Option Investor
Newsletter

Daily Newsletter, Wednesday, 10/14/2009

Table of Contents

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

Market Wrap

Earnings Look Genuine, Dow Breaks 10,000

by Judy Alster

Click here to email Judy Alster
You could just hear the cheering at Wednesday's closing bell on the floor of the New York Stock Exchange. Better-than-expected results from bellwether companies Intel Corp. (INTC) and JPMorgan Chase (JPM) helped send the Dow above 10,000 for the first time since its close of 10,325 on Oct. 3 of last year. These were results based on bona fide revenue increases, not cost-cutting. If top-line sales are in fact increasing across the board, it could go a long way toward getting everyone who has been fed up with the market for the last year and a half, mainly individual investors, back into the pool.

MARKET INDEX WRAPUP, Wednesday, Oct. 14:

(At the risk of dumping the ashtray into the punchbowl, I must report that this week brings results from only a half-dozen heavily-weighted Dow components, and that we have a loooong row to hoe before we hit the Oct. 9, 2007 high of 14,164. And that only 29 companies in the S&P500 Index report this week; next week we look for some 160 S&P announcements. And that once again, MACDs all over the place are not confirming new highs (Hey, I paint what I see). But there's enough to stay chipper about, especially if you rustled up a few dollars and went long in the last few months.

DOW JONES INDUSTRIAL AVERAGE:

Don't feel betrayed if there's a backup soon; at least one sign warns us. Note the possible reversal off the top Bollinger band. Corrections after a runup should not surprise:

DOW OUTSIDE BOLLINGER: BACKUP SIGNAL?

At 2,172, the Nasdaq also had its highest close in more than 12 months, helped by Intel:

NASDAQ:

Not to be outdone, the S&P500 capped its high of Oct. 6 of last year:

S&P500:

JPMorgan Chase was the first major bank to report third-quarter earnings and easily topped Wall Street's expectations with a profit of $3.59 billion or 82 cents a share. The bank reported rising loan losses which it warned would continue for some time, but those losses were more than offset by JP Morgan's successful investment banking operations. The first of the big banks to announce earnings for the July-September period, JP Morgan thumbed its nose at analyst forecasts of 52 cents while almost doubling the amount of money it set aside for failed home and credit card loans.

Investment bank net income came to $1.92 billion, up $1 billion from a year earlier as fixed income trading especially thrived. It was helped by investors still edgy about their long-term financial situations who are continuing to seek the comparative safety of bonds. Overall revenue came to $28.78 billion, better than the predicted $24.96 billion. The stock gapped up and stayed up, gaining 3.29%.

JPMORGAN CHASE: WILL OTHER FINANCIALS FOLLOW IT UP?

JPMorgan has been considered one of the strongest financial companies during the past year's turmoil. It has performed better than other large competitors in part because of its relatively light exposure to troubled subprime mortgages and commercial real estate. It was also, in June, among the first banks to repay government bailout money, in this case $25 billion.

The bank said the percentage of credit card loans it wrote off as not being repayable in the third quarter reached 10.3% of its total portfolio; it's expected to reach 10.5% in the first half of 2010 and could go higher depending on the unemployment rate. Loan losses were also pushed higher by weakness in the portfolios JPMorgan acquired when it purchased failed Washington Mutual last year.

However, in a glimmer of good lending news, the company said that for the second straight quarter there were signs of stabilization in delinquencies in recently-past-due consumer loans. If that continues — no guarantee, said the bank — JP Morgan's credit costs will decline and it might be able to raise its 5-cent-per-share-quarterly dividend to as much as 25 cents. Which would be some increase.

Most financial companies don't have huge stock and bond trading operations to help overcome loan losses, so let's maybe save some confetti until a few other big banks report. Citigroup (C) and Bank of America (BAC) are scheduled to report this week.

Boding well for the tech sector, Intel announced results late Tuesday and watched its stock rise Wednesday. The company announced of promising third-quarter results which could point to strong demand for personal computers and maybe better, to an improving corporate market in technology.

