Option Investor
Newsletter

Daily Newsletter, Thursday, 3/1/2012

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Dow Flirts with 13,000 Again

by Thomas Hughes

Click here to email Thomas Hughes
Yesterday's barrage of economic data continued today with jobless claims, PCE and auto sales. The news, while viewed as positive, failed to spark a significant rally.

The markets were bombarded by economic data and testimony from Ben Bernanke for the last two days. The news continued with the release of jobless data which was positive and supports the recent trend in the job market. The news however failed to spark any real buying in the markets. All the major indexes were up in the pre trading and opened higher but more news throughout the morning, and statements from Fed Chairman Ben Bernanke did not support the positive outlook. The chairman also failed to inspire any confidence of further easing of monetary policy. Many economists and traders had been expecting more from the federal reserve and the lack has been blamed for yesterdays market decline.

Some bright spots in the today's data include lower unemployment claims, increasing auto sales and a surprise gain in Chinese manufacturing. The recent trend of decreasing unemployment was reinforced by today's data. Initial claims decreased as well as the total number of people receiving unemployment benefits. The job market is being watched very closely as a meter of the improving economy. Today's reported improvements coupled with China's unexpected gain in orders for export goods gave investors reason to hope the world economy would expand at a greater rate than forecast. The renewed hope led oil to trade higher, closing in on the $110 price level.



Today's economic data seemed to put a positive spin on sentiment on but did not result in higher equity prices. The mix of data was a bit confusing, with positive news balanced by negative. The European markets had been trading higher throughout the day but after the string of releases, and on top of all of yesterday's news, ended the day off of their highs.

Initial jobless claims for the week ending 2/18/2012 were revised up by 2000 to 353,000. The advance number for new claims in the week ending 2/25/2012 fell by 2000 to 351,000, holding in line with the recent downward trend in unemployment. The four week moving average of initial claims dropped by 5,500 to 354,000, the lowest level since March, 2008. Continuing claims fell by 2000 as well to 3.4 million in the week ending 2/18/2012. As of the week ending 2/11/2012 there were 7.5 million total people claiming some form of unemployment.




Unemployment seems to have reached a peak in late 2011 and has been receding since. The real question though is the actual employment rate. Are the recent declines due to people finding jobs or are job seekers simply falling off the books when they can not find work. The unemployment rate will be a key metric to watch. The next release is scheduled for March 9 th.

In other economic headlines Personal Income is up by .3% and Spending is up by .2%. These numbers are both on the light side, expectations were for an increase in each of .4%. Construction spending decreased by .1% as well, a number in line with expectations and no surprise. The weather this year, particularly in the south east could help boost construction activity. Orders for Durable goods also fell and by record numbers. Forecasts were for a drop of 1.8% but the actual number came in far weaker. Orders dropped by 4% to the lowest level in 3 years.

Personal Consumption Expenditures prices rose by .2% in January and and 2.4% from the year ago period. This is slightly below analysts forecasts and the lowest reading of PCE inflation since April. The Institute for Supply Management's index of national factory activity came in at a much lower than expected 52.4 compared to last months reading of 54.1. The ISM had been looking for an increase of .4 to 54.5. This, along with weak income gains and spending is casting doubts on the strength of the recovery.

The 30 year fixed rate mortgage fell in the last week by .5%. The current rate is 3.9% and near record lows. Recent buying activity in the real estate market has failed to boost prices. Home values actually declined in 18 of 20 cities tracked by the Case-Shiller Home-Price index. The biggest declines were seen in Atlanta, Chicago and Detroit.

The European debt crisis is still on the radar. A panel of major international banks, the International Securities and Derivatives Commission, ruled today that Greece had not defaulted and caused a “credit event”. The move was called a “bad precedent” by PIMCO's Bill Gross. The European Central Bank also issued a major injection of liquidity that temporarily boosted the market. After Ben Bernanke's statements quashing hopes for further quantitative easing the European markets reversed on Bernanke's statements and turned negative before finally finishing the day up, but off of the highs. The central bank's move will help in the short term but there are still many hurdles ahead.

