Current Portfolio:

BEARISH Play Updates

Crown Holdings - CCK - close 28.05 change +0.59 stop 28.38

Target(s): 27.60, 27.35, 27.00, 26.80
Key Support/Resistance Areas: 27.35, 27.00, 26.25, 25.90, 25.50, 25.00
Current Gain/Loss: -1.78% Time Frame: 1 week
New Positions: No

7/24: My thesis of a daily reversal bar and pullback in CCK has failed so far. We have tight stop overhead to limit losses should the stock continue defying gravity. CCK gained about +10% last week and it is way overdue for a retracement. The stock (and the broader market in general) need a retracement to regain some steam before there can be any sustained move higher. I suspect the market will do this early next week which is when I suggest we exit positions. I have listed four tight targets above which can be used as a guide to tighten stops and exit positions. Ideally, trailing stops down will get the most out of this trade and protect against the hard reversals we have been experiencing lately. Our final target of $26.80 is close to a gap higher on 7/22 that needs to be filled and would produce a decent gain in the position. The small caps need to pullback and I suspect they will prior to moving much higher.

7/22: CCK gapped opened higher at $27.56 which was near our stop and where short positions should have been initiated. The stock proceeded to decline and then bounce back in the afternoon closing near the opening price. CCK finds itself near its YTD highs and I like a short play here for move lower. I am not trying to hit a home run, rather I am looking for a countertrend move lower to retrace some of the +8% gains of the past three days. I suggest readers set a target and take profits or tighten stops if CCK heads lower. I've adjusted the targets above to use as a guide.

7/21: CCK printed an ugly reversal candlestick after their earnings report on 7/19. The stock has rallied right up into a congestion area that lasted 2.5 months in March/April. I expect CCK to turn back towards its 200-day SMA which is near our first target of $26.00, and possibly its 20-day and 50-day SMA's near our more aggressive targets. The stock made a lower low in late May and appears to be making a lower high now. I think we can catch some of this move for a quick gain with a tight stop above today's highs. I suggest readers use the above targets as areas to tighten stops to see how far we can ride CCK down.

Suggested Position: Short CCK stock, entry was at $27.56

Options Traders: September $25.00 PUTS

Annotated Chart:

Entry on July 22
Earnings 10/7/10 (unconfirmed)
Average Daily Volume: 1.43 million
Listed on July 21, 2010

Costco Wholesale - COST - close 55.95 change +1.05 stop 57.25

Target(s): 55.40, 54.80, 54.30
Key Support/Resistance Areas: 56.80, 55.60, 54.25, 53.40, 51.50
Current Gain/Loss: -0.81%%
Time Frame: 1 week
New Positions: No

7/24: COST traded to $55.50 which triggered our entry for short positions. There is intraday resistance right at this level plus a downtrend line from 6/15 so this is a logical spot for COST to retrace some of the gains from the past two days. COST has now had two powerful rallies since 7/7 off of the $53.50 support level (i.e. double bottom). There is obviously a lot of support at this level and I just don't see it revisiting those lows for awhile. As such, we need to adjust so I suggest we stay nimble on this trade and begin looking for an exit. I have adjusted our targets above to use as a guide to tighten stops or simply take profits. I am looking for a small gain on this trade, nothing more. At a minimum COST should turn back to test its 20-day SMA near $55.40. Our next targets are $54.80 and $54.30. I expect the broader market to be weak early this week which should get COST moving towards these targets.

7/22: COST could not even get above yesterday's highs when the market was spring boarding higher. The stock is a relative underperformer and I like it short if we get filled at $55.50. If nothing else a quick turn around from this resistance area can turn into a quick profit. I've added $54.35 as an immediate target. If we get triggered and hit this target, options positions should easily gain 20% to 30%. If we get a meaningful pullback COST should be one of the first stocks to let go.

Current Position: Short COST stock, entry was at $55.50

Options Traders: September $55.00 PUTS

Annotated Chart:

Entry on July xx
Earnings 10/7/10 (unconfirmed)
Average Daily Volume: 3.76 million
Listed on July 20, 2010