The world's biggest semiconductor company reported profit of $1.9 billion in the quarter or 33 cents a share, down a bit from Q308's $2 billion or 35 cents; revenue was $9.4 billion, down from $10.2 billion. Analysts were looking for 28 cents on $9 billion. For the current quarter, Intel expects revenue of $10.1 billion, beating Wall Street's expectation of $9.5 billion and kindling hopes that the tech market is truly waking up. Intel gapped up and gained over 1.5%, but closed below its open.

INTEL CORP.:

Apparently, manufacturers made pretty big bets on the next quarter. Chip companies are generally seen as good indicators of where the broader tech market is going, since chip companies must build their products ahead of any upswing in demand for end-customer goods. In fact, Intel's third quarter revenue represented an 18% jump from the previous quarter and the largest sequential third quarter revenue growth in over 30 years. One analyst called it "a sign of life in end-use demand."

Emerging markets could be partial drivers, at least, of the tech revival. Over and over again we see that when consumers get a little discretionary income, their first purchases tend to be electronic gadgets such as TVs, cell phones and PCs. Thus the tech sector, as usual, stands to be an early beneficiary of an economic upturn. Nor for the most part are tech companies burdened by nasty credit issues. Following Intel's lead, the Semiconductor Index had a similarly upbeat day:

SEMICONDUCTOR INDEX:

In the big news of the day, the report of the September 22-23 Federal Open Market Committee meeting showed the Fed boosting its outlook for the economy. Still, monetary policy is likely to remain easy for some time, due to under-utilization of resources and the expectation of low inflation. Not all members seem to be in agreement on when to tighten things up, which should prove interesting in coming months.

The projection was raised for real GDP growth through the second half of 2009 and through 2010. A bigger upturn is now expected than at the previous meeting, due to firming sales and starts of single-family homes, a slowing rate of decline in capital spending, and a mild recovery in consumer spending. The Fed, as always, was capable of simply not factoring oil prices into inflation, despite the sharp recent increase.

WEST TEXAS INTERMEDIATE CRUDE:

The report largely dovetailed with most economists' view that the recession is over but the recovery is far from strong. In all, the report didn't much affect the market.

Contradicting some of that news was this week's Mortgage Bankers' Association MBA's purchase index, which thudded 5% last week while the refinance index edged down 0.1%. Mortgage rates moved up from near-record lows with 30-year loans up 13 basis points to an average 5.02%, which is largely why refinancings made up 67.4% of all applications: homeowners were hurrying to lock in low rates.

The decline in retail sales for September was smaller than expected, which helped market gains. The Commerce Department said overall retail sales declined 1.5% percent last month after a 2.2% spike in August; the decline was due to car sales falling 10.4% after the end of the government's Cash for Clunkers program, and now we don't have to hear "Cash for Clunkers" again.

It was the biggest monthly decline this year but not nearly as depressing as the 2.1% drop analysts had expected. Without the bad auto news, retail sales actually rose 0.5%, beating forecasts, but still lagging last year's showing.

RETAIL SALES:

There have now been two months of unexpectedly rising core sales. Gains were seen, interestingly, in the furniture & home furnishings category, up 1.4%; general merchandise, up 0.9%; and health & personal care, up 0.8%. There were also gains in the categories of food & beverage stores, clothing & accessories, sporting goods & hobbies, and food services & drinking places (do drinking places ever have a bad month?). Declines came in building material & garden shops, miscellaneous stores and nonstore retailers.

Furniture-maker Stanley (STLY) reported a wider loss but, yes, still beat expectations and added almost 6% today after a week of gains. Analysts were expecting increases at general merchandise stores following reports last week from the nationwide retailers of growing same-store sales. It marked the first year-over-year rise in sales after a year of declines. Sales at department stores edged up 0.4% in August and in fact department store chains Kohl's (KSS), Nordstrom (JWN), Macy's (M, below) and Dillard's (DDS), to name just a few, have all been soaring. Still, as long as unemployment is touching 10%, we probably shouldn't expect too much slack to be taken up by the still-employed.

