Editor's Note:

This is a very busy week for Q2 earnings. We have a few trading candidates that will report this week. Cautious traders may want to consider one of the following: you could take profits or scale back positions ahead of the announcement, you could raise your stop loss, or you could buy some short-term puts a temporary protection from a disastrous earnings announcement.

Keep in mind that if we don't see a debt ceiling deal soon the entire market could start to retreat lower.

-James


Closed Plays


BA has been closed.


Play Updates


Bristol-Myers Squibb Company - BMY - close: 29.49

07/23 update: It was a bullish week for BMY. Positive analyst comments and a positive reaction to news that BMY is buying Amira Pharmaceuticals for $325 million helped lift shares of BMY to new two-year highs. I am still concerned that the $30.00 level might be resistance so I'm not suggesting new positions at this time. Investors need to be aware that BMY is due to report earnings on July 28th before the opening bell. Wall Street is expecting a profit of 54 cents a share.

I am suggesting we take profits early on Wednesday, July 27th at the closing bell to take some money off the table prior to the earnings report. Or you could take some money off the table right now. Conservative traders may want to seriously consider raising their stop loss too. We have a wide stop at $26.95, still under the 200-dma.

Our long-term target is $32.00. Investors might want to consider turning this trade into a calendar spread or vertical spread to maximize its potential.

- Suggested Positions -
Mar 14, 2011 - entry price on BMY @ 26.14, option @ 1.13
symbol: BMY1221A27.5 2012 JAN $27.50 call - current bid/ask $ 2.65/ 2.69

- or -

Mar 14, 2011 - entry price on BMY @ 26.14, option @ 1.63
symbol: BMY1319A27.5 2013 JAN $27.50 call - current bid/ask $ 3.40/ 3.50

07/23/11 Plan taking some profits on July 27 at the close. Or consider taking so money off the table now.
06/25/11 New stop loss @ 26.95
06/04/11 New stop loss @ 25.90

Current Target: $32.00
Current Stop loss: 26.95
Play Entered on: 03/14/11
Originally listed in the New Plays 03/12/11


CACI International - CACI - close: 61.56

07/23 update: Investors have a decision to make. Do you hold on or do you exit early right now? I warned readers last week that CACI had performed a three-candle reversal pattern lower on the week chart. This past week confirmed the bearish reversal with another decline. The larger trend of higher highs and higher lows is still in place but shares have fallen to technical support at the 100-dma. A breakdown here would be even more bearish.

Cautious traders will want to seriously consider an early exit. I am expecting lawmakers to get it together and agree on a debt ceiling deal, which could fuel the market's next move higher. I am not suggesting new positions at this time. We will leave our stop loss at $59.75. More conservative trades may want to up their stop closer to $61.00 instead.

Earlier Comments:
I do consider this a more aggressive trade and if we keep our position size small we can limit our risk. CACI doesn't have LEAPS so we'll have to use the 2011 September calls.

- Current (small) Positions -
Apr 4, 2011 - entry price on CACI @ 62.04, option @ 3.30
symbol: CACI1117I65 2011 SEP $65 call - current bid/ask $ 0.90/ 1.10

- 2nd Position -

May 31, 2011 - entry price on CACI @ 63.14, option @ 2.65*
symbol: CACI1117I65 2011 SEP $65 call - current bid/ask $ 0.90/ 1.10

06/25/11 new stop loss @ 59.75
06/04/11 Adjustment - new stop @ 58.75
*5/31/11 estimate on the entry point of our 2nd position
05/28/11 New stop loss @ 59.25.
05/28/11 New entry point on the bounce. 2nd position above.
05/07/11 New stop loss @ 57.75

Current Target: $69.00
Current Stop loss: 59.75
Play Entered on: 04/04/11
Originally listed on the Watch List: 02/12/11


Canadian Natl. Railway Co. - CNI - close: 79.01

07/23 update: The bullish trend of higher lows and higher highs continues for the railroad industry. Traders bought the dip on Monday and CNI has been moving erratically higher. Unfortunately, everything could change if CNI blows the earnings report. The company is due to report on Monday (July 25) after the closing bell. Analysts are expecting a profit of $1.25 a share. I am not suggesting new positions in front of the earnings report.

