Option Investor
Newsletter

Daily Newsletter, Thursday, 1/6/2011

Table of Contents

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

Market Wrap

Waiting On Payrolls

by Jim Brown

Click here to email Jim Brown
The markets stagnated on Thursday as traders waited on the Non-Farm Payroll report on Friday.

Market Statistics

Even though the ADP report on Wednesday was very positive it was really weighing on the markets today. The +297,000 jobs it said were created in December really upped the ante on expectations for the Non-Farm Payrolls on Friday. Last week the expectations for the payroll report were for a gain of 125,000 jobs. Since the ADP report some analysts are now expecting upwards of 200,000 jobs on Friday.

That is a big jump when analysts were expecting such a mediocre report just a month ago. It would mean employment has turned the corner and a real recovery is beginning. Unfortunately the increased expectations bring with them increased concerns that the ADP report was the result of a some body data and reality could be much lower on Friday.

This worry along with a negative surprise in retail sales kept the lid on the market on Tuesday. The Chain Store Sales for December came in at +3.1% and a sharp decline from the 5.8% in November and the 5+% analysts were expecting. The big decline came as a result of the blizzard that shutdown sales in the important after Christmas week. Analysts estimate up to $1.5 billion in sales were missed because consumers were snowbound. Many of those sales will occur in January as those gift cards begin burning a hole in consumer pockets.

Despite the lower than expected sales it was still the best holiday season since 2006. Department stores saw a 4.6% increase and luxury stores saw an 8.1% increase in sales. Wholesale clubs rose +5.7%. The ICSC is predicting slower growth in January of +2.5% but that is still a decent gain. The sector that lagged was electronic sales but there were no specific details in the report.

Retailers were pummeled by the drop in sales with Abercrombie & Fitch (ANF) losing -2.05 and Gap (GPS) dropping $1.57. Target (TGT) lost -7% or -$4 and Kohls (KSS) -$1.67. Even the luxury retailers that posted strong sales lost ground but the selling was less intense on stores like Tiffany (TIF).

Weekly Jobless Claims rose by 18,000 to 409,000 but this week's data is full of noise and is not followed closely. This data was for the week ended on December-25th. Many people hold off filing claims until after the holidays and there will be a large number of seasonal temporary workers going back into the unemployment lines so the number two weeks from now is the one that matters.

The big mover today was the dollar and the Euro. The dollar rallied over the last two days to six-week highs. Pushing the dollar higher was better than expected economic news on Wednesday and growing worries over European debt. Even with out $14 trillion of recognized debt on the books the dollar is still seen as a safe haven currency.

The Euro plunged -1$ to $1.301 after Portuguese and Spanish bonds declined over auction fears. The European nations will hold debt auctions next week and analysts believe investors will demand higher yields to purchase the risky debt. The yield on Portuguese rose 26 basis points to 7.17% ahead of the auctions to the highest level in a month. Portugal plans on selling 20 billion euros in bonds in 2011 to finance its deficit. Spain will attempt to sell debt on Jan 13th, the same day Italy auctions debt for 2015 and 2026 maturities. Belgian bonds sold off after the nation's political leaders failed to restart seven party negotiations to form a government.

The massive amounts of sovereign European debt coming to market is weighing on the Euro and pushing the dollar higher by default.

The sharply rising dollar crushed commodity prices with corn dropping -3%, wheat -3% and sugar -6%. Oil lost -2.3% and copper -2%. Anyone who hoped the commodity rally would continue into 2011 has been seriously mistaken. However, we know this is temporary. The dollar is basically back to where it was three weeks ago and metals like gold and silver are back to levels they were in the same period. This is the buying opportunity many investors were waiting for. The only challenge is waiting for a bottom to appear. Remember, the Fed is still in QE2 mode and over the long term that will force the dollar lower and lift commodities. The counter balance to that is the improving economy. That will push the dollar higher. It is going to be a battle and the economy and strong dollar will eventually win but the near term could see the dollar strength ebb once the European debt auctions are over.