MACY'S:

Also on Wednesday, in what appeared to be a surfeit of good news, the Commerce Department said businesses slashed their inventories 1.5% in August, the 13th straight decline and more than the 0.9% drop analysts had expected. This cannot go on forever. Eventually, businesses must begin rebuilding depleted store shelves and back rooms. When that happens, factory production will begin to rise, employment will pick up, consumers will start consuming, and we'll see a reasonable recovery.

But it won't be a robust recovery unless our exports pick up. On the subject of exports, a colleague recently asked me (snidely, if you must know) whether I happened to know who Cato the Elder was. Being a nerd since before it was fashionable, naturally I knew: He was a Roman senator who ended every speech in the Senate for 20 years with the phrase, "Carthage must be destroyed." Time passed, and eventually Rome went and destroyed Carthage. It is my great hope that if I keep slipping "exports" into my writing, people will see the importance of manufacturing things and selling them to other countries, and eventually, even if it takes 20 years, you and I will have a recovery and a balance of trade we can be proud of.

CATO THE ELDER — my kind of guy:

Not surprisingly, a Bureau of Labor Statistics report suggests that import prices are showing the effect of the weak greenback, since inflation pressures look like they're increasing -- barely, but still increasing. Import prices excluding petroleum were up 0.4% in September after a 0.3% rise in August, and import prices for industrial supplies excluding petroleum were up 1.5% after August's 1.1% rise. Hmm. Pressures may now be starting, slowly, to find their way into finished goods. It's not the end of the world, but the report does indicate rising pressures for intermediate goods.

ALL IMPORTS EXCLUDING PETROLEUM:

Pharmaceuticals company Abbott Labs (ABT) also announced third quarter adjusted earnings up some 35% at 92 cents a share, and raised its full-year guidance. Strong sales of its rheumatoid arthritis drug Humira were to thank, along with its nutritional products; like almost everything else that happened Wednesday, it beat expectations. Abbott's results helped the pharmaceutical sector and that nudged healthcare up 1.5%.

Rail company CSX (CSX) was one of this session's best performers following its upside earnings surprise of 74 cents a share. Other rails shared in its strength and sent the industrial sector to a 2.6% gain, second only to financials. Transportation is considered by some an early and significant indicator of economic activity.

Telecom was the only sector that failed to post a gain. The loss was minor, but this session was the fifth time in the last six sessions that telecom underperformed.

Hardly anyone thinks we'll see a test of last spring's lows, but a look at the NYSE Advance/Decline Line might be in order. The NYAD is a market-breadth indicator that tells us whether bullish or bearish momentum is driving the market. It compares the number of NYSE stocks that are advancing in price with the number that are declining. When more stocks on the NYSE are increasing in value than are decreasing, the A/D Line moves higher indicating bullish momentum; when more stocks are decreasing in value, the A/D Line moves lower, indicating bearish momentum. We want to see higher highs and higher lows; until just recently, that's what we got:

NEW YORK STOCK EXCHANGE ADVANCE-DECLINE . . . .

. . . .COMPARED TO THE DOW:

A steeply rising A-D Line is usually followed by a considerable period of rising stock prices. What we don't want to see, assuming we're long, is a sharp sustained falloff in the rise of the A-D line. Obviously there can be bumps and corrections along the way, as seems to be the case here. We'd be dreamers not to expect a top of some kind after the runup of the last seven months, especially considering today's breach of psychologically-significant Dow 10,000.

On Thursday we get the Philadelphia Fed Survey, New York Manufacturing and the Consumer Price Index, which many will be watching. The earnings pace hastens with Citigroup (C), Goldman Sachs (GS), Google (GOOG) and International Business Machnes (IBM) Amphenol (APH), Baxter Intl (BAX), Cypress Semiconductor (CY) Fairchild Semiconductor (FCS), Harley Davidson (HOG), Nokia (NOK), Omniture (OMTR) and Southwest Airlines (LUV), among others.


