Editor's Note:

We are electing for an early exit on one of our bullish candidates this week. That candidate is ROST. The stock has a 2-for-1 split coming and begins trading post-split on Thursday. See the ROST update for details.

-James


Closed Plays


None. No closed plays this week.


Play Updates


Allergan Inc. - AGN - close: 83.49

Comments:
12/10 update: This stock is down less than a quarter (25 cents) for the week. AGN has spent several days now consolidating under resistance at the $85.00 level. Thursday's drop pretty much filled the gap from late November, which is a good thing. If the market retreats then look for AGN to dip toward its 200-dma near $80.00. If you're looking for a new bullish entry point I'd wait for AGN to close over $85.50 before considering new positions. However, The spreads on our 2013 January calls just keeps getting wider! We won't trade AGN again until this improves.

Earlier Comments:
Option spreads are wide for these LEAPS. We want to keep our position size pretty small to limit our risk.

- Suggested Positions -
OCT 17, 2011 - entry price on AGN @ 85.46, option @ 5.10
symbol: AGN1319A100 2013 JAN $100 call - current bid/ask $ 1.75/ 4.10

12/10/11 spreads on our 2013 calls are getting wider!
11/19/11 Taking an aggressive stance on our stop loss and moving it down to $77.45
10/22/11 Earnings are coming up. Readers might want to consider raising their stop loss. We are keeping ours at $79.45.

Current Target: $99.00
Current Stop loss: 77.45
Play Entered on: 10/17/11
Originally listed on the Watch List: 09/24/11


Bank of America - BAC - close: 5.72

Comments:
12/10 update: BAC spent the week consolidating sideways under the $5.90 level. The action almost looks like a bull-flag pattern and Thursday's dip tested short-term technical support at its simple 10-dma. Unfortunately, I am still cautious here. U.S. financials will remain hostage to headlines out of Europe and the EU summit on Friday accomplished very little but postpone any true action.

Nimble traders could try buying calls on dips in the $5.20-5.00 zone. Or you might want to consider bullish positions if we see BAC close above the $6.00 level.

NOTE: Our option prices did not change for the week.

Earlier Comments:
A few weeks ago there was a report from Reuters suggesting that S&P was going to change the way they rate the credit ratings of banks. Bank of America, Citigroup (C) and Morgan Stanley (MS) might all see their credit rating downgraded by S&P after they implement this new rating process. That will likely send shares of BAC lower.

- Suggested Positions -
AUG 29, 2011 - entry price on BAC @ 8.10, option @ 0.57
symbol: BAC1221A10 2012 JAN $10 call - current bid/ask $ 0.01/ 0.02
(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 $ 0.39/ 0.40
(No stop loss on this position)

(2nd Position, bought the dip at $5.15)

NOV 23, 2011 - entry price on BAC @ 5.15, option @ 0.35
symbol: BAC1319A10 2013 JAN $10 call - current bid/ask $ 0.39/ 0.40
(no stop loss on this position)

11/23/11 BAC hits new trigger @ 5.15 to buy calls.
11/19/11 New trigger to buy calls @ $5.15 (see 2nd position)
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.

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: 33.54

Comments:
12/10 update: BMY has managed to keep the rally alive. The stock closed at new multi-year highs on Friday. Although it is worth noting that volume has been fading all week long. BMY is short-term overbought with a two-week bounce from $30 to $33.50 (+11.6%). I would still expect some profit taking after such a big move. BMY is normally a slow-moving stock.

BMY did raise their dividend by 3%. The stock currently has a yield of 3.9%, which makes it attractive given Wall Street's current fad for high-dividend stocks.

Please note that I am altering our exit target again. We still have a year before our options expire and BMY is just not hitting new multi-year highs. More conservative traders may want to leave their exit target at $34.50. I am setting our exit target at $37.50. Compare that to the Point & Figure chart, which is forecasting a $41 target.

- Suggested Positions -
SEP 19, 2011 - entry price on BMY @ 30.53, option @ 1.20
symbol: BMY1319A35 2013 JAN $35 call - current bid/ask $ 2.02/ 2.07

12/10/11 adjust exit target to $37.50
12/03/11 reduce our two exit targets to just one at $34.50
10/22/11 BMY is due to report earnings this week on Oct. 27th. Readers may want to take profits now or prior to the report.
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: $37.50
Current Stop loss: 29.40
Play Entered on: 09/19/11
Originally listed on the Watch List: 09/10/11


Beazer Homes - BZH - close: 2.47

Comments:
12/10 update: BZH gained a nickel for the week. Shares are actually consolidating sideways in a triangular pennant pattern. These are supposed to be neutral consolidations but normally the prior trend (up, in this case) wins out. It is worth noting that BZH is consolidating under technical resistance at its simple 150-dma. The next level of major resistance is likely the $3.00 mark.

