Agrium Inc. - AGU - close: 48.18 change: +1.26 stop: 43.85 *new* The fertilizer-chemical names continue to perform well. Most of the big names in the group were up sharply on Friday. Shares of AGU rallied to $49.57 before paring its gains. Volume was about double the norm. I am raising our stop loss to $43.85. If you're looking for a new bullish entry point wait for a dip or a bounce in the $46-45 zone. Our first target to take some money off the table is $49.95. Our second target is $54.00. The Point & Figure chart is bullish with a $59 target. FYI: Traders need to know that AGU is currently trying a hostile takeover of rival CF Industries (CF). CF believes that AGU's offer is too cheap. In the meantime CF is trying a hostile takeover of Terra Industries (TRA). One of our biggest risks by trading AGU is that AGU might raise its offer to buy CF. The company did so in late March and the stock gapped down on the news. AGU raised its offer a second time yesterday, which may have accounted for the spike down toward $43.50. AGU raised the cash portion of their offer by $5 to $40 a share in cash and one share of AGU stock for CF. On Saturday, May 16th, CF's Board of Directors rejected the latest offer by AGU claiming it still under values the company. Meanwhile TRA is saying the same thing about CF's offers.
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BHP Billiton Plc - BBL - close: 42.60 change: -0.51 stop: 41.90 The bounce in BBL is struggling and shares are back to testing the $42.00 level. I remain very cautious here. Buying calls now with a stop under $42.00 is a relatively lower-risk entry point. Short-term our success will probably depend on whether the S&P 500 can hold support near 875. If the market continues lower this week then BBL will probably stop us out pretty quickly. Traders may want to wait for a new bounce over $44.00 before considering new call positions on BBL. Our first target is $49.90. Our second target is $54.00. The Point & Figure chart is bullish with a $62 target.
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Emerging Markets Bear 3x ETF - EDZ - close: 19.47 change: +0.65 stop: n/a So far so good. The EDZ is crouched and ready to spring higher if the market continues to sink. I am still suggesting call positions now but more conservative traders may want to wait for either the EDZ to breakout over $20.00 or the S&P 500 to breakdown under 875-870. This is a very volatile security and we don't have a stop loss on it. Use money management to limit your risk. If you feel more comfortable with a stop I would put one around $16.65. Our first target is $24.75. Our second target is $29.45. FYI: If you can't pull up a chart of the MSCI Emergin Markets index you can watch the EEM instead.
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Factset Research - FDS - close: 55.73 change: +0.18 stop: 52.40 *new8 FDS is still marching higher. Shares rallied to new relative highs last week. While the trend is up I'm not suggesting new positions. We're raising the stop loss to $52.40. FDS has exceeded our first target and we're currently aiming for $59.00. The Point & Figure chart is very bullish with a $79 target.
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Currencyshares British Pound - FXB - cls: 151.53 chg: -0.63 stop: 147.90*new* The Euro zone reported on Friday that the European economy had fallen into its deepest recession since WWII. This sent the euro currency lower. The British Pound also ticked lower as the U.S. dollar rose in relative strength. The trend in the FXB remains higher but it's interesting and a little bearish to note that volume has been extremely light the last few days. I am raising our stop loss to $147.90. I'm not suggesting new positions at this time. Our target is $157.00. More conservative traders could buy longer-dated options. The Point & Figure chart is bullish with a $176 target.
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iShares China ETF - FXI - close: 33.68 change: -0.09 stop: 31.90 *new* I have nothing new to report on for the FXI. I'm a little surprised it has held up so well this past week with China announced both a plunge in exports for the month of April and a three-month trend of deflationary price action in their economy. I am still expecting the FXI to dip toward $32.50, which is where I would consider buying calls again. We are going to raise the stop loss to $31.90. We have two targets. Our first target to take profits is $36.45. Our second target is $39.45.
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SPDR Gold Trust - GLD - close: 91.55 change: +0.52 stop: 87.75 The GLD is still inching higher thanks to deflating world currencies and investor caution. If you are looking for a new entry point to buy calls I would watch for a pull back near $90.00 or $89.00. Our first target is $94.75. Our second target is $97.45.
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Intl. Bus. Mach. - IBM - close: 101.37 change: +0.32 stop: 99.65 A lot of the technical indicators for IBM are forecasting a breakdown. Yet the stock has not broken support near $100. While that support holds we'll hold on with a bullish bias although I'm not suggesting new bullish positions. A move over $104 might change my mind. More conservative traders might want to go ahead and exit early. The longer we wait the more our option premium decays. Currently our target is $109.40.
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Mastercard - MA - close: 173.13 change: -0.22 stop: 159.90 Obviously we'd like to see MA hold support at the $170 level but with the market poised to break support odds are MA will break too. The next level of support for MA is the $165 region with both the 200-dma and 50-dma. After that it's the $160 region. I would go ahead and buy calls on a dip in the $165-160 zone or better yet wait for MA to dip into and then bounce out of that zone. We have two targets. We want to take some money off the table at $198.50 since the $200.00 mark could be round-number resistance. Our second target is $218.50. The Point & Figure chart is bullish with a $218 target.
