Last week we saw those stocks that have been strong get stronger and the weak get weaker.
ACI $20.03 -0.40 -- Arch Coal Inc.
Shares of ACI have continued to deteriorate. We've been focused on key support near $20.00 and that's exactly where ACI has landed. The intraday low on Friday morning was $19.45. Our stop loss happens to be $19.40. If shares don't bounce from here it's game over.
I am not suggesting new bullish positions at this time. Our long-term target is the $30 region.
May 14th, 2009 - entry price on ACI @ 16.00, option @ 2.40
symbol: OSE-AF, 2011 JAN $30 LEAP call - current bid/ask $1.40/1.50
-stop loss on ACI @ 19.40
Chart of ACI:
ANR $37.22 -0.22 - Alpha Natural Resources, Inc.
ANR was upgraded to a strong buy on Friday morning but the early morning rally fizzled under the $40.00 level. The short-term trading in ANR has turned bearish. I am still expecting a retracement toward the $35-33 zone unless we see another broad-market rally higher.
I'm not suggesting new bullish positions at this time.
Our long-term target is the $50-60 zone.
Aug. 25th, 2009 - entry price on ANR @ 34.00, option @ 7.00
symbol: VJV-AH, 2011 JAN $40 LEAP call - current bid/ask $7.40/8.10
-stop loss on ANR @ 32.40
bought 1/2 LEAP position on 08/25/09 (option price @ 7.00)
Chart of ANR:
BAC $16.28 +0.52 - Bank of America Corp.
BAC has been making headlines the last few days when the company announced on Thursday that they would repay the $45 billion in TARP funds back to the government. BAC would use $26 billion in cash and raise an additional $19 billion in stock. However, they need shareholder approval to increase the number of shares outstanding so they sold common equity securities that will be converted to stock. There was so much demand for these new shares that BAC actually upped the number of securities sold. We're talking over 1 billion new shares of BAC, which is dilutive to current shareholders but investors don't seem to care. They're more excited that BAC is healthy enough to pay back TARP and now they can find a new CEO without having to worry about how much they can pay him or her.
Shares of BAC are currently testing one of its trendlines of higher lows. I would be tempted to open new (smaller) positions on a move over $17.00 or you can wait for a close over stronger resistance at the $18.00 level.
Our long-term target is the $25-30 zone. Please note that we're raising our stop loss to $13.85.
Jan 25th, 2009 - entry price on BAC @ 6.24, option @ 2.38
symbol: VBA-AB, JAN 2011 $10 LEAP call - current bid/ask $6.90/7.05
-stop loss on BAC @ 13.85
10/31/09 Sell Half -- option at $6.00 (+152%)
Chart of BAC
BQI $1.20 +0.02 -- Oilsands Quest Inc.
BQI has already produced a 38.2% retracement off its recent highs near $1.28. I would look for another bounce from the $1.10 level or a new close over $1.30 as potential entry points to open Our long-term goal is $2.90.
Nov 27th, 2009 - entry price on BQI @ 1.05, (buy the stock)
-stop loss on BQI @ 0.89
Chart of BQI:
CHK $22.57 -0.46 -- Chesapeake Energy Corp.
It has not been a good week for CHK. The price of natural gas has sunk to new multi-year lows. There is still too much supply for current demand. Shares of CHK have retreated to support near $22.00, which is bolstered by the rising 200-dma. More conservative traders may want to raise their stops toward $22.00. I am not suggesting new positions at this time.
Our long-term target is $40.00.
Oct 30th, 2009 - entry price on CHK @ 24.00, option @ 4.70
symbol: VEC-AE, JAN 2011 $25 LEAP call - current bid/ask $3.30/3.45
-stop loss on CHK @ 20.95
Chart of CHK:
CNX $43.76 -1.18 -- Consol Energy Inc.
Unfortunately shares of CNX have continued to retreat along with most of the coal sector. The stock's bearish head-and-shoulders pattern looks even more defined now. The stock hit its 100-dma on Friday morning and bounced but the bounce was pretty meager. If this sector doesn't rebound soon we'll get stopped out at $41.00. I am not suggesting new bullish positions at this time.