New Plays

DOW Hits 10000

by Keene Little

Click here to email Keene Little

Editor's Note:

I am filling in for James tonight so if you don't like what's said tonight you can blame James (smile). Our bias remains bullish for the market (the trend is your friend) but the market is stretched to the upside and the indexes are testing resistance. This would be a logical spot for stocks to pull back after the strong rally over the past two weeks.

We're not adding any new candidates tonight.


In Play Updates and Reviews

Some Upside Targets Achieved

by Keene Little

Click here to email Keene Little


BULLISH Play Updates

Apartment Investment & Mgmt - AIV - close: 15.96 chg: +0.66 stop: 13.49

AIV got a shot in the arm today and shook off the doldrums it's been in since the September high and surpassed it today. It's too bad the daily chart is showing a lot of bearish divergence as AIV tries to climb above its September high. More conservative traders may want to raise their stop toward $14.00.

Our first target to take profits is at $16.50. Our second target is $18.50 but we may not have time. The plan is to exit ahead of the October 30th earnings report.

Entry on   October 07 at $14.72 /gap open higher
                            /originally listed at $14.52
Change since picked:     + 1.24   			
Earnings Date          10/30/09 (confirmed)    
Average Daily Volume:       3.6 million 
Listed on   October 07, 2009    


Airgas Inc. - ARG - close: 49.65 change: +1.25 stop: 45.85

After yesterday's dip to $47.71 traders bought it and then drove it higher today. It looks like a test of the September high at 50.29 is on the agenda. More conservative traders may want to raise their stops toward the 50-dma near $46.70.

Our first target is $52.45. Our second target is $54.85. More aggressive traders could aim higher. The Point & Figure chart is bullish and predicting a $77 target.

Entry on September 25 at $47.25
Change since picked:     + 2.40  			
Earnings Date          10/29/09 (confirmed)    
Average Daily Volume:       1.5 million 
Listed on September 19, 2009    


AZZ Inc. - AZZ - close: 40.03 change: +0.75 stop: 37.85

AZZ remains stuck in a relatively tight trading range over the past week. A rebound from here would be encouraging because right now some of the technical indicators are starting to turn bearish. But the stock did make a move over $40.00 and may have triggered some of you into a play. Our first target is $44.00. Our second target is $47.50.

Entry on   October 07 at $40.08 /gap open higher
                             /originally listed at $39.73
Change since picked:     - 0.05   			
Earnings Date          01/07/09 (unconfirmed)    
Average Daily Volume:       120 thousand
Listed on   October 07, 2009    


BE Aerospace - BEAV - close: 21.14 change: +0.56 stop: 18.49

I would still expect a dip toward $20.00 in BEAV. I'm not suggesting new positions at this time. Our target is $22.25.

Entry on September 12 at $19.19 
Change since picked:     + 1.95   			
Earnings Date          10/27/09 (confirmed)    
Average Daily Volume:       834 thousand
Listed on September 12, 2009    


Sotheby's - BID - close: 19.38 change: +1.17 stop: 16.80

Why We Like It:
After dropping back to support near $18 BID made a strong dash back up to Monday's high. It may pull back some but it looks good for continued upside.

I would use small positions (about 1/2 to 1/4 your normal trade size) to limit risk. Our first target is $19.95 since the $20.00 mark could be round-number resistance. Our second target is $22.00. Currently the Point & Figure chart is bullish with a $30 target. We do not want to hold over the early November earnings report.

Entry on   October 13 at $18.21 
Change since picked:     + 1.17   			
Earnings Date          11/05/09 (unconfirmed)    
Average Daily Volume:       861 thousand
Listed on   October 13, 2009    


Cracker Barrel - CBRL - close: 36.56 chg: +0.48 stop: 32.80

CBRL didn't enjoy the same kind of rally the rest of the market did but was nonetheless bullish. A dip or a bounce near $35.00 could be used as a new entry point. Our first target is $39.75. The Point & Figure chart is forecasting a $57 target.