- Current Positions -
Feb 28, 2011 - entry price on CNI @ 72.39, option @ 2.90
symbol: CNI1221A80 2012 JAN $80 call - current bid/ask $ 4.10/ 4.40

- 2nd Position, listed 7/9/11 -

Jul 11, 2011 - entry price on CNI @ 78.49, option @ 1.85
symbol: CNI1221A85 2012 JAN $85 call - current bid/ask $ 2.20/ 2.35

07/11/11 CNI opened lower, 2012 Jan. $85 call opened @ $1.85
07/09/11 Add a 2nd position (2012 Jan $85 call)
07/02/11 new stop loss @ 74.90
06/25/11 new stop loss @ 72.75
05/21/11 new stop loss @ 71.75
05/05/11 new entry point @ 75.00
04/02/11 New stop loss @ 69.00

Current Target: $89.00
Current Stop loss: 74.90
Play Entered on: 02/28/11
Originally listed in the New Plays 02/26/11


Coach Inc. - COH - close: 66.80

07/23 update: COH spent most of the week churning sideways inside the $66-68 range. Even a downgrade on Friday couldn't shock COH out of this range. The larger trend is up but I'm still concerned COH might see a dip back toward the $62 area so I am reluctant to open new positions here. COH is expected to report earnings in the first week of August but there is no confirmed date yet.

The plan was to keep our position size small to limit our risk.

- Current Positions -
Jun 03, 2011 - entry price on COH @ 61.00, option @ 4.40
symbol: COH1221A65 2012 JAN $65 call - current bid/ask $ 6.80/ 7.00

- or -

Jun 03, 2011 - entry price on COH @ 61.00, option @ 6.80
symbol: COH1319A70 2013 JAN $70 call - current bid/ask $ 8.80/ 9.10

07/09/11 New stop loss @ 59.00, targets are $74.00 & $79.00
07/02/11 Look for some profit taking after the big rally
06/25/11 COH appears to be forming an H&S pattern. Consider an early exit now.
06/18/11 COH looks weak. Readers may want to consider an early exit.

Current Target: $74.00 & $79.00
Current Stop loss: 59.00
Play Entered on: 06/03/11
Originally listed on the Watch List: 05/28/11


Costco Wholesale - COST - close: 81.67

07/23 update: I was expecting a dip toward the 100-dma but traders bought the dip near $79.00 on Monday instead. If you look at the last couple of months you can see that COST is actually consolidating in a big pennant-shaped pattern of higher lows and lower highs. That's not necessarily a bad thing. I would expect to see a breakout one way or the other within the next two or three weeks.

Currently we have a stop loss at $76.75. More conservative traders may want to raise theirs toward the 100-dma near $78 or even toward the $79 area. Conservative traders might want to consider an early exit now to lock in a gain. I am not suggesting new positions at this time.

FYI: COST doesn't report earnings again for a couple of months.

- Current Positions -
Apr 7, 2011 - entry price on COST @ 76.37, option @ 3.80
symbol:COST1221A80 2012 JAN $80 call - current bid/ask $ 5.45/ 5.55

- or -

Apr 7, 2011 - entry price on COST @ 76.37, option @ 5.05
symbol:COST1319A85 2013 JAN $85 call - current bid/ask $ 6.70/ 6.90

07/16/11 Cautious traders may want to exit now
07/09/11 new stop loss @ 76.75
06/25/11 expecting a dip toward the 100-dma
06/04/11 Adjusting our stop to $74.75
05/21/11 Take Profits - Sell Half now! COST @ 83.40.
2012 $80 call @ $7.55 (+98.6%), 2013 $85 call @ $8.30 (+64.3%)
05/14/11 New stop loss @ 75.75
04/30/11 New stop loss @ 73.40