The FDIC released some information today concerning strengthening in the US banking sector. The number of troubled banks declined in 2011 to 831 from over 860 total in 2010. Earnings among US banks increased by 24% in the fourth quarter of 2011 and more than 60% of all banks reported increased earnings for the quarter. These improvements were made on increased asset quality, higher deposit balances and higher loan originations.

Oil traded higher today on brighter prospects for the economy and concerns over Iran. Supply concerns mixed with higher than expected factory orders from China helped to support higher prices. Brent Crude traded to settle over $124 while light crude traded up $1.81 to settle at 108.88. Oil demand from China was expected to decline as their economy cooled in 2012. The newest data suggests that the previous estimates could be wrong. Brighter news here at home in the form of improved banking and declining joblessness boosted outlook for demand in the coming year. Gas prices are still rising but have not yet crossed the $4 mark for most states. The increased cost of fuel could balance the rise in expectations.

A reported explosion at a Saudi Pipeline was was the catalyst for a late spike in oil prices. At the time of this writing Saudi officials were denying the claims.

Autos February US Auto Sales were also released today with some big surprises here as well. Toyota (TM )and General Motors (GM) both beat estimates while Ford (F) missed. Ford's February sales increased by 14.4% but were estimated at 18.3%. General Motors beat negative expectations with a 1.1% gain in sales and Toyota led with a 12.4% sales increase. The troubled Japanese automaker had been projected to increase sales by only 5.6% in the month. These numbers are line with 2011's results and the expected trend in 2012. GM and Ford have both been increasing sales and gaining market share over their Asian based competition. It is looking like Toyota will not give up without a fight, Ford and GM will have to continue improving their business and balance sheets in order to keep their competitive edge.

Precious Metals Buyers flooded back to gold and silver today after yesterday's 5% drop. The move came after further testimony from Bernanke gave no signs of more quantitative easing. Yesterday's drop was dashed by quashed hopes of global easing, a move seen by many as the way to get the economy rolling again. US gold prices rose more than 0.7% in today's trading.

Stock to Watch Chain store retailers hit it big in the recent quarter. A string of positive surprises sent the retail indexes higher throughout the day. The retail Spyder (XRT) made new highs to close up 1.16% at $59.56. Several factors went into the strong sales. Warmer weather and the improving job market are the number one contributors. Valentines spending was also included in these numbers.

Retail Spyder XRT

Gap same store sales led the charge. Gap comp sales were up 4% versus an expected decline of -1.4%. The stock lived up to its name today and gapped up to trade as high as 10%. Gap ended the day at $25.05, an increase of over 7%. Target sales jumped 7%, Macy's sales are up 4.6%, Limited up 8% and Nordstrom's sales are up 10.2% compared to an expected 5.6% gain.

Gap Stores Inc

Wal Mart raised its divided today by 9%. The current payout is $1.59 per share annually, up from the previous $1.45, and at the current prices yeilds about 2.75%. Wal Mart has a long history of dividend increases. Management has said that “core US business is on track”.

Wal Mart Stores

Research in Motion (RIMM) got pounded today. The stock lost more than 4% to close at a new 2012 low of $13.58. Analyst Peter Misek of Jefferies warned today that there is at least a 50% chance that Research in Motion will negatively pre warn on earnings scheduled to be released at the end of this month. Weakening demand for the companies high tech smart phones and its lower end models is putting the companies current guidance at risk. Mr. Misek thinks the company may even miss the low end of the guidance. Increased competition from Apple's iPhone and other phones based on the Android system are hurting market share and sales worldwide. The iPhone 5 is supposed to seriously impact the potential success of the Blackberry 10 slated to be released later this year.

Research In Motion

Apple is also going to be offering a cheaper version of its iPad as early as next week. The company is expected to re-launch a less expensive version of the iPad 2 in order to compete with the lower end tablets and readers powered by Android. This move will put pressure on Amazon and other tablet makers. The super cheap models like the Kindle Fire may be the only ones able to gain a foothold against Apple and the iPad. Apple is set up to dominate the tech market on several levels. The iPhone and iPad lines have been gaining success and will keep on pressuring rivals Research in Motion and Amazon. The stock traded up to all time highs today but bearish pressure throughout the day brought the stock down from its intra-day peak to a new closing high of $544.47.