I am not suggesting new positions at this time.

- Suggested Positions -

(stock position)
OCT 28, 2011 - entry price on BZH @ $2.12

(option position)
OCT 28, 2011 - entry price on BZH @ 2.12, option @ 0.70
symbol: BZH1319A2.5 2013 JAN $2.50 call - current bid/ask $ 0.85/ 0.95

12/03/11 new stop loss @ 1.85
11/26/11 new stop loss at $1.75
11/15/11 BZH reports a loss of 57 cents a share, worse than expected
11/12 BZH has seen a big bounce. Cautious investors may want to take profits now before BZH reports earnings on Nov. 15th. (BZH +13.2%, option +21.4%)
10/28 trade begins: BZH opens @ $2.12
10/27 BZH meets our entry point requirement with a close over $2.05

Current Target: $3.70
Current Stop loss: 1.85
Play Entered on: 10/28/11
Originally listed on the Watch List: 10/22/11


Cisco Systems - CSCO - close: 18.88

Comments:
12/10 update: CSCO eked out a gain for the week even though shares remain inside the $18.50-19.00 trading range. We remain long-term bullish on CSCO but we're not suggesting new positions here. If the stock fails to breakout to new highs this looks like a potential bearish double top pattern forming.

- Suggested Positions -
OCT 28, 2011 - entry price on CSCO @ 18.28, option @ 1.68
symbol: CSCO1319A20 2013 JAN $20 call - current bid/ask $1.98/2.00

10/29/11 new stop loss @ 16.40
10/28/11 stock opens at $18.28
10/27/11 CSCO meets our entry requirement: close at $18.44
10/22/11 Added entry to buy a close over $17.75
10/15/11 We are adjusting our entry point. Wait for a dip to $16.65
10/14/11 CSCO hit our entry point requirement for a close over $17.50.

Current Target: $21.75
Current Stop loss: 16.40
Play Entered on: 10/28/11
Originally listed on the Watch List: 10/08/11


CSX Corp. - CSX - close: 21.32

Comments:
12/10 update: CSX lost about 30 cents for the week. The stock is currently in no-man's land with support near $30.00 and overhead resistance at $22.25. Nimble traders can buy dips near the $20.00 level but given this market I'd be more interested in buying bounce off the $20 mark.

Earlier Comments:
I do see potential resistance at the $24.00 level and the $26.75-27.00 zone. Yet the Point & Figure chart for CSX is bullish with a $33.50 target.

- Suggested Positions -
NOV 14, 2011 - entry price on CSX @ 22.59, option @ 2.24
symbol: CSX1319A25 2013 JAN $25 call - current bid/ask $ 1.57/ 1.63

- or -

NOV 14, 2011 - entry price on CSX @ 22.59, option @ 3.30
symbol: CSX1418A25 2014 JAN $25 call - current bid/ask $ 2.50/ 2.75

11/26/11 I had cautioned readers to expect a potential dip to $20.00. CSX hit this level on Friday.

Current Target: $29.75
Current Stop loss: 19.75
Play Entered on: 11/14/11
Originally listed in the New Plays 11/12/11


Enterprise Products Partners - EPD - close: 45.50

Comments:
12/10 update: EPD ran into a speed bump this past week. Management has decided to take advantage of their record-high stock price and raise capital. The company announced a secondary offering of 9 million units (shares) at $44.68. The stock immediately gapped from approximately $46 to hit $44.40 before bouncing. Currently EPD has about 192.4 million shares outstanding so this new offering dilutes current shareholders by 4.6%. The stock only fell -3.4% at Thursday's open and has since recovered a good chunk of this decline. The lack of any real selling pressure is bullish.

Investors can choose to wait for another dip into the $44.00 area or wait for a new close over $46.50 before considering new bullish positions. Just remember that EPD doesn't move very fast.

Earlier Comments:
Our long-term target is $59.00. FYI: The Point & Figure chart for EPD is bullish with a $60 target. I am listing the 2013 calls but there are also 2014s available (with a much wider spread).

