Editor's Note:

Stocks just experienced an extremely volatile week. The breakdown back on Monday and Tuesday morning hit some of our stop losses.

-James


Closed Plays


BMC IYT, KO, MCD, NVDA, and V were all closed.


Play Updates


Bank of America - BAC - close: 5.90

update 10/08: Another rocky week for the financials saw BAC plunge to $5.13 on Tuesday morning before bouncing back to $6.33 on Friday morning. That's a -16% drop from the prior Friday's close to its low on Tuesday and a +23.3% bounce from Tuesday's low to Friday's morning spike. Unfortunately for the bulls this stock is rolling over under its bearish trendline of lower highs.

Our September 26th position had a stop loss at $5.75. These were closed on October 3rd. The 2012 January $7.50 call at $0.48 and the 2013 January $10 call at $0.74.

I am not suggesting new positions at this time. We'll wait to see if share retest the $5.00 area or close above $6.50 before considering new positions.

- Suggested Positions -
AUG 29, 2011 - entry price on BAC @ 8.10, option @ 0.57
symbol: BAC1221A10 2012 JAN $10 call - current bid/ask $ 0.08/ 0.10
(no stop loss on this position)

- or -

AUG 29, 2011 - entry price on BAC @ 8.10, option @ 1.50
symbol: BAC1319A10 2013 JAN $10 call - current bid/ask $ 0.73/ 0.78
(No stop loss on this position)


2nd Position, listed 09/24/11, opened on 09/26/11

SEP 26, 2011 - entry price on BAC @ 6.48, option @ 0.66
symbol: BAC1221A7.50 2012 JAN $7.50 call - Exit $0.48 (-27.2%)
Stop loss @ 5.75

- or -

SEP 26, 2011 - entry price on BAC @ 6.48, option @ 1.00
symbol: BAC1319A10 2013 JAN $10 call - Exit $0.74 (-26%)
Stop loss @ 5.75

10/03/11 Sept. 26th position stopped out at $5.75.
2012 Jan. $7.50 call @ 0.48 (-27.2%)
2013 Jan. $10 call @ 0.74 (-26%)
10/01 raising our stop loss on the Sep. 26th position to $5.75
09/24 adding 2nd position, stop loss at $5.40
09/03 no stop loss on this trade at this time.

Chart of BAC:

Current Target: $12.00-to-$15.00
Current Stop loss: see details above
Play Entered on: 08/29/11
Originally listed in the New Plays 08/27/11


Bristol Meyers Squibb - BMY - close: 32.38

update 10/08: BMY continues to show relative strength. The stock is up a dollar for the week and broke out to new multi-year highs. While the trend is positive I would not chase it here. Investors could wait for a dip or a bounce near $30 before considering new positions. Please note our new stop loss at $29.40.

We have two targets. Our first target is $33.50.

Earlier Comments:
NOTE: BMY is not a very fast moving stock. We will need to be patient.

- Suggested Positions -
SEP 19, 2011 - entry price on BMY @ 30.53, option @ 1.20
symbol: BMY1319A35 2013 JAN $35 call - current bid/ask $ 2.26/ 2.36

10/08/11 new stop loss @ 29.40
09/16 Friday's close at $30.53 is our trigger to buy calls. Our entry will be Monday morning.

Current Target: $33.50 and 35.75
Current Stop loss: 29.40
Play Entered on: 09/19/11
Originally listed on the Watch List: 09/10/11


EMC Corp. - EMC - close: 22.39

update 10/08: It was a big week for EMC. Traders bought the dip near support at $20.00 again. The market's widespread bounce lifted EMC to $22.85 on Friday morning. That's a +14% bounce. The $23.00 level has been resistance in the past few weeks and EMC pared its gains by the closing bell. Essentially the stock is at the top of its trading range. I am not suggesting new positions at this time. Please note we are raising our stop loss to $19.85.

NOTE: If you're holding the 2012 Jan. calls then you may want to take some profits now. Our 2012 Jan. $20 call is up +50%.

