Wednesday, March 10, 2010

Its HOT!

Today I found another potential breakout candidate. I am looking at HOT.

Sector: Services > Industry: Hotels and Motels


Starwood Hotels & Resorts Worldwide, Inc. is a hotel and leisure company. The Company conducts its hotel and leisure business both directly and through its subsidiaries. Its brand names include St. Regis (luxury full-service hotels, resorts and residences), The Luxury Collection (luxury full-service hotels and resorts), W (luxury and upscale full service hotels, retreats and residences), Westin (luxury and upscale full-service hotels, resorts and residences), Le Meridien (luxury and upscale full-service hotels, resorts and residences), Sheraton (luxury and upscale full-service hotels, resorts and residences), Four Points (select-service hotels), Aloft (select-service hotels), and Element (extended stay hotels). The Company is organized into two business segments: hotels and vacation ownership and residential. In January 2010, the Company announced that it has completed the disposal of Bliss World Holdings, Inc. to Steiner Leisure Limited.

The Charts:


Now the pattern that I noticed almost immediatly on the daily chart was the bull flag. Of the tons of chart patterns this is one of the few that I actually know. It is setting up very nice with the base of the flag around 41. I think that I safe entry would be 41-41.50 ish.  If you drill down the the small more micro time frames you can see that 41 has acted as support. As you may of noticed there is nothing to the right on the daily chart above to try to get some target.

So I had to go out to a larger time frame. So take a look at the weekly chart below:

There is really nothing standing in the way of this stock until 55. Now I do not intend to try and capture this whole move. But I think that if the market can continue higher that this stock will be glad to follow suit.

I want to play this one directionally again with call options. I am looking at the Apr '10 42 call options which are fetching 1.30 currently. Take a look at analysis below:

Entry: 41.50 ish

Stop: 40.90

Target: 43-45

Risk: 150 (less than 1% of portfolio)

Reward: 400-1,100

Risk/Reward: 1:2.6 and up to 1:7.3

Position: 5 Apr '10 42 call contracts @ 1.30 limit ($650, 3.9% of portfolio)

Time frame: Til March Opex. I would like to see it trade in my favor rather quickly or I will cut the position in a few days. It is either ready or it is not.


  1. So I put in an order to buy 2 contracts at 1.30 and I will buy 3 more on confirmation of the breakout above 42.15.

  2. My order never got executed and the contract is now trading at 1.55. I am not going to chase it here. But will look to see if it pulls back.

  3. I am in for 1 contract at 1.45. Risking about $35 here. Target 140-300 in profit. Will buy one more if it trades back down to 41.25-41.50. Otherwise this is all I am willing to hold right now.

  4. I have now moved my stop up to 41.50 from 40.90. I would love to see this stock base around 42 before it makes its next move higher.

  5. Just got stopped out of HOT for a $27 loss.