The market struggles to keep the upward momentum alive. Nervous investors are feeling even more wary with the Dubai news.
ACI $21.12 -0.59 -- Arch Coal Inc.
The pain in shares of ACI continued last week. The stock bounced from its exponential 200-dma on Tuesday but overall the bearish head-and-shoulders pattern has only gotten worse. ACI is nearing what should be important support near $20.00. I'm repeating my comments from last week. More conservative traders may want to consider an early exit now. We have a long-term target on this stock so we're going to try and weather the volatility but if ACI breaks $20 we'll probably get stopped out at $19.40. More aggressive traders might want to put their stop loss under the simple 200-dma near $18.00.
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 $1.80/2.05
-stop loss on ACI @ 19.40
Chart of ACI:
ANR $37.40 -1.94 - Alpha Natural Resources, Inc.
Last week was an ugly week for ANR too. Shares continued to reverse lower after the failed rally near $42.00. On Friday the stock broke short-term support near $38.00. We can expect a dip toward the $35-33 zone now.
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 $8.00/8.70
-stop loss on ANR @ 32.40
bought 1/2 LEAP position on 08/25/09 (option price @ 7.00)
Chart of ANR:
BAC $15.47 -0.48 - Bank of America Corp.
Friday's move lower in BAC doesn't bode well. The stock had been consolidating sideways under its 50-dma. As a major bank investors naturally sold it on Friday. The markets were unclear over which banks had exposure to the potential Dubai World default. Now we know that most of the exposure lies with European banks.
Technically Friday's action is bearish and more conservative traders may want to exit early now. An alternative might be to put a stop loss on your LEAP option at breakeven (or higher).
I'm not suggesting new positions at this time. Our long-term target is the $25-30 zone.
Jan 25th, 2009 - entry price on BAC @ 6.24, option @ 2.38
symbol: VBA-AB, JAN 2011 $10 LEAP call - current bid/ask $4.60/4.90
-stop loss on BAC @ 11.90
10/31/09 Sell Half -- option at $6.00 (+152%)
Chart of BAC
BQI $1.24 +0.10 -- Oilsands Quest Inc.
BQI almost hit our trigger to buy the stock on Tuesday last week but shares bounced at $1.06. It was Friday's decline that finally pushed BQI to our trigger to open long-term positions. Shares gapped open lower at $1.06 and hit $1.05 before soaring higher.
BQI was on our watch list with a trigger to buy the stock at $1.05 and a stop loss at $0.89. Now that the play is 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 $23.03 -0.35 -- Chesapeake Energy Corp.
The intermediate trend in CHK is still down but shares appeared to find some support near $22.75 in the last several days. The real story here could be natural gas, which appears to have found a bottom (for now). If natural gas can rally from these levels it will really help shares of CHK.
More aggressive traders may want to keep their stops under $20.00, which should be psychological round-number support. I'm not suggesting new long-term 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 $4.15/4.25
-stop loss on CHK @ 20.95
Chart of CHK:
CNX $45.89 -1.57 -- Consol Energy Inc.
The selling pressure in CNX last week wasn't that bad. Friday's market weakness was not enough to break the recent lows. However, bulls are still in danger here. CNX still has a bearish head-and-shoulders pattern forming.
Last week we raised the stop loss to $41.00 since the $42.00 level should be support. More aggressive traders will want to keep their stops under the $40.00 mark. More conservative traders may want to exit early right now! I'm not suggesting new positions. 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 $12.30/13.20
-stop loss on CNX @ 41.00
Target hit 09/16/09 @ 48.50, option price $15.40 (+97%)
Chart of CNX
DE $52.36 -1.34 -- Deere & Co.
DE rallied to a new 2009 high last week on its earnings report. Yet gave back a big chunk on Friday's market weakness. I remain bullish on the stock with DE above $50 and considering our long-term time line we could still open positions now but if you're patient we'll probably get a better entry point closer to $50.00. If the S&P 500 breaks down under 1180 I would hesitate to launch new trades. You could always start with a small position that you can add to over time once the market looks a little stronger.
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 $ 9.10/ 9.30
-stop loss on DE @ 44.00
Chart of DE:
EMR $41.50 -0.82 -- Emerson Electric Co.
EMR had been holding up reasonably well and the selling on Friday wasn't that bad. The trend is up but I'd probably wait for a dip near $38.00 or its 100-dma before considering new long-term positions.
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 $5.70/6.00
-stop loss on EMR @ 33.50.
Chart of EMR:
FSLR $120.30 - 0.67 -- First Solar
Nothing has changed for us with FSLR. The stock continues to hover around the $120 level. I would focus on potential support at its September 2009 lows near $112. If that fails I'd look for possible support near $100.
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) $2.61.
If you're curious the 2010 Jan. $150 call is at $ 1.56.
Chart of FSLR
FST $18.50 -0.57 -- Forest Oil Corp.