CNX has already hit our first target at $48.50. We will plan to sell the second half or our position at $57.50.
Sep 1st, 2009 - entry price on CNX @ 36.50, option @ 7.80(estimate)
symbol: VTL-AH, 2011 JAN $40 LEAP call - current bid/ask $11.00/11.50
-stop loss on CNX @ 41.00
Target hit 09/16/09 @ 48.50, option price $15.40 (+97%)
Chart of CNX
DE $54.24 -0.16 -- Deere & Co.
DE has continued to climb setting new 2009 highs. The stock is probably a little bit overbought here. Investors looking for a new entry point can wait for a dip into the $52-50 zone.
Our long-term target on DE is $69.50. The Point & Figure chart is bullish with a $66 target. FYI: Readers will want to note that DE is due to report earnings around November 25th. The results could produce some volatility. More cautious traders might want to consider some put protection.
Nov 18th, 2009 - entry price on DE @ 51.00, option @ 8.75(estimate)
symbol: VER-AJ, 2011 JAN $50 LEAP call - current bid/ask $10.40/10.60
-stop loss on DE @ 44.00
Chart of DE:
EMR $42.14 +0.67 -- Emerson Electric Co.
The sideways consolidation in EMR has narrowed. Depending on your personal style you can buy a dip near $41.00 or look for a breakout past resistance near $43.00 as a potential entry point.
Our target is $47.50.
Sept. 8th, 2009 - entry price on EMR @ 38.00, option @ $4.50
symbol: VHH-AH, 2011 JAN $40 call - current bid/ask $5.80/6.40
-stop loss on EMR @ 33.50.
Chart of EMR:
ESV $41.95 +0.08 -- ENSCO Intl. Inc.
Ouch! It was an ugly week for ESV. The stock produced a failed rally under its 10 and 50-dma last Tuesday and it was down hill the rest of the week. The pull back did allow us an entry point. We've been waiting for a dip to $42.50, which ESV hit on Thursday. The stock is now testing support at its trendline of higher lows and its exponential 200-dma. My concern is the dollar/commodity relationship. If the dollar continues to bounce then oil will see selling pressure. Investors may want to wait and see if ESV slips closer to the $40.00 level and look for a bounce near $40.00 instead. The simple 200-dma has risen to $37.00. I'm adjusting our stop loss from $37.25 to 36.90. Our target is the $55-60 zone.
Dec. 3rd, 2009 - entry price on ESV @ 42.50, option @ $6.80
symbol: VKS-AI, 2011 JAN $45 call - current bid/ask $6.30/6.70
-stop loss on ESV @ 36.90.
Chart of ESV:
FSLR $129.62 + 1.50 -- First Solar
FSLR has produced a decent bounce the last few days. The bottom of the gap down near $130 should be resistance and FSLR is now testing this level. We only have a few weeks left before our 2010 January options expire.
We're not suggesting new positions at this time. Currently we are long the 2010 January $100 put and we have a covered call play that should be fine if FSLR stays above $90.
Covered Call position:
Long 100 shares of FSLR @ $128.00
Short 2010 $150 LEAPS Call LZL-AA @ $40.70
Profit if called is $40.70 in option premium + $22 in stock (+49%)
if FSLR is above $150.00.
Put Spread position:
Long 2010 $100 LEAPS Put LQM-MT @ $32.90
Short 2010 $250 LEAPS Put LZL-MJ @ $135.70, net credit $103
- Update 08/15/09 -
Cover the 2010 $250 Put at $109.40. Keep the $100 put.
Currently the 2010 Jan. $100 put is worth (bid) $1.37.
If you're curious the 2010 Jan. $150 call is at $ 2.73.
Chart of FSLR
FST $19.05 +0.02 -- Forest Oil Corp.
FST shot to a two-week high last Monday but it's been downhill ever since. The stock managed to fill the gap with Friday's low. At this point traders can choose to buy another bounce near $18.00 or wait for FST to clear resistance near $22.00 again before launching positions. If oil really starts to breakdown then FST could see a sharper correction.