Dollar Index Chart

Euro Chart

Another reason for the weakness in commodities is the Commodity Futures Trading Commission (CFTC) meeting next week. At that meeting they will again discuss position limits in commodities to prevent large funds and investors from pushing prices around with large positions. This is a very thorny topic and there are many advocates and opponents to the various types of limits they are proposing. Once they agree on a plan they still have to go out for public comment so changes are not imminent but they are coming. They are going to try once again to get a position limit of 10% in any commodity. They have tried to pass this in recent meetings and could not get enough votes. They will vote again next Thursday.

In stock news Goldman Announced it was being sued by ACA over the Abacus synthetic CDO. This is the same one the SEC sued Goldman for and reaped millions in fines. ACA is claiming now that Goldman did not disclose Paulson's true role in selecting the mortgages that went into the product. They are suing for $120 million for "unjust enrichment" in the joint venture. ACA is claiming it was misled by Goldman. Goldman shares fell -1.79 to close at $172.

Borders (BGP) rallied +21% in after hours after news broke they were in talks about refinancing their debt and staying out of bankruptcy.

Borders Chart

After hitting a new high this morning Apple ended with a minor loss after Motorola and Verizon officially announced the XOOM tablet at CES. I included a link last week for the innovative video ad for the XOOM and it appears to deliver on all accounts. The tablet has HD video at 1080P on a 10.1 inch screen, HDMI output, dual core 1Ghz processor, front and rear cameras that shoot HD video in 720P, flash is supported as is a gyroscope, barometer, compass, accelerometer, adaptive lighting and Verizon's high speed network. The XOOM has the new Honeycomb OS from Google specifically designed for the tablet. It is not a smartphone OS running on a tablet.

The sheer quantity of products being released is tough for Apple lovers to overcome. Sony released 60 products at the CES show. So far there has been over 200 new product announcements. None of those products were from Apple since Apple does not participate in CES. Since many of those products have some component from Google it was a good day for Google shares with a $4.43 gain while Apple shares ended fractionally lower.

In an online survey connected to a news story about the XOOM tablet it appears Apple will still be the favored tablet supplier in 2011 but the year is still young.

Tablet survey:
Which tablet will you buy in 2011?

Intel released a picture of its new 2nd generation Core processor with one billion transistors and highly enhanced video capabilities for laptop PC users. Shrinking processor sizes is a big deal because the signals don't have as far to travel, power consumption is lower and they can pack more components into the limited space. The picture below shows a Core processor, Reese's Peanut Butter Cup and a dime. That is pretty dang small for a one billion transistor chip.

Intel 2nd Generation Core Processor

Other than CES news and retail sales there was not much happening in the market today. As I said earlier everyone was just passing time until the Payroll report on Friday. The S&P declined slightly to 1273 but you would be hard pressed to draw any material conclusions about market direction from today's action. Volume was decent at 8.2 billion shares with decliners about 2:1 over advancers. If I had to put a label on today's market I would call it distribution rather than consolidation. Just wanting a profit taking dip does not make it happen. We can't "hope" the market into a buying opportunity any more than we can wish it higher when we are long. The market will do whatever it wants and we have to follow the trend not fight it.

The support on the S&P is 1258, a level we grew very accustomed to seeing in late December. That would be a 15-point decline from todays close and without some event to trigger profit taking we could just continue to melt up. Resistance is 1275-1280 followed by 1290.

S&P-500 Chart

The Dow is following the same trend higher and despite the minor loss there was no change in direction. The trend since December 1st has been slowly higher and for investors this is a perfect environment once they are long. For those not long it is very frustrating as they wait for an entry point.

Current resistance is 11,700 dating back to August 2008. This could be a tough level to cross without a major news event. That event could be the Payroll Report on Friday if the numbers come in much better than initial estimates. Support is 11,600 followed by 11,445.

Dow Chart - Daily

The Nasdaq broke above the early resistance at 2700 and closed at a new high. What else can I say? Strong gains in Google, Priceline and First Solar overcame minor weakness in Apple and the Nasdaq moved over its consolidation range from early in the week. This is a bullish chart. Of course the CES show in Vegas is normally positive for tech stocks.