Current Target: $89.50, 99.00
Current Stop loss: 76.75
Play Entered on: 04/07/11
Originally listed on the Watch List: 01/29/11


Dr. Pepper Snapple Group, Inc. - DPS - close: 40.36

07/23 update: The action in DPS over the past three weeks has been very disappointing. This last week saw a plunge toward its June lows. Shares did see a big bounce but the oversold bounce failed at new resistance near $41 and its 50-dma. DPS did not react very much to news that rivals KO and PEP reported better than expected earnings. KO rallied to new highs while investors sold the news in PEP. DPS will report earnings on July 27th before the opening bell. Wall Street is looking for a profit of 77 cents a share.

I am not suggesting new positions before the earnings report. If DPS misses the stock will most likely see a breakdown to new relative lows and hit our stop loss at $39.40.

Earlier Comments:
DPS does not have LEAPS so we are using the November 2011 calls.

- Current Positions -
May 11, 2011 - entry price on DPS @ 40.55, option @ 2.85
symbol: DPS1119K40 2011 NOV $40 call - current bid/ask $ 2.15/ 2.40

- or -

May 11, 2011 - entry price on DPS @ 40.55, option @ 1.00
symbol: DPS1119K45 2011 NOV $45 call - current bid/ask $ 0.50/ 0.65

07/02/11 new stop loss @ 39.40
06/25/11 DPS looks poised to correct toward the $38 level.

Current Target: $46.00
Current Stop loss: 39.40
Play Entered on: 05/11/11
Originally listed on the Watch List: 05/07/11


Fiserv, Inc. - FISV - close: 62.16

07/23 update: The correction in FISV reversed when it hit technical support at the 200-dma last Monday. Currently the oversold bounce has reached an area of congestion in the $62-63 area. I'm expecting the stock to drift sideways until its earnings report on July 26th. FISV doesn't announce until after the closing bell. Analysts are expecting a profit of $1.08 a share but FISV has been consistently beating estimates by 5-to-10 cents for the last several quarters. If they don't produce another strong beat this quarter the stock might sell-off sharply.

I am not suggesting new positions in front of the earnings announcement. Please note our new stop loss at $59.45.

- Suggested Positions -
Feb 14, 2011 - entry price on FISV @ 62.30, option @ 3.20
symbol: FISV1117I65 2011 SEP $65 call - current bid/ask $ 0.75/ 0.90

07/23/11 new stop loss @ 59.45
07/09/11 readers may want to consider a 2nd position.
06/25/11 new stop loss @ 58.95
06/04/11 new stop loss @ 58.45

Current Target: $74.75
Current Stop loss: 58.95
Play Entered on: 02/14/11
Originally listed on the Watch List: 01/29/11
Originally listed in the New Plays 02/12/11


Intel Corp. - INTC - close: 23.13

07/23 update: It was a good week for INTC. Bears were unable to take the stock down below the $22.00 level. The company reported earnings last Wednesday and beat estimates significantly. Management also raised some of their guidance. The stock initially sold off on Thursday morning but quickly rebounded. If the market cooperates I would expect INTC to challenge resistance near $24 soon.

If we get a resolution to the U.S. debt ceiling problem then I would consider new bullish positions on INTC.

- Current Positions -
Jun 01, 2011 - entry price on INTC @ 22.00, option @ 1.41
symbol: INTC1221A22.5 2012 JAN $22.50 call - current bid/ask $ 1.75/ 1.79

- or -

Jun 01, 2011 - entry price on INTC @ 22.00, option @ 2.38
symbol: INTC1319A22.5 2013 JAN $22.50 call - current bid/ask $ 2.76/ 2.81

07/09/11 new stop loss @ 20.85

Current Target: $26.00-28.00 zone
Current Stop loss: 20.85
Play Entered on: 06/01/11
Originally listed on the Watch List: 05/07/11


Kaiser Aluminum - KALU - close: 56.00

07/23 update: KALU produced a series of new two-year highs last week. Earnings are coming up this week so shares might drift sideways as investors wait for the report. The company reports on July 27th after the close. Wall Street is looking for a profit of 53 cents.