Entry on   October 10 at $36.00 
Change since picked:     + 0.56   			
Earnings Date          11/24/09 (unconfirmed)    
Average Daily Volume:       322 thousand
Listed on   October 10, 2009    


Check Point Software - CHKP - cls: 29.96 change: +0.22 stop: 27.35

The rally in CHKP may be running low on steam and today's rally attempt fizzled early. I had warned readers on Monday that the $30.00 level could be round-number resistance and shares were probably due for a little pull back. I would prefer to open new positions on a dip near $28.50. Our first target is $32.50.

Entry on   October 06 at $29.19 
Change since picked:     + 0.77   			
Earnings Date          10/27/09 (unconfirmed)    
Average Daily Volume:       2.4 million 
Listed on   October 06, 2009    


Capstone Turbine - CPST - close: 1.41 change: +0.00 stop: 1.18

CPST wasn't able to make any progress today. Our first target is $1.75. We don't want to hold over the November earnings report. FYI: The Point & Figure chart is bullish with a $2.75 target.

Entry on   October 10 at $ 1.40 
Change since picked:     + 0.01   			
Earnings Date          11/09/09 (unconfirmed)    
Average Daily Volume:       3.7 million 
Listed on   October 10, 2009    


Carpenter Tech. - CRS - close: 23.68 change: +1.19 stop: 21.90

CRS got a strong bounce back up towards last Thursday's high and pulled back a little. It looks good for a continuation of the rally after a perhaps a small pullback. I'm not suggesting new positions at this time.

CRS has already hit our first target. Our secondary target is $27.40.

Entry on September 05 at $21.45 /gap higher entry
                             /originally listed at $20.92
Change since picked:     + 2.23
                             /1st target hit @ 24.90 (+16.0%)
Earnings Date          10/28/09 (unconfirmed)    
Average Daily Volume:       536 thousand
Listed on September 05, 2009    


DELL Inc. - DELL - close: 15.63 change: +.032 stop: 14.75

DELL bounced off its 50-dma but like techs in general it was not able to hold its initial high this morning. It was tough to enter a new position today but the pullback from the high is offering another opportunity. New entries may want to pull your stop up a little and park it just beneath the 50-dma, currently near 15.23.

Our first target to take profits is at $16.95. Our second target is $19.75. DELL doesn't move super fast so this play could take several weeks. We'll plan to exit ahead of the mid November earnings report.

Entry on   October 06 at $15.51 
Change since picked:     + 0.12   			
Earnings Date          11/19/09 (unconfirmed)    
Average Daily Volume:      25.6 million 
Listed on   October 06, 2009    


F5 Networks - FFIV - close: 43.94 change: +1.29 stop: 38.45 *new*

Is it possible a rally could be too strong? The move up from the end of September is looking a bit frothy--a parabolic climb. The best thing for this stock would be to consolidate sideways for a bit and that would make for another good entry point. A dip to support near $40.00 would be another opportunity. Please note our new stop at $38.45. Our first target to take profits is at $44.50 which it came close to today. I'd like to aim higher but we may not have time. Earnings are in a couple of weeks.

Entry on   October 07 at $40.63 
Change since picked:     + 3.31   			
Earnings Date          10/21/09 (unconfirmed)    
Average Daily Volume:       1.2 million 
Listed on   October 07, 2009    


General Electric - GE - close: 16.84 change: +0.45 stop: 15.49

We've got just one more day left. I'm raising our stop loss to $15.49 and aggressive traders may want to raise it to 16.43 to have it just below today's gap. I'm not suggesting new positions at this time. We will plan to exit on Thursday, October 15th at the closing bell to avoid holding over earnings on Friday morning.

GE has already hit our first target. We're currently aiming for $18.50. I do consider this an aggressive trade so we want to keep our positions small.

Entry on September 14 at $15.49 /gap higher entry
                             /originally listed at $15.35
Change since picked:     + 1.35
                            /1st target hit @ 17.25 (+11.3%)
Earnings Date          10/16/09 (confirmed)    
Average Daily Volume:        83 million 
Listed on September 14, 2009    


Gold Fields Ltd - GFI - close: 14.92 change: -0.13 stop: 12.99

Gold was weaker than the broader market and it showed in gold stocks. I'd prefer to open new positions on a dip near $14.00 but shares have been trading in a $14.50-15.00 zone lately.