Apple

Financial stocks also gained in today's trading following upgrades by Nomura. The investment group raised price targets and earnings estimates for four of the world's largest financial institutions. Bank of America, JP Morgan, Citigroup and Goldman Sachs all gained more than 2% in today's trading. The financial Spyder (XLF) traded up to 7 month highs today and closed up 1.22% at $14.94.

Financial Spyder

GM traded up today to close at $26.47. The stock is building support upon its 30 day exponential moving average and looks like it will wipe out resistance at $27.50. A move above this level will leave the stock open to further short term gains and could take the stock as high as $30.

General Motors

Ford is also moving up from its 30 day EMA and on strong volume. Volume over the last two days has been about double the average for the last 30 days of trading. The stock is moving up to resistance at $12.50 and is forming a bullish triangle. A break out here could take the stock over $14, continued strength in sales and positive earnings news will be key for this move.

Ford Motor Company

Toyota (TM ) has been moving up since the beginning of the year but on extremely choppy trading. The sales news today helped to support the stock which moved up 0.44% from yesterday's close. Toyota still faces many challenges on an international basis but its US market is improving. It will be important to keep an eye on production levels and sales going forward.

Toyota Motors

Today's Market Recap

The markets were a bit quiet today, trading in a fairly tight range on low volume. The Dow flirted with 13,000 throughout the day, trading over the bench mark number for some time in the morning and then again in the afternoon. The Financial, retail and materials sectors were the leaders of the day while consumer staples was the laggard. During the afternoon trading prices declined bringing the Dow down to yesterdays closing number before a small bounce kept the index in positive territory for the day by 0.22% but failed to close above 13,000.

Dow Jones

The Dow ($DJI) is in much the same shape as the S&P. The Dow is now trading at a resistance level comparable to the 1400 mark on the S&P chart. The index opened basically inline with yesterday's close, traded higher, crossed 13,000 and then declined during the afternoon to close shy of the target by 20 points. The bull move has weak volume, which I consider to be very important in any bull movement. The index needs to close over 13,000 with some significant volume for me to be convinced it will continue higher. Momentum is also divergent, giving me further reason to suspect the current bull market.

Dow Jones Average

The S&P is still trending up and trading well above its 30 day exponential moving average. The index is trading above 1360, which has been noted as an important resistance level. I see the index trading below resistance at 1400,a level which is in line with an a major pivot point set during the 2008 crash. I am going to be watching 1400 more closely than 1360. Volume is also lacking from the move and it is possible that the S&P could be approaching a top. I think some caution is in order at this point in the rally.

S&P 500

The Nasdaq continued its trend upward today and made a new high of 2,995.13. On short term charts it looks extended and indicators could be pointing to a correction. On the long term charts the index is showing some strength. Improving domestic data and now heightened expectations from China and Asia could support a continuation of the upward trend.

Nasdaq

Things to watch out for in Friday's trading are rising oil prices and technical resistance on the Dow Jones index. The domestic and global economies are showing some resilience but the rising cost of energy could derail gains made last year and in the first part of this year. Earnings will also continue to drive stocks. The big names have already reported for the current quarter but it will soon be time for some of the earlier reporting companies to start releasing information. US companies will have to increase revenue, margins and earnings in order to continue the bull trend.


New Option Plays

Industrials, Supplements, & Grocery

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Chart Industries - GTLS - close: 70.03 change: +1.64

Stop Loss: 66.40
Target(s): 74.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
GTLS manufacturers a variety of equipment but investors are betting that the company is poised to reap the benefits of the booming natural gas industry. GTLS recently reported earnings and missed estimates but the stock rallied anyway. Now GTLS is testing the $70.00 level.

I am suggesting small bullish positions now at current levels but only if both GTLS and the S&P 500 index open higher. If these conditions are not met then we'll use a trigger at $70.55 to buy calls instead. We'll start this trade with a stop loss at $66.40. Our initial target is $74.75. FYI: The Point & Figure chart for GTLS is bullish with an $82 target.