I am not suggesting new bullish positions in front of the earnings report. Plus, I am not suggesting new positions because the spreads on KALU's options are outrageously wide right now! It's ridiculous. We won't be playing KALU again if this doesn't improve.

Earlier Comments:
Our long-term targets are $64.00 and $69.00 but that might be a little too optimistic since KALU does not have LEAPS. FYI: The Point & Figure chart for KALU is forecasting a long-term target of $65.00. NOTE: KALU does not have LEAPS so we are choosing to play the 2011 December calls.

- Suggested Positions -
Jul 11, 2011 - entry price on KALU @ 53.56, option @ 2.35
symbol: KALU1117L60 2011 DEC $60 call - current bid/ask $ 2.15/ 6.50

Current Target: $64.00, 69.50
Current Stop loss: 49.75
Play Entered on: 07/11/11
Originally listed in the New Plays 07/09/11


Monsanto Co. - MON - close: 75.41

07/23 update: MOS got some help from Goldman Sachs this past week. The firm upgraded MON to their "conviction buy" list with a $96 price target. Yet shares of MON remain stuck under resistance in the $76 area. I am not suggesting new positions at this time. If the market happens to see a correction we can look for support near $70.00. Please note our new stop loss at $67.00.

Prior Comments:
Our plan was to keep our position size small to limit our risk since MON can be so volatile at times. Our long-term targets are the $85-90 zone.

- Current (SMALL) Positions -
Mar 15, 2011 - entry price on MON @ 65.50, option @ 6.75
symbol: MON1221A70 2012 JAN $70 call - current bid/ask $ 9.00/ 9.15

- or -

Mar 15, 2011 - entry price on MON @ 65.50, option @ 8.75
symbol: MON1319A75 2013 JAN $75 call - current bid/ask $10.70/10.90

07/23/11 new stop loss @ 67.00
07/02/11 new stop loss @ 64.00
06/25/11 Earnings are June 29th. Consider exiting ahead of the announcement.
06/18/11 Get defensive. Consider raising your stop loss or reducing your position size. Decide if you're willing to hold over the earnings report or if you'll exit early prior to the announcement.
04/09/11 New stop loss @ 61.75, Readers may want to exit early now.

Current Target(s): $85.00
Current Stop loss: 67.00
Play Entered on: 03/15/11
Originally listed on the Watch List: 01/08/11


Targa Resources - NGLS - close: 35.62

07/23 update: NGLS did not make any progress last week. Shares consolidated sideways in a narrow range. Considering the strength in the market this past week NGLS' failure to participate is a caution signal. I am not suggesting new positions at this time. I do have some good news. The spreads on the December $35 calls have narrowed but they are still too wide and another reason I am not suggesting new positions tonight.

FYI: NGLS is due to report earnings on Aug. 8th.

Earlier Comments:
I do consider this a slightly more aggressive trade. NGLS does not have normal LEAPS. We have to settle for the 2011 December calls. Plus, the spreads are a little bit too wide. We need to keep our position size small to limit our risk.

- Suggested Positions -
Jul 11, 2011 - entry price on NGLS @ 35.61, option @ 2.50
symbol: NGLS1117L35 2011 DEC $35 call - current bid/ask $ 1.60/ 2.35

07/16/11 Spreads on the 2011 DEC calls are now outrageously wide! Do not use market orders

Current Target: $39.75, 44.00
Current Stop loss: 33.75
Play Entered on: 07/11/11
Originally listed in the New Plays 07/09/11


Pepsico, Inc. - PEP - close: $68.53

07/23 update: It looks like Coca-Cola might be winning the cola wars. This past week Coke (KO) reported earnings and beat by one cent with revenues up +46.8%. The stock rallied to new multi-year highs. PEP reported earnings and beat by one cent but revenues were only up +13.7%. The stock plunged to new three-month lows.