Our long-term target is $37.50.
Oct 15th, 2009 - entry price on FST @ 23.85, option @ 7.40
symbol: OJG-AD, 2011 $20 LEAP call - current bid/ask $3.90/4.20
-stop loss on FST @ 16.85
Chart of FST:
GHM $18.87 +0.08 -- Graham Corp.
GHM has continued to consolidate sideways in the $18-20 zone. If shares correct we can look for a bounce in the $17-15 region. More conservative traders might want to raise their stops closer toward $15.00. I'm not suggesting new positions at this time.
Our target is $24.00. Our stop is at $12.40.
Oct 26th, 2009 - entry price on GHM @ 15.15, option @ 2.65
symbol: GHM-FC, 2010 JUNE $15 call - current bid/ask $4.90/5.30
-stop loss on GHM @ 12.40
- or -
Oct. 26th 2009 - entry price on GHM (the stock) @ 15.15
- stop loss on GHM @ 12.40
Chart of GHM:
GNK $24.29 -0.15 -- Genco Shipping
GNK managed to post a gain for the week but that was due to the Monday-Tuesday rally. The Baltic Dry (goods) index is on the rebound again, which should help shares of GNK. I would look for a bounce near $22.50 or a close over $26.00 as our next entry point to launch positions.
Our plan was to use small positions to keep our risk limited.
Our long-term target is $39.00.
Nov 21st, 2009 - entry price on GNK @ 25.46, option @ 5.00
symbol: OKJ-AF, 2011 $30 LEAP call - current bid/ask $3.40/4.30
-stop loss on GNK @ 19.65
Chart of GNK:
INTC $20.46 +0.59 -- Intel Corp.
Semiconductor stocks have been some of the best performers over the last few days. Shares of INTC have rallied from $19.00 to $20.50 and now it's approaching the 2009 highs. The current bounce has me less convinced that INTC will ever fill the gap from last July. The simple 200-dma has risen to $17.40. I'm raising our stop loss to $16.90.
I am not suggesting new long-term positions at this time. Our long-term target is the $24-26 zone.
FYI: Shares of Intel don't move very fast. Readers might want to consider turning this play into a calendar or diagonal spread to further maximize your gains.
June 13th, 2009 - entry price on INTC @ 16.31, option @ 1.36
symbol: VNL-AD, 2011 LEAP $20 call - current bid/ask $2.70/2.76
-stop loss on INTC @ 16.90.
Chart of INTC:
MTW $ 9.65 +0.20 -- Manitowoc Inc.
MTW has been correcting for three weeks in a row. Now the stock is testing technical support at its exponential 200-dma. If this slide continues we can look for support near $8.00. I'm not suggesting new positions at this time. Our long-term target is $17.00.
Oct 30th, 2009 - entry price on MTW @ 9.10, option @ 2.61
symbol: VMT-AB, 2011 JAN $10 call - current bid/ask $2.40/2.75
-stop loss on MWT @ 7.90
- or -
Oct. 30th 2009 - entry price on MTW (the stock) @ 9.10
- stop loss on MTW @ 7.90
Chart of MTW:
PBR $50.80 -1.32 - Petroleo Brasiliero
PBR has been stuck under resistance at the $53.50 level. Shares have been able to maintain their bullish trajectory higher while most of the oil sector has begun to roll over. While this relative strength is encouraging we could be at risk for a sell-off in oil if the dollar continues its bounce from Friday. Shares of PBR should have some support at their 50-dma near $49.00 and its long-term trendline near $47.00.
NOTE: I want to repeat some earlier comments. We only have a few weeks left with our options expiring in January 2010. More conservative traders may want to exit early right now to avoid potential losses. I'm not suggesting new bullish positions at this time.
I'm suggesting we sell half our position at $54.50. We'll sell the second half at $59.50.
Apr. 4th, 2009 - entry price on PBR @ 35.10, option @ $2.80
symbol: PMJ-AJ, 2010 $50.00 LEAP call - current bid/ask $3.00/3.15
-stop loss on PBR at $44.40
Chart of PBR:
PEP $63.85 +1.09 -- PEPSICO Inc.
