BHP Billiton Plc - BBL - close: 48.10 change: +1.50 stop: 43.70 Sharp weakness in the dollar fueled another rally in commodity-related names and shares of BBL rallied to $48.67 intraday. The stock is flirting with a breakout from its three-week consolidation. More conservative traders might want to consider raising their stops toward the $45.00 level or maybe near Wednesday's low of $44.92. As long as this trend of higher lows remains intact we can look to buy dips. Right now I'd watch for a dip near its 10-dma. 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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iShares China ETF - FXI - close: 37.37 change: +1.21 stop: 33.95 *new* Target achieved. The Chinese stock markets soared toward new multi-month highs. This lifted the FXI past recent resistance and the ETF hit $37.51 intraday. Our first target to take profits was $36.45. I am raising our stop loss to $33.95. At this point if you're looking for a new entry point we can watch for a dip near $36.00 or the $35.00 levels. I am adjusting our second target to $39.90.
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SPDR Gold Trust - GLD - close: 96.20 change: +1.96 stop: 89.90 The U.S. dollar continued its plunge closing out the month of May with one of its worst monthly performances on record. This lifted the GLD gold ETF from the $87 level to over $96.00. I'm not suggesting new bullish positions at these levels. The U.S. dollar looks very oversold and gold looks short-term overbought. We'll wait for a correction before considering new call positions. The GLD has already exceeded our first target to take profits at $94.75. We're currently aiming for $97.45.
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iShares Fincl.Srvcs - IYF - close: 43.60 change: +0.99 stop: 41.20 *new* It looks like the bulls are reasserting their control over the financial sector. The banks stocks have been very resistant to profit taking. Now it looks like the IYF could be breaking out higher from its pennant-shaped consolidation. There is potential resistance at $46.00 and its 200-dma but I'm going to suggest an aggressive, higher-risk entry point right here instead of waiting for a correction toward $35.00. If we get stopped out we can always jump back in near $35.00 anyway. We want to buy calls now and we'll try using a relatively tight stop loss at 41.20, which is just under Thursday's low. We'll take some money off the table at $46.00 but we'll also have a second target at $49.85. I want to repeat this is an aggressive trade and I'm suggesting readers only trade half (or less) than their normal option position.
Suggested Options: BUY CALL JUL 42.00 IYI-GP open interest= 79 current ask $3.30 BUY CALL JUL 45.00 IYI-GS open interest= 50 current ask $1.85 BUY CALL JUL 50.00 IYI-GX open interest= 0 current ask $0.55
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Mastercard - MA - close: 176.33 change: +4.22 stop: 158.90 Is MA turning around? Are investors buying this stock on the better than expected consumer confidence numbers? Shares of MA have spent the last two and a half weeks consolidating in the $165-175 zone and testing its 200-dma more than once in the process. It is very possible that shares have built a new higher-level base to rally from. We've been waiting for a dip near $160 as our next entry point. If the market is going to keep rising then maybe we can use a new move over $177.50 as our next entry point. Traders might want to consider a stop loss near $165. We're keeping our wide stop at $158.90 for now. This remains a very aggressive play due to MA's volatility. I would consider July or October calls. 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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Mobile Telesys - MBT - close: 41.49 change: +2.77 stop: 35.75 We're off to a good start with MBT. The Russian MICEX index was up 4% on Friday and shares of MBT soared more than 7%. The stock has broken out past resistance near the top of its trading range and past resistance at its exponential 200-dma and the $40.00 mark. We had a trigger to buy calls at $39.55 so the play is now open. Our first target is $44.95. I'm adding a second target at $49.00. If you don't want to chase this move then consider waiting for a dip back toward $40.00.
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Ultra-short $RUT - TWM - close: 45.00 change: -1.81 stop: 43.25 *new* With the market moving higher on Friday it seems like we should give up on the TWM. However, the Friday afternoon surge looks like some end of month window dressing. The Russell 2000 (RUT) still has resistance overhead at the 510 level and its 200-dma. The question is, "will the TWM hit our stop loss at $44.35 before the RUT rolls over under 510?" The answer is probably. The TWM is supposed to be a double-short inverse ETF meaning it moves twice the inverse of the daily performance in the Russell 2000. Currently the RUT is at 501.50. It will take a 1.69% rally to reach 510. Let's round it off to 1.7% rally. If the RUT does move to 510 the TWM should fall about 3.4%, which is $1.53 or $43.47 (assuming it happens in one session). I am going to move our stop loss to $43.25 and if we see the RUT start to roll over under 510 more aggressive traders can think about doubling down on the TWM. Keep in mind that the Russell 2000 is the most volatile of the major indices and we're playing an ETF that is twice as volatile as the RUT. Our first target is $54.00. Our second target is $59.00.
