Play UpdatesEditor's Note: Crude oil prices have continued to soar, hitting new multi-month highs last week. Yet the rally in the energy stocks did not keep up. The OIX oil index stalled at resistance near 640. The OSX oil services index did hit new relative highs on Thursday but saw some profit taking on Friday. The rally in oil still looks overbought but if the dollar keeps falling the direction for commodities should be higher.
ACGY $11.19 -0.20 -- Acergy S.A.The oil services stock continues to tack on gains although the momentum certainly slowed last week. Short-term the stock is finding support at its 10-dma. If this sector does see any serious profit taking I would expect a drop back toward $10.00 or $9.50. I'm not suggesting new positions at this time. Please note that I'm raising our stop loss to $6.95. Our plan is to exit in the $14.50-15.00 zone.
April 25th, 2009 - entry price on ACGY @ 7.61, option @ 1.05
Chart of ACGY
ACI $18.70 -0.75 -- Arch Coal Inc.I am growing a little concerned about the short-term health of ACI. There has been a disconnect between coal and oil last week. Crude oil kept on climbing but ACI failed again at the $20 level and its simple 200-dma. So far the bullish trend of higher lows is still in place but I wouldn't be surprised to see a correction here. I'm not suggesting new positions at current levels. Our stop loss is at $12.45 just under the late April low. More conservative traders might want to consider a stop loss closer to $15.00. Our target is the $30.00-35.00 range.
May 14th, 2009 - entry price on ACI @ 16.00, option @ 1.30 -or-
May 14th, 2009 - entry price on ACI @ 16.00, option @ 2.40
Chart of ACI:
BAC $13.72 +0.75 - Bank of America Corp.After weeks of trading sideways in a relatively narrow range BAC is finally on the move again. The stock broke sharply higher on Thursday thanks to an analyst upgrade. The rally or what I suspect is partially short covering continued on Friday with another analyst upgrade. BAC will probably rally to resistance near $15.00 or its 200-dma in the $14.50-15.00 zone. I would expect some profit taking there but BAC should find support again at its rising 30-dma. I want to remind readers that this is a long-term, two-year trade. Our exit target is the $30-40 zone.
Jan 25th, 2009 - entry price on BAC @ 6.24, option @ 2.38
Chart of BAC
CHK $23.84 -0.47 - Chesapeake EnergyThe trend of higher lows in shares of CHK should eventually bear fruit and produce a breakout over resistance near $24-25. The stock has continued to be very resilient in spite of weakness in the price of natural gas. This past week there was a lot of speculation about a bottom in natural gas. I'm not suggesting new bullish positions at this time. Our long-term target to exit is $35.00 on CHK. We have set our stop loss on CHK at $16.40 but I'm thinking about raising the stop toward $17.50.
April 9st, 2009 - entry price on CHK @ 21.00, option @ 2.00
Chart of CHK:
CRM $41.60 +0.00 -- Salesforce.comCRM turned in a bullish week. After days of trying to breakout over resistance at $40.00 it finally succeeded last Thursday. Traders were quick to buy the dip on Friday morning although volume was very light so it's tough to put much importance behind it. Technicals are turning bullish again. As long as the market doesn't crash CRM looks ready to run again. Our exit target to sell our LEAPS position is $49.00.
April 1st, 2009 - entry price on CRM @ 30.00, option @ 4.30 -or-
April 1st, 2009 - entry price on CRM @ 30.00, option @ 2.00
Chart of CRM
DBA $27.32 -0.35 -- PowerShares DB Agriculture ETFThe rally in commodities has gone soft. Even though the big bounce in the dollar has rolled over the rebound in the commodity sector, at least for the DBA, struggled to get over resistance near $28.00 and its 10-dma. Today the DBA slipped to its exponential 200-dma thanks to another bounce in the dollar. I would look for a pull back near $26.00 or the rising 50-dma as a new bullish entry point to buy LEAPS. I'm listing a stop loss at $23.90. Our long-term target is the $37.50-38.00 zone.