PEP is still showing relative strength. The stock hit new highs for the year last week. The $65.00 level might offer some overhead resistance but if the market can begin a new leg higher I expect PEP to work past it.
More conservative traders might want to tighten their stops.
I am not suggesting new bullish positions at this time.
Our exit target is the $69.90 mark.
July 7th, 2009 - entry price on PEP @ 57.25, option @ $4.50(estimate)
symbol: VP-AL, 2011 $60.00 LEAP call - current bid/ask $7.40/7.80
-stop loss on PEP at $54.95
Chart of PEP:
RAI $53.04 +1.99 -- Reynolds American Inc.
Shares of RAI were upgraded to a "buy" on Friday and the stock exploded higher setting new 52-week highs. I am raising our stop loss to $47.45.
I'm not suggesting new positions at this time.
Our second and final target is $57.50.
July 24th, 2009 - entry price on RAI @ 42.50, option @ $4.50(estimate)
symbol: OWO-AH, 2011 JAN $40.00 LEAP call - current bid/ask $11.20/14.90
-stop loss on RAI at $47.45
Sold Half on 10/19 @ 49.50, option @ $8.90 (+97%)
Chart of RAI:
RGLD $51.26 -2.83 -- Royal Gold Inc.
The price of gold had started to turn parabolic with a huge string of consecutive gains and new all-time highs. The jobs report finally sparked some profit taking. The nonfarm payroll report was significantly stronger than expected. It was so strong that investors worried the Federal Reserve might have to raise interest rates sooner than expected. Higher rates usually mean a stronger dollar and there were so many investors who were short the dollar that it started a short squeeze in the currency. This big bounce in the dollar is what ignited the sell-off in gold. The goldminers followed it lower.
Now this bounce in the dollar is probably temporary. The Fed is not going to raise rates any time soon. That means gold will eventually turn higher again but we don't know when this current sell-off will end. Shares of RGLD should find support near $50.00 and the low on Friday was $49.83. However, if $50 breaks then RGLD should also find support near $45 and its longer-term moving averages.
I would be tempted to buy LEAPS on RGLD here but it might pay off to wait and see if shares dip toward $45.00 first.
Our target to exit is $64.50.
Nov. 7th, 2009 - entry price on RGLD @ 50.70, option @ 7.50
symbol: ZMO-AL, 2011 JAN $60 LEAP call - current bid/ask $6.10/7.00
-stop loss on RLGD @ 41.95
Chart of RGLD
TEX $19.13 +0.09 -- Terex Corp.
TEX is going nowhere fast. The stock spent another week consolidating sideways between overhead resistance near $20.00 and technical support at its 100-dma. The 50-dma is currently at $21.00. I would wait for a close over $21.00 before considering new LEAPS positions.
Our final target is $29.50.
Sept. 11th, 2009 - entry price on TEX @ 18.25, option @ 4.10
symbol: VXQ-AD, JAN 2011 $20 LEAP call - current bid/ask $4.10/4.70
-stop loss on TEX @ 17.75
Sell half (10/24/09), option at $7.50 (+82.9%)
Chart of TEX:
UYG $5.66 +0.18 - ProShares Ultra Financials (2x) ETF
The financials have continued to churn sideways. The good news here is that the consolidation is narrowing. A breakout is imminent. The bad news is that the breakout could go either way. Now normally stocks tend to break in the direction of the previous trend, which in this case would be higher, but it's not a guarantee. You might think the stronger jobs report would be bullish for financials but the group failed to move on the news.
I would almost be tempted to open new bullish positions on a move over $6.00 but I'd up my stop loss toward $5.25.
Our second and final target is $9.50.
FYI: The UYG trades off the DJUSFN index.
Our strategy called for buying the ETF instead of the options.
Current position in the UYG = $1.50 entry (stop loss: 4.80)
10/14/09 Exit - Sell Half @ 6.31 (gap open exit, +320%)
Chart of UYG: