Stock and Option Ideas
Volatility on Option Friday
The first thing I want to comment on here was the volatility on option Friday. Normally, it is very
dangerous to trade on options expirations because market makers have a habit of closing the stock
right at a strike price (so if you are long calls or puts), neither wins. This Friday was unusual as two
stocks that I follow, CAT and MA, both traded wildly (though) MA did close at its $165 strike.
A stock to keep your eye on for Monday:
The first stock that I will comment on is HAL (which reports results before the bell on Monday,
7/23/07). Lenny Dykstra (yes the former baseball player) has been having a great year with his DITM
call strategy and he wrote a piece on HAL on 7/19/07. Fundamentally, IBD gives HAL a 91 EPS
rating, a 75 RS rating, and a A+ Industry group rating with a B accumulation. An additional
fundamental positive is the fact that SLB reported a great quarter. The negatives fundamentally are
the fact that natural gas service providers seem to have had a tough quarter. Technically, the 5-year
chart below doesn't show resistance till 40. If you hold this one, I would continue to hold it, but I would
wait for the conference call if you have an inclination to add to it. Energy stocks have had such a
strong run, they are due for a correction and the fact this one has not made highs would bother me if I
were a shareholder.
The first thing I want to comment on here was the volatility on option Friday. Normally, it is very
dangerous to trade on options expirations because market makers have a habit of closing the stock
right at a strike price (so if you are long calls or puts), neither wins. This Friday was unusual as two
stocks that I follow, CAT and MA, both traded wildly (though) MA did close at its $165 strike.
A stock to keep your eye on for Monday:
The first stock that I will comment on is HAL (which reports results before the bell on Monday,
7/23/07). Lenny Dykstra (yes the former baseball player) has been having a great year with his DITM
call strategy and he wrote a piece on HAL on 7/19/07. Fundamentally, IBD gives HAL a 91 EPS
rating, a 75 RS rating, and a A+ Industry group rating with a B accumulation. An additional
fundamental positive is the fact that SLB reported a great quarter. The negatives fundamentally are
the fact that natural gas service providers seem to have had a tough quarter. Technically, the 5-year
chart below doesn't show resistance till 40. If you hold this one, I would continue to hold it, but I would
wait for the conference call if you have an inclination to add to it. Energy stocks have had such a
strong run, they are due for a correction and the fact this one has not made highs would bother me if I
were a shareholder.
 | |  | |  | |  | |  | |  | |  | |  | |  |
Another Stock to Watch on Monday (ACI)
Arch Coal had a tough week last week as Citigroup analyst John Hill said "the industry has missed a
critical window in its business cycle, unexpectedly losing market share to natural gas in the
power-generation business-by far its biggest market...". Hill also said the industry's profits have
been hurt over the past three months by the struggle to squeeze higher prices out of well-supplied
utilities. Hill trimmed his earnings estimates, and ACI suffered the most. Arch Coal's revised
earnings for 2007 were trimmed down 18% to $1.22 a share from $1.44.
The stock sold off following the downgrade and it is not two far from it's lows reached at the start of
2007 (see chart below). IBD's EPS rating is 81, its RS rating is 48, and the Industry Group strength
is a A+, so fundamentally it is not to bad. One would think that higher oil prices would help the
company. However, a surplus of appears to have hurt prices. I would stay away from ACI for now
and let the stock put a firm bottom in place before acquiring shares.
Come back to this page tomorrow and I will show you one of my favorite energy stocks that I will
profile for my active portfolio in my next newsletter.
Arch Coal had a tough week last week as Citigroup analyst John Hill said "the industry has missed a
critical window in its business cycle, unexpectedly losing market share to natural gas in the
power-generation business-by far its biggest market...". Hill also said the industry's profits have
been hurt over the past three months by the struggle to squeeze higher prices out of well-supplied
utilities. Hill trimmed his earnings estimates, and ACI suffered the most. Arch Coal's revised
earnings for 2007 were trimmed down 18% to $1.22 a share from $1.44.
The stock sold off following the downgrade and it is not two far from it's lows reached at the start of
2007 (see chart below). IBD's EPS rating is 81, its RS rating is 48, and the Industry Group strength
is a A+, so fundamentally it is not to bad. One would think that higher oil prices would help the
company. However, a surplus of appears to have hurt prices. I would stay away from ACI for now
and let the stock put a firm bottom in place before acquiring shares.
Come back to this page tomorrow and I will show you one of my favorite energy stocks that I will
profile for my active portfolio in my next newsletter.
Check this page for stock ideas that I find in my
reading. I will post like a blog with archived links
as they become available.
reading. I will post like a blog with archived links
as they become available.
