Play Editor's Note: The market's sell-off is picking up speed and there is a growing camp of investors and analysts that do not believe the October lows will hold this time. While we agree with this view we would use today's decline as an opportunity to start taking profits in our put plays. Some of our put plays hit our targets today. Several are getting very close to our targets. We have tighten stops on all of our remaining put plays.
*Currently we do not have any call play updates*
Bard CR - BCR - close: 79.08 change: -1.84 stop: 84.05 *new*
BCR continued to sink but we're a little surprised at its relative strength. The stock lost 2.2% versus a 6.1% drop in the S&P 500. BCR failed to close under its low from last week. We are not suggesting new bearish positions. Please note that we are lowering the stop loss to $84.05. More conservative traders may want to adjust their stops toward $83.00.
The Point & Figure chart is bearish with a $69.00 target. Our target is $75.50.
Capital One Financial - COF - close: 26.50 change: -2.75 stop: 31.31*new*
Financial stocks led the market lower on Wednesday. Shares of COF lost more than 9% and closed at lows not seen since early 2003. We are suggesting readers take profits right here but we will stick with our official target of $25.50. The Point & Figure chart is very bearish with a $15.00 target.
Please note that we are adjusting the stop loss to $31.31. We are not suggesting new bearish positions.
iShares Brazil - EWZ - close: 30.20 change: -3.01 stop: 34.55*new*
We are adjusting our play here and strongly suggest readers take some profits at this level. The EWZ lost 9% and sank to round-number support at $30.00. We're adjusting the stop loss to $34.55 and we are not suggesting new bearish positions. We will close this play if the EWZ hits $29.50. The Point & Figure chart is bearish with a $23.00 target.
Intl. Business Machines - IBM - cls: 75.97 change: -4.11 stop: 81.26*new*
IBM turned in another negative session and closed on its lows with a 5% loss. Yet shares did not breakdown past their lows from last week. We are adjusting our stop loss to $81.26 and we're not suggesting new bearish positions at this time.
We've set two targets. Our first target is $75.50. Our second target is $71.00.
iShares Russell 2000 - IWM - close: 41.36 change: -3.67 stop: 46.01*new*
Small cap stocks continue to under perform. The RUT lost 7.8% versus a 6% drop in the S&P 500 index. We are not suggesting new bearish plays here and we're lowering the stop loss to $46.01.
We strongly suggest that readers begin taking profits right here. Our target may be $41.00, which will probably be hit tomorrow morning but there is no reason to wait. FYI: The P&F chart points to an $18 target.
Kohl's Corp. - KSS - close: 26.39 change: -1.74 stop: 30.01 *new*
Retailers continue to plummet. While KSS hasn't taken the same beating that SHLD, ANF and TGT have the stock is quickly sliding lower. We are adjusting our stop loss to $30.01. More conservative traders may want to use a stop loss closer to our entry price. We're not suggesting new positions at this time.
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.
L-3 Communications - LLL- close: 65.16 change: -4.15 stop: 70.05 *new*
Target achieved! LLL delivered another failed rally under $70.00 this morning and then plunged to new multi-year lows. Shares hit $65.06 at its worst levels this afternoon. Our first target was $65.25.
Please note that we are dropping our stop loss to $70.05. Currently we have a secondary target listed at $61.00. We're not suggesting new positions.
Potash Corp. - POT - close: 64.02 change: -5.92 stop: 70.01 *new*
Readers may want to start taking profits in our put play on POT. The stock sank 8.4% today and looks poised to hit our target at $61.50 soon. There is no rule that says you can't start scaling out of a position early. We are not suggesting new positions and we're adjusting the stop loss to $70.01.
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: 72.26 change: -0.25 stop: n/a
This morning the U.S. dollar spiked lower and the GLD reacted by spiking higher toward $75.00. The rally in GLD didn't last as the dollar rebounded. We don't see any changes from our previous comments. If you are looking for a new position an entry in the $72.00-73.00 zone would work but we'd use December or January options.
Remember that we don't care what direction the GLD moves as long as it picks a direction and goes.
NOTE: lack of any real directional movement is bad news for our November play. Readers may want to exit early right now! November options expire in two days.
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: 22.18 change: -2.45 stop: n/a
The S&P 500 index dropped to new multi-year closing lows today. The SSO followed and ended the session with a 9.9% decline. We are not suggesting new positions at this time.
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-
Range Resources - RRC - close: 38.53 change: -3.24 stop: 39.45
Our attempt at a bullish play didn't last very long. RRC had been showing some relative strength. All that strength evaporated today as the markets sank to new multi-year lows. RRC gave up 7.7% and hit our stop loss at $39.45 closing the play.
Northern Trust - NTRS - close: 38.65 change: -4.92 stop: 50.05
Target achieved. The financial stocks led the market lower on Wednesday and NTRS plunged 11.3% to an intraday low of $38.65. Our target to exit was the $40.00-38.50 zone.