Option Investor
Play Updates

Time To Raise Stops Again.

HAVING TROUBLE PRINTING?
Printer friendly version


CALL Play Updates

Alcon Inc - ACL - close: 86.45 change: +0.35 stop: 84.45 *new*

ACL's performance on Tuesday paled to the late session gains in the major indices. Shares of ACL only managed a 0.4% gain but on the positive side the stock does appear to be building support near the $85.00 level. We are raising our stop loss to $84.45. Thus if ACL does breakdown we'll be closed out pretty quickly. Currently the bulls are facing potential technical resistance at ACL's falling 50-dma near $87.82. Lately I've suggested waiting for a rise over $87.00 before initiating positions. More conservative traders may want to wait for a breakout past the 50-dma instead. We need to trade defensively and that means smaller positions, tighter stops, and be even more patient for the right set up.

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.

Picked on December 22 at $ 85.25 *triggered     
Change since picked:      + 1.20
Earnings Date           02/04/09 (unconfirmed)
Average Daily Volume =       840 thousand 


Caterpillar - CAT - close: 43.66 change: +1.32 stop: 41.40 *new*

The current bounce in CAT is about four days old and it's starting to look a lot more convincing. I'm going to try and reduce our risk by raising the stop loss to $41.40. If you're going to play with a tight stop you could entertain new positions here. Otherwise I would stick to my previous comments and wait. Let's just say I don't trust the rally on this light holiday volume. Our target is $49.50. The Point & Figure chart is bullish with a $58 target.

Picked on December 16 at $ 43.80
Change since picked:      - 0.14
Earnings Date           01/29/09 (unconfirmed)
Average Daily Volume =      13.4 million  


Energizer Holdings - ENR - close: 52.95 change: +2.79 stop: 48.25 *new*

ENR delivered a strong session with a 5.5% gain and closing near its highs for the day. Taking a closer look at ENR's chart I see potential resistance at the October 30th high at $54.38. Therefore I'm adjusting our first target down from $54.50 to $54.25. Be sure to take some money off the table when ENR hits our first target. I'm also adjusting the stop loss to $48.25.

We have two targets. Our first target is $54.25. Our second target is $59.00. The Point & Figure chart is already bullish with a $68.00 target.

Picked on December 29 at $ 50.05 *triggered     
Change since picked:      + 2.90
Earnings Date           01/29/09 (unconfirmed)
Average Daily Volume =       798 thousand 


Lockheed Martin - LMT - close: 84.29 change: +3.75 stop: 79.95 *new*

Be ready to exit! LMT surged more than 4.6% to close at new six-week highs. There is no resistance between current levels and our target at $84.90 and I expect the stock to hit our target tomorrow. We're adjusting the stop loss to $79.95. More conservative traders may even want to use a tighter stop. More aggressive traders may want to aim higher. FYI: The P&F chart is bullish with a $90 target.

Picked on December 29 at $ 80.00 *triggered     
Change since picked:      + 4.29
Earnings Date           01/22/09 (unconfirmed)
Average Daily Volume =       2.8 million  


Sunoco Inc - SUN - close: 43.05 change: +0.56 stop: 39.85

Right on cue SUN dipped toward technical support at its 200-dma and bounced. The intraday low was $40.71. Yesterday I said use a dip to $40.75 or lower as a new entry point to buy calls. After two weeks of consolidating sideways SUN looks ready to rally higher. More conservative traders may want to use a stop loss under today's low.

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

Picked on December 20 at $ 42.30
Change since picked:      + 0.75
Earnings Date           02/04/09 (unconfirmed)
Average Daily Volume =       4.2 million  


PUT Play Updates

AvalonBay - AVB - close: 58.43 change: +3.28 stop: 61.65

A lot of the REITs exploded higher today with 4%-to-5% gains. I think it's all short covering from short-term oversold conditions. The trend on most of these stocks is definitely down especially after breaking down from the six-week bounce from the November lows. The plan today is to wait for this bounce to roll over and then use it as a new entry point to buy puts.

AVB has already hit our first target at $55.10. We're currently aiming for $50.55. The P&F chart has seen its bearish target drop from $50 to $41.