Support is well back at 2660 and resistance continues to evaporate as the index marches steadily higher. I don't know what it is going to take to produce profit taking in the Nasdaq with major tech earnings only two weeks away.

Nasdaq Chart

The Russell is not giving any clues to direction other than it did NOT make a new high on a day when the Nasdaq was positive. The Russell seems to be either consolidating or distributing at the 790 level where it has held since Dec 22nd. We had the two days of deviation but the price quickly came back to neutral. Relative strength is getting weaker so I continue to warn this is the canary in the coalmine. If the Russell retests 780 support and fails we could be in for a decent dip. My guess is that 780 will hold on the first test assuming there is not a major news event providing directional force.

Russell Chart

In summary I believe the markets are just passing time while we wait for the Payroll Report on Friday. Assuming the report passes muster and shows enough job gains to avoid a sell off then we could continue this holding pattern until earnings begin the following week. However, options expiration is only two weeks away so next week is normally our volatility week ahead of expiration. Funds move out of option positions the week before expiration. Are they net long or net short in their option positions? If we knew that we could pick a market direction a little more accurately.

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Jim Brown

Send Jim an email


New Plays

Friday's Report: Jobs

by James Brown

Click here to email James Brown

Editor's Note:

Investors are crossing their fingers that Friday's jobs report is strong following the better than expected ADP number on Wednesday. If we do see a better than expected job number then the market rally should resume. If we don't, well, stocks could see some profit taking. Friday morning could be volatile.

I am not adding any new candidates tonight. We need to wait and see what the jobs number is and how the market chooses to interpret the data.

- James


In Play Updates and Reviews

NVDA Explodes Higher!

by James Brown

Click here to email James Brown

Editor's Note:
NVDA surged more than +13% in one day on excitement at the CES convention in Vegas. Our profit target was hit. MSFT also had a strong day and I've updated our stop loss on MSFT. Plus, WCG hit our trigger to open bullish positions.

-James

Current Portfolio:


BULLISH Play Updates

Automatic Data Processing - ADP - close: 48.00 change: +0.37

Stop Loss: 45.45
Target(s): 49.75, 52.50
Current Gain/Loss: + 2.6%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/06 update: ADP extends its gains to close at new relative highs near $48. If you're looking for a new entry point I'd wait for a dip near $47.00. Keep your position size small to limit your risk.
FYI: The Point & Figure chart for ADP is forecasting a bullish price target of $66.00.

Current Position: Long ADP stock @ $46.75

- or -

Long the 2011 February $45.00 call (ADP1119B45) Entry @ $2.00

01/03: Entry @ $46.75
01/01: New stop loss @ 45.45
01/01: New entry point @ current levels, new option strike (Feb. $45)

Entry on January 3 at $46.75
Earnings Date 01/26/11 (unconfirmed)
Average Daily Volume: 2.8 million
Listed on December 16th, 2010


Alaska Air Group - ALK - close: 59.70 change: +0.59

Stop Loss: 54.90
Target(s): 59.75, 64.00, (option exit 61.75)
Current Gain/Loss: + 8.7%
Time Frame: 8 to 9 weeks
New Positions: see below

Comments:
01/06 update: A drop in oil prices failed to buoy the XAL airline index but ALK managed to post another gain (+0.99%). There is no change from my prior comments. I am not suggesting new bullish trades in ALK at this time.

Earlier Comments:
We want to sell half of our stock position at $59.75. Sell all of our January options at $61.75. Sell the rest of our stock position at $64.00.

Current Position: Long ALK stock @ $54.91

- or -

Long the 2011 January $60 calls (symbol: ALK1122A60) entry @ $1.60

01/05: Target hit at $59.75 (+8.8%)
12/21: First target is 59.75, adding second target at $64 for ALK stock.
12/21: Adjusting our only exit target on the calls to $61.75.