- Suggested Positions -
Nov 21, 2011 - entry price on EPD @ 45.17, option @ 1.45
symbol: EPD1319A50 2013 JAN $50 call - current bid/ask $ 1.10/ 1.40

12/08/11 EPD gapped down on news of a 9 million share secondary price at $44.68.

Current Target: $59.00
Current Stop loss: 41.75
Play Entered on: 11/21/11
Originally listed in the New Plays 11/19/11


Hewlett-Packard - HPQ - close: 27.90

Comments:
12/10 update: HPQ posted a gain for the week but shares remain inside their $27.50-28.50 trading range. One of the big headlines for the week was news that HPQ would make its webOS platform open source code.

I don't see any changes from my prior comments. HPQ still has a lot of resistance in the $28.50-30.00 zone. I am not suggesting new positions at this time.

FYI: It is worth noting that the Point & Figure chart for HPQ is bullish with a $41 target.

- Suggested (SMALL) Positions -
Longer-term Trade
Sep 26, 2011 - entry price on HPQ @ 22.59, option @ 3.75
symbol: HPQ1319A25 2013 JAN $25 call - current bid/ask $ 6.05/ 6.15
Stop Loss @ 24.75

12/03/11 new stop loss @ 24.75
11/19/11 Readers need to decide: Take profits now (+76%) or hold on and expect some volatility following HPQ's earnings report on Nov. 21st
10/31/11 scheduled exit for the remainder of our 2012 calls @ the open. Options opened at $5.40 (+100%), plus we sold half of our 2013 $25 calls, which opened at $5.70 (+52%).
10/29/11 new stop loss on 2013 calls at $23.90
10/29/11 prepare to exit remainder of 2012 position on Monday @ open
prepare to sell 1/2 (half) of 2013 position on Monday at open
10/17/11 Planned exit, sell 1/2 of 2012 position, bid @ 4.10 (+52.4%)
10/15/11 new stop loss for the 2012 position @ 22.85
10/15/11 Plan to sell 1/2 of 2012 calls on Monday
10/08/11 new stop loss (both positions) at $21.40

Current Target: 2013 call target: 32.50
Play Entered on: 09/26/11
Originally listed in New Plays: 09/24/11


KB Home - KBH - close: 8.10

Comments:
12/10 update: KBH delivered a gain for the week but shares are currently stuck under technical resistance at the simple 150-dma. I am not suggesting new bullish positions at this time. If the market corrects the KBH should have some support near $7.50. If the market rallies then the next hurdle is the $9.00 level.

Earlier Comments:
KBH can be a volatile stock. There is no need to chase it. If there is a breakout the stock could see a short squeeze. The most recent data listed short interest at 52% of the 65 million-share float.

- Suggested Positions -
(Stock Position)
Oct 19, 2011 - entry price on KBH @ 7.17

- or -

(Option Position)
Oct 19, 2011 - entry price on KBH @ 7.17, option @ 1.25
symbol: KBH1319A10 2013 JAN $10 call - current bid/ask $ 1.22/ 1339

12/03/11 new stop loss @ 6.38
10/19/11 Trade opens. KBH opens @ 7.17, option @ 1.25
10/18/11 KBH meets our entry requirement with a close above $7.00

Current Target: $9.90
Current Stop loss: 6.38
Play Entered on: 10/19/11
Originally listed on the Watch List: 10/15/11


Kraft Foods Inc. - KFT - close: 36.70

Comments:
12/10 update: KFT spent the week consolidating sideways but Friday's +1.5% bounce left shares at a new multi-year closing high. The $36.00 level is holding up as short-term support. If the S&P 500 can close above resistance at 1265 then I'd consider looking at new bullish positions in KFT with the stock above $36.00.

Earlier Comments:
NOTE: KFT is normally 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 $ 3.65/ 3.80

12/03/11 new stop loss @ 33.85, adjusted exit target to $40.00
11/12/11 new stop loss @ 32.40

Current Target: $40.00
Current Stop loss: 33.85
Play Entered on: 09/22/11
Originally listed on the Watch List: 09/17/11


Kimberly-Clark Corp. - KMB - close: 70.14

Comments:
12/10 update: KMB has spent the last few days hovering near the $70.00 level. I am not suggesting new positions at this time. Look for support near $68.00.