Our buy-the-dip trigger was hit at $67.50. Actually PEP gapped open lower at $67.31 on July 21st so our entry point was better but shares almost hit our stop loss at $64.75 the same day. The close under what should have been support near $66 and its 200-dma is very worrisome. I am not suggesting new bullish positions in PEP at this time. More conservative traders may want to abandon ship and put your money in KO instead. I'm adding KO as a new candidate this weekend.

- Suggested Positions -
Jul 21, 2011 - entry price on PEP @ 67.31, option @ 1.17
symbol: PEP1221A70 2012 JAN $70 call - current bid/ask $ 0.88/ 0.91

- or -

Jul 21, 2011 - entry price on PEP @ 67.31, option @ 2.95
symbol: PEP1319A70 2012 JAN $70 call - current bid/ask $ 2.50/ 2.62

Chart of PEP:

Current Target: $75.00, 79.00
Current Stop loss: 64.75
Play Entered on: 07/21/11
Originally listed on the Watch List: 05/14/11


Southwestern Energy Co. - SWN - close: 49.00

07/23 update: Buy-out speculation continues. The rally that started on July 15th continued last week. Shares extended their gains and SWN is getting closer to the $50 mark. SWN is also short-term overbought. The company is due to report earnings on July 28th, after the closing bell. Wall Street is looking for a profit of 43 cents a share. Currently our first target to take profits in SWN is at $52.00. However, with the stock overextended there is a chance investors will sell the earnings news and lock in gains after the report. That's why I am suggesting we go ahead and take profits in SWN on July 28th, at the close. That way we can take some money off the table prior to any post-earnings volatility. We'll keep our long-term, secondary target at $57.00. Cautious traders could go ahead and take profits now. Please note our new stop loss at $43.90.

Earlier comments:
We wanted to keep our position size small to limit our risk.

- Current (SMALL) Positions -
Apr 7, 2011 - entry price on SWN @ 40.50, option @ 2.90
SWN1221A45 2012 JAN $45 call - current bid/ask $ 6.75/ 6.85

- or -

Apr 7, 2011 - entry price on SWN @ 40.50, option @ 5.85
SWN1319A45 2013 JAN $45 call - current bid/ask $10.00/10.25

07/23/11 new stop loss @ 43.90
07/23/11 Prepare to take profits on July 28th at the close.
07/16/11 new stop loss @ 41.95, targets adjusted to $52.00 & 57.50
07/02/11 SWN has reversed higher and stalled at resistance near $44.
06/25/11 SWN looks poised to drop toward support near $40.00.
05/28/11 new stop loss @ 39.45
05/07/11 New stop loss @ 37.75

Current Target(s): $52.00, 57.50
Current Stop loss: 43.90
Play Entered on: 04/07/11
Originally listed on the Watch List: 04/02/11


Union Pacific Corp. - UNP - close: 103.80

07/23 update: UNP garnered at least one analyst upgrade following its earnings report on July 21st. The company beat the $1.57 estimate by 2 cents. Revenues for the quarter were up +16.3%. Prior to the report shares were testing technical support at the 100-dma. Now the stock is back above its 50-dma but it's testing resistance in the $104 area. I'm bullish on the rails but I'm not enthusiastic about new positions in UNP tonight. Please note our new stop loss at $98.00.