FST managed to post a gain for the week in spite of a 3% sell-off on Friday. Shares tested technical support at their 200-dma and bounced. Wednesday's breakdown in the dollar really helped the commodity-related stocks. Unfortunately Friday's sudden reversal higher in the dollar is worrisome. If the market was any stronger I'd be tempted to buy LEAPS right here on the bounce. Unfortunately with the S&P looking vulnerable I would hesitate to launch new positions now. 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 $3.40/4.10
-stop loss on FST @ 16.85
Chart of FST:
GHM $18.78 -0.83 -- Graham Corp.
The November rally in GHM has been so steep that Friday's 4.2% decline doesn't look that bad. Shares were due for some profit taking Look for support near $17.00.
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 $4.10/6.40
-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 $22.99 -1.65 -- Genco Shipping
GNK spent most of last week testing support near $24.00 and holding it. Unfortunately Friday's action was painful. The shipping stocks were hammered and GNK lost 6.6%. The stock should find some support near $22.00 and again near $20.00. At this point I would want to see a pretty convincing bounce before launching new 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 $3.30/4.00
-stop loss on GNK @ 19.65
Chart of GNK:
INTC $19.11 -0.23 -- Intel Corp.
Friday's selling pressure in INTC was relatively mild. Although the close under the 100-dma is bearish. I'm still concerned that INTC could be forming a large, rounded top formation.
More conservative traders may want to start taking some money off the table now. I would seriously consider closing all or part of the trade if INTC closes under $18.00 but I've been predicting that the stock will eventually fill the gap near $17.00. Shares should have support near the 200-dma and the $16.00 level.
An alternative stop loss strategy would be to put a stop on your LEAPS option instead of focusing on shares of Intel. If you choose this route I'd put the stop at breakeven.
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 $2.07/2.11
-stop loss on INTC @ 15.90.
Chart of INTC:
MTW $ 9.90 -0.39 -- Manitowoc Inc.
Shares of MTW had continued to weaken even before Friday's market decline. The stock is now under its 50-dma and under one of its trendlines of higher lows. The short-term trend has turned bearish. The question now is how deep will this correction be? MTW should find additional support near $9.00, at its 100-dma near $8.50, and again at $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 $2.80/3.10
-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 $51.33 -1.68 -- Petroleo Brasiliero
PBR remains one of the strongest looking energy stocks in the market. Shares had rallied to new 2009 highs before the Dubai sell-off. Short-term direction will probably depend on movement in the dollar. If the dollar continues lower then oil should stay strong and PBR can maintain its up trend.
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 would continue to look for support in the $46-45 zone. 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 $3.45/3.55
-stop loss on PBR at $44.40
Chart of PBR:
PEP $62.30 -0.89 -- PEPSICO Inc.
PEP is another stock that had broken out to new 2009 highs on Wednesday only to give back all of its gains on Friday's market sell-off. The trend is still up. The bottom of the bullish channel has risen to $61.00. 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 $6.20/6.50
-stop loss on PEP at $54.95
Chart of PEP:
RAI $51.32 -0.05 -- Reynolds American Inc.
The action in RAI was unusual. Shares did gap down on Friday morning but the stock managed to hit a new 2009 high intraday on Friday. The trend is up and RAI's position as a defensive stock should protect it from too much profit taking. Broken resistance at $50.00 should be new support.
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 $ 9.10/13.50
-stop loss on RAI at $43.40
Sold Half on 10/19 @ 49.50, option @ $8.90 (+97%)
Chart of RAI:
RGLD $53.31 -1.77 -- Royal Gold Inc.
Investors panicked on the Dubai news and rushed their money into "safety" plays like the U.S. dollar and treasury bonds. The sudden rise in the dollar pushed commodities lower. Gold was not immune but the overnight $50 drop in gold had been pared down to just a $10 decline before Friday's market closed. The gold miners suffered bigger declines than gold but the overall trend is still positive. I would still consider new long-term positions on dips near $50.00. More conservative traders may want to tighten their stops.
The Point & Figure chart has a new buy signal with a $72 target. 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 $7.40/8.20
-stop loss on RLGD @ 41.95
Chart of RGLD
TEX $18.98 -0.93 -- Terex Corp.
As we expected the correction in shares of TEX continued. The stock appears to be headed for the $18.00 level. Shares should find some support near the rising 100-dma or the $18.00 mark. At this point I would want to see a convincing bounce before launching new positions and I would still hesitate to buy anything if the S&P 500 breaks down under the 1080 level.
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 $4.20/4.80
-stop loss on TEX @ 17.75
Sell half (10/24/09), option at $7.50 (+82.9%)
Chart of TEX:
UYG $5.38 -0.30 - ProShares Ultra Financials (2x) ETF
Bullish investors could be in serious trouble with the UYG. Up until Friday this financial ETF had continue to trade sideways. Friday's sell-off produced a drop toward technical support at its 100-dma, which held. Yet shares closed under their long-term trendline of higher lows (dating back to the March 2009 lows).
I am repeating my comments that more conservative traders may want to exit early now. If the selling continues the UYG should have some support near $5.00 and if not we have our stop loss at $4.80.
I am not suggesting new positions at this time. 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: