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Play Updates

Stocks Sleep Through Christmas

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CALL Play Updates

Alcon Inc - ACL - close: 85.83 change: +0.46 stop: 83.75

ACL spent the post-Christmas Friday consolidating sideways. Shares reversed Wednesday's minor decline but overall nothing changed. I would wait for ACL to breakout past the very short-term trend of lower highs before considering new bullish positions. That would mean waiting for a rise over $87.00. Unfortunately, the stock is now facing technical resistance at its 50-dma, which has fallen toward the $89.80 region. If ACL can push past the $89-90 zone it would be a bullish breakout past the neckline of an inverse head-and-shoulders pattern with a potential bullish target of $110 or more. This coincides with the Point & Figure chart's bullish target of $110. Our upside target is $99.00.

Suggested Options:
If ACL provides another entry point we would use the January or February calls but we would not hold over the February earnings report.

Annotated Chart:
ACL

Picked on December 22 at $ 85.25 *triggered     
Change since picked:      + 0.58
Earnings Date           02/04/09 (unconfirmed)
Average Daily Volume =       840 thousand 


Caterpillar - CAT - close: 42.72 change: +0.81 stop: 39.95

CAT continues to show some relative strength. The stock added another 1.9% on Friday. I remain cautious because the technical picture is mixed with both bearish and bullish indicators. Yet it's worth noting that CAT has not broken the bullish trend of higher lows. More conservative traders could raise their stops toward last week's low around $40.60. We're going to keep our stop under clearly defined support at $40.00 for now. Another reason I'm cautious is that traders should not put too much confidence behind such low-volume moves like Friday's bounce. Our target is $49.50. The Point & Figure chart is bullish with a $58 target.

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

Annotated Chart:
CAT

Picked on December 16 at $ 43.80
Change since picked:      - 1.08
Earnings Date           01/29/09 (unconfirmed)
Average Daily Volume =      13.4 million  


Research In Motion - RIMM - close: 40.85 change: -0.17 stop: 39.45 *new*

RIMM has spent the last four days consolidating its post-earnings breakout higher. The drift back toward $40.00 was not unexpected. More aggressive traders may want to jump in here. I still think RIMM might see another push toward the $40.00 mark. Friday's low was only $40.45. We are going to try and limit our risk by raising the stop loss to $39.45. I would buy a dip close to $40.00 or better yet a bounce from $40.00. Another strategy would be to wait for RIMM to break this four-day trend of lower highs, which would probably mean waiting for a rise over $41.50 as your next entry point.

We have two targets. Our first target is $44.95. Our second target is $48.00. FYI: The P&F chart is bullish with a $56 target.

Suggested Options:
If RIMM provides another entry point we would buy the January or February calls. Probably the $40 or $45 strikes.

Annotated Chart:
RIMM

Picked on December 22 at $ 41.50
Change since picked:      - 0.65
Earnings Date           12/18/08 (confirmed)
Average Daily Volume =        25 million  


Sunoco Inc - SUN - close: 42.53 change: +0.42 stop: 39.85 *new*

Crude oil broke its multi-day losing streak but it didn't have much affect on SUN. Shares of oil refiner SUN continue to churn sideways above previous resistance at $40.00 and its 200-dma. Friday's could be considered a new bullish entry point to buy calls. We are going to raise our stop loss to $39.85, which is about 20 cents under the 10-dma and still under round-number support at $40.00. More patient traders may want to wait and see if SUN retests the $40 level again before initiating new positions.

The P&F chart is very bullish with a $54 target. Our target is $47.00.

Suggested Options:
We are suggesting the January or February calls.

Annotated Chart:
SUN

Picked on December 20 at $ 42.30
Change since picked:      - 0.23
Earnings Date           02/04/09 (unconfirmed)
Average Daily Volume =       4.2 million  


PUT Play Updates

AvalonBay - AVB - close: 57.04 change: -0.56 stop: 63.01 *new*

AVB continued to drift lower on Friday. The stock has broken its bullish trend of higher lows and almost all of its technical indicators have turned bearish. We would still consider new positions here or wait for a bounce back to what should be resistance near $60.00 as another entry point. We are adjusting the stop loss to $63.01. More conservative traders might want to try a tighter stop.

We have two targets. Our first target is $55.10. Our second target is $50.55. FYI: The Point & Figure chart currently points to $50.00.

Suggested Options:
We would use the January or February puts.

Annotated Chart:
AVB

Picked on December 24 at $ 57.98 *gap down entry
Change since picked:      - 0.94
Earnings Date           02/04/09 (unconfirmed)
Average Daily Volume =       3.5 million  


Avon Products - AVP - close: 22.68 change: +0.05 stop: 24.05

It's been two days since we added AVP as a put play and shares haven't moved much. We don't see any changes in our strategy. This is still an entry point to buy puts. More conservative traders may want to wait for a drop under $22.00 before initiating positions. The simple 50-dma overhead at $23.50 offers technical resistance and more conservative traders may want to tighten their stops closer to $23.50.

We have two targets. Our first target is $20.25. Our second target is $18.60. FYI: The Point & Figure chart is bearish with an $11 target.

Suggested Options:
We would use the January or February puts.

Annotated Chart:
AVP

Picked on December 23 at $ 22.46
Change since picked:      + 0.22
Earnings Date           02/05/09 (unconfirmed)
Average Daily Volume =       4.6 million  


Capital One Financial - COF - close: 29.48 chg: +0.08 stop: 31.51

COF is drifting sideways and the closer it inches toward $30.00 the better our entry point to buy puts. Consumers are in trouble. The economy is slowing down. Real estate isn't improving. Delinquent accounts at COF are going to go up. The mid December bounce is an opportunity to buy puts. I expect the stock to challenge is lows and probably break them.

Our first target is $25.50. Our second target will be a new relative low at $21.00. FYI: The P&F chart is bearish with a $17 target.

Suggested Options:
We would use the January or February puts.

Annotated Chart:
COF

Picked on December 23 at $ 29.38 /gap higher entry
Change since picked:      + 0.10
Earnings Date           01/22/09 (unconfirmed)
Average Daily Volume =       8.5 million  


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