May 23rd, 2009 - entry price on DBA @ 27.63, option @ 1.50 -or-
May 23rd, 2009 - entry price on DBA @ 27.63, option @ 2.25
Chart of DBA:
DRYS $7.04 -0.09 - DryShips, Inc.It was a forgettable week for DRYS, which traded sideways in an 80-cent range. Traders continue to buy the dips at its rising 50-dma for now. Volume has been sinking as DRYS consolidates. The only good news I can see is that the Baltic Dry Goods index is beginning to bounce after a two-week correction. If the rebound continues it could fuel a new move in the shipping stocks. I am a little cautious on DRYS right now. Our stop loss is at $5.45. Our target is the $14.00-16.00 zone.
May 13th, 2009 - entry price on DRYS @ 6.50, option @ 1.50 -or-
May 13th, 2009 - entry price on DRYS @ 6.50, option @ 0.85
Chart of DRYS:
DXO $4.73 -0.03 -- Deutsche Bank Double-long Oil ETNThe DXO has been soaring thanks to a big rally in crude oil. This double-long ETF is up 46% in just the last four weeks. Volume has definitely began to fade away as investors realize oil looks short-term overbought. I would expect a correction sooner rather than later. Short-term I'm not suggesting new positions at this time. I would watch for potential entry points in the DXO in the $3.50-3.00 zone.
Prior comments on this play: The Crude oil double-long ETN (exchange-traded note) offers investors two times the leveraged exposure to the monthly performance of the Deutsche Bank optimum yield crude oil index plus the monthly TBill index return. Basically, when oil was $147 a barrel this ETN was $29.65. If oil returns to the $150 range over the next few years this ETN could rally to $30 for a 1500% return. This ETN does not expire. It can be used in IRAs and has no margin requirements like crude oil futures. ETN Info: Deutsche Bank Pricing Description Our plan called for buying this ETN instead of the options.
Current position in the DXO = $2.15 entry (no stop loss at this time)
Chart of DXO
ERTS $21.93 +0.06 -- Electronic ArtsERTS ran into technical resistance at its 200-dma two weeks ago and has continued to drift lower. I was a little concerned when the stock got an upgrade and a $32 price target last week and shares didn't react to it. I still haven't heard any more news or rumors about ERTS as a takeover candidate. I might be tempted to open new positions on a dip near $20.00 but a pull back near its 100-dma is probably a better entry point. Our stop loss is $16.90. The $17.50 zone should offer support if ERTS falls that far. We have two targets. We want to take part of the position off the table at $29.00. Take the rest off at $34.00.
April 20th, 2009 - entry price on ERTS @ 18.00, option @ 1.08 -or-
April 20th, 2009 - entry price on ERTS @ 18.00, option @ 0.70
Chart of ERTS:
FAS $10.55 +0.15 - Direxion Fincl.Bull 3x ETFThe financials are just now hinting at a new leg higher. The banking indices are starting to drift up and away from their sideways consolidation but it's not very established yet. What is encouraging is that the trend of higher lows is still intact. Currently we have sold one third of our position at $12.00 and we plan to see another third at $24.00. We'll re-evaluate our final target for the last third of our position as needed. I am not suggesting new long-term bullish positions in the FAS at this time. We'll reconsider once it looks like any correction is ending. The triple-leveraged FAS is based off the $RIFIN index. The $RIFIN has broken through significant resistance at the 600 level this past week. Broken resistance should start acting as new support. Our plan called for buying the ETF instead of the options.
Current position in the FAS = $2.64 entry (stop loss: 2.64) Exit 1/3 position @ 12.00 (+354%)
Chart of FAS
Chart of RIFIN (Russell 1000 financial services)
FSLR $183.80 -0.30 -- First SolarFSLR continues to consolidate sideways but the trend of lower highs is bearish and could be forecasting a breakdown toward the $160 level of support. This past week saw a couple of dueling analyst opinions. One downgraded FSLR while another raised their price target to $250. I don't have anything new to say about FSLR. The April 30th rally in this stock has pretty much sealed the deal for us. Here's a repost of our April 30th, 2009 trade recap:
The covered-call trade is now at maximum profit. We bought FSLR at $128.00 and sold the 2010 $150 LEAP for $40.70. After the April 30th move odds are almost guaranteed that we'll be called out but we have to leave it in our portfolio until we are. Profit if called is $40.70 for the call option we sold and a $22 rise in the stock price (from $128 to $150). Together that's a $62.70 gain on a $128 investment (+48.9%). Covered Call position:
Long 100 shares of FSLR @ $128.00 Put Spread position:
Long 2010 $100 LEAPS Put LQM-MT @ $32.90
Currently the 2010 Jan. $100 put is worth $5.90.