- Current Positions -
May 5, 2011 - entry price on UNP @ 100.15, option @ 5.00
UNP1221A110 2012 JAN $110 call - current bid/ask $ 4.15/ 4.25

- or -

May 5, 2011 - entry price on UNP @ 100.15, option @ 6.00
UNP1319A120 2013 JAN $120 call - current bid/ask $ 5.80/ 6.85

07/23/11 new stop loss @ 98.00
05/28/11 New stop loss @ 97.00

Current Target(s): $119.75-134.00
Current Stop loss: 98.00
Play Entered on: 05/05/11
Originally listed on the Watch List: 04/30/11


Zimmer Holdings, Inc. - ZMH - close: 63.29

07/23 update: Heads up! This could be the week we see some movement in ZMH. Cautious traders might actually want to consider an early exit now to avoid or limit any losses. On a short-term basis the stock just failed again at technical resistance at the 50-dma. Looking at the last three or four weeks ZMH is trading in a neutral trend of higher lows and lower highs. Looking at the last several months you could argue ZMH is forming a bearish head-and-shoulders pattern but has yet to break the neckline. The company is due to report earnings this week on July 27th before the opening bell. Consensus estimates are at $1.19 a share.

I am not suggesting new positions prior to the earnings report. Currently we have a stop loss at $58.90, just under the simple 200-dma. Readers could choose to raise their stop loss instead.

Earlier comments:
Healthcare stocks had been one of the market's strongest sectors. When this market correction is over I expect healthcare to remain popular with investors. I like ZMH since an aging baby boomer population is going to see rising demand for ZMH's replacement joints and implants.

- Current Positions -
Jun 10, 2011 - entry price on ZMH @ 63.00, option @ 4.00
ZMH1221A65 2012 JAN $65 call - current bid/ask $ 3.90/ 4.20

- or -

Jun 10, 2011 - entry price on ZMH @ 63.00, option @ 5.50
ZMH1319A70 2013 JAN $70 call - current bid/ask $ 5.70/ 6.70

07/23/11 ZMH just failed at the 50-dma again. Cautious readers may want to scale back or exit early prior to the earnings report.
07/09/11 Look for a dip or a bounce near $63 as an entry point.
06/25/11 We are still expecting a dip toward $60.00. Wait for a bounce from this level before considering new positions.

Current Target(s): $78.50 & 88.50
Current Stop loss: 58.90
Play Entered on: 06/10/11
Originally listed on the Watch List: 04/30/11


CLOSED Plays


Boeing Co. - BA - close: 72.67

07/23 update: Do you remember last Monday? The whole market swooned and the S&P 500 traded under the 1300 level. That same day, July 18th, BA plunged under round-number support at $70.00 and hit our stop loss at $69.75 closing our trade. We were stopped out before American Airlines announced the biggest plane order in history. We were stopped out before BA was upgraded later in the week. Unfortunately for shareholders the oversold bounce in BA has not broken the bearish trend of lower highs and lower lows.

If you missed it AMR announced a deal for 460 single-aisle planes worth up to $40 billion split between Boeing and European rival Airbus. AMR will order 200 planes from BA and 260 from Airbus.

I had warned that BA looked weak and that cautious traders may want to exit early last weekend. The plan was to keep our position size small to limit our risk.

- Current Positions -
Apr 27, 2011 - entry price on BA @ 76.50, option @ 4.50
symbol: BA1221A80 2012 JAN $80 call - Exit @ $1.55 (-65.5%)

Apr 27, 2011 - entry price on BA @ 76.50, option @ 4.95
symbol: BA1319A90 2013 JAN $90 call - Exit @ $2.30 (-53.5%)

07/18/11 Stopped out @ 69.75.
06/25/11 BA dips toward support near $70 and 200-dma as expected.
06/04/11 re-evaluated our risk and moved the stop loss to $69.75 under the simple 200-dma
05/14/11 New stop loss @ 73.90
04/27/11 Play opened. Small positions.

Chart of BA:

Current Target: $89.00, and $104.00
Current Stop loss: 69.75
Play Entered on: 04/27/11

Originally listed on the Watch List: 03/26/11