile. On Thursday it's range was almost $31.00 to $37.50.
Intl. Business Machines - IBM - cls: 80.08 change: +2.60 stop: 85.55
Positive earnings news from Hewlett Packard (HPQ) was enough to spur some buying or at least some short covering in other big name tech stocks. IBM almost erased yesterday's losses. We would wait and watch for another failed rally near its 10-dma in the 82.50-83.00 zone as another entry point to buy puts. More conservative traders may want to start adjusting their stop loss lower.
We are suggesting puts with a stop loss at $85.55. We're setting two targets. Our first target is $75.50. Our second target is $71.00.
iShares Russell 2000 - IWM - close: 45.03 change: -0.22 stop: 49.01
Yesterday the small caps showed a little relative strength. Today they showed a little relative weakness and under performed the big cap indices. It's worth noting that the IWM dipped to last week's lows near $43.00 before bouncing back. Today's bounce may not be over but we would watch for resistance near the 10-dma around $48.00 or even the $47.00-47.50 zone. A new failed rally can be used as an entry point to buy puts.
Our target is the $41.00 mark. FYI: The P&F chart points to an $18 target.
Kohl's Corp. - KSS - close: 28.13 change: +0.68 stop: 32.05
As expected high-end retailer SKS missed its earnings estimates this morning. The news didn't have much affect on KSS. Shares of KSS dipped to $27.12 and then bounced to close up 2.4%. If KSS see any follow through on this bounce watch for a failed rally near $30.00 as a new entry point to buy puts.
We have two targets on KSS. Our first target is $25.50 since KSS appears to have some long-term support around $25.00. Our second target is $22.00. Believe it or not the P&F chart is still bullish from the late October rally but a new move under $26.00 would change that. FYI: More conservative traders may want to use a tighter stop near the late Friday rebound around $31.15.
L-3 Communications - LLL- close: 69.31 change: +0.81 stop: 73.25
LLL was working on its seventh loss in a row until the late afternoon bounce broke the trend and the stock ended up 1.1%. If this bounce continues then readers can look for short-term resistance near $72.50 or $73.00 around its 10-dma. A failed rally near resistance can be used as a new entry point to buy puts.
We're listing two targets. Our first target is $65.25, which would be a new relative low. Our second target is $61.00.
Northern Trust - NTRS - close: 43.57 change: +1.41 stop: 50.05
NTRS hit new multi-year lows today at $40.60 before bouncing back late in the session. If this bounce continues we would look for it to run out of gas around the $47.00-48.00 zone. More conservative traders may want to tighten their stops a bit.
Our first target is the $40.00-38.50 zone. The Point & Figure chart is bearish with a $34.00 target.
Potash Corp. - POT - close: 69.94 change: +0.79 stop: 74.51
It ended up being a quiet day for POT. The stock traded in about a $4.00 range. If shares bounce tomorrow look for a failed rally near $74.00 as a new entry point for shorts.
We are suggesting a stop loss at $74.51, just above Friday's high. Our target is the $61.50 mark. More aggressive traders may want to aim lower. The P&F chart is bearish with a $48 target.
SPDR GOLD Trust - GLD - close: 72.51 change: -0.14 stop: n/a
As the U.S. dollar ticked higher the GLD gold ETF ticked lower. There was nothing out of the ordinary in trading today. Given the trend in the dollar we're expecting the GLD to move lower.
Remember that we don't care what direction the GLD moves as long as it picks a direction and goes. We're not suggesting new positions at this time.
NOTE: lack of any real directional movement is bad news for our November play. Readers may want to exit early right now!
We listed two strangles back on Nov. 9th to take advantage of what appeared to be an imminent breakout, up or down, in gold prices.
The first strangle uses November options, which expire this week. Thus it's much more risky. The second strangle uses December options.
What is a strangle?
Ultra S&P500 ProShares - SSO - close: 24.63 change: +0.18 stop: n/a
The S&P 500 continues to bounce around its lows. Eventually it will see a significant move one way or the other.
If you want to open new positions we would pick anywhere in the $25.50-24.50 zone but the closer to $25.00 the better.
Note: The SSO is an ultra-long ETF that typically moves twice the daily performance of the S&P 500 index.
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.
-December Strangle Details-
ConocoPhillips - COP - close: 49.89 chg: +3.13 stop: 50.05
By 2:00 p.m. COP had produced another bearish failed rally pattern under the $50.00 level. The stock was ready to roll over into a new leg lower. Then the programmed buying commenced and thanks to the BUD deal closing with Inbev funds were buying S&P 500 components. Shares of COP surged to the $50.00 level and hit our stop loss at $50.05.
Joy Global - JOYG - close: 21.31 change: -1.38 stop: 27.51
Target achieved. Shares of JOYG sank to $20.24 intraday before bouncing late in the afternoon to settle with a 6% loss. Our target was a drop to the $20.50 mark. JOYG found support near $20.00 in October and this may be significant support.
Volatility Index - VIX - cls: 67.64 chg: - 1.51 stop: n/a
The VIX spiked to new four-week highs before reversing course today. The Volatility index closed a lot higher than we expected when we were looking at it a couple of months ago. Today was the last day of trading for November VIX options. All of our VIX put positions have closed with a loss after an unprecedented rise in volatility that this market has never seen before.