Chart of FSLR
GLBL $7.08 -0.21 -- Global IndustriesGLBL turned in a forgettable week, which is a little surprising since the OSX oil services index managed to hit new relative highs. This relative weakness in GLBL is a little concerning. More conservative traders may want to consider taking some profit off the table a little early right here. Our long-term view for the oil services is still very bullish. We are not suggesting new bullish positions at this time. Please note that our stop loss is at $3.95. Readers might want to consider the use of a higher stop (maybe near $5.00 or even $5.50 depending on your tolerance for risk). Our target to exit is $8.85. Our plan called for buying the stock instead of the options. Our entry point to buy GLBL was hit on January 6, 2009
Current position in GLBL = $4.10 entry (stop loss: 3.95)
Chart of GLBL:
GT $12.41 -0.67 -- Goodyear Tire & Rubber Co.The rally in GT stalled near $14.00 last week but this pull back near $12.00 looks like another entry point. Even a pull back near $11.00 and its exponential 200-dma could work as an entry point. The Point & Figure chart is bullish with a $35.00 target. Our target is $25.00.
June 6th, 2009 - entry price on GT @ 12.94, option @ 2.20
Chart of GT:
HES $59.58 -0.89 -- HESS Corp.HES was trying to rebound after its early June sell-off but the stock was running into resistance near its 200-dma. I remain very cautious here. There are plenty of oil companies for us to invest in. More conservative traders may want to exit their LEAPS position in HES and look elsewhere. I am not suggesting new bullish positions in HES at this time. We're keeping our stop loss at $49.00. Our exit target is $79.00.
April 1st, 2009 - entry price on HES @ 52.50, option @ 7.30
Chart of HES:
KSU $17.94 +1.34 -- Kansas City SouthernInvestors will want to keep an eye on the railroads. The Dow Jones Transportation index failed to breakout near significant resistance last week. The railroads might be able to lead this group higher. The DJUSRR railroad index surged 2.9% on Friday and closed just above its 200-dma. Technically it looks like this index is still inside its trading range. Helping fuel this move in rail stocks was KSU, which surged 8% to new relative highs on Friday. Volume was more than twice the norm for KSU, which is a bullish sign. I see this rally as a new entry point to buy LEAPS but readers may want to wait for a dip back toward $17.00 or wait for the railroad index to truly breakout past its 200-dma or even wait for the Dow Jones Transportation index to break higher. Again, there is no real rush. KSU does not normally move that fast. The good news is that the last three months looks like a higher base for the stock to build on. Our target is the $27.50-30.00 zone.
May 9th, 2009 - entry price on KSU @ 17.01, option @ 1.00 Note: KSU actually gapped open lower at $16.64 on Monday, May 11th so traders would have gotten a lower price on the option instead of the $1.00 I have listed above.
Chart of KSU:
MDR $23.28 -0.76 - McDermott Intl. Inc.The rally continues for MDR. The stock set another new relative high last week. The stock did garner positive analyst coverage this past week. I don't see any changes from my previous comments. The stock looks overbought here. I'm not suggesting new bullish positions at this time. Our target to exit is a move into the $30.00-35.00 zone. The Point & Figure chart is bullish and forecasting a $25 target (for now).
April 4th, 2009 - entry price on MDR @ 15.56, option @ 2.70
Chart of MDR:
MON $86.54 -0.31 - Monsanto Co.Most of the agriculture-chemical-fertilizer names rallied last week. Helping boost the stock was a new "buy" rating and a $110 price target. MON finally cleared resistance in the $84-85 zone and its 200-dma. This is a great improvement since a week ago the stock look poised to move lower. I'm not suggesting new positions at this time. Our stop loss is currently at $76.75. We have two targets on MON. We want to take some profits off the table at our first target of $99.00. Our second target is $115.00. At the moment the Point & Figure chart is forecasting at $96 target.