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Visa - V - close: 67.71 change: +1.21 stop: 65.45 Visa is still slowly drifting higher. The stock is once again nearing resistance in the $68.00-68.50 zone. This could be the week we see Visa hit one of our entry points. 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. Edit: I would use the July or September calls. 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: 67.68 change: +0.68 stop: 68.25 BDX tested technical support at its 10-dma this morning but the bounce looked like it was going to roll over again. Then the market produced a late afternoon rally and BDX closed on its highs. If there is any follow through on Monday we'll probably be stopped out. I am not suggesting new positions at this time unless BDX produces a clearly defined failed rally at $68.00. 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: 43.50 change: -0.10 stop: 48.11 ETN is still performing well for us. The stock produced a new lower high today at $44.31. The next move will probably be another test of technical support near its 50 and 100-dma. I would prefer to open new positions on a failed rally near $45.00. We're keeping our stop loss at $48.11 for now. You may want to use a tighter stop. Our first target is $40.25. Our second target is $38.25.
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First Solar Inc. - FSLR - close: 190.29 change: + 6.54 stop: 195.51 Solar energy stocks have been rising because oil is rising. As traditional energy gets more expensive investors start looking at alternatives. FSLR also announced some good news with a multi-year deal with Pfalzsolar, a Germany company. FSLR is now testing what should be short-term resistance in the $190-195 zone. Wait for the rebound to roll over near $195 before opening new positions. Our second target for FSLR is the $166.00 mark.
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Harman Intl. - HAR - close: 18.64 change: +1.01 stop: 19.51 *new* Right on cue shares of HAR bounced. There was no follow through lower in the stock market and that gave HAR the freedom to bounce back toward the top of its bear-flag pattern. The slightly better than expected consumer sentiment numbers didn't hurt the discretionary stocks either. HAR looks poised to retest and possibly break resistance at $19.00. I hesitate to open new bearish positions at this time. I am suggesting more conservative traders leave their stop at $19.05. I'm going to take a more aggressive approach and put the stop loss at $19.51, which is just above technical resistance at the 200-dma (19.40). 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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iShares Real Estate - IYR - close: 33.75 change: +0.90 stop: 34.15 The IYR was forming a new lower high in the pattern of lower highs until the late afternoon market surge. I don't trust this rally but if there is any follow through on Monday we'll probably be stopped out. More aggressive traders could raise their stop above $35.00. I'm keeping our stop at $34.15. I am not suggesting new positions at this time. Our target has been $25.55.
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L-3 Comm. - LLL - close: 73.51 change: +0.41 stop: 76.15 LLL is presenting a similar situation where the late afternoon rally is skewing things with a bullish tint to it. It didn't hurt that LLL received some new analyst coverage with a $101 price target. I am not suggesting new bearish put positions at this time. We can look for resistance in the $75-76 zone but the next level of tough resistance is probably the 200-dma. We have our first target at $70.25. Our second target is $67.00.
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MDC Holdings - MDC - close: 30.71 change: +1.04 stop: 33.55 The homebuilders bounced on Friday thanks to the U.S. government's change in the rules for first time homebuyers. Instead of waiting for the $8,000 tax credit to buy a home those consumers that get an FHA loan will get an advance from their lenders. This produced an oversold (+4%) bounce in the DJUSHB home construction index. MDC rose 3.5%. The trend is still down. Look for a bounce or failed rally near $32.00 as a new entry point for bearish positions. Our first target is $27.75. Our second target is $25.15.
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Northrop Grumman - NOC - close: 47.62 change: -0.34 stop: 50.85 NOC dipped to its rising 50-dma and bounced. We can watch for another failed rally in the $48.50-49.00 zone as our next entry point. Our first bearish target is $45.51. Our second target is $42.75.
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Everest RE Group - RE - close: 69.23 change: +1.89 stop: 70.25 The financials and insurance stocks were strong performers on Friday. RE's bounce has now pushed it past short-term resistance at the 10-dma. The stock is poised to test round-number resistance at $70.00. If the market is too strong on Monday we could easily get stopped out. A failed rally under $70.00 would be a new entry point. Our target is $62.55. I am considering a secondary target near $60.00.