Earlier Comments:
KMB does have long-term resistance in the $73.00-73.50 area. Therefore we will only start with small (half-sized) positions. When KMB closes above $74.00 we'll reconsider adding new positions to this play. Our long-term target is $79.75 but we'll readjust it as the play progresses. The Point & Figure chart is currently suggesting a long-term target of $98.00. NOTE: KMB does not move very fast. Investors may want to try and maximize their returns by changing this into a vertical (a.k.a. calendar) spread.

- Suggested Positions -
(half sized position)
Nov 07, 2011 - entry price on KMB @ 69.50, option @ 2.05
symbol: KMB1319A75 2013 JAN $75 call - current bid/ask $ 2.10/ 2.25

Current Target: $79.75
Current Stop loss: 65.75
Play Entered on: 11/07/11
Originally listed in the New Plays 11/05/11


Limited Brands, Inc. - LTD - close: 40.83

Comments:
12/10 update: Hmm... LTD has risen to new two-week highs on Wednesday to close right at resistance near $44.00. Then Thursday produced a sharp market-wide decline and the stock was crushed, gapping open lower under $42.00 and its 50-dma. It looks like an overreaction to the market's decline because I couldn't find any company-specific news to explain Thursday's plunge. The stock did begin trading ex-dividend on December 8th, which would explain the gap down but the quarterly dividend was only 20 cents. What is concerning is the lack of a rebound on Friday while the rest of the market was in rally mode.

I would hesitate to launch positions here but nimble traders could buy a bounce off the $40.00 level.

NOTE: There appears to be some sort of error with LTD's option quotes. I've tried multiple sources and can't get a current bid/ask for the 2013 Jan $50 call. Let's see if things improve on Monday. If not we'll call one of the exchanges.

Earlier Comments:
The plan was to keep our position size small

- Suggested (SMALL) Positions -
Oct 25, 2011 - entry price on LTD @ 43.70, option @ 4.25
symbol: LTD1319A50 2013 JAN $50 call - current bid/ask $ 3.10/ 3.40*

*12/10/11 bid/ask for our 2013 $50 call is out of date
11/16/11 LTD reports earnings one cent above estimates
10/25/11 trade begins when LTD opens at $43.70
10/24/11 closed at $43.79, meets our entry point requirement
10/15/11 New Strategy: buy a close over $43.50, stop 37.90
10/01/11 adjusted stop loss to $32.90, if triggered
09/24/11 new trigger @ 35.50, updated 2013 option strike
09/17/11 new trigger @ 37.50, updated option strikes.

Current Target: $54.00
Current Stop loss: 37.90
Play Entered on: 10/25/11
Originally listed on the Watch List: 08/27/11


QUALCOMM Inc. - QCOM - close: 55.18

Comments:
12/10 update: QCOM has spent almost two weeks consolidating sideways in the $53.60-55.50 zone. Friday's bounce (+2.0%) is encouraging and appears to break the short-term trend of lower highs but the stock remains inside this range.

I am not suggesting new positions at this time.

Earlier Comments:
QCOM recently reported much better than expected earnings, beating both the top and bottom line estimates. Management raised their guidance looking ahead. The company is reaping the benefits from the booming smartphone market. The CEO said there is over 300 new devices in development that will use QCOM electronics inside. That sounds like there is a lot of potential for growth.

- Suggested (SMALL) Positions -
NOV 23, 2011 - entry price on QCOM @ 52.50, option @ 4.90
symbol: QCOM1319A60 2013 JAN $60 call - current bid/ask $ 5.20/ 5.35

11/23/11 QCOM hits our trigger @ 52.50

Current Target: $74.50
Current Stop loss: 49.40
Play Entered on: 11/23/11
Originally listed on the Watch List: 11/05/11


Reynolds American Inc. - RAI - close: 40.54

Comments:
12/10 update: RAI gapped down on December 7th as the stock adjusted for the company's latest quarterly dividend. Shares spent the rest of the week consolidating sideways. I would consider new bullish positions with RAI near support at $40.00 but readers may want to wait for the S&P 500 to close over resistance at 1265 before considering new bullish positions here.

- Suggested Positions -
Nov 18, 2011 - entry price on RAI @ 40.02, option @ 2.00
symbol: RAI1319A42.5 2013 JAN $42.50 call - current bid/ask $ 1.85/ 2.10

Current Target: $49.00
Current Stop loss: 37.85
Play Entered on: 11/18/11
Originally listed on the Watch List: 10/22/11


Red Hat Inc. - RHT - close: 49.70

Comments:
12/10 update: RHT has spent the last three days churning sideways in a relatively narrow range. I am cautious with the stock under the $50.00 level. Further weakness from here would make last week's peak look like the second half of a bearish double top pattern.