Do not enter position unless GTLS and the S&P 500 are both positive at the open - OR - buy calls if GTLS trades at $70.55

- Suggested Positions -

Buy the Apr $75 call (GTLS1221D75) current ask $2.60

Annotated Chart:

Entry on March xx at $ xx.xx
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 665 thousand
Listed on March 01, 2012


Herbalife Ltd. - HLF - close: 67.70 change: +1.49

Stop Loss: 64.90
Target(s): 72.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
This network marketing supplements company is seeing its stock rally to record highs. The stock exploded higher a couple of weeks ago on a better than expected earnings report. Shares have spent the last six days digesting gains and consolidating sideways. Today's rally is a new high.

I am suggesting we open small bullish positions at the opening bell tomorrow but only if both HLF and the S&P 500 index open positive. If these conditions are not met we'll use a trigger to buy calls at $68.25 instead. I'm suggesting a stop at $64.90. Our target is $72.50. FYI: The Point & Figure chart for HLF is bullish with a long-term $100 target.

NOTE: HLF is due to trade ex-dividend on March 5th. We should expect shares to gap down at the open by 40 cents as a result.

Do not enter position unless HLF and the S&P 500 are both positive at the open - OR - buy calls if HLF trades at $68.25

- Suggested Positions -

buy the Mar $70 call (HLF1217C70) current ask $0.70

- or -

buy the Apr $70 call (HLF1221D70) current ask $2.00

Annotated Chart:

Entry on March xx at $ xx.xx
Earnings Date 05/02/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on March 01, 2012


Whole Foods Market - WFM - close: 82.17 change: +1.43

Stop Loss: 79.95
Target(s): 87.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
WFM is a high-end grocery chain. Shares have been consolidating sideways near record highs for the last three weeks. Today's move puts it on the verge of a new breakout. I am suggesting a trigger to buy calls at $82.55 with a stop loss at $79.95. Our target is $87.50. FYI: The Point & Figure chart for WFM is bullish with a $103 target.

Trigger @ 82.55

- Suggested Positions -

buy the Apr $85 call (WFM1221D85) current ask $1.74

Annotated Chart:

Entry on March xx at $ xx.xx
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on March 01, 2012



In Play Updates and Reviews

Stocks Shrug Off Yesterday's Decline

by James Brown

Click here to email James Brown

Editor's Note:

The market's major indices shrugged off yesterday's ominous pullback. The fact that the transportation average did participate in the rally today is positive. Yet the small caps still look vulnerable here.

Our COH and NE trades were opened. PH has been stopped out.

Current Portfolio:


CALL Play Updates

Alexion Pharma. - ALXN - close: 84.54 change: +0.81

Stop Loss: 81.45
Target(s): 89.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
03/01 update: The market did not see any follow through on yesterday's decline. Traders continue to buy the dip and ALXN added +0.9%. We'll adjust our entry point strategy again. Buy calls tomorrow morning but only if both ALXN and the S&P 500 open positive.

We want to keep our position size small to limit our risk.

Do not enter position unless ALXN and the S&P 500 are both positive at the open

- Suggested (SMALL) Positions -

buy the Apr $85 call (ALXN1221D85)

- or -

buy the Apr $90 call (AXLN1221D90)

03/01/12 adjust entry strategy. buy calls if both ALXN and S&P 500 open positive tomorrow
02/29/12 trade not open yet. Adjust entry to use a buy the dip trigger at $82.50 with a stop loss at $81.45

Entry on February xx at $ xx.xx
Earnings Date 04/23/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on February 28, 2012


Airgas Inc. - ARG - close: 82.31 change: -0.02

Stop Loss: 78.90
Target(s): 87.00
Current Option Gain/Loss: -20.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/01 update: Hmm... ARG failed to rally with the market today. Shares merely churned sideways and closed almost unchanged on the session. Readers may want to wait for a rally past $82.75 before considering new positions.

FYI: The Point & Figure chart for ARG is bullish with a $92 target.

- Suggested Positions -

Long Mar $82.50 call (ARG1217C82.5) Entry $1.00

02/28/12 trade opened @ 82.21
02/27/12 not open yet, buy calls at the open tomorrow
02/24/12 not open yet, try again.

