BHP Billiton Plc - BBL - close: 44.95 change: +0.01 stop: 43.70 Miners and material stocks were generally stronger last week but shares of BBL suffered some profit taking on Thursday. The trend of higher lows is still in place but momentum indicators are flashing warning signals. I am not suggesting new positions at this time. We've already moved up our stop to just under support near $44.00. If you're feeling adventurous you could try jumping in on another dip near $44.00 or bounce from this level. 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: 16.00 change: -0.24 stop: n/a This could be a big week for the EDZ if the markets begin correcting lower. Aggressive traders could jump in now at $16.00. I am suggesting readers wait for a breakout over $17.75 (new entry) or wait for a move over $20.00. 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.
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iShares China ETF - FXI - close: 34.69 change: -0.04 stop: 32.90 It looks like the FXI might also be building a bearish double top pattern. I would still consider buying a dip in the $34.00-33.50 zone but it might pay off to wait for the pull back to $33.50 size of the range. 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: 94.15 change: +0.30 stop: 89.90 The crumbling U.S. dollar is helping fuel the rally in gold. The GLD hit an intraday high of $94.42. Our first target to take profits is $94.75. On Thursday night and in Friday's intraday update I suggested readers consider taking profits early before Friday's closing bell. As long as the dollar continues to sink the GLD should keep climbing but gold is looking short-term overbought and the dollar is looking short-term oversold. It's about time for a bounce in the dollar. I'm not suggesting new bullish positions at this time. Our second target to take profits in the GLD is at $97.45.
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Intl. Bus. Mach. - IBM - close: 101.89 change: -0.93 stop: 101.45 Short-term traders should probably be considering an exit right here if they haven't already. IBM has produced a lower high and momentum is turning bearish. The only reason to keep a short-term bullish position open is the belief that the trend of higher lows will not break. IBM is already within half a point of our stop loss and I expect to be stopped out soon. No new plays at this time but a dip near $95.00 might be a new entry point. Currently our target is $109.40.
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iShares Fincl.Srvcs - IYF - close: 41.44 change: -0.31 stop: 31.95
Strategy Change! Please see our new put play on the RKH as an attempt to catch the correction.
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Mastercard - MA - close: 168.36 change: -3.33 stop: 158.90 After a week of consolidating sideways around the $170 level it appears that MA is about to break lower. I repeat that more conservative traders may want to cut their losses now. I fully expect a dip toward $160 now. Don't forget that this was an aggressive, higher-risk trade due to MA's volatility. That's why our stop is so wide. Currently the plan is to buy calls near $160, preferably on a bounce. 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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Ultra-short $RUT - TWM - close: 50.05 change: +1.01 stop: 44.35 So far so good. The TWM added another 2% on Friday. If you were quick we got another entry near $48.30. I would still consider new bullish positions right here. Remember, as the Russell 2000 goes down the TWM will go up twice as fast. Our first target is $54.00. Our second target is $59.00.
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Visa - V - close: 65.75 change: -0.53 stop: 65.45 There is no change from our previous comments on Visa. The stock is still trading sideways. 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.
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Becton Dickinson - BDX - close: 65.90 change: +0.87 stop: 68.25 The oversold bounce from May 11-14th made sense. The bounce on Wednesday, May 20th matches the market action. Friday's rally in BDX is unexplainable and should make bears a little nervous. Wait for a new failed rally in the $67.50-68.00 zone before considering new bearish put positions. 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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Eaton - ETN - close: 44.15 change: -0.36 stop: 48.11 I would really prefer to buy puts on a bounce near $46.00 but we might not get the chance. Therefore let's open half a position now and then if ETN does bounce near $46.00 we can open the second half (entry point $45.75). Our first target is $40.25. Our second target is $38.25.
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Harman Intl. - HAR - close: 16.89 change: -0.19 stop: 19.05 The price action in HAR is rolling over as expected. I don't see any big changes from my previous comments. Be sure to close out half to two-thirds of your position at our first target of $16.10. We have a second target at $14.55.
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L-3 Comm. - LLL - close: 71.89 change: +0.52 stop: 76.15 The last six months LLL has been a great trending stock. Currently that trend is down. Short-term the stock actually looks a little oversold. Wait for a new failed rally near $75 or $76 before considering new bearish positions. We have our first target at $70.25. Our second target is $67.00.
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MDC Holdings - MDC - close: 31.15 change: -0.66 stop: 35.75 The more I read about the homebuilders the more bearish I get. This coming week this sector could see some volatility as investors react to new and existing home sales reports. I would open new put positions on a bounce in the $33-34 region. Our first target is $27.75. Our second target is $25.15.
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Nike Inc. - NKE - close: 52.41 change: +1.06 stop: 53.05 The relative strength in NKE on Friday was a little surprising. The action on Wednesday had looked like a bearish reversal and now NKE is producing new gains over the 200-dma and what should have been resistance near $52.00. It is possible that this is just another thread in the bear-flag pattern. However, if NKE builds on this move the stock could stop us out on Tuesday. I would wait for a new move under $51.50 before considering new positions. Our target to exit is $48.15. More aggressive traders may want to aim lower like the $45.00 region.
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Northrop Grumman - NOC - close: 48.03 change: -0.11 stop: 50.85 The action last week looks like a new failed rally under the 200-dma and a new lower high. I am suggesting that readers buy puts now. Our first target is $45.51. Our second target is $42.75.
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Everest RE Group - RE - close: 66.58 change: -0.55 stop: 72.25 RE still looks good. The bounce attempt on Friday failed near $68.00 and shares closed at new three-week lows. With the market poised to correct lower RE could be a leader to the downside. Should the stock bounce we can use a bounce into the $69-70 zone as a new entry point to buy puts. Our target is $62.55. My time frame is about four weeks.
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Retail Holders - RTH - close: 77.16 change: +0.39 stop: 80.81 Good news. The gap higher in Sears had no influence on the RTH. These retail holders saw a little pop toward $78 but that was the high for the day. I am still suggesting new bearish positions right here or on a bounce near $79-80. My first target is $73.75. My second target is $70.25.
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Silgan Holdings - SLGN - close: 44.16 change: -0.73 stop: 46.55 SLGN is also off to a good start. Shares broke support on Thursday and closed at new four-month lows on Friday. I'm already tempted to lower the stop but we'll leave it at $46.55 for now. A bounce or failed rally near $45.00 can be used as a new entry point. Our target is the $40.25 mark.
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Toll Brothers - TOL - close: 18.13 change: -0.11 stop: 20.21 TOL is another homebuilder sinking to new relative lows for the month of May. If the stock bounces we can open new bearish positions in the $19-20 zone. Our target is $16.25.
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Wynn Resorts - WYNN - close: 35.85 change: -1.26 stop: 42.55 *new* The correction in WYNN continues. I am suggesting that readers go ahead and take some profits right here. The stock traded to $35.25 and bounced. I would pocket some money just in case WYNN sees an oversold bounce. Speaking of bounces look for a move back toward $40 or its 10-dma before considering new bearish positions. We're lowering our stop loss to $42.55. Since we're taking profits now I'm moving our final exit target to $31.00 (down from $32.55).
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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: 94.15 change: +0.30 stop: n/a The GLD continues to climb thanks to the falling U.S. dollar. The $95.00 level could be resistance for the GLD so don't be surprised if it pulls back soon. The trend is up. The question is will the call side of our strangle turn profitable before the June options expire in four weeks? 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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