Agrium Inc. - AGU - close: 51.21 change: +3.03 stop: 44.95 *new* Target achieved. News over the weekend that CF's board had rejected AGU's latest offer did not stop the rally. Shares of AGU gained 6.2% and broke through the $50.00 level. Our first target to take profits was $49.95. I'm raising our stop loss to $44.95 and more conservative traders may want to raise their stop closer to $46.00. 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.
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BHP Billiton Plc - BBL - close: 44.94 change: +2.34 stop: 41.90 Material stocks performed well on Monday. Shares of BBL gained 5.4% and rallied back above short-term support/resistance at $44.00. My only complain would be the lack of volume on the move, which is a cautionary sign for the bulls. Our first target is $49.90. Our second target is $54.00. The Point & Figure chart is bullish with a $62 target.
Emerging Markets Bear 3x ETF - EDZ - close: 16.20 change: -3.27 stop: n/a Ouch! The EDZ got hammered today. This is an inverse ETF on the emerging markets. Today's history-making rally in the Indian stock market (+17% for the Sensex) had a big impact on the emerging market index. To sum up what happened in one sentence election results over the weekend showed that a more pro-business coalition made huge wins in India and the Indian market skyrocketed higher before shutting down due to circuit breakers. OptionInvestor.com did not have a stop loss on this play. We knew it was going to be super volatile since it's a triple-leveraged ETF. Investors were to limit their risk by using a small position size. If you are looking for an exit you could exit now with the EDZ at new lows or you could wait for an oversold bounce tomorrow. I am not suggesting an exit yet but I'm not suggesting new entries either. 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.
More info on the EDZ:
Factset Research - FDS - close: 55.89 change: +0.16 stop: 52.40 FDS is slowly inching higher. More conservative traders may want to consider a stop loss closer to $53.00 or even $53.75. I'm leaving our stop at $52.40 for now. 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.
Currencyshares British Pound - FXB - cls: 153.32 chg: +1.79 stop: 147.90 The British Pound delivered another strong move with a 1.1% gain and a new relative high. I don't see any changes from our previous comments. More conservative trades might want to consider taking some money off the table right here. I'm not suggesting new positions at this time but you might consider buying a dip near $150.00. Our target is $157.00. More conservative traders could buy longer-dated options. The Point & Figure chart is bullish with a $176 target.
iShares China ETF - FXI - close: 35.66 change: +1.98 stop: 31.90 It was a very strong day for the FXI, which outpaced the rally in the Chinese markets. I am not suggesting new call positions at current levels. We have two targets. Our first target to take profits is $36.45. Our second target is $39.45.
SPDR Gold Trust - GLD - close: 90.36 change: -1.19 stop: 87.75 The move on gold today seems like profit taking after a two-week run higher. Stocks regained their luster so investors could have been reallocating some capital. A dip near $90 or the $89 level can be used as a new bullish entry point. Our first target is $94.75. Our second target is $97.45.
Intl. Bus. Mach. - IBM - close: 104.58 change: +3.21 stop: 99.65 IBM closed at its highs for the day. The stock gapped open at $102.00 and eventually broke through short-term resistance at the $104.00 level. Volume was light, which should make bulls a little cautious. Today's rally does look like the beginning of a new leg higher. Currently our target is $109.40.
Mastercard - MA - close: 173.40 change: +0.27 stop: 159.90 Mastercard under performed on Monday. The stock traded sideways above the $170 level. With the rest of the market up 3% this should make bullish investors worried. I am not suggesting new positions at this time. 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.
Visa - V - close: 66.41 change: +1.34 stop: 65.45 Visa continues to bounce but we're still waiting on an entry point. 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.
Becton Dickinson - BDX - close: 64.93 change: -0.23 stop: 68.25 BDX under performed the market today but it's worth noting that shares found support at the $64.50 level several times on Monday. I would not be surprised to see another bounce into the $66.50-67.50 region. 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.
Harman Intl. - HAR - close: 17.14 change: +0.63 stop: 19.05 HAR is still trying to bounce and did a pretty good job of it today with a 3.8% gain. This stock should find new resistance near $18.00. I'm not suggesting new bearish positions at this time and more conservative traders may want to exit early. Our target is $16.10.
L-3 Comm. - LLL - close: 74.11 change: -0.58 stop: 77.05 Goldman Sachs downgraded the defense sector and part of that downgraded listed LLL as a sell. The stock gapped open lower at $72.72, which sadly is now our entry point since we had a trigger to buy puts at $73.90. The stock bounced back but it was probably just an oversold bounce fueled by the widespread market strength. I remain bearish but readers may want to wait for a failed rally near $75 or $76 before initiating new positions. 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: 51.20 change: +1.45 stop: 54.05 NKE is still trying to rebound and added 2.9% on the session. The stock looks poised to challenge resistance near $52.00 and its 200-dma soon. I'm not suggesting new bearish positions at this time. 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.
Northrop Grumman - NOC - close: 47.70 change: -0.39 stop: 50.85 NOC is another defense stock that was downgraded by Goldman Sachs this morning. Shares gapped lower and spiked to $46.24 before bouncing. Look for a failed rally in the $48.50-49.00 zone as a new entry point. Our target is $44.25 or the 50-dma, whichever one NOC hits first.
Everest RE Group - RE - close: 70.11 change: +1.35 stop: 72.25 RE delivered an interesting session. The stock was strong this morning, faded down to $67.25, and then began to scream higher in the last few hours. The move looks like a "hammer" style candlestick. During the low point of the session the stock hit our trigger to buy puts at $67.90. Our bearish play is now open unfortunately the action today was more bullish. You could watch for a failed rally near $72.00 but I'm not suggesting new positions at this time. If the financials continue to rally strong tomorrow the insurance sector could lift RE to our stop loss. Our target is $62.55. My time frame is about four weeks.
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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: 90.36 change: -1.19 stop: n/a It looks like gold and the GLD experienced a little bit of profit taking today in spite of another decline in the U.S. dollar. 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.
ProShares UltraShort - SDS - close: 57.84 change: -3.53 stop: 57.40 The nascent bullish breakout in the SDS has been crushed. This 2x inverse ETF lost 5.7% compared to a 3% rally in the S&P 500. I was really expecting a bigger correction in the S&P 500 but we have to play based on what the market is telling us. I am suggesting an early exit. Let's cut our losses now versus waiting to be stopped out tomorrow.
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iShares Russell 2000 - IWM - close: 49.36 change: +1.60 stop: 50.25 Uh-oh! The market's correction is suddenly in trouble as investors go back to buying the banks and just about everything else. Monday's rally was way too strong. I could see aggressive traders just enduring this bounce waiting for it to fail but the IWM might rally back to $51.00 and its 200-dma before rolling over. I would rather exit early now, cut our losses, and look for a new entry point later. If the IWM breaks through the 200-dma we may want to buy calls. Otherwise I'm watching for it to roll over. More specifically watch to see if this rally rolls over under the old trendline of higher lows, which could now be new resistance.
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Simon Property Grp. - SPG - cls: 51.49 change: +4.57 stop: 51.05 The rally or probably more correctly the short covering in the REIT stocks today was very strong. Shares of SPG gained 9.7% and hit our stop loss at $51.05 closing this play.
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