Entry on February 28 at $82.21
Earnings Date 05/07/12 (unconfirmed)
Average Daily Volume = 528 thousand
Listed on February 23, 2012


American Express Co - AXP - close: 53.57 change: +0.68

Stop Loss: 51.25
Target(s): 57.50
Current Option Gain/Loss: - 6.6%
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Comments:
03/01 update: AXP was an early leader this morning with a spike off its morning lows. Shares ended the session up +1.2%. If both AXP and the S&P 500 open positive tomorrow readers can use it as a new entry point.

The plan was to keep our position size small. Our multi-week target is $56.50. Keep in mind that AXP doesn't move super fast. FYI: The Point & Figure chart for AXP is bullish with a $75 target.

- Suggested Positions - (Small Positions)

Long Apr 52.50 call (AXP1221D52.5) Entry $2.40

02/29/12 AXP gapped down at $53.46
02/28/12 not open yet. buy calls at the open tomorrow.
02/27/12 not open yet, try again.

Entry on February 29 at $53.46
Earnings Date 04/19/12 (unconfirmed)
Average Daily Volume = 5.7 million
Listed on February 25, 2012


BorgWarner Inc. - BWA - close: 84.19 change: +1.35

Stop Loss: 79.25
Target(s): 89.00
Current Option Gain/Loss: -19.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/01 update: BWA rallied to new all-time highs and closed above the $84.00 level. More conservative traders may want to start raising their stop loss.

Earlier Comments:
A breakout would mean new record highs and could produce a some short covering in BWA. The most recent data listed short interest at 14% of the 108 million share float. FYI: The Point & Figure chart for BWA is bullish with a $108 target.

- Suggested Positions -

Long Mar $85 call (BWA1217C85) Entry $1.55

02/25/12 new stop loss @ 79.25
02/17/12 trade opened on BWA's gap open higher at $82.49

Entry on February 17 at $82.49
Earnings Date 04/30/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on February 16, 2012


Caterpillar, Inc. - CAT - close: 113.39 change: -0.82

Stop Loss: 112.75
Target(s): 122.50
Current Option Gain/Loss: -74.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/01 update: Red alert! CAT did not participate in the market's widespread rally today. Shares broke down under $114.00 and dipped to $113.00 this afternoon. If there is any follow through lower tomorrow CAT will likely hit our stop loss at $112.75. I am not suggesting new positions at this time.

- Suggested Positions -

Long Mar $120 call (CAT1217C120) Entry $1.15

02/29/12 CAT produced a bearish engulfing candlestick pattern
02/25/12 adjusted exit target to $122.50
02/23/12 new stop loss @ 112.75

Entry on February 21 at $115.25
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 7.5 million
Listed on February 14, 2012


Capital One Financial - COF - close: 50.24 change: -0.36

Stop Loss: 47.75
Target(s): 54.75
Current Option Gain/Loss: Mar$50c: -14.6% & Apr$50c: - 5.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/01 update: It was a disappointing session for COF. After outperforming yesterday the stock underperformed today. Shares slipped back toward $50.00, which should be new support. I would use a bounce from current levels as a new bullish entry point.

Earlier Comments:
We want to keep our position size small to limit our risk. Our multi-week exit target is $54.75.

(small positions)

- Suggested Positions -

Long Mar $50 call (COF1217C50) entry $1.30

- or -

Long Apr $50 call (COF1221D50) entry $2.30

02/28/12 triggered at $50.25

Entry on February 28 at $50.25
Earnings Date 04/23/12 (unconfirmed)
Average Daily Volume = 6.4 million
Listed on February 15, 2012


Coach, Inc. - COH - close: $76.74 change: +1.90

Stop Loss: 73.75
Target(s): 82.50
Current Option Gain/Loss: Mar$75c: - 4.0% & Apr$77.50c: - 4.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/01 update: Retail and consumer discretionary stocks were showing progress today. COH outperformed the market with a +2.5% gain and an intraday breakout to new highs at $76.80. Our trigger to buy calls was hit at $76.75.

