I believe our positions are in the right sectors but its time to get defensive. We have moved up our stop on PRE, lowered several of our targets, and are also adding a bearish play on SPY to act as a hedge on our long leaning portfolio.
CALL Play Updates
F5 Networks - FFIV - close: 63.99 change: -0.77 stop: 61.40
FFIV closed in the lower quarter of its trading range on Monday. On the intraday charts the $63.50 to $64.00 level has been a key support/resistance area over the last several weeks. The stock is also forming a symmetrical triangle that began on April 1 on its intraday charts. FFIV remains stuck below $65.50. We need it to break-out above this level for our target of $69.75 to be hit. However, I continue to be cautious about a broader market sell-off which would probably take FFIV down. As such, I am looking to close the position this week (or at least move up stops), especially if the stock makes a new high. Our stop remains a $61.40 for now. I am not suggesting any new positions at this time. I want to remind readers again that this is an aggressive, higher-risk trade and we want to keep our position size small.
Current Position: CALL MAY $65.00 (FFIV 10E65.00) @ $3.00
Entry on April 6th at $ 65.26
Earnings Date 04/21/10
Average Daily Volume = 1.0 million
Listed on April 5th, 2010
Coca-Cola - KO - close: 54.59 change: +0.83 stop: 52.95
KO continued its bounce off of its 200-day SMA which has produced a +2.50% rally off the lows from Thursday. My technical analysis comments from the weekend remain the same. KO appears to be forming a higher low on the daily chart. Another positive sign for KO is that it closed above its 20-day and 50-day SMA's. KO is entering a congestion/resistance area just overhead at the $55 to $56 level. KO still looks oversold and if it can break through this level the stock should see $57.00. Our options are doing better and we still have plenty of time until May options expire but KO is a slow mover and I don't want to get stuck in a losing position. KO tends to be a defensive play so it could rally if the overall market is weak. I am moving our target to exit the position from $59.00 to $57.00 but will consider closing the position prior to this level if KO starts to struggle. Conservative traders should consider exiting their positions if KO rallies into the aforementioned congestion zone, with $55.25 as a potential target.
Current Position: CALL May $55.00 (KO 10E55.00) at $1.62
Entry on March 24th at $ 55.22
Earnings Date 04/21/10
Average Daily Volume = 14.6 million
Listed on March 23rd, 2010
L-3 Communications - LLL - close: 94.39 change: +0.48 stop: N/A
We initially viewed this trade as a highly speculative trade and our April 100 calls purchased for $0.30 are now essentially worthless. At this point we will need some sort of a catalyst or news event on LLL to make any money. If LLL happens to spike and the options become worth something we will sell them immediately. I am not suggesting any new positions in LLL at this time.
We chose the out of the money $100 calls to keep our capital investment very small and our position size limited.
Current Position: CALL APRIL 100.00 (LLL 10D100.00) @ $0.30
Entry on March 18th at $ 93.88
Earnings Date 04/22/10
Average Daily Volume = 908 thousand
Listed on March 17th, 2010
Occidental Petrol. - OXY - close: 86.79 change: +0.23 stop: 83.45
OXY was up marginally today +0.27% and is inching higher. OXY has strong support in the $84.50 to $85.00 level and are I am expecting this support to hold if there is any weakness in OXY this week. OXY appears poised to rally from here to new 52-week highs. But we will need crude oil and overall market strength to be in our favor. Our calls in OXY have now gained about $0.70 and we are up +21%. Conservative readers should consider selling their positions or placing a defensive stop to protect profits. On Saturday I moved our first target down $1.00 to $88.75 which is just below last weeks highs. I am looking for OXY to rally to this level in the next week and if it does it will ensure a nice profit on our position. We'll use a longer-term target at $94.00 but this could take several weeks to achieve.
Current Position: BUY CALL MAY $85.00 (OXY 10E85.00) at $3.25
Entry on April 7th at $85.50
Earnings Date 04/29/10 (unconfirmed)
Average Daily Volume = 5.5 million
Listed on April 6th, 2010
PartnerRe Ltd. - PRE - close: 79.79 change: -0.91 stop: $78.75 *NEW*
PRE reversed hard on us today and formed a bearish engulfing candlestick on the daily charts and closing near its lows of the session. I am suggesting readers be cautious here and should consider tightening up stops to limit losses if the selling in PRE continues. My fear is that PRE may have seen its highs for the time being, although there are two key technical levels that may support PRE in the coming days. The stock is very close to its 20-day SMA and an ascending trend line that started March 10, which are both at $79.64. The stock could trade down to the $79.00 level before bouncing so a logical level to place to move up stops would be at $78.75. If PRE can break-out above $81.05 it should test its October 2009 highs of $81.70 which we are going make our new first target. If PRE follows through and breaks out above $81.70 we have a good chance to reach our new second target of $83.90 (just below the late 2007 highs). Conservative traders should consider lightening up positions or taking profits if PRE rallies into the $81.00 level, which should also produce a winning trade.
Current Position: CALL MAY $80.00 (PRE 10E80.00) $ $2.40
Annotated Daily Chart:
Entry on April 6th at $ 80.55
Earnings Date 04/27/10
Average Daily Volume = 989 thousand
Listed on March 20th, 2010
Silicon Laboratories â€“ SLAB â€“ close: 50.47 change: -0.42 stop: 47.95
We are waiting for a pullback in SLAB prior to initiating positions. My comment from Saturday's new plays remains the same. SLAB broke out of resistance in the $49 area on Monday (4/5). The stock closed the week almost $2 higher at $50.89. SLAB is in the semiconductor sector which has been showing overall relative strength recently. The SOX index and SLAB have been holding their uptrend line, and upward channel, since February. I am expecting a quick retracement of SLAB down to its prior resistance line (which is now support) at around $49.25 which we will use as a trigger to buy calls. Our first target is $51.95 and our second more aggressive target is $53.95. Both of these levels are near highs from 2006 and 2003. We'll place our initial stop at $47.95.
Trigger to open bullish positions at $49.25
Suggested Position: CALL MAY $50.00, current ask $2.50, estimated ask at trigger price $1.30
Entry on April xxth at $ xx.xx
Earnings Date 4/28/10
Average Daily Volume = 762,000
Listed on April 10th, 2010