I am seeing a lot of the Large Cap Oil E&P stocks near critical breakdown levels that could result in another 10%+ downside.

Looking at Crude Oil going back to 2008 the 50% Fibonacci at $90 was recently broken, next major Retracement is at $77 which would align with the Summer 2011 lows.  The 200 week SMA is rolling over with a downward sloping trend and currently is at $81.29, while Crude is already firmly below its 200 day SMA at $97.  Looking at the weekly chart you can also see an upward sloping Head and Shoulders top, a move below $85 would measure a $30 breakdown to $55.  I would be watching the following levels, $85, $77, and $70, a chance to short each wave on a break.  Crude was a sell signal on its break of trend support and the 100 day EMA at $102.50 and really has not looked back.

Overall the chart looks weak and susceptible to a sell-off to at least $70, while fundamentally global growth is slowing causing weaker demand from China, India, and Brazil, and no signs of an extensive monetary easing plan to save the day.  Looking at P/E’s or Price/Book will do no good here, these moves can be violent in risk-off environments and a liquidity trade.

Now, looking at a few of the larger E&P names that could breakdown hard and the critical levels to watch.

Continental Resources (CLR)  – The $70 level is critical here on a closing basis, the 50% Fibonacci of the 2011 lows to 2012 highs and recent level of support.  A break and it lacks much support until $63.50.

Pioneer Natural (PXD) - The magic number here is $95, recent support, shares are forming a bear flag right above its 200 day SMA after losing support of a 15 point channel, measured move down to $85, while the $82 level offers more support.

Concho Resources (CXO)  – The key level here is $85, shares bear flagging after a 25 point topping pattern, and could sink all the way back to $75.

Occidental Petro (OXY) - The lucky number here is $78, recent support as shares bear flag, recent break of a 20 point range that measures down to $66.

Apache (APA) - The $80 level is key here, a massive H&S top has formed and a break could lead to $70 or lower.

Noble Energy (NBL) - The number here is $81.50 and of the group has the nicest bear flag set-up on its daily, a pattern that would measure down to near $60, and also aligns with a long term uptrend break.

This morning in the Options Hawk Trading Hub I was looking at a few names that have been beaten down, mostly on earnings, and many with large gaps, that are starting to show signs of basing.  Although the stocks are unlikely to make sharp moves higher without any near term catalysts, we could see these names start a slow grind higher, rebounding off lows and seeing some money put to work at these levels, especially if the market gets back to 1,250.  These names are some of the most oversold, and many are former momentum/growth names that are looking to establish a base to work higher.  With volatility elevated across stocks, and seeing limited upside, the butterfly call spread is a strategy to take for a slow grind type of rebound.  June is historically a low volatility period for stocks, and it is a short expiration month this year, so the OTM calls will decay faster, although this year we are awaiting the Greece elections in June.  The butterfly spread is preferred for those unable to trade margin accounts, while 1X2 and even 1X3 ratio call spreads are even better trades for a smaller debit.

I discussed these this morning so some of the pricing may have changed.  As always, if you see an idea you like feel free to try it out, and I will try and update this post after June expiration.  These are just a few I came across and as always with options, you can define your risk and catch some solid reward/risk trades with these spreads.

1) Herbalife (HLF) – $45 – The $5.26B former momentum name that had been reporting consistently strong earnings, but now faces allegations, is trading down nearly 40% off its April highs.  At 10.5X earnings, 0.85 PEG, 1.45X sales and 16X cash flow it is cheap.  Shares put in lows right at the 61.8% Fibonacci Level, $42.25, of the range from the key breakout level in 2010 to the recent highs.

The Trade: HLF: June 47.5/52.5/57.5 Call Fly Trades at $0.80

2) Mercadolibre (MELI) – $76.35 – The $3.37B Latin America online commerce Co. trades 25.8X earnings, 1.45 PEG, and 10.5X sales, which is fairly rich, but considered a top emerging growth name.  Shares recently were hit on earnings after establishing a major top at $102.50, and now trying to base above 72.50 and moving out of oversold territory.  The $70 level would be a better support area as the 61.8% Fibonacci and a re-test of the prior breakout.

The Trade: MELI:  June $80/$85/$90 Call Fly Trades at $0.65

3) Fossil (FOSL) - $72.15 – The $4.47B apparel Co. trades 11.6X earnings, 0.79 PEG, 1.7X sales and 3.97X book after the recent sharp sell-off on earnings, shares off nearly 50% from May highs.  Shares have been holding above $70 though which happens to have been the August 2011 lows on a large sell-off and also its 200 week EMA.

The Trade: FOSL: June 70/75/80 Call Fly Trades at $1.10

4) Deckers Outdoor (DECK) – $56.30 – Deckers shares have been under pressure for awhile now, off more than 50% from October 2011 highs.  The $2.17B footwear Co. now trades at a level that makes it an attractive acquisition target.  Shares trade 10.3X earnings, 0.65 PEG, 1.53X sales and 2.6X book value.  On the chart shares have found some support above the $50 psychological level, also near a re-test of the key October 2010 breakout and the 61.8% peak to trough Fibonacci is at $53.

The Trade: DECK:  June $55/$60/$65 Call Fly Trades at $1.30

5) Weight Watchers (WTW) - $57.10 – Weight Watchers was another earnings wash-out and is trading about 30% off April highs.  The $3.17B leading brand in weight loss trades 10.37X earnings, 0.99 PEG, 1.74X sales and short interest has been coming down the last few months.  WTW is basing at a familiar level it found support at the past year and developing a horizontal trading channel.