Earlier Comments:
Our target is $82.50 although don't be surprised if shares pause and pull back a bit when they initially test $80.00. FYI: The Point & Figure chart for COH is bullish with a long-term $109 target.

- Suggested Positions -

Long Mar $75 call (COH1217c75) entry $2.45

- or -

Long Apr $77.50 call (COH1221D77.5) entry $2.40

03/01/12 COH hit our trigger at $76.75

Entry on March 01 at $76.75
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on February 27, 2012


Eastman Chemical Co. - EMN - close: 53.79 change: -0.34

Stop Loss: 53.25
Target(s): 59.00
Current Option Gain/Loss: -22.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/01 update: Warning! After yesterday's bull-trap pattern today's relative weakness is definitely a warning signal. Shares hit a low of $53.44 intraday. Our stop is at $53.25. I am not suggesting new positions at this time.

(small positions) - Suggested Positions -

Long Apr $55 call (EMN1221D55) Entry $1.75

02/29/12 triggered at $55.05
02/27/12 adjusted suggested call from March to April.

Entry on February 29 at $55.05
Earnings Date 04/30/12 (unconfirmed)
Average Daily Volume = 2.6 million
Listed on February 18, 2012


Goldman Sachs - GS - close: 121.13 change: +5.99

Stop Loss: 114.75
Target(s): 125.00
Current Option Gain/Loss: +76.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/01 update: GS made headlines today when it announced plans to buy Ariel Re's insurance and reinsurance business. I doubt this news was behind the relative strength in GS today. The stock shot higher at the open and broke out past resistance near $118.00. What a difference a day can make!

At this point readers may want to wait for a dip near $119 if you're looking for a new entry point. Our exit target is $125.00 but more aggressive traders may want to aim for the $127.50-130.00 zone instead.

Earlier Comments:
GS can be a volatile stock at times so we want to keep our position size small.

(small positions) - Suggested Positions -

Long Mar $120 call (GS1217C120) Entry $2.10

02/28/12 GS disclosed it has received a Wells Notice from the SEC
02/28/12 triggered at $118.25

Entry on February 28 at $118.25
Earnings Date 04/19/12 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on February 21, 2012


3M Co. - MMM - close: 87.49 change: -0.11

Stop Loss: 86.75
Target(s): 94.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
03/01 update: I am giving up on MMM. The stock refuses to participate in the market's widespread rally. If we don't see MMM close over $88.50 tomorrow I am dropping it as a bullish candidate in the weekend newsletter.

Currently I am suggesting a trigger to buy calls at $88.75. If our trade does open we want to keep our position size small!

Earlier Comments:
The $90 level could be round-number resistance but we're setting our exit target at $94.00. FYI: The Point & Figure chart for MMM is bullish with a $109 target.

Breakout Trigger (buy calls) @ $88.75 (small positions)

- Suggested Positions -

buy the MAR $90 call (MMM1217C90)

- or -

buy the Apr $90 call (MMM1221D90)

03/01/12 about to drop MMM for lack of movement.
02/25/12 adjusted trigger to $88.75 and stop to $86.75
Added the April $90 call
02/09/12 removed the February call.

Entry on February xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on February 07, 2012


Noble Corp. - NE - close: 40.90 change: +0.72

Stop Loss: 38.45
Target(s): 44.75
Current Option Gain/Loss: +18.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/01 update: Our new trade on NE is open. Shares of NE opened higher at $40.24 and outperformed the market with a +1.79% gain. I don't see any changes from my prior comments.

Earlier Comments:
Our multi-week target is $44.75. FYI: The Point & Figure chart for NE is bullish with a long-term $61 target.

- Suggested Positions -

Long Apr $40 call (NE1221D40) Entry $1.89

Entry on March 01 at $40.24
Earnings Date 04/19/12 (unconfirmed)
Average Daily Volume = 4.4 million
Listed on February 29, 2012


Sherwin-Williams - SHW - close: 103.56 change: +0.41

Stop Loss: 99.40
Target(s): 104.75
Current Option Gain/Loss: +80.9%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
03/01 update: SHW is still drifting higher and added another +0.3%. I am not suggesting new positions at this time. Readers may want to start taking profits now.