Our first target is $15.75. Our second target is $19.75 but that may be a little optimistic given our time frame. We plan to exit ahead of the late October earnings report. The Point & Figure chart is very bullish with a $21 target.

Entry on September 30 at $13.78 
Change since picked:     + 1.14   			
Earnings Date          10/29/09 (unconfirmed)    
Average Daily Volume:       7.7 million 
Listed on September 30, 2009    


Starwood Hotels - HOT - close: 35.28 change: +1.31 stop: 29.90 *new*

HOT finished strong but had an even stronger rally under way until just after lunch and then it retraced almost half ot it. But so far it fits as just a normal correction before proceeding higher again. outperformed the market with a 2.6% gain. Our plan was to use small position sizes to limit our risk.

Our first target is $34.75 and the second target is $39.00. FYI: HOT has above average short interest (more than 15% of the float).

Entry on   October 01 at $31.00
Change since picked:     + 3.00   			
Earnings Date          10/27/09 (unconfirmed)    
Average Daily Volume:       3.4 million 
Listed on September 19, 2009    


Microsoft - MSFT - close: 25.96 change: +0.15 stop: 24.40

I was hoping the INTC earnings would be the catalyst to push MSFT above resistance near $26.00. The good news is that it did. The bad news is that it didn't stick--MSFT dropped back down to close this morning's gap before bouncing into the close. I'm not suggesting new positions at this time. MSFT reports earnings on October 23rd, which gives about less than two weeks left for this play. Our target is $27.75.

Entry on      July 27 at $23.00
Change since picked:     + 2.96   			
Earnings Date          10/23/09 (confirmed)    
Average Daily Volume:        58 million 
Listed on  July 23, 2009    


NII Holdings - NIHD - close: 31.01 change: +0.79 stop: 27.60

I'm growing concerned about the rebound in NIHD. It's starting to falter and some of the short-term technicals are beginning to hint at a bearish move lower. I would be concerned if it closed under the $29.75 level. The good news is that today the stock made it above the highs for this week so may have broken resistance and will continue higher. The next resistance level is the September high of 31.39. More conservative traders may want to raise their stops. The plan was to use small position sizes (1/2 to 1/4 normal size) to limit risk. Our first target is $33.75. FYI: The P&F chart is very bullish with a $57 target.

Entry on   October 08 at $30.60
Change since picked:     + 0.41   			
Earnings Date          10/22/09 (unconfirmed)    
Average Daily Volume:       3.4 million 
Listed on September 23, 2009    


Petrobras - PBR - close: 49.86 change: +1.38 stop: 43.70

PBR continues to look strong but I wouldn't be surprised to see a dip soon. Broken resistance in the $46.50-46.00 zone should now be support.

The $50.00 level is probably round-number, psychological resistance so don't be surprised to see PBR pull back on its initial test of the $50 mark.

Our first target is $52.50. Our second target is $59.00. The P&F chart is bullish with a $63 target.

Entry on   October 08 at $46.80
Change since picked:     + 3.06   			
Earnings Date          11/13/09 (unconfirmed)    
Average Daily Volume:      12.8 million 
Listed on   October 07, 2009    


Patriot Coal - PCX - close: 13.33 change: +0.31 stop: 9.95

We've been expecting a little correction after PCX's big bounce and this week has been a little volatile. The short-term direction is up for grabs. I'd still look for a deeper pull back before the stock moves much higher.

I'm using a wide stop loss given PCX's recent volatility. We'll take profits at $13.90. I've optimistically set a secondary target at $16.75 but the plan is to exit ahead of the late October earnings report.

