Additional Trading Ideas:
In addition to tonight's new candidate(s), consider these stocks as possible trading ideas and watch list candidates. Some of these may need to see a break past key support or resistance:
BECN, RDUS, PRTA, HRB
SPW, FLS, CNK, HPQ, WUBA, NUE, FMC, SOHU, HSNI, NFG
NEW BEARISH Plays
Westlake Chemical Corp. - WLK - close: 50.61 change: -0.67
Stop Loss: 53.85
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on September -- at $---.--
Listed on September 14, 2015
Time Frame: Exit prior to earnings in November
Average Daily Volume = 732 thousand
New Positions: Yes, see below
We are adding WLK as a bearish momentum play. Shares are down -48% from their all-time high in 2014. They're down about -35% from the 2015 high and off -17% year to date. The S&P 500 is only down -5% in 2015.
WLK is in the basic materials sector. According to the company,
"Westlake Chemical Corporation is a manufacturer and supplier of petrochemicals, polymers and building products with headquarters in Houston, Texas. The company's range of products includes ethylene, polyethylene, styrene, propylene, caustic, VCM, PVC resin and PVC building products, including pipe and specialty components, windows, and fence."
Products include "the tires we ride on, the plastic wrap that keeps our meats and produce fresh, the pipes that are essential to ensuring clean water, the frames that secure our windows and doors."
Earnings and revenues have been all over the map lately. Their Q4 results announced in February missed the bottom line estimates. Revenues were up +19% but they missed analysts estimates. Q1 results came out in May . Earnings missed by an even wider margin this time and down -6.7% from a year ago. Revenues also missed. Yet their most recent earnings report (Q2) came out on August 4th. Earnings were $1.41 a share, which was much better than expected. Revenues were up +18% to $1.19 billion, also above expectations.
Unfortunately for shareholders traders used the early August rally as a chance to sell. The oversold bounce of round-number support near $50.00 has already failed. Today WLK is poised to breakdown under this key support level at $50. If this level breaks the next support area could be $40.00. The point & figure chart is bearish and forecasting at $33 target.
Tonight we are suggesting a trigger to open bearish positions at $49.75.
Trigger @ $49.75
- Suggested Positions -
Short WLK stock @ $49.75
- (or for more adventurous traders, try this option) -
Buy the 2016 Jan $45 put (WLK160115P45) current ask $2.85
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike