BHP Billiton Plc - BBL - close: 44.94 change: -1.17 stop: 43.70 Metal and mining stocks not related to gold were generally lower after Credit Suisse downgraded the sector over concerns that momentum in China was slowing. Shares of BBL dipped toward support near $44.00 and bounced but still closed with a 2.5% loss. Anything related to gold was higher as gold rallied on a weak dollar. Short-term momentum indicators in BBL are starting to turn negative again but the stock has not yet broken the bullish pattern of higher lows. I would hesitate to open new bullish positions now. Let's wait until next week and reconsider then. 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: 16.24 change: +0.80 stop: n/a Stocks around the world were lower today and emerging markets were no exception. The EDZ rallied to $16.85 and closed with a 5.1% gain. The trend is still down for the EDZ. We've yet to see a decisive breakout. I might be tempted to add to or launch new positions in the EDZ over $18.50 or over $20.00. For now I'm not suggesting new trades here. 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. 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:
iShares China ETF - FXI - close: 34.73 change: -0.65 stop: 32.90 Is this the dip we were expecting? Yesterday I said look for a dip near $34.00 and the FXI hit $34.23. It doesn't quite look like enough. I would say look for a move into the $34.00-33.50 zone and buy calls there. We have two targets. Our first target to take profits is $36.45. Our second target is $39.45.
SPDR Gold Trust - GLD - close: 93.85 change: +1.60 stop: 89.90 *new* Another plunge in the U.S. dollar, as the markets worry about the U.S. losing its AAA credit rating, helped lift gold prices to new relative highs. The GLD shot to a 1.7% gain. The rally in gold has been strong the last three weeks. Readers might want to consider taking profits tomorrow before the closing bell and the long weekend to avoid three days of premium decay. I am moving the stop loss to $89.90 and I'm not suggesting new bullish positions at this time. Our first target is $94.75. Our second target is $97.45.
Intl. Bus. Mach. - IBM - close: 102.82 change: -1.23 stop: 101.45 Tomorrow could be a make or break session for the up trend in IBM. Shares sold off this morning and hit $101.74 but eventually trimmed its losses. IBM still has a bullish trend of higher lows. An easy way to see it is to apply a 40-dma to the daily chart. If you think stocks will bounce from here then this is your entry point. I am not suggesting new positions. Currently our target is $109.40.
iShares Fincl.Srvcs - IYF - close: 41.75 change: -0.14 stop: 39.49 Financial stocks were somewhat resilient on Thursday thanks to news that Goldman Sachs had upgraded the sector to a "neutral". I'm still expecting a dip toward $40.00. The plan is to buy calls on a dip in the $40.50-39.50 zone. We have a stop loss at $39.49. If triggered at $41.00 our first target is $45.45. More aggressive traders could aim for the 200-dma.
Mastercard - MA - close: 171.69 change: +2.06 stop: 158.90 The lack of follow through lower on the recent failed rally patterns in MA is good news but not good enough to buy it. The stock has been consolidating sideways in volatile fashion for the last several days. For the moment the 200-dma and the 50-dma are holding up as support. If you're feeling cautious with the S&P looking vulnerable above 880-870 you may want to consider an early exit now. Currently the plan is to buy calls near $160, preferably on a bounce near $160. 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.
Ultra-short $RUT - TWM - close: 49.04 change: +1.19 stop: 44.35 Our bullish play on the inverse Russell ETF is off to a strong start. Unfortunately it was too strong and gapped open higher at $49.18. The TWM might see a dip near $48.00 again but I would still consider new positions now (anywhere in the $50-45 zone). Our first target is $54.00. Our second target is $59.00.
Visa - V - close: 66.28 change: +1.32 stop: 65.45 Visa was showing some relative strength today. I am almost tempted to buy calls on V's bounce with a stop loss just under $64.00. However, we're going to stick to our plan. We have two different entry points listed. 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: 65.03 change: -0.03 stop: 68.25 Only losing 3 cents on Thursday seems like a victory for the bulls. I hesitate to open new bearish positions at this time. 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: 17.08 change: -0.58 stop: 19.05 I don't see any changes from my previous comments. Be sure to close out half to two-thirds of your position at $16.10. We have a second target at $14.55.
L-3 Comm. - LLL - close: 71.37 change: -1.84 stop: 76.15 *new* LLL plunged to new relative lows at $70.76 this morning. I'm adjusting our stop loss down to $76.15. Our first target to take profits is at $70.25. Our second target is $67.00. I am not suggesting new positions at this time.
MDC Holdings - MDC - close: 31.81 change: -1.06 stop: 35.75 Our bearish home building play is off to a good start. Shares actually gapped open lower at $32.31. If this stock sees any sort of bounce I would look for resistance in the $33.50-34.00 zone. A bounce or failed rally under $34.00 would be an attractive entry point. Our first target is $27.75. Our second target is $25.15.
Nike Inc. - NKE - close: 51.35 change: +0.66 stop: 53.05 NKE displayed some relative strength. I would expect the bounce to reach $52.00 again before running into resistance. A failed rally near $52.00 can be used as a new bearish entry point. Our target to exit is $48.15. More aggressive traders may want to aim lower like the $45.00 region.
Northrop Grumman - NOC - close: 48.14 change: -1.03 stop: 50.85 I do not see any changes from my prior comments on NOC. Shares still look vulnerable to more selling pressure. Our first target is $45.51. Our second target is $42.75.
Everest RE Group - RE - close: 67.61 change: +0.80 stop: 72.25 The relative strength in RE today was a little surprising. The stock has bounced three times now in the $66.75 region in just the last two sessions. I suspect RE is coiling for a rebound toward $70.00 again. Look for a failed rally near $70 as a new bearish entry point. Our target is $62.55. My time frame is about four weeks.
Retail Holders - RTH - close: 76.77 change: -1.04 stop: 80.81 Uh-oh! Retailers could be very volatile again tomorrow. Sears Holding, which runs Sears and Kmart (SHLD), reported earnings after the closing bell tonight. Wall Street was expecting SHLD to report a loss of 88 cents a share. Excluding one-time charges (don't they always?) SHLD announced a profit of 21 cents a share. This is a HUGE beat for the company in a very tough retail environment. Gross margins were better than expected, which is a positive. More importantly SHLD announced that it had amended and extended its available credit to $4.1 billion while also shaving off $500 million in debt thereby reducing its current debt to just $3 billion. There was a lot of short interest in SHLD with the latest data listing 11.5% of the 102 million-share float. Those shorts are getting crushed in after hours with shares of SHLD up $13.00 to $63.00. The recent May 2009 highs were almost $64.00 so this might still hold as overhead resistance. The good news is that SHLD is not a component of the RTH retail holders. The bad news is that this could still spark some knee-jerk short covering across the sector. More aggressive traders may want to consider temporarily removing their stops on our RTH put play so you don't get stopped out on an intraday morning spike only to see it fail like the one on Wednesday. I would watch for another failed rally near $80.00 as a new entry point to buy puts. My first target is $73.75. My second target is $70.25.
Silgan Holdings - SLGN - close: 44.89 change: -1.11 stop: 46.55 Our bearish play on SLGN is now open. The stock broke support and hit $44.36 intraday. Our trigger to buy puts was at $44.75. After three weeks of consolidating sideways this stock has finally broken lower. Our target is the $40.25 mark.
Chart:
Toll Brothers - TOL - close: 18.24 change: -0.74 stop: 20.21 TOL is another bearish bet on the homebuilders. Shares lost 3.8% following yesterday's failed rally. If you missed the entry point this morning look for a bounce near $19.00 as your next entry. Our target is $16.25.
Wynn Resorts - WYNN - close: 37.11 change: -2.07 stop: 43.55 WYNN continues to slip lower. I don't see any changes from my previous comments. More conservative traders might want to adjust their stops toward the $42.50 region. This is a very aggressive play and I suggest readers trade a much smaller position size. My target is $32.55.
(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: 93.85 change: +1.60 stop: n/a Another day, another decline for the U.S. dollar and a gain for the GLD. 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.
Factset Research - FDS - close: 53.81 change: -1.22 stop: 53.75 *new* The market weakness on Thursday was finally enough to push FDS lower. The stock has been showing relative strength but momentum was clearly fading, which was why we kept raising our stop. Shares hit our new stop loss at $53.75.
Chart:
Whirlpool - WHR - close: 41.14 change: -1.48 stop: 41.99 Our WHR play seemed doomed as soon as I saw the failed rally on Wednesday morning. We were triggered on the breakout over $44.00 but the rally failed at $45.00. This call play has been stopped out at $41.99. Honestly the failed rally action looks like a sell signal and WHR may be a decent put candidate if it breaks $40.00. I'd target $35.00 and its 100-dma. The biggest challenge for the bears is probably the 50-dma.
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