Entry on   October 05 at $12.14 /gap open higher
                            /originally listed at $11.78
Change since picked:     + 1.19   			
Earnings Date          10/28/09 (unconfirmed)    
Average Daily Volume:       6.4 million 
Listed on   October 05, 2009    


Pride Intl. Inc. - PDE - close: 30.96 change: -0.01 stop: 29.49 *new*

PDE tried to rally early this morning but gave it up and then consolidated near the lows. More conservative traders may want to exit early or scale down their position sizes. I'm raising our stop loss to $29.49. If PDE continues lower I'm watching technical support at the rising 30-dma.

Our first target is $34.75. We'll plan to exit ahead of the late October earnings report.

Entry on   October 08 at $31.15
Change since picked:     - 0.19   			
Earnings Date          10/29/09 (unconfirmed)    
Average Daily Volume:       3.7 million 
Listed on September 12, 2009    


Playboy Ent. - PLA - close: 3.70 change: +0.13 stop: 2.95

Shares of PLA continue to scream higher although today's price action looks like it needed to do a little consolidation after the initial gap up. This is the 5th day of a move that has gone pretty much straight up so more conservative traders may want to exit early with the stock this overbought. If the stop loss to $2.95 is not tight enough for you then consider a stop closer to $3.20.

Our second and final target is $3.95. FYI: The Point & Figure chart is bullish with a long-term $7.50 target.

Entry on September 01 at $ 2.65
Change since picked:     + 1.05 
                            /take profits 09/16/09 (+17.7%)
Earnings Date          11/05/09 (unconfirmed)    
Average Daily Volume:       370 thousand
Listed on  August 29, 2009    


Market Vectors: Steel - SLX - close: 58.28 change: +3.01 stop: 49.95

After stalling at the September high for the past few days SLX rocketed higher, starting with a big gap up and never looking back. It's probably due a pullback but it's looking good for our second upside target of %59.50 after tagging our first target at $54.75. I'm not suggesting new positions at this time.

Entry on   October 01 at $50.25 *triggered
Change since picked:     + 8.03   			
                            /1st target hit @ 54.75 (+8.9%)
Earnings Date          00/00/00 
Average Daily Volume:       309 thousand
Listed on September 19, 2009    


Stryker Corp. - SYK - close: 45.92 change: +0.58 stop: 43.90

I remain very cautious on SYK but not wary enough to drop it. With our stop loss at $43.90 we can control the risk. More aggressive traders can keep their stop under the 50-dma. I'm not suggesting new positions.

Our first target is $47.75.

Entry on   October 06 at $44.54 *new entry 
Change since picked:     + 1.38  			
Earnings Date          10/20/09 (confirmed)    
Average Daily Volume:       3.2 million 
Listed on   October 03, 2009    


Tractor Supply Co. - TSCO - close: 52.20 change: -0.99 stop: 48.90

We've been expecting a correction in TSCO and today it started with a little more power, which is a little surprising considering how bullish the market was today. Shares need to fill the gap and that means a dip back toward $51.00. Our first target is $54.40 and our second target is $57.45 but that's probably too aggressive given our time frame. I would exit the majority of our position at $54.40. We need to exit ahead of the October 21st earnings report. FYI: The Point & Figure chart is very bullish with a $72 target.

Entry on   October 06 at $50.56 
Change since picked:     + 1.64   			
Earnings Date          10/21/09 (confirmed)    
Average Daily Volume:       384 thousand
Listed on   October 06, 2009    


VisionChina Media - VISN - close: 8.67 change: +0.15 stop: 7.45

We've been expecting a dip back toward what should be support in the $8.15-8.00 zone but so far price looks to be consolidating in a trading range between 8.40 and 9.20. Look for a bounce near $8.00 as a new entry point. Remember, this is a very aggressive trade and we want to keep our positions small.

Our first target is $10.90. Our second target is $13.75. The Point & Figure chart is bullish with a $15.00 target. My time frame is several weeks (maybe year end).

Entry on   October 07 at $ 8.53 
Change since picked:     + 0.14   			
Earnings Date          10/29/09 (unconfirmed)    
Average Daily Volume:       407 thousand
Listed on   October 07, 2009    



BEARISH Play Updates

*We currently do not have any bearish play updates*