Entry on November 22 at $54.91
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 331 thousand
Listed on November 20th, 2010


BB& T Corp. - BBT - close: 26.89 change: -0.58

Stop Loss: 25.80
Target(s): 29.90
Current Gain/Loss: - 1.5%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
01/06 update: Our new BBT play is not off to the strongest start. Financial stocks saw some profit taking today and BBY opened at $27.32 but settled with a -2.1% loss. I'm still bullish and could consider new positions here but readers may want to wait and see if BBT can bounce from its 10-dma near $26.65 or will it test the $26.00 level. Keep your position size small to limit your risk. Our first target is $29.90. We will have to decide whether or not we want to hold over BBT's earnings in late January.

(small positions only)

Current Position: BBT stock @ $27.32

- or -

Buy the 2011 February $28.00 calls (BBT1119B28) Entry @ 0.90

Entry on January 6 at $27.32
Earnings Date 01/21/11 (confirmed)
Average Daily Volume: 6.4 million
Listed on January 5th, 2010


Popular Inc. - BPOP - close: 3.13 change: -0.07

Stop Loss: 2.75
Target(s): 3.40, 3.95
Current Gain/Loss: + 4.3%
Time Frame: 12 to 16 weeks
New Positions: see below

Comments:
01/06 update: Profit taking in the banking stocks shaved off -2.1% in BPOP. There is no change from my prior comments. I'm not suggesting new positions at current levels. Conservative traders may want to raise their stop closer to the 50-dma (currently near $2.90).

Current Position: Long BPOP stock @ $3.00

- or -

Long the 2011 April $3.00 calls (BPOP1116D3) Entry @ $0.34

12/22: Close over $3.00 is another bullish entry point.
12/18: New stop loss @ 2.75

Entry on December 14 at $ 3.00
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume: 11.7 million
Listed on December 11th, 2010


Citigroup Inc. - C - close: 4.95 change: -0.02

Stop Loss: 4.49
Target(s): 5.00, 5.35
Current Gain/Loss: + 4.6%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/06 update: Yesterday C hit our target at $5.00 and I warned readers to look for some profit taking. This morning C spiked to $5.05 and faded lower. I am still looking for a bigger pull back, maybe to the $4.80 area. I am not suggesting new bullish positions at these levels. This remains an aggressive, higher-risk trade. The plan was to keep our position size small to limit their risk.

Current Position: Long Citigroup stock @ $4.73

- or -

Long the 2011 March $5.00 calls (C1119C5) Entry @ $0.20

01/05: New stop loss @ 4.63
01/05: Target hit @ 5.00 (+5.7%), option @ $0.30 (+50%)

Entry on December 20 at $ 4.73
Earnings Date 01/18/11 (confirmed)
Average Daily Volume: 688 million
Listed on December 18th, 2010


Companhia Brasileira de Distribuicao - CBD - close: 41.07 change: -1.36

Stop Loss: 39.80
Target(s): 44.95, 49.00
Current Gain/Loss: + 2.0%
Time Frame: 12 to 14 weeks
New Positions: see below

Comments:
01/06 update: Uh-oh! CBD underperformed the market with a -3.2% loss. Shares have broken short-term support near $42.00 and are now testing the trend of higher lows. If CBD breaks the 40-dma it will be a very quick drop toward $40.00 and we'll be at risk of getting stopped out. I am not suggesting new positions at this time. CBD can be a volatile stock so readers should consider this a higher-risk trade.

NOTE: We may need to reconsider our time frame on CBD. It could take longer than previously expected for shares to hit our targets.

Current Position: Long CBD stock @ $40.25

01/01 new stop loss @ 39.80
12/29 new stop loss @ 39.25
12/21 New stop loss @ 37.90

Entry on November 23 at $40.25
Earnings Date 03/02/11 (unconfirmed)
Average Daily Volume: 608 thousand
Listed on November 20th, 2010


Check Point Software Technologies - CHKP - close: 46.72 change: -1.64

Stop Loss: 44.95
Target(s): 47.25, 49.75
Current Gain/Loss: + 3.5%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
01/06 update: Ouch! CHKP completely erased yesterday's gains thanks to an analyst downgrade this morning. The stock settled with a -3.3% loss. I am not suggesting new bullish positions at this time. There is some short-term support near $46.00 and CHKP should also see some support at the $45.00 level. Our final target is $49.75. Investors will have to decide whether or not they are willing to hold over CHKP's earnings in late January.

