Date Purchased: April 6th
Price: $9.94
Buy Strategy: Trying to find leading stocks that have not "run away" from us is a challenge these days. However, with China Unicom, we just might have identified just such a position. Telecom has been moving up in our sector rankings (currently #4) and China Unicom has some room to run yet to the upside on a chart basis.
Active Trader Stop: $9.49
Company Profile
We are watching many of our Success Trading Group favorites like McDonald's (Ticker: MCD) for new entry points for short term trades. We will be watching MCD for a trade below $55. Our favorite trading stocks have made some nice moves recently. Entering new positions will require analysis and caution.
Company Profile
After Hours: $18.56
EARNINGS: 04/23/2009
STATUS: Cup w/handle. BUCY has spent all 2009 forming a 13 week base. Nice handle this past week with a low volume fade to near support and then a breakout move Thursday on rising, above average volume. This is BUCY's first base coming off the bottom and the industrials are finally starting to make their move to join the rest of the market. Nice break higher Thursday as BUCY made a higher high on this run off the March low. Been awhile.
Volume: 3.467M Avg Volume: 2.86M
BUY POINT: $18.72 Volume=3.8M Target=$22.95 Stop=$17.41
POSITION: HBU GA - July $17.50c (65 delta) &/or Stock
Company Profile
$10 Trader hit a home run on ZLC capturing a 51% gain before the small commission in a 5 day trade! Currently there is resistance at the $5 level, but a break above there could leave room for some clear sailing to somewhere above the $10 mark, perhaps to $14 or so.
Company Profile
When the market makes a reversal move, either upside or downside, you hear a lot of pundits on the financial stations saying if you miss the early move you miss most of the move. Sure early moves are strong; if the trendline is good, however, so are the other moves. The key is focusing in on the leading stocks that continue to receive investor money and can make strong, substantive moves. As one of the traders here puts it, you want a strong stock that can tear off chunks of real estate in a hurry. Thus we have chronicled our trades in BIDU, ICE, CME, AAPL, GS, PCLN, AMZN, etc. in prior columns. The nice thing about strong upside runs is that new leaders continue to crop up and surge higher.
BRCM is such a leader. It took a bit longer to make the breakout as it traded in a 4 month lateral range similar to AAPL before it made its move. Of course that did not stop us from playing AAPL during that move but we also got the bonus of the breakout this last cycle in the trading range. When that breakout occurs with a strong quality stock, you often get an established run higher that gives you several times to buy both for the longer term and the shorter term trends. BRCM has been doing that for us of late.
We got onto BRCM for the most recent move in mid-March. As noted, BRCM was trading in a rolling range from 15 to 20 and we made the plays up and down during that range; very nice work if you can get it as the stock moves were 30+% up and down and our option plays were even better. In March, however, it did something different. First, it was on the fifth cycle in the rolling range; 4 or 5 cycles is a long range to play and usually by that time the range breaks apart either with an upside breakout or a collapse lower. Second, this time when BRCM hit the 20 range it did not fall right back down but started moving laterally. That had us looking for a breakout move and we put it on the report on the 3-14 weekend.
It tested that Monday and then broke over the top of the range to a new post-October high on 3-17-09. We moved in with some stock positions at $19.03 and some May $18 strike call options at $2.50. BRCM rallied to the 200 day SMA, paused and came back to tap the top of the range it broke from in a classic test, then it zoomed higher by over $2 to a new post-October high yet again.
When BRCM tested again it tested the last key level it broke, the 200 day SMA. When it made that test we put a new play on the report on 3-26, looking to catch it on a bounce off the 200 day. On 4-1 it surged off the 200 day, and when we saw the move was holding into the close we picked up some more positions at $21.10 and some May $20 call options at $2.70. The next session BRCM added $1.39, and as it was up 11% in 2 days we banked some gain on our original position, selling part of our stock position for $21.76 or a 14% gain and part of our option position for $4.30 or a 72% gain.
As has been the case on this move, BRCM tested back after that 2-day surge, coming back to near support at the 10 day EMA. In a strong trend that is establishing itself to the upside the 10 day EMA will start acting as support for bounces higher. So . . . we moved in early Wednesday on 4-8 with more positions as BRCM tested and held the 10 day EMA on an intraday test after gapping higher to start the day. Thursday BRCM gapped higher again, posting a 5% move on the session as it continues stair-stepping higher in this strong breakout from a well-formed base.
What we are doing with BRCM is adapting to the market moves as they occur. We played the trading range when it was bouncing up and down with almost clocklike regularity. Then when we saw a potential change in the pattern we readied to play the breakout. It came and now we are playing the uptrend, adding to positions as BRCM tests strong moves higher, tests that give us logical entry points for longer term and shorter term positions. BRCM's earnings are on 4-21-09 and we are looking to ride this trend as long as it holds toward earnings and then bank much of the gain. We have gains in excess of 100% on our early option positions and the others are pushing the century mark as well. Averaging up into strong leaders allows you to put your money to work on proven movers that are building strength into their moves. Have to like that.
NRP (Natural Resource Partners LP)
Company Profile
Option Trader captured a 90 cent a share gain on NRP in less than two weeks first selling and later buying back puts. This MLP remains in a trend up and looks like it may offer additional possibilities over the next week or so.
LFC - China Life Insurance Co. Ltd. is currently trading at $54.71. The May $55.00 Calls (LFCEK) are trading at $2.95. That provides a return of about 5% if LFC is not called away at expiration and about 6% if LFC is above $55.00 on expiration Friday in May.
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