Earlier Comments:
The plan was to use small positions to limit our risk. Our first long-term target is $25.75. Our second target is $28.50. Aggressive traders could aim higher.

- Suggested (SMALL) Positions -
Aug 18, 2011 - entry price on EMC @ 20.25, option @ 2.20
symbol: EMC1221A20 2012 JAN $20 call - current bid/ask $ 3.30/ 3.40

- or -

Aug 18, 2011 - entry price on EMC @ 20.25, option @ 1.80
symbol: EMC1319A25 2013 JAN $25 call - current bid/ask $ 2.55/ 2.70

10/08/11 new stop loss @ 19.85
09/24 new stop loss @ 19.49
09/17 new stop loss @ 19.80

Chart of EMC:

Current Target: $25.75 and 28.50
Current Stop loss: 19.85
Play Entered on: 08/18/11
Originally listed on the Watch List: 07/23/11


Hewlett-Packard - HPQ - close: 24.88

update 10/08: HPQ was an outperformer last week. Traders bought the dip near $22 and the stock rallied to a new four-week high and closed up +10% for the week. If you're looking for a new entry point I would consider buying a bounce in the $24.00-23.00 zone.

Please note that we're updating our stop losses to $21.40.

- Suggested (SMALL) Positions -
Short(er)-Term Trade
Sep 26, 2011 - entry price on HPQ @ 22.59, option @ 2.69
symbol: HPQ1221A22.5 2012 JAN $22.50 call - current bid/ask $ 4.15/ 4.25
Stop Loss @ 21.40

- or -

Longer-term Trade
Sep 26, 2011 - entry price on HPQ @ 22.59, option @ 3.75
symbol: HPQ1319A25 2013 JAN $25 call - current bid/ask $ 5.00/ 5.20
Stop Loss @ 21.40

10/08/11 new stop loss (both positions) at $21.40

Current Target: $29.50
Play Entered on: 09/26/11
Originally listed in New Plays: 09/24/11


iShares Russell 2000 ETF - IWM - close: 65.50

update 10/08: Our new bearish play on the IWM is not panning out as expected. We did see the breakdown last Monday. The plan was to buy calls the day after the IWM closed under $63.00. Shares closed at $60.99 on Monday and opened at $60.32 on Tuesday morning. We pretty much bought our puts at the bottom of the week. The very sharp oversold bounce was unexpected. The close back above what should have been resistance near $64 and $65 was also very unexpected. Yet in spite of the bounce the overall trend is still down.

If we see the IWM close under $64 again I would be tempted to launch new bearish positions. I am adjusting our target to $52.50.

Stop Loss

If the IWM can close above $68.00 then we'll exit the next morning at the open.

- Suggested Positions -
Oct 04, 2011 - entry price on IWM @ 60.32, option @ 6.36
symbol: IWM1221M60 2012 JAN $60 PUT - current bid/ask $ 3.79/ 4.14

10/04/11 Trade begins at the open. IWM @ 60.32
10/03/11 meet our entry point requirement (close under $63.00)

Chart of IWM:

Current Target: $52.50
Current Stop loss: close over 68.00
Play Entered on: 10/04/11
Originally listed on the Watch List: 10/01/11


Kraft Foods Inc. - KFT - close: 33.76

update 10/08: KFT gave us a scare on Tuesday. When the market was breaking down shares of KFT spiked lower to $31.88 before rebounding higher. Our stop loss is at $31.75. This stock managed a bounce back to $34.00 by Friday afternoon. I am concerned that KFT is building a new trend of lower highs and lower lows. More conservative traders may want to scale back positions or exit early. I am not suggesting new positions at this time.

NOTE: KFT is a very slow moving stock. It will take months to make any progress. Once a position is open readers may want to turn these into calendar spreads (a.k.a. vertical spreads).