Current Position: Long CHKP stock @ $45.10

- or -

Long the 2011 April $45.00 calls (CHKP1116D45) Entry @ $2.55

01/05: New stop loss @ 44.95
01/03: 1st Target Hit @ $47.25 (+4.7%) Option @ $3.75 (+47%)

Entry on December 20 at $45.10
Earnings Date 01/26/11 (unconfirmed)
Average Daily Volume: 1.4 million
Listed on December 18th, 2010


Walt Disney Co. - DIS - close: 39.65 change: -0.31

Stop Loss: 37.49
Target(s): 39.90, 42.50
Current Gain/Loss: + 3.6%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/06 update: There should be no surprise here. With the quick rally toward $40.00 DIS was overbought and due for some profit taking. The profit taking probably isn't over yet. No new positions at this time.

Readers might want to consider a stop closer to $38.00, which should be new support.

- Current Positions -

Long DIS stock @ 38.25

- or -

Long the 2011 February $40.00 calls (DIS1119B40) Entry @ $0.45

- or -

Long the 2011 April $40.00 calls (DIS1116D40) Entry @ $1.10

01/05: 1st Target Hit. Stock @ 39.90 (+4.3%)
01/05: 1st Target Hit. Feb. call @ $1.20 (+166%). April call @ 1.80 (+63.6%)
01/05: new stop loss @ 37.49
01/04: Play triggered @ 38.25

Entry on January 4 at $38.25
Earnings Date 02/08/11 (unconfirmed)
Average Daily Volume: 8.6 million
Listed on December 25th, 2010


Ford Motor Co. - F - close: 18.22 change: +0.33

Stop Loss: 16.75
Target(s): 18.40, 19.95
Current Gain/Loss: + 7.8%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/06 update: Ford continued to look strong with another new relative high. Shares hit $18.29 intraday. Our first target to take profits is at $18.40. No new positions at this time.

FYI: The Point & Figure chart for Ford is bullish with a long-term target of $19.50.

- Suggested Positions -

Long Ford stock @ $16.90

- or -

Long the 2011 January $17.50 calls (F1122a17.5) Entry @ $0.25

- or -

Long the 2011 March $18.00 calls (F1119C18) Entry @ $0.61

01/05: New stop loss @ 16.49.

Entry on December 23 at $16.90
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 58.7 million
Listed on December 22nd, 2010


FLIR Systems Inc. - FLIR - close: 29.18 change: -0.25

Stop Loss: 27.40
Target(s): 30.90, 33.00
Current Option Gain/Loss: + 0.2%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/06 update: It was a relatively quiet session for FLIR on Thursday. I don't see any changes from my prior comments. Don't be surprised to see a dip toward the 200-dma. FLIR doesn't move super fast but our targets are $30.90 and $33.00.

Current Position: Long FLIR stock @ $29.10

- or -

Long the 2011 April $30.00 calls (FLIR1116D30) Entry @ $1.60

Entry on December 22 at $29.10
Earnings Date 02/10/11 (unconfirmed)
Average Daily Volume: 1.6 million
Listed on December 18th, 2010


JB Hunt Transport Services - JBHT - close: 41.42 change: +0.11

Stop Loss: 38.75
Target(s): 43.50, 46.75
Current Option Gain/Loss: + 2.7%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/06 update: JBHT was drifting higher on Thursday. If we see a bad jobs number tomorrow then JBHT could easily dip toward $40.00. No new positions until we see the jobs number. Readers may want to raise their stops closer to the $40 level.

FYI: The Point & Figure chart for JBHT is bullish with a $54.50 target.