I want to remind readers that RHT is due to report earnings on Monday, December 19th, after the closing bell. More conservative traders may want to consider buying some sort of hedge prior to the close that Monday or raise their stop loss on this position to limit your risk. I am not suggesting new positions at this time.

- Suggested Positions -
Nov 01, 2011 - entry price on RHT @ 47.70, option @ 4.75
symbol: RHT1319A60 2013 JAN $60 call - current bid/ask $ 4.60/ 5.30

11/12/11 new stop loss @ 44.75

Current Target: $59.75
Current Stop loss: 44.75
Play Entered on: 11/01/11

Originally listed on the Watch List: 10/29/11


Transocean Ltd. - RIG - close: 43.26

Comments:
12/10 update: RIG struggled with resistance at $46.00 the first part of the week. Shares did garner some bullish analyst comments on CNBC but it failed to help the stock price. Investors might want to consider new positions now with Friday's intraday bounce from $41.75. However, an alternative entry point would be to wait for RIG to close over resistance at $46.00 instead.

We have a stop loss at $39.45. More conservative traders may want to use a stop just under the 52-week low at $41.28 instead.

- Suggested SMALL Positions -
Nov 29, 2011 - entry price on RIG @ 42.25, option @ 4.65
symbol: RIG1319A50 2013 JAN $50 call - current bid/ask $ 4.95/ 5.15

Current Target: $59.00
Current Stop loss: 39.45
Play Entered on: 11/29/11
Originally listed on the Watch List: 11/26/11


Ross Stores Inc. - ROST - close: 93.58

Comments:
12/10 update: ROST has spent over a week now churning sideways in the $92-94 zone. Although with Friday's bounce the stock looks poised to breakout higher. This stock is going to start trading post 2-for-1 split on December 16th. I am suggesting we exit positions on Wednesday, December 14th at the closing bell to avoid any hassles with the effects of the split on our option position.

Please note that I am raising our stop loss to $89.00.

- Suggested Positions -
Oct 11, 2011 - entry price on ROST @ 84.36, option @ 5.30
symbol: ROST1319A100 2013 JAN $100 call - current bid/ask $ 7.80/ 8.20

12/10/11 Prepare to exit on Weds. Dec. 14th at the closing bell to avoid holding over the stock split.
12/10/11 new stop loss @ 89.00
12/03/11 new stop loss @ 83.90
11/17/11 ROST reported earnings that were in-line and announced a 2-for-1 stock split set for Dec. 16th
11/12/11 Cautious investors may want to take profits early. Option has a bid of $6.70 (+26.4%)
11/05/11 new stop loss @ 81.75
10/22/11 new stop loss @ 79.25
10/15/11 adjusted stop loss to $77.00
10/11/11 ROST opened at $84.36
10/10/11 ROST closed above $83, our requirement to open the trade
10/08/11 adjusted option strike to 2013 Jan. $100 call
10/01/11 new strategy: buy a close over $83.00
09/24/11 new trigger at $73.00, stop 69.50
09/17/11 new trigger at $76.50, stop @ 71.40, new strikes.

Current Target: $99.00
Current Stop loss: 89.00
Play Entered on: 10/11/11
Originally listed on the Watch List: 09/10/11


U.S. Steel Corp. - X - close: 27.48

Comments:
12/10 update: Shares of X spent the week hugging technical resistance at its descending 100-dma. The stock managed to find some short-term support near its simple 10-dma on Thursday's market-wide decline. Big picture the action in X over the last couple of months looks like a bottom. Yet I wouldn't buy calls now. Wait for another bounce from the $25.00 level as a possible entry point.

Earlier Comments:
This is an aggressive trade because X can be volatile and we have a wide stop loss. That's why we're using small positions to limit our risk.

- Suggested (SMALL) Positions -
Nov 09, 2011 - entry price on X @ 25.50, option @ 5.00
symbol: X1319A30 2013 JAN $30 call - current bid/ask $ 5.65/ 5.85

12/03/11 new stop loss at $21.90
11/09/11 Trade opened at $25.50 (small positions)

Current Target: $37.50
Current Stop loss: 21.90
Play Entered on: 11/09/11
Originally listed on the Watch List: 11/05/11