- Suggested (SMALL) Positions -
Sep 22, 2011 - entry price on KFT @ 32.71, option @ 2.35
symbol: KFT1319A35 2013 JAN $35 call - current bid/ask $ 2.53/ 2.72

Current Target: $38.00
Current Stop loss: 31.75
Play Entered on: 09/22/11
Originally listed on the Watch List: 09/17/11


CLOSED Plays


BMC Software - BMC- close: 36.98

update 10/08: I could not find any reason behind BMC's sell-off on Friday. Think back to Tuesday, when the market was breaking down to new lows. BMC only dipped to $37.07 and then rallied to almost $41 by Thursday afternoon. Yet Friday's session (-9.4%) was negative almost immediately following the opening spike past $41.00. Shares accelerated lower on big volume and broke down to new lows. Our stop loss was hit at $36.90.

- Suggested Positions -
SEP 22, 2011 - entry price on BMC @ 39.74, option @ 2.05
symbol: BMC1221A45 2012 JAN $45 call - Exit $0.45 (-78.0%)

- or -

SEP 22, 2011 - entry price on BMC @ 39.74, option @ 5.40
symbol: BMC1319A45 2013 JAN $45 call - Exit $2.70 (-50%)

10/07/11 stopped out at $36.90
10/01 Readers may want to exit early now! BMC @ $38.56
09/24 new stop loss @ 36.90
09/22 play opened at $39.74 (gap down)
09/17 adjusted entry point to buy the dip at $40.25, stop 37.40
09/17 adjusted option strikes to 2012 and 2013 Jan $45s.

Chart of BMC:

Current Target: $46.50, 49.75
Current Stop loss: 36.90
Play Entered on: 09/22/11
Originally listed on the Watch List: 08/20/11


iShares Dow Jones Transport ETF - IYT - close: 78.15

update 10/08: The IYT was a new watch list candidate last week. The plan was to buy puts if the IYT closed under $74.00. Shares hit our entry point condition on Monday with a close at $72.40. Shares opened on Tuesday morning at $71.51 and quickly bounced. The market's widespread, oversold bounce carried the IYT from $70.82 to $79.67 on Friday (a +12.4%). This sort of volatility is pretty rare. We had set a stop loss to close positions at $78.25. The IYT hit our stop on Thursday.

I would keep the IYT on your watch list. The overall trend for this group is still bearish.

- Suggested Positions -
Oct 04, 2011 - entry price on IYT @ 71.51, option @ 3.00
symbol: IYT1221M65 2012 JAN $65 PUT - Exit $2.15 (-28.3%)

10/06 stopped out at $78.25
10/04 opens at $71.51
10/03 closes under $74.00

Chart of IYT:

Play Entered on: 10/04/11
Originally listed on the Watch List: 10/01/11


Coca-Cola Co - KO - close: 65.90

update 10/08: The stock market's extreme volatility last week pushed KO to a new relative low on Tuesday. Shares hit our stop loss at $63.49. The stock has tried to bounce back but has stalled near technical resistance at its 200-dma.

Earlier comments:
Our plan is to keep positions small to limit our risk.

- Suggested Positions -
Sep 22, 2011 - entry price on KO @ 67.00, option @ 2.25
symbol: KO1221A70 2012 JAN $70 call - Exit $1.30 (-42.2%)

- or -

Sep 22, 2011 - entry price on KO @ 67.00, option @ 3.00
symbol: KO1319A75 2013 JAN $75 call - Exit $2.20 (-26.6%)

10/04/11 stopped out at $63.49
09/22/11 play opened at $67.00
09/17/11 stocks are showing strength. New entry point at $67.00, stop at $63.49
09/10/11 adjusted entry point to $64.50, stop loss to $61.45
09/03 adjusting buy-the-dip trigger to $66.50
09/03 removing the secondary entry point
08/27 Adding a secondary entry point to buy $75 calls if KO can close over $70.50. stop loss at $66.40.