Suggested Position: Long JBHT stock @ $40.33

- or -

Buy the 2011 February $40 calls (JBHT1119B40) Entry @ $1.85

12/22 Entry at $40.33
12/21 New Entry Point - Launch Positions Now (open of 12/22)

Entry on December 22 at $40.33
Earnings Date 01/28/11 (unconfirmed)
Average Daily Volume: 1.2 million
Listed on December 13th, 2010


Morgan Stanley - MS - close: 28.80 change: -0.03

Stop Loss: 25.95
Target(s): 29.85, 31.85
Current Gain/Loss: + 6.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/06 update: With the big gains in MS this week I'm surprised the profit taking today wasn't worse especially with the company shuffling some of its top executives. I am not suggesting new bullish positions at this time. MS should have some support near $27.50 and $27.00. Our first target is $29.85.

Current Position: Long MS stock @ 26.95

- or -

Long the 2011 January $27.50 calls (MS1122a27.50) Entry @ $0.58

- or -

Long the 2011 April $27 calls (MS1116D27) Entry @ $1.64

01/03: New stop loss @ 25.95

Entry on December 22 at $26.95
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume: 12.2 million
Listed on December 21st, 2010


Microsoft Corp. - MSFT - close: 28.82 change: +0.82

Stop Loss: 26.95
Target(s): 27.45, 29.75
Current Gain/Loss: +12.8%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/06 update: MSFT was flexing its muscles today. The stock outperformed the market with a +2.9% gain. Maybe it was something they said at the CES convention. I didn't see any specific news behind the rally. Please note that I am raising our final exit target from $29.00 to $29.75. I am raising our stop loss to $26.95.

Current Position: Long MSFT stock @ 25.55

- or -

Buy the 2011 January $25.00 calls (symbol: MSFT1122A25) Entry @ $1.39

01/06/11 raised final exit target to $29.75
01/06/11 new stop loss @ 26.95
12/25/10 new stop @ 25.95
12/18/10 new stop @ 25.70
12/14/10 Target hit @ 27.45 (+7.4%), option @ $2.55 (+83.4%)
12/11/10 New stop @ 25.45
11/29/10 New stop @ 24.70

Entry on November 17 at $25.55
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 68.4 million
Listed on November 15th, 2010


Manitowoc Co. Inc. - MTW - close: 13.39 change: +0.07

Stop Loss: 11.95
Target(s): 14.95, 16.25
Current Gain/Loss: -1.1%
Time Frame: 10 to 12 weeks
New Positions: Yes, see below

Comments:
01/06 update: MTW turned in a mild session with shares consolidating sideways. I would still buy this stock (or calls) in the $13.00-13.50 zone. We want to keep our position size small to limit our risk. We're starting this play with a wide (aggressive) stop loss at $11.95. More conservative traders may want to use a stop closer to $12.50 or even Friday's low near 12.70. Our targets are $14.95 and $16.25. FYI: The Point & Figure chart for MTW is bullish with a long-term $21 price target.

Current Position: Long MTW stock @ $13.54

- or

Long the 2011 February $14.00 calls (MTW1119B14) Entry @ $0.70

Entry on January 4 at $13.54
Earnings Date 02/02/11 (unconfirmed)
Average Daily Volume: 2.0 million
Listed on January 3rd, 2010


Mylan, Inc. - MYL - close: 22.46 change: +0.77

Stop Loss: 20.90
Target(s): 22.90, 23.60.
Current Gain/Loss: +2.9%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
01/06 update: Thursday proved to be a healthy session for MYL. The stock opened at $21.81 (our entry point) and rallied past the $22.00 level to close with a +3.5% gain. Volume was strong on the move, which is normally bullish. If you missed our entry point you might want to wait for a dip near $21.75. I am setting a secondary target at $23.60. Our first target is $22.90.

The most recent data listed short interest at 12% of the 287 million-share float. Any significant rallies could fuel some short covering.
FYI: The Point & Figure chart for MYL is bullish with a $33 target.