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Regional Bank HOLDRs - RKH - close: 68.65 chg: +0.81 stop: 71.11 The smaller regional banks were rolling over on Friday until the afternoon market bounce. I don't trust this bounce on a low-volume summer Friday. However, on Thursday night I suggested that more conservative traders may want to exit early if the RKH closes over $68.50 and it just did. Right now I'm watching for a failed rally under $70.00. Really aggressive traders could raise their stop until it's above the 200-dma, which should be technical resistance. Our first target is $58.50. Our second target is $54.00.
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Retail Holders - RTH - close: 77.63 change: +0.71 stop: 80.81 The RTH holders under performed the RLX retail index. The sector was generally trading sideways until late Friday afternoon. If you are looking for an entry point wait for another failed rally near $79.50. Our first target is $73.75. Our second target is $70.25.
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Silgan Holdings - SLGN - close: 44.26 change: +0.39 stop: 46.01 SLGN didn't do much on Friday. The stock is still consolidating under previous support and what should be resistance near $45.00. Another failed rally near $45.00-45.50 can be used as a new entry point for puts. Our target is the $40.25 mark.
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Toll Brothers - TOL - close: 18.58 change: +1.14 stop: 20.21 The homebuilders bounced on the change in the $8,000 tax credit for new homebuyers. Shares of TOL rose 6.5% on what was probably short covering Friday morning. Look for a bounce or a failed rally near $19.00 as a new entry point to buy puts. Our target is $16.25.
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United Parcel Service - UPS - close: 51.14 chg: +2.13 stop: 53.55 The 4% rally in the transports was not lost on shares of UPS. The stock bounced back toward last week's highs with its own 4.3% gain. Shares should have resistance in the $52.00-53.00 zone so look for a bounce there or better yet a failed rally there as our next bearish entry point to buy puts. Our new first target is $45.55. No second target at this time (yet).
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Wynn Resorts - WYNN - close: 37.06 change: +0.71 stop: 42.55 The DJUSCA casino and gambling index rose 3.4% on Friday. Shares of WYNN lagged its peers with a 1.9% bounce. We can watch for a failed rally near $40.00 as a potential entry point to launch new put positions. We need to keep a wary eye on the 50-dma, which might also be support. Our first exit was on Friday (May 22nd). Our second and final exit is $31.00.
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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: 96.20 change: +1.96 stop: n/a The drop in the U.S. dollar during the month of May has helped lift the GLD to a 10% gain for the month. Today's plunge in the dollar lifted the GLD to $96.35 intraday. I am starting to worry that the dollar is getting so short-term oversold that it will produce a big bounce, which would spark some profit taking in the GLD. More conservative traders may want to consider an early exit soon. The June $95 calls traded to $3.10 today. I am not suggesting new positions at this time. We only have three weeks left before June options expire. 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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Emerging Markets Bear 3x ETF - EDZ - close: 13.81 change: -0.74 stop: n/a As global markets continue to rise our aggressive bet on the EDZ is looking more and more like a bust. Two weeks ago the U.S. market was poised to breakdown and the EDZ was set to break out over resistance at $20.00. Instead of waiting for the breakdown in stocks and the breakout in the EDZ we tried to jump ahead of the crowd. That obviously didn't work for us. The U.S. market may be churning sideways but the rest of the world is drifting higher and that's crushing the EDZ. I'm going to go ahead and drop EDZ from the play list. June options still have three weeks left and I'd be tempted to just hold on to my calls instead of selling them at these levels. If there is a correction there's a chance we could recoup some of our capital. We knew this was going to be volatile and risky and the plan was to use a smaller position size to limit our risk. If stocks do eventually turn lower we can come back to the EDZ as a potential candidate. The U.S. markets tend to lead the rest of the world. If the S&P looks ready to breakout over 930 and its 200-dma then maybe we can look at EDZ as another bearish candidate.
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Union Pacific - UNP - close: 49.27 change: +3.71 stop: 49.05 The Dow Jones Transportation index was a main driver behind the market's strength today. The $TRAN index rose 4.1%. Behind that move was a huge 6.5% rally in the Railroads, which was fueled by an improvement in the rail car index from -19 to -13. Yet oddly enough this "news" doesn't match up with what the National American Rail Shippers Association said this week, which is essentially there is no improvement in business. Shorts decided to run for cover anyway on the improving index numbers and shares of UNP soared 8% hitting our stop loss at $49.05. I'd keep an eye on it and watch for resistance at the 200-dma.
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