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ProShares UltraShort - SDS - close: 61.37 change: +0.97 stop: 57.40 Hmm... the action in SDS was interesting. The S&P 500 did not break support but SDS still tagged a new high over $62.00. Shares of this inverse ETF hit $62.08 and our entry point to buy calls was $62.05 so the play is now open. I would consider new positions now or you could wait for the S&P 500 to trade under 870 as your new trigger. Our first target is $69.95. Our second target is $74.40. FYI: Don't forget that the SDS is the ultra-short or double-short inverse ETF so it should see twice the volatility of the S&P 500
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Visa - V - close: 65.07 change: +0.55 stop: 65.45 Shares of Visa are holding up reasonably well. It's kind of floating in no-man's land between resistance at $69.00 and support near $60.00. We have two different entry points. One entry point to buy calls is at $69.00 with a stop at $65.45. Our second entry point is at $60.50 with a stop at $57.40. Our first target, if triggered at $69.00, is the $74.00 level. The P&F chart is very bullish with a $95 target.
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Becton Dickinson - BDX - close: 65.16 change: -0.73 stop: 68.25 So far so good. BDX tagged our entry point at $66.50 on Thursday morning and has already begun to fade lower. I would still consider new positions now although readers may want to tighten their stop loss. Our first target to take profits is $61.00. Our second target is $55.15. At this point I would take off at least half of the position at $61.00.
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Harman Intl. - HAR - close: 16.51 change: -0.09 stop: 19.05 *new* HAR is still hovering about the $16.00 level but has not yet hit our target at $16.05. I'm going to tweak our exit and move the target to $16.10, which is where the stock bounced on Thursday. I'm also adjusting the stop loss down to $19.05. No new plays at this time. More conservative traders might just want to go ahead and take profits now.
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iShares Russell 2000 - IWM - close: 47.76 change: -0.18 stop: 50.25 I think our put play on the IWM is off to a good start. Shares hit our entry point on Thursday. Now that IWM has broken its bullish up trend the path of least resistance should be down. Our first target is $45.25. I'm tempted to set a second target lower but the combined 50-dma and 100-dma around 44.75 could be tough support to break.
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L-3 Comm. - LLL - close: 74.69 change: -0.34 stop: 77.05 LLL is slipping closer to our entry point. The plan is to buy puts on a breakdown under $74.00 with a trigger at $73.90. We might also want to consider an entry point on a failed rally in the $77-78 region. If triggered our first target is $70.25 (just above the 50-dma). We can contemplate a secondary target around $67.00 but for now the plan is to exit at $70.25.
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Nike Inc. - NKE - close: 49.75 change: -1.20 stop: 54.05 The oversold bounce in NKE rolled over near the $51.50 level. There should be nothing stopping it from falling to our exit target. More aggressive traders may want to aim lower like the $45.00 region. More conservative traders could move their stop near $52.50 or $52.00 instead. Our downside target is $48.15.
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Northrop Grumman - NOC - close: 48.09 change: -0.74 stop: 50.85 NOC is inching closer to a breakdown under short-term support at $48.00. I would still consider new put positions now but readers could wait for another bounce near $49.00 or a new relative low under $47.75. Our target is $44.25 or the 50-dma, whichever one NOC hits first.
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Simon Property Grp. - SPG - cls: 46.92 change: -3.13 stop: 51.05 SPG is off to a good start. Shares gapped down on Friday morning at $49.11 so we did have to adjust our entry point. The bounce back to $50 failed and the stock lost 6.2% on the session. I wouldn't be surprised to see another bounce toward $49-50 and that is where I would consider new positions. Our first target is $45.25. More aggressive traders might want to aim for the 50-dma.
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(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.) Gold ETF - GLD - close: 91.55 change: +0.52 stop: n/a Gold prices are still floating higher thanks to a falling dollar and rising investor caution about a tired stock market and a global economy that doesn't want to bounce. Plus we have the looming threat of inflation with so much quantitative easing going on. We're not suggesting new strangle positions at this time. The options we suggested were the June $95 calls (GLD-FQ) and the June $80.00 puts (GLD-RB). Our estimated cost was $1.95. We want to sell if either option hits $4.85 or higher.
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Lockheed Martin - LMT - close: 80.87 change: +0.34 stop: 79.40 We have been slowly adjusting our stop loss higher for days and LMT finally hit our stop on Friday at $79.40. Momentum indicators are fading fast and more nimble traders may want to consider bearish trades if LMT breaks down under $78.00.
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Volatility Index - VIX - close: 33.12 change: +1.75 stop: 38.55 Target achieved! The VIX actually shot higher throughout most of the session but not before dipping to 30.59. Our second and final target to exit was 31.00. If the S&P 500 breaks down under 870 nimble traders might want to consider buying short-term calls. Otherwise I'm watching for a potential failed rally under 40 again as a potential entry point for new put plays.
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Editor's note on Strangles: Our AAPL and GOOG strangles did not perform. Our catalyst was their first quarter earnings report. When neither stock produced the necessary post-earnings move we should have exited immediately. Hindsight is always 20/20. In the future if we play an earnings report and the stock doesn't hit our necessary target in a day or two we'll be closing the play. Lesson learned. Apple Inc. - AAPL - close: 122.42 change: -0.53 stop: n/a How ironic that after four weeks and two $10 moves in the stock price that AAPL closes right where we started. Our strangle has failed. Please see the editor's note above. The options we suggested were the May $130 calls (APV-EF) and the May $110 puts (QAA-QB). Our estimated cost was $5.12.
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Google - GOOG - close: 390.00 change: + 2.50 stop: n/a Friday was a great example for how some stocks get pinned to a strike price at options expiration. GOOG closed right at the $390.00 mark. The up trend has been broken but there has not been any significant correction yet. The recent analyst call for a $600 price target seems a little outlandish here. Please see my editor's note on strangles above. The options we suggested were the May $420 calls (GOP-ED) and the May $340 puts (GGD-QE). Our estimated cost was $18.10.
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