The Trade: WTW: June 55/60/65 Call Fly Trades at $1.35

6) Cognizant Tech (CTSH) – $60.93 – Cognizant shares are nearly 20% off April highs, another name hit hard on earnings, but often considered one of the top large cap growth plays.  The $18.55B Tech Co. trades 15.3X earnings, 1.08 PEG, 2.87X sales and 4.25X book.  The recent lows in shares around $55 touched not only the 200 week EMA, but the August 2011 lows as support and re-testing a key breakout from 2010 and RSI/MACD in uptrends from 2011 lows.

The Trade: CTSH June 60/65/70 Call Fly Trades at $1.50

A few others without the graphics:

JCP June 27/29/31 Call Fly Trades at $0.39

ADSK June $32/$35/$38 Call Fly Trades at $0.75

AKAM June $30/$33/$36 Call Fly Trades at $0.57

SNDK June $32/$35/$38 Call Fly Trades at $0.84

MCD June $92.5/$95/$97.5 Call Fly Trades at $0.38

NFLX June $70/$75/$80 Call Fly Trades at $0.79

NTAP June $34/$38/$42 Call Fly Trades $0.67

Europe is not healthy whether looking at the Debt Crisis, Political Uncertainty, or the Poor PMI and Other Economic Data-points.  In an effort to risk exposure to Europe I suspect the first stocks that will be sold by Institutions are the ones that will be impacted the most by the recession in Europe, and although we saw quite a few optimistic Q1 reports and forecasts, it seems the depth and length of this double dip recession in Europe may have been misjudged by many.

I am going to lay out some charts, noting some levels and targets, of the names I came across with high sales exposure to Europe.  The numbers are rough estimates based on recent Investor Presentations, and mostly looking at long term charts with weekly candles, strictly price patterns, doing away with all of the other indicators.  I surely will miss quite a few names, and feel free to contribute others.  I will note the % of Sales from Europe with Each Name.  Many of these names are Large Caps and considered fairly good values with high dividend yields, but as history has shown, cheap can get cheaper.  If not interested in shorting, consider the target levels as a better long entry at least.

Philip Morris (PM) – 41% of Sales – $86.16 – A near parabolic move the past few years, but now threatening a trend break off the 2011 lows.  Short Below $85.50 with $83.50 Initial Target, while a Break of that Level Can See a Slide to $79.

McDonald’s (MCD) – 39.7% of Sales – $91.87-  MCD has already began to feel some pain and near a major trend break on the weekly, first Fibonacci at $89.25.  A break of that level targets a return all the way to $81.25.

Kraft (KFT) – 32% of Sales – $39.06 – KFT currently is re-testing a key breakout and the Food stocks have been strong, but in a weak market a return to the $35 long term trend support level would align with a re-test of the 2011 breakout.  Short at $39 with $35.50 Target, Wrong Above $40.

DuPont (DD) – 25% of Sales – $52 – DD is another stellar Co. but a break of short term trend support, say $51.50 and a move back to $48.50 the Target, and Plenty of Resistance Overhead at $54 and $55.

International Fragrances and Flavors (IFF) – 35% of Sales – $58.32- IFF forming large descending triangle and failed at resistance recently.  Short Below Week Lows at $57.50 with Target 1 at $55, while Return to $51 Possible.

Intercontinental Excahnge (ICE) – 40% of Sales – $125.05 – ICE is in this rising wedge long term and sits on its 50% Fibonacci.  Short Below $122.50 with $112 Target.

IBM – 33% of Sales – $200.60 – IBM with a tight rising wedge that appears long overdue to break.  Playing it safe would look to short below $196 for target 1 at $188, Target 2 at $182.50.

Owen Illinois (OI) – 40% of Sales – $21.84 – OI shares topped out right at a re-test of a major breakdown from 2011 level, and look ready to roll right back over.  Only problem here is limited downside remains, target of $20.

AutoDesk (ADSK) – 40% of Sales – $36.18 – ADSK chart looks real ugly, earnings next week, broke uptrend to start this week.  Shares could slide back to $32.85, or even $30.50.

Pall Corp (PLL) – 39% of Sales – $57.91 – PLL with a long channel up and a move below $56.20 Targets $53

Illinois Tool (ITW) – 31% of Sales – $56.33 – ITW is way extended from its long term trend support, and is showing signs of topping.  A patient player waits for $54 to break with a target return to $49, while aggressive short can enter here.

Accenture (ACN) – 44% of Sales – $58.70 – ACN has already felt the pain thanks to the CTSH report, so actually like this one on weakness as a long near $55.50, as the stock is worth $70.  A short can likely squeeze 3 points out of it here still.

Priceline.com (PCLN) – 45% of Sales – $681.11 – PCLN set up well as a short today on its morning move through $700.  Trend support and 23.6% Fibonacci both point to $625 as a target.

Harman (HAR) – 60% of Sales – $42.08 – HAR put in a triple top and $39 target for trend support, while it could get ugly and look to form a horizontal channel, extending back to $29 support.

Borg Warner (BWA) – 56% of Sales – $77.29 – BWA first support comes in a $73, and below that can slid back to $65.

Johnson Controls (JCI) – 35% of Sales – $31.79 – JCI shares trading in a tight range, but below $31 this can get nasty back to $26/$28 range.

Western Union (WU) – 40% of Sales – $17.28 – WU looks ripe to roll over nad fall back to familiar support at $14.50/$15

Coca Cola (KO) – 22% of Revenues – $77.41 – KO is loved but is very extended, a soft drink stock rarely goes parabolic.  Short 1/2 here at $77.40 with a target return to $72 and add 1/2 if it reaches its $79.30 Fibonacci extension target.

Paccar (PCAR) – 36% of Sales – $39.45 – PCAR has already come down quite a bit and may want to wait for a weak bounce back to $42.50 as $37.50 is trend support, so reward/risk not as favorable here.  A break of $37.50 and $35 the next stop.