Chart of KO:

Current Target: $80.00
Current Stop loss: 63.49
Play Entered on: 09/24/11
Originally listed on the Watch List: 08/13/11


McDonalds Corp. - MCD - close: 87.20

update 10/08: A week ago we raised our stop loss from $79.50 to $84.75 on worries that the market's major indices would breakdown. Sure enough the market did breakdown but stocks immediately reversed higher. Yet the market weakness on Tuesday as enough to hit our new stop loss on MCD.

The long-term trend for MCD is still higher. I would keep this stock on your watch list.

Earlier Comments:
The plan was to use small positions to limit our risk. Our first target is $99.00.

- Suggested (small) Positions -
Aug 15, 2011 - entry price on MCD @ 86.82, option @ 2.50
symbol: MCD1221A90 2012 JAN $90 call - Exit $2.60 (+4.0%)

- or -

Aug 15, 2011 - entry price on MCD @ 86.82, option @ 3.90
symbol: MCD1319A95 2013 JAN $95 call - Exit $4.30 (+10.2%)

10/04/11 stopped out at $84.75
10/01/11 new stop loss at $84.75
09/10/11 adjusted stop loss down to $79.50
09/03/11 look for a dip toward the 50-dma

Chart of MCD:

Current Target: $99.00
Current Stop loss: 84.75
Play Entered on: 08/15/11
Originally listed in the New Plays 08/13/11


NVIDIA Corp. - NVDA - close: 14.15

update 10/08: We knew NVDA was a volatile stock. Yet the volatility in NVDA over the past few weeks has been ridiculous. The August low to the September high was a +38% gain. The September high to the October low was a -28.5% plunge. In the last three and a half days the stock is up +18%. These sorts of swings are very hard to trade around on a weekly newsletters. You're probably better off trying to day trade NVDA.

The long-term story on NVDA remains compelling but we've been stopped out at $12.25. This occurred near the opening bell on Monday (Oct. 3rd). I'd like to see shares settled down a bit before we consider new positions.

Our plan was to use small positions to limit our risk.

- Suggested (small) Positions -
SEP 14, 2011 - entry price on NVDA @ 15.62, option @ 2.40
symbol: NVDA1221A15 2012 JAN $15 call - Exit $0.80 (-66.6%)

- or -

SEP 14, 2011 - entry price on NVDA @ 15.62, option @ 4.25
symbol: NVDA1319A15 2013 JAN $15 call - Exit $2.45 (-42.5%)

10/03/11 stopped out at $12.25

Chart of NVDA:

Current Target: $19.75
Current Stop loss: 12.25
Play Entered on: 09/15/11
Originally listed on the Watch List: 09/10/11


Visa Inc. - V - close: 86.25

update 10/08: Visa continued to drop early last week and hit our stop loss at $84.45 on Monday. Shares dipped under $82 on Tuesday morning. Yet the widespread rebound lifted shares back to $88.00 on Friday morning.

I remain longer-term bullish on Visa but short-term I would not open new positions. Wait to see if shares correct back toward $80 and its 200-dma before considering new positions.

- Suggested (small) Positions -
Aug 18, 2011 - entry price on V @ 80.00, option @ 4.00
symbol: V1221A90 2012 JAN $90 call - Exit $5.50 (+37.5%)

- or -

Aug 18, 2011 - entry price on V @ 80.00, option @ 7.75
symbol: V1319A100 2013 JAN $100 call - Exit $9.10 (+17.4%)

10/03/11 stopped out at $84.45
09/24 new stop loss at $84.45
09/20 1st target hit at $94.50
bid 2012 Jan $90 call @ $9.80 (+145%)
bid 2013 Jan $100 call @ $11.10 (+43.2%)
09/17 new stop loss @ 81.45. Readers may want to take some profits here with the 2012 calls up +87.5%
08/27 new stop loss at $77.00

Chart of V:

Current Target: $94.50, and $99.00
Current Stop loss: 84.45
Play Entered on: 08/18/11
Originally listed on the Watch List: 08/13/11