BHP Billiton Plc - BBL - close: 46.50 change: +1.55 stop: 43.70 Shares of BBL rallied more than 3.4% and back above potential resistance at the $46.00 level. The surge in volume is also good news as BBL's strength was fueled by volume about twice the norm. 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: 15.18 change: -0.52 stop: n/a Shares of the inverse emerging markets ETF spiked to $17.20 and then reversed as investors bought the consumer confidence numbers. My comments from the weekend still stand. 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.
More info on the EDZ:
iShares China ETF - FXI - close: 35.12 change: +0.43 stop: 32.90 Chinese markets were down today as Asian investors reacted to the North Korean missile news. Odds are good that the Chinese market will rally tomorrow as Asian markets get a chance to react to the consumer confidence numbers. We have two targets. Our first target to take profits is $36.45. Our second target is $39.45.
SPDR Gold Trust - GLD - close: 93.76 change: -0.39 stop: 89.90 The U.S. dollar was stronger this morning as the currency enjoyed a brief flight to safety trade over the N. Korean saber rattling. The rally didn't hold and the dollar began to fade lower again. The price of gold mirrored that move with a gap down at the open and a slide rise higher. I'm not suggesting new bullish positions at this time. Our first target is $94.75. Our second target to take profits in the GLD is at $97.45.
iShares Fincl.Srvcs - IYF - close: 41.44 change: -0.31 stop: 31.95 Hmm... if I had stuck to our original plan then this morning's plunge under $41.00 would have hit our original trigger to buy calls. As it stands now we're still on the sidelines waiting for a more serious correction. I could see more aggressive traders chasing this bounce with a stop under today's low. We are not going to chase it. Currently our strategy is to wait and buy calls on a dip in the $35.50-34.50 zone. We'll use a stop loss at $31.95. More conservative traders can use a stop closer to $34.50. If triggered our first target is $39.90. Our second target is $44.00.
Mastercard - MA - close: 168.61 change: +0.25 stop: 158.90 Someone made a good point about MA today. If today's rally was all about the consumer and the better consumer confidence numbers then why did MA under perform? If consumers are feeling confidence and spending more money then that's good news for companies like MA. Instead the stock slipped toward its 200-dma again near $165 and bounced only to close up fractionally on the session. 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.
Ultra-short $RUT - TWM - close: 45.39 change: -4.66 stop: 44.35 Ouch! That stings. The TWM had built a bullish double bottom pattern, which means the Russell 2000 index had produced a bearish topping pattern. When traders decided to buy the consumer confidence news (or more likely when traders decided to cover shorts) since many were expecting a market correction, the rally was steep. The Russell 2000 added 4.7% and the TWM (2x inverse) gave up 9.3%. If there is any follow through in the rally tomorrow we'll probably get stopped out. Our first target is $54.00. Our second target is $59.00.
Visa - V - close: 66.77 change: +1.02 stop: 65.45 Shares of V are slowly melting higher. I could see more aggressive traders launching bullish positions now but the stock does have resistance near $69.00. There is no change from our previous comments on Visa. 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: 67.13 change: +1.23 stop: 68.25 Short-term, today's rally in BDX looks like a bullish breakout from its seven-day consolidation. I think more conservative traders will want to seriously consider an early exit right now to cut your losses. As it stands now BDX is challenging technical resistance at its 100-dma. Look for this rally to roll over before considering new 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.
Eaton - ETN - close: 45.83 change: +1.68 stop: 48.11 The good news is that ETN did provide a bounce near $46.00 as I was hoping for. The bad news is that shares produced a bullish engulfing candlestick pattern in the process. I do expect this bounce to continue but ETN should have resistance near $48.00. You could start launching new positions or complete the second half of our original position in the $47-48 zone or you could wait for the rebound to roll over first. I would consider turning bullish on a close over $48.00. Our first target is $40.25. Our second target is $38.25.
First Solar Inc. - FSLR - close: 179.51 change: -12.21 stop: 206.01 FSLR hit our first target at $177.50. Unfortunately the stock gapped open lower at $182.18 (-9.54 from Friday) before hitting our target. Shares were reacting to a very negative articles in Barron's over the weekend that FSLR's might lose business to rivals thanks to the falling price of refined silicon. I would wait for a failed rally near $190 before considering new positions. We're lowering our stop loss to $195.51. Our second target is $166.00.