- Suggested Positions -

Long Mar $100 call (SHW1217C100) Entry $2.10

02/28/12 new stop loss @ 99.40
02/27/12 readers may want to take profits now (@ +80.9%)
02/25/12 new stop loss @ 98.90
02/22/12 new stop loss @ 98.25

Entry on February 17 at $100.25
Earnings Date 04/23/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 14, 2012


Weight Waters Intl. - WTW - close: 78.85 change: +0.87

Stop Loss: 77.45
Target(s): 86.50
Current Option Gain/Loss: -71.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/01 update: WTW is still trying to bounce and managed to outperform the major indices today with a +1.1% gain. I remain cautious on this stock. I am not suggesting new positions at this time.

Earlier Comments:
WTW could see a potential short squeeze. The most recent data listed short interest at 24.6% of the relatively small 35.1 million-share float. The stock has rallied to significant resistance near $80.00. A breakout could spark some short covering. FYI: The Point & Figure chart for WTW is bullish with a $106 target.

- Suggested Positions -

Long Mar $80 call (WTW1217C80) Entry $1.40

02/24/12 WTW gapped open higher at $80.26, which was above our trigger at $80.25.

Entry on February 24 at $80.26
Earnings Date 05/07/12 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on February 23, 2012


S&P Oil ETF - XES - close: 39.17 change: +0.54

Stop Loss: 36.90
Target(s): 43.00
Current Option Gain/Loss:(Feb37c: -48.1%) & Mar36c: +18.6%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/01 update: Crude oil futures continued to bounce and the XES followed the commodity higher. You could argue the recent pullback in the XES almost looks like a bull-flag pattern. I am not suggesting new positions at this time.

Earlier Comments:
The option spreads on the XES a bit wide, which makes this a higher-risk trade. I am suggesting we keep our position size small to limit our risk. Our multi-week exit target is $43.00.

(small positions) - Suggested Positions -

Long Mar $36 call (XES1217C36) Entry $2.45

02/18/12 new stop loss @ $36.90
02/14/12 exited Feb. calls at the close: bid @ $0.70 (-48.1%)
02/13/12 prepare to exit our Feb. $37 calls at the closing bell tomorrow.

Entry on February 06 at $37.75
Earnings Date --/--/--
Average Daily Volume = 177 thousand
Listed on February 04, 2012


Oil & Gas Exploration ETF - XOP - close: 60.35 change: +1.03

Stop Loss: 57.45
Target(s): 63.00
Current Option Gain/Loss: Mar$60c: - 8.8% & Jun$60c: + 3.6%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/01 update: XOP also enjoyed a bounce thanks to strength in oil and the broader market. While the XOP is back above $60.00 it is not back above its simple 10-dma. Today's session is essentially an inside day (inside yesterday's trading range. I am not suggesting new positions at this time. FYI: The Point & Figure chart for XOP is bullish with a $74 target.

- Suggested Positions -

Long Mar $60 call (XOP1217C60) Entry $1.70

- or -

Long Jun $60 call (XOP1216F60) Entry $4.10

02/29/12 adjusting stop loss to $57.45
02/23/12 new stop loss @ 57.85

Entry on February 14 at $58.75
Earnings Date --/--/--
Average Daily Volume = 3.8 million
Listed on February 13, 2012


PUT Play Updates

Currently we do not have any active put trades.


CLOSED BULLISH PLAYS

Parker-Hannifin - PH - close: 89.34 change: -0.47

Stop Loss: 88.45
Target(s): 96.50
Current Option Gain/Loss: -50.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/01 update: PH did not want to cooperate. Shares hit our trigger on an intraday spike higher that reversed lower on us. Today the stock underperformed the market and spiked lower to hit our stop at $88.45.

- Suggested Positions -

Mar $90 call (PH1217C90) Entry $2.65 exit $1.30 (-50.9%)

03/01/12 stopped out at $88.45
02/29/12 triggered at $91.25
02/25/12 adjusted trigger to buy calls to $91.25

chart:

Entry on February 29 at $91.25
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on February 22, 2012