Afternoon Cuppa Joe – Jan. 26

A quick spotlight on some of today’s compelling plays & market observations

Channeling Stock After a disappointing earnings report, Boeing (BA) stock has sharply reversed course, tumbling from its channel high of $72. Lower channel support is at $62. The stock is optionable and you get a lot more bang for your buck by playing channeling stocks with options (without ever having to short a stock!). [For an extensive list of channeling stocks plus a free “recipe” on how to play them (including options), please check out our subscriber services on our website}

Options Plays
1. Corning (GLW) – $21.84Corning stock broke out yesterday after it beat revenue estimates due to its expanding Gorilla glass unit which makes glass for touch screen applications. The stock got another shot in the arm today when an analyst called the company undervalued and raised the price target to $27. If you’re interested in buying the stock at a discount, consider selling a put. Here are two worth considering:

Feb 21 Put @ $0.25: Cost basis = $20.75. This is more than a dollar below the current price but you risk losing out on price appreciation if the stock keeps advancing.
Feb 22 Put @ $0.65: Cost basis = $21.35. This is still about 50 cents below the current price and again you would lose out on price appreciation but not by as much as with the lower strike put. Should the stock reverse direction, you could get stuck buying it at a higher price if you don’t buy back the put option first.

Note that if you do elect to buy any stock using this method your broker will require you to have the appropriate amount of cash in your account should the stock get put to you.

2. Kapstone Paper & Packaging (KS) – $17.00
The packaging and container industry has been on fire with Kapstone well into new high territory. The stock has been appreciating at a rate of $1/month. This means that a Feb 17.5 covered call written now has a high probability of getting assigned, good news for income seekers. The Feb 17.5 call is currently trading at 65 cents which gives a 6.7% assigned return and and a respectable 3.8% return unassigned.

Speculative Leader

The parabolic rise in PHC, Inc. (PHC, $2.32) stock must be a residual effect of Celebrity Rehab since there’s no other news to account for its movement. (The company operates rehab facilities located in the West, Mid-west, and on the East Coast.) The stock began the month at $1.60. It broke $2 major resistance and is looking to test the $2.50 level. Investor interest is apparent by the heavier than normal (38k) volume. Day-traders especially may want to take a look at this one. (See weekly chart below.)


For a technical snapshot of today’s market action including low-priced leaders and leading speculative stocks, please check out our Subscriber Services and sign up for a subscription. You’ll get all the information you’ve grown accustomed to reading here plus an extensive database of channeling stocks and companies that have compelling upward earnings revisions plus detailed strategies on how to use them–all for less than the price of a cup of coffee!

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