BULLISH Play Updates
Teck Resources Ltd - TCK - close 35.30 change -1.27 stop 32.65
Target(s): 36.00, 36.90, 37.70
Key Support/Resistance Areas: 37.00, 36.00, 34.75, 34.00, 33.00, 32.25
Current Gain/Loss: -0.7%
Time Frame: 1 to 2 weeks
New Positions: Yes
8/5: Our play on TCK has been opened. The weakness in the U.S. dollar on Thursday did not have much impact on commodity prices. Gold produced minor gains while copper turned lower. The GDX gold miner ETF managed a gain but miners like FCX and equipment maker BUCY both posted losses today. TCK underperformed with a -3.4% decline and a close back under its 200-dma. However, shares also hit our trigger to buy the stock (or calls) at $35.55. The play is now open. We have a stop at $32.65. If the jobs data comes in a strong tomorrow it should soothe fears over the economic slowdown and demand worries, which would have a bullish influence on TCK stock price.
It looks like the Sept. $36 calls were trading near $2.00 when TCK hit our trigger. They closed at $1.91.
8/4: We came close again today with TCK but it is not letting us in long positions at our desired entry. Letâ€™s be patient. My comments from below havenâ€™t changed.
8/3: TCK came within 40 cents of our trigger to enter long positions at $35.55. I suggest we remain patient and take advantage of any weakness in this basic materials name as the sector is gaining momentum. My comments from below remain valid.
8/2: TCK gapped higher at the open and ran away from us. The stock closed +4.74% on the day and has already hit our first two targets. TCK has resistance at current levels and should retrace some of today's gains. I suggest we be patient and see if TCK heads toward closing Monday's gap higher before initiating long positions. Let's adjust our trigger up to $35.55 which is just above today's low and 30 cents above the gap. The 20-day and 50-day SMA's are now rising and should provide support if TCK goes any lower that this. TCK is also trading in an upward channel and if the broader market remains strong the stock should trade to new highs. Let's take advantage of any weakness.
Suggested Position: Long TCK stock if it trades down to $35.55
Options Traders: September $36.00 CALL, current ask $2.89, estimated ask at entry $2.15
Entry on August 5th @ 35.55 (call $2.00)
Earnings More than 2 months (unconfirmed)
Average Daily Volume: 6.4 million
Listed on July 31, 2010
ProShares UltraShort 20 YR Treasury - TBT - close 36.59 change -0.31 stop 35.55
Target(s): 36.90(hit), 37.50 (hit), 38.00, 39.25, 40.50
Key Support/Resistance Areas: 42.00, 41.00, 39.70, 38.25, 37.55, 34.65
Current Gain/Loss: +0.22%
Time Frame: Several Weeks
New Positions: Yes
8/5: Both stocks and bonds are holding their breath for the Friday morning jobs report. If the report comes in strong it will help alleviate fears about the U.S. economy slowing down. This could inspire investors to sell bonds to raise money and buy stocks. On the other hand if the jobs number disappoints then investors will continue to seek shelter in the bond market, which is bad for our call play, since this is the ultrashort bond ETF. I would expect the TBT to gap open one way or the other tomorrow.
8/4: TBT is showing signs of life and I expect it move higher from here. This ETF (short bonds) is a good hedge against our short DIA position. After the big sell-off in TBT on Friday we offered a lowered target of $36.90 which was hit today. Options positions are now up nearly +10% and I am looking for TBT to trade to at least $37.50 which is below the 50-day SMA and still a valid target. I suggest tightening stops at this level. I suggest tightening stops at these levels to see if we can get more out of the trade. A break above the 50-day SMA should easily send TBT towards our more aggressive targets. We plan to tighten the stop in the coming days when we have a better reference point.
8/3: After a brief dip in early trading TBT recovered nicely. Prices are coiling on its intraday chart and a breakout should happen tomorrow or Thursday. If TBT breaks above today's highs it should easily trade to our first two targets which are both below the 50-day SMA. I suggest tightening stops at these levels to see if we can get more out of the trade. A break above the 50-day SMA should easily send TBT towards our more aggressive targets.
Current Position: Long TBT stock, entry was at $36.51
Options Traders: Long September $37.00 CALL
Entry on July 27, 2010
Earnings N/A (unconfirmed)
Average Daily Volume: 3.8 million
Listed on July 24, 2010
BEARISH Play Updates
SPDR DJIA ETF - DIA - close 106.88 change -0.08 stop 108.75
Target(s): 106.25, 105.25, 104.30, 103.65
Key Support/Resistance Areas: 108.00, 107.00, 105.90, 104.75, 104.20, 103.50
Current Gain/Loss: -0.38%
Time Frame: 1 week
New Positions: possibly
8/5: Stocks are drifting sideways in a very narrow range. The market is waiting for the results from July's jobs report. A strong, better than expected report "should" produce another move higher. On the other hand, if the jobs number disappoints, stocks could see some serious profit taking, especially after the +7% rally in July. Odds are really good that the DIA will gap open tomorrow morning. I would look for a move under $105.00 as a potential entry point although nimble traders could use a move under $105.50 as an entry. I would not surprise me to see the DIA trading near $100 in the next several days if the jobs data disappoints.
8/4: The markets melted higher again today despite an early attempt to sell-off. Our main goal with this trade is to fill the gap higher from Monday which is near 105.25. This is the area where readers should tighten stops, or use a trailing stop, to see if the selling intensifies or if buyers step in. The drop could happen fast so simply taking profits is also a smart move. A drop to this area will produce a winning trade and for options traders it should be a +20% gain. We are at resistance points so this is a logical place for the DJIA to turn lower to regain some energy before possibly moving higher. For readers looking for a quicker exit $106.25 could be considered which is near this weekâ€™s lows as the DJIA is stubbornly hanging onto the gap.
8/3: It was an inside day for DIA in that it traded within yesterday's high/low price range. DIA closed just about where it opened so we are currently breakeven on the position. I've raised the first target to $105.15 so that it is just above Friday's high as opposed to its closing price. A trip down to this level could happen fast and it is a good place to consider tightening stops or taking profits. For options traders this level should produce a +20% gain. Our next target is $104.30 which just above the 200-day SMA.
Current Position: Short DIA stock, entry was at $106.48
Options Traders: Buy September $106.00 PUTS
Entry on August 2nd @ 106.08
Earnings: N/A (unconfirmed)
Average Daily Volume: 14 million
Listed on August 2, 2010