Current Position: Long MYL stock @ 21.81

- or -

Long the 2011 April $22.00 calls (MYL1116D22) Entry @ $1.25

Entry on January 6 at $21.81
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume: 9.0 million
Listed on December 20th, 2010


ResMed Inc. - RMD - close: 34.49 change: -0.08

Stop Loss: 32.40
Target(s): 38.00
Current Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Comments:
01/06 update: RMD is still slowly consolidating lower. There is no change from my prior comments. We want to keep our position size small! I am suggesting a trigger to launch bullish positions at $34.00 with a stop loss at $32.40. If triggered our multi-week target is $38.00.

Trigger to buy-the-dip @ $34.00

Suggested Position: Buy RMD stock @ $34.00

- or -

Buy the 2011 April $35.00 calls (RMD1116D35) current ask $2.05

Entry on January xx at $xx.xx
Earnings Date 02/03/11 (unconfirmed)
Average Daily Volume: 752 thousand
Listed on January 1st, 2010


Starbucks Corp. - SBUX - close: 31.96 change: -0.39

Stop Loss: 31.70
Target(s): 35.75
Current Gain/Loss: - 0.9%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
01/06 update: It's not looking good for our SBUX play. Shares sank to $31.79 intraday. I'm sure the disappointing same-store retail sales numbers across the retail sector did not help investor sentiment. If the jobs report on Friday morning is disappointing we could see SBUX gap open lower below our stop loss at $31.70. Assuming we don't get stopped out I would look for a move over $32.50 before considering new positions.

FYI: SBUX is currently in a legal battle with Kraft Foods (KFT) over distribution of SBUX's ground coffee brand but investors seem to be ignoring it.

Suggested Position: Long SBUX stock @ $31.25

- or -

Long the 2011 January $33.00 call (SBUX1122A33) Entry @ $0.55
Long the 2011 April $34.00 call (SBUX1116D34) Entry @ $1.30

01/03/11 New target at $35.75
12/27/10 Trigger hit @ 32.25
12/25/10 new trigger 32.25, new stop 31.70

Entry on December 27 at $32.25
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume: 7.1 million
Listed on December 8th, 2010


Sony Corp. - SNE - close: 36.01 change: -0.20

Stop Loss: 34.75
Target(s): 37.75, 39.75
Current Gain/Loss: + 1.6%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/06 update: SNE is moving sideways inside its larger up trend. Wait to see how the jobs number turns out before considering new positions.

Current Position: Long SNE stock @ $35.60
- or -
Long the 2011 APRIL $35 calls (SNE1116D35) Entry @ $2.26

01/01 New stop loss @ 34.75
12/22 Triggered @ $35.60
12/21 New trigger @ 35.60, New stop @ 34.40

Entry on December 22 at $35.60
Earnings Date 02/03/11 (unconfirmed)
Average Daily Volume: 888 thousand
Listed on November 23rd, 2010


Seagate Technology - STX - close: 14.75 change: +0.05

Stop Loss: 14.70
Target(s): 16.95, 17.75
Current Gain/Loss: unopened
Time Frame: 10 to 12 weeks
New Positions: Yes, see trigger

Comments:
01/06 update: STX was underperforming this morning but managed to rebound intraday. Aggressive traders might want to buy a bounce over $15.00. I am suggesting we stick to our plan and wait for a move to $15.45 before launching bullish positions. Don't forget that STX is due to report earnings in about three weeks. Normally we do not want to hold over earnings. Conservative traders will want to exit ahead of the announcement.
FYI: The Point & Figure chart for STX is bullish with a long-term $28.50 target.

Trigger at $15.45

Suggested Position: Buy STX stock @ $15.45

- or -

Buy the 2011 February $15 calls (STX1119B15) current ask $0.91

Entry on January xx at $xx.xx
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume: 7.1 million
Listed on January 1st, 2010


WellCare Health Plans, Inc. - WCG - close: 31.39 change: +0.78

Stop Loss: 29.40
Target(s): 33.75, 37.75
Current Gain/Loss: + 2.0%
Time Frame: 10 to 12 weeks
New Positions: Yes, see below

Comments:
01/06 update: Our play in WCG has been triggered. The stock continues to show relative strength and shares broke out to new relative highs and hit our trigger at $30.75. If you missed our entry point consider waiting for a dip in the $30.75-30.00 area. Keep in mind that investors will have to decide whether or not they are willing to take the risk of holding over WCG's earnings report in late February.
FYI: The Point & Figure chart for WCG is bullish with a $41 target.