Q&A
One of our readers, Michael, asked me if there were any other REIT stocks that might be additional bearish candidates for a put play. I do think there is a very good chance that the market will retest the November lows. Several of the REIT stocks are setting up for possible put plays and aggressive traders could target their November lows. I would make sure to take profits along the way to avoid losing them in any oversold, bear-market rallies on the way down.

ESS is another REIT that looks bearish. A failed rally at $77 or maybe $80 could be an entry point to buy puts. Otherwise wait for a breakdown under $70.00.

VNO is a REIT that looks like a bearish candidate. A failed rally at $60.00 or a new relative low under $54 can be used as entry points.

Two more REITs that I would consider and have similar patterns are BXP and SPG. Caution - There are a lot of traders that think these REITs are heading lower and some of them have very high short interest. This means they are at risk for a short squeeze should the market suddenly shoot higher.

Picked on December 24 at $ 57.98 *gap down entry
Change since picked:      + 0.45
Earnings Date           02/04/09 (unconfirmed)
Average Daily Volume =       3.5 million  


Avon Products - AVP - close: 23.43 change: +0.93 stop: 24.05

A little bit of an oversold bounce is to be expected but today's gain in AVP (+4.1%) is worrisome because it pushed the stock above technical resistance at the 50-dma. Now given the light holiday volume I suspect this is just a bull trap but I would not bet on it being a trap. AVP still has resistance at $24.00. Wait for a failed rally at $24.00 before considering new positions.

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.

Picked on December 23 at $ 22.46
Change since picked:      + 0.97
Earnings Date           02/05/09 (unconfirmed)
Average Daily Volume =       4.6 million  


Equinix Inc. - EQIX - close: 52.48 change: +1.45 stop: 52.75

EQIX is still bouncing from the $50.00 level. The general trend is still bearish and we're going to stick to our plan.

Our suggested entry point to buy puts is $49.75. If triggered we have two targets. Our first target is $45.05. Our second target is $40.50. More aggressive traders may want to aim lower.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           02/11/09 (unconfirmed)
Average Daily Volume =       990 thousand 


Capital One Financial - COF - close: 30.86 chg: +1.55 stop: 31.51

Be careful here! Bears need to start looking for the exit signs. Today's short-covering rally in COF powered a 5.2% gain and a breakout over the $30.00 mark and its multi-week trendline of lower highs. I suspect that this is just a head fake to suck in the bulls before COF reverses but we have to act as if this is the real thing. If COF breaks out over the 50-dma it may be time to switch to bullish positions. I would wait for a new decline under $29.50 or $28.75 before considering new bearish positions.

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.

Picked on December 23 at $ 29.38 /gap higher entry
Change since picked:      + 1.48
Earnings Date           01/22/09 (unconfirmed)
Average Daily Volume =       8.5 million  


Google Inc. - GOOG - close: 303.11 change: +5.69 stop: 311.00

GOOG served up a 1.9% gain but this actually under performed the NASDAQ and the S&P 500. Short-term resistance near $307 held firm today. I would look for a new move under $295 or $290 as an entry point to start new bearish positions. Or you could use a failed rally under the 50-dma as a potential entry point.

Our first target is $281.00. Our second target is $265. More aggressive traders could aim for $250. The Point & Figure chart points to $252.

Picked on December 27 at $300.36
Change since picked:      - 2.94
Earnings Date           01/29/09 (unconfirmed)
Average Daily Volume =       5.4 million  


Strangle & Spread Play Updates

*Currently we do not have any Strangle or Spread play updates*


CLOSED BEARISH PLAYS

Franklin Resources - BEN - close: 63.41 change: +3.92 stop: 63.11

It was the financial sector that really lead the market higher in the last 60 minutes of trading. This put the bears on the defense and BEN saw some short covering into the closing bell. The stock rallied more than 6.5% and broke the two-week trend of lower highs. Shares of BEN hit our stop loss at $63.11 closing the play.

I would keep BEN on your watch list. The stock has resistance near $66.00. A breakout or reversal there might be an opportunity.

Chart:
BEN

Picked on December 27 at $ 59.64
Change since picked:      + 3.77
Earnings Date           01/22/09 (unconfirmed)
Average Daily Volume =       1.4 million  


Play Update Archives