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Harman Intl. - HAR - close: 18.13 change: +1.24 stop: 19.05 This is another stock that bears will want to stop and consider an early exit. Today's market rally was reportedly fueled by the better than expected consumer confidence. If that is true than a consumer discretionary stock like HAR can rally because investors think consumers will buy more stuff if they're feeling better. Today's gain in HAR has produced a bullish engulfing candlestick pattern in addition to bouncing at its 50-dma. I am not suggesting new positions and I'm going to repeat that more conservative traders may want to exit now! I am not suggesting new positions. 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.
iShares Real Estate - IYR - close: 33.35 change: +1.64 stop: 34.15 The IYR is another security that produced a bullish engulfing candlestick pattern. Is this the beginning of a new leg higher or just a one-day wonder on the consumer confidence numbers? Unfortunately, we don't know yet. I would look for a failed rally under $34.00 or wait for a new relative low under $31.25 before initiating new positions. Our target is $25.55.
L-3 Comm. - LLL - close: 73.91 change: +2.02 stop: 76.15 Defense stocks rallied with the rest of the market. Shares of LLL look poised to test resistance in the $75-76 zone soon. 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.
MDC Holdings - MDC - close: 31.82 change: +0.67 stop: 35.75 Homebuilders rallied even though the S&P/Case Shiller index on home values produced their biggest quarterly drop in the 21-year history of the index. This strength should be temporary. 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.
Northrop Grumman - NOC - close: 49.00 change: +0.97 stop: 50.85 NOC is another defense stock that is bouncing but has yet to clear resistance. I remain short-term bearish but readers may want to lower their stops closer to $50.00. Over $51.00 we may want to switch directions and turn bullish. Our first bearish target is $45.51. Our second target is $42.75.
Everest RE Group - RE - close: 68.33 change: +1.75 stop: 72.25 RE spiked lower to $65.02 and traders bought the dip near round-number support. Shares rallied more than 5% off its lows and produced a bullish engulfing candlestick pattern. This is a warning flag for the bears. I am expecting a bounce back toward $70.00 now. More conservative traders might want to adjust their stop toward $70.50. Our target is $62.55. My time frame is about four weeks.
Regional Bank HOLDRs - RKH - close: 67.35 chg: +2.60 stop: 71.11 Our aggressive trade on the regional banks is not off to a good start. This sector rallied from its lows this morning to close up 4% on the session with another bullish engulfing candlestick pattern. At this point I'm watching for a failed rally near $70.00 as our next entry point. We have a stop loss above last week's high. Our first target is $58.50. Our second target is $54.00.
Retail Holders - RTH - close: 78.99 change: +1.83 stop: 80.81 I think the retailers are out to get me. The largely unexpected surge in consumer confidence today sent the retail stocks soaring. The RTH gained 2.3% and also produced the very common bullish engulfing candlestick pattern, which can usually be interpreted as a one-day bullish reversal pattern. I do expect the bounce to reach $80.00. If it breaks past last week's high is the real question. If the RTH provides a new lower high then jump on it as our new entry point. My first target is $73.75. My second target is $70.25.
Silgan Holdings - SLGN - close: 46.00 change: +1.84 stop: 46.55 SLGN is another great example of the ubiquitous bullish engulfing candlestick pattern. The stock opened lower and then soared off its lows with a 4.1% gain. The close back above $45.00 is bullish as is today's turnaround pattern. More conservative traders will want to consider an early exit now before we get stopped out. I am now suggesting new positions. Last week's breakdown now looks like a bear trap. Our target is the $40.25 mark.
Toll Brothers - TOL - close: 18.55 change: +0.42 stop: 20.21 TOL managed to rally in the face of a terrible Case-shiller home price decline for the first quarter (of -19%). I would use any strength in the 19-20 zone as a new entry point for bearish positions. Our target is $16.25.
Wynn Resorts - WYNN - close: 38.10 change: +2.25 stop: 42.55 The consumer confidence numbers naturally sent the casino stocks higher. A more confident consumer has more discretionary income. WYNN added 6.2% after last week's painful decline. I'm watching for a failed rally near $40.00 as our next entry point to begin new positions. Our first exit was on Friday (this morning). Our second and final exit is $31.00.
(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: 93.76 change: -0.39 stop: n/a We got a little pull back in gold thanks to a temporary spike in the U.S. dollar. Overall the trend is unchanged. 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.
Intl. Bus. Mach. - IBM - close: 105.02 change: +3.13 stop: 101.45 IBM rallied more than 3% as tech stocks soared higher on Tuesday. Yet the market and IBM was weak at the open this morning. Shares of IBM gapped open lower at $101.32 and hit $101.02 before bouncing. Our stop loss was at $101.45 so the opening trade closed our play.
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Nike Inc. - NKE - close: 54.17 change: +1.76 stop: 53.05 NKE continued to rally presumably on the better than expected consumer confidence numbers. The stock has rallied past a cloud of significant moving averages and its MACD is on the verge of turning positive again. Today's gain stopped us out at $53.05. I would keep an eye on NKE. If the stock can clear the $56.00 level it may be a bullish candidate.
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