Current Position: WCG stock @ $30.75

- or -

Long the 2011 March $35.00 calls (WCG1119C35) Entry @ $0.60

01/06: Play triggered @ 30.75.

chart:

Entry on January 6 at $30.75
Earnings Date 02/17/11 (unconfirmed)
Average Daily Volume: 410 thousand
Listed on January 4th, 2010


Wells Fargo & Co - WFC - close: 32.15 change: -0.22

Stop Loss: 30.40
Target(s): 29.25, 32.75
Current Gain/Loss: +19.6%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/06 update: If the jobs number is disappointing we're going to wish we'd taken profits today. WFC spent the session moving sideways as investors wait for the economic data tomorrow. Our final target to exit is $32.75. I am not suggesting new positions at this time.

Current Position: Long WFC stock @ $26.88

- or -

Long the 2011 January $27.50 call (WFC1122A27.5) Entry @ $1.16

01/05: New stop loss @ 30.40, final target adjusted to 32.75
12/22: New stop loss @ 28.90, New final target @ 32.90
12/21: New stop loss @ 28.49
12/09: New stop loss @ $27.90
12/08: Target Hit $29.25 (+8.8%), Option @ $2.30 (+98.2%)

Entry on November 30 at $26.88
Earnings Date 01/19/11 (unconfirmed)
Average Daily Volume: 32.7 million
Listed on November 29th, 2010


World Wrestling Entertainment - WWE - close: 14.10 change: -0.19

Stop Loss: 13.90
Target(s): 14.95, 16.40
Current Gain/Loss: + 0.0%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/06 update: I am growing more and more concerned about WWE. We might want to consider an early exit to make room for something else. I am not suggesting new bullish positions at this time. Keep your position size small to limit your risk.

Suggested Position: Long WWE stock @ $14.10

- or -

Buy the 2011 April $15.00 calls (WWE1116D15), entry @ $0.45

*Note: The call options on WWE have very large spreads, making them a higher-risk trade.

12/30/10 new stop loss @ 13.90
12/30/10 WWE provides another entry point at $14.15

Entry on December 13 at $14.10
Earnings Date 02/10/11 (unconfirmed)
Average Daily Volume: 242 thousand
Listed on December 9th, 2010


CLOSED BULLISH PLAYS

NVIDIA Corp - NVDA - close: 19.33 change: +2.35

Stop Loss: 15.25
Target(s): 16.75, 17.90
Current Gain/Loss: +18.5%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/06 update: Target achieved. NVDA exploded higher with a +13.8% gain. The stock surged past resistance near $18.00 and tagged a high at $19.34. Fueling this rally was news that some of the most alluring products at the CES show in Vegas this year has NVDA's Tegra 2 chips in it. Plus, MSFT is designing a new tablet with NVDA chips. Our final target to exit was hit at $17.90.

(small positions)

Closed Position: Long NVDA stock @ $15.15, exit @ 17.90 (+18.5%)

- or -

Long the 2011 February $15.00 calls (NVDA1119B15) Entry @ $1.05, exit @ $3.10 (+195%)

- or -

Long the 2011 March $15.00 calls (NVDA1119C15) Entry @ $1.25, exit @ 3.25 (+160%)

01/06: Final Target Hit @ 17.90 (+18.5%)
01/06: Final Target Hit. Feb. $15 call @ $3.10 (+195%), Mar. call @ $3.25 (+160%)
01/05: 1st Target Hit. Feb. call @ $2.10 (+100%) March call @ $2.25 (+80%)
01/05: 1st Target Hit @ 16.75 (stock +10.5%)
01/05: New stop loss @ 15.25

chart:

Entry on December 31 at $15.15
Earnings Date 02/17/11 (unconfirmed)
Average Daily Volume: 13.2 million
Listed on December 30th, 2010