We are adding both bullish and bearish candidates tonight as we look for a market dip. In addition to tonight's candidates check out what's on my watch list:
PH - this might be a bullish candidate if we see shares bounce from the $90 or $88 levels near the 100-dma or 50-dma.
ILMN - shares are breaking out to new all-time highs. This looks like a new entry point. My only worry is the stock market itself is short-term overbought and due for some profit taking.
ROK - I'm watching for a pull back toward likely support near $85.00.
FO - shares have been stuck in multiple trading ranges for seven months. A breakout past resistance near $65.00-65.50 might change that.
AGU - some of the agricultural chemical names have been moving higher. There are growing expectations that demand for fertilizer is going to be strong throughout the rest of this year. Another dip followed by a bounce in the $86-87 area might be a bullish entry point.
POT - this is another agriculture name. I'd prefer to wait for the pull back and then buy the bounce.
NEW DIRECTIONAL CALL PLAYS
Toyota Motor Corp. - TM - close: 83.60 change: +0.15
Stop Loss: 79.40
Target(s): 85.75, 89.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger
Why We Like It:
You are probably already aware that Toyota has suffered greatly due to the terrible earthquake and tsunami that hit Japan in March of this year. Their dealers suffered a lack of inventory and selection due to the supply chain disruption and temporary plant closures. The company just announced last week that TM's June auto sales were down -21% but they believe that to be a bottom since the supply issues are now behind them. I suspect that all the bad news has been factored in.
Yet we don't want to launch new positions right here. I am suggesting we buy calls on a dip at $82.00 with a stop loss at $79.40, under the simple 200-dma. Our target is $85.75 and $89.50. We'll plan on exiting ahead of the early August earnings report.
NOTE: Shares of TM traded here in the U.S. gap open (up or down) every day as the stock adjusts for trading back home in Japan. This can be a frustrating experience with the gaps every day. We may not get triggered at $82.00. The play could be opened on a gap down below this level.
Trigger @ $82.00
- Suggested Positions -
buy the Aug. $82.50 call (TM1120H82.5) current ask $3.05
- or -
buy the Aug. $85 call (TM1120H85) current ask $1.75
Entry on July xx at $ xx.xx
Earnings Date 08/01/11 (unconfirmed)
Average Daily Volume = 539 thousand
Listed on July 05, 2011
NEW DIRECTIONAL PUT PLAYS
Scotts Miracle Gro Co. - SMG - close: 50.42 change: -1.19
Stop Loss: 52.51
Target(s): 47.50, 45.50
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below
Why We Like It:
The gap down in the middle of June was due to SMG lowering its earnings guidance. The stock's oversold bounce managed the fill the gap and then stall. With the stock market in rally mode last month SMG was unable to rise past resistance in the $52.00-52.50 area. Now today SMG is showing relative weakness.
I am suggesting we launch small put positions now. We'll use a stop at $52.51. Our targets are $47.50 and $45.50.
Open Small Put Positions now
- Suggested (small) Positions -
Buy the Aug. $50 PUT (SMG1120T50) current ask $1.90
Entry on July 6 at $ xx.xx
Earnings Date 08/02/11 (confirmed)
Average Daily Volume = 991 thousand
Listed on July 5, 2011