April 3rd, 2009 - entry price on MON @ 77.00, option @ $7.80
Chart of MON:
MSFT $23.33 +0.50 -- Microsoft Corp.MSFT has been a real leader in the tech sector. The stock has been climbing almost everyday and the current rally is about three weeks old. Obviously shares are short-term overbought. I would wait for a dip back toward $21.50-21.00 before initiating new positions. This is going to be a very long-term play as MSFT doesn't move very fast in spite of its recent performance. My long-term target is the $30 region.
June 2nd, 2009 - entry price on MSFT @ 21.60, option @ 2.20
Chart of MSFT:
NYX $29.81 -0.21 -- NYSE EuronextWe're seeing a healthy consolidation in NYX. After weeks of rising the stock has been churning sideways. It's probably time for a little correction lower. Chart readers will notice that volume has been dropping as NYX moves sideways. I'm not suggesting new positions at this time. Our long-term target is the $35.00-40.00 zone but shares have been so strong I'm seriously considering raising the target. The P&F chart's bullish target has risen from $37 to $49.
Apr. 11th, 2009 - entry price on NYX @ 21.51, option @ $1.81
Chart of NYX:
PBR $43.95 -1.20 -- Petroleo BrasilieroFor the second time this month the rally stalled at the $46.00 level, which also happens to be the 50% Fibonacci retracement of its 2008 sell-off. To open long-term LEAP positions we want to see a dip near the $36-35 zone or maybe the rising 50-dma. I am suggesting that readers sell half their position at $49.50. We'll sell the second half at $57.50. FYI: If you've got money in PBR you'll want to keep one eye on the Brazilian market (Bovespa Index) as PBR trades closely with its home market.
Apr. 4th, 2009 - entry price on PBR @ 35.10, option @ $2.80
Chart of PBR:
PCU $24.25 -0.66 - Southern Copper Corp.Weakness in the U.S. dollar and hopes for an economic rebound have kept the commodity trade going but commodities began to see some profit taking on Friday. PCU still made significant gains for the week. I'm not suggesting new bullish positions at this time. Our target is $30.00. We should expect the stock to encounter some resistance near $25.00.
April 20th, 2009 - entry price on PCU @ 19.00, option @ 1.95
Chart of PCU:
SLB $60.27 -1.91 -- Schlumberger Ltd.The oil service stocks have been real leaders in this market and SLB has been at the front charging higher. Shares broke out over resistance at $60.00 last week and almost hit $64.00 on Thursday. I'm not suggesting new bullish positions at this time. Currently our exit strategy has three parts. The plan is to sell one third of our position at $59.00, which was originally our first target. We'll sell another one third at $69.00. We'll exit our final third at $77.50.
April 20th, 2009 - entry price on SLB @ 45.01, option @ 3.00 1st exit @ $59.00 (1/3 of position) option @ $7.25 (+141% estimate)
Chart of SLB:
UYG $4.28 +0.06 - ProShares Ultra Financials (2x) ETFThe financials have been consolidating sideways for weeks but it finally looks like they're ready to begin a new leg higher. Keep an eye on the $DJUSFN index, which has been consolidating under the simple 200-dma. I'm not suggesting new bullish positions here but I could see more aggressive traders launching positions and just using a much tighter stop loss. Please note that we have set our stop loss on UYG at breakeven at $1.50. More conservative traders might want to consider a stop near $2.00 or $2.25. Don't forget that the UYG trades off the DJUSFN index. Currently the picture is mixed for the DJUSFN. The trend of higher lows is still in place but this index just tested its 200-dma on Friday and pulled back. At the moment we're thinking a very long-term UYG target (emphasis on long) at $13.00 and then at $24.00 (very long term). I'd scale out half at $13.00 and hold on to the rest until $24.00. I have to honest with you it's going to be extremely tough to not exit early at say $7.00 or maybe $9.75. We'll have to adjust our expectations based on how the financials are doing in the second half of 2009. Our plan called for buying the ETF instead of the options.
Current position in the UYG = $1.50 entry (stop loss: 1.50)
Chart of UYG:
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