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Daily Newsletter, Saturday, 11/5/2011

Table of Contents

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

Market Wrap

What Have You Done For Us Today

by Jim Brown

Click here to email Jim Brown

Investors seemed to be frustrated that nothing material came out of Europe and the G20 meeting on Friday. Without a market moving headline the markets fell into a funk while they waited the fall of the Greek government.

Market Statistics

Without a European headline to rock the markets it was a relatively calm day. The indexes started off in the hole after a mediocre jobs report and no help out of the G20 for Europe, but they slowly improved their position as the day progressed. It was not enough to finish in the green but the looming Greek confidence vote was weighing heavy at the close.

The Nonfarm Payroll report for October was a little lighter than expected but it was still decent. The headline number showed a gain of +80,000 jobs compared to estimates of 95,000. However, the prior two months were revised higher by +102,000 jobs. August was revised up from 57,000 to 104,000 and September rose from 103,000 to 158,000. Private sector jobs rose by +104,000 but that was down from an upwardly revised 191,000 in September.

The unemployment rate declined by -0.1% to an even 9.0% rate. This was due to a gain of 277,000 jobs in the separate Household Employment Survey.

The positive employment components in several of the regional economic reports suggests the economy will continue to add jobs but at a very slow pace. Moody's is expecting an average of +100,000 jobs per month for the next four quarters. That is on the bearish side of most forecasts. Most believe jobs will improve in early 2012 after some seasonal weakness in the next four months. You need +200,000 jobs per month to reduce unemployment because 150,000 new workers enter the job market each month. The Fed said they expect the unemployment rate to decline to 8.5% to 8.7% by Q4-2012. That is not a very big decline and that suggests the economy and unemployment is going to be THE big battleground for the 2012 elections.

Payroll Chart

There were no other material economic reports on Friday. Next week will also be an economic wasteland with a lack of material reports all week. Stocks will be on their own and at the mercy of a trickle of earnings and European headlines. The EU Finance Ministers will have a two day meeting on Mon/Tue on implementing changes to the EFSF. On Thursday the EU releases its semi-annual economic forecast and that is likely to be negative given the recent events.

Economic Calendar

After the close on Friday the Greek prime minister, George Papandreou, survived his vote of confidence and the Greek government is still intact. The vote was 153 to 145. He calmed a revolt in his socialist party by pledging to step aside if need be and seek a cross-party government lasting for four months to safeguard the new debt agreement. The finance minister said the new provisional government would last until the end of February. The opposition party leader, Antonis Samaras rejected the plan and called for snap elections. However, that call is not likely to proceed now that a compromise has been reached that assures a majority vote on maters in parliament. Expect several more days of political maneuvering.

By surviving the confidence vote and remaining in office Papandreou appears to have escaped the chaos he created last week with the call for a general election to vote on austerity and staying in the euro zone. When the EU said they were going to withhold euro 8 billion in bailout funds until after the election in December that killed the process since Greece cannot exist without the funds. For the next few days Greece should be off the table as a market mover and the successful confidence vote should allow the markets to rise on Monday, assuming some new government crisis does not appear.

Unfortunately there is a new development in Italy. Prime minister Berlusconi agreed to allow the IMF to oversee its books and financial dealings in insure the country is fulfilling its promises under the bailout agreements. Throughout this process Berlusconi has seen his support weaken and as of Friday it appears he has lost a majority. If a confidence vote were held today he would likely lose. Opposition leaders are rumored to be planning a move to launch a vote next week. The Greek PM is out of the fire but the Italian PM is about to be roasted over his own problems. He has multiple charges and suits pending against him for everything under the sun including prostitution. His days appear to be numbered.

The problem for our markets is that Italy is the third largest economy in Europe. If the Greek contagion successfully migrates to Italy it would be a disaster. Italy has 1.9 trillion euros in debt compared to 369 billion euros for Greece. The interest rate on the benchmark 10-year Italian bond rose to 6.39% on Friday and a new record high. A year ago it was only 4% and that was after a year of headlines about Greece. It is also after the ECB has been buying Italian bonds and unsuccessfully trying to force the rates lower. Italy cannot pay 6.4% on its debt and should Berlusconi be removed from office the rates could go a lot higher. The bond vigilantes are smelling blood and the situation in Italy is growing worse. Basically Italy is becoming the new Greece. Welcome to 2012.

The G20 meeting ended with a thud. While Germany, France and the U.S. tried to elicit additional support for the EFSF it was not forthcoming. Merkel confirmed that late Friday when she said "very few G20 nations are interested in lending to the EFSF." I would say that was an understatement. Would you want to loan money to a fund that plans to leverage itself up 4-5 times and lend to countries already in financial trouble with no hope of escape? Even the IMF went on record at the meeting saying it would not loan to the EFSF. That removed any implied security blanket that might have made it easier for some countries to participate. Basically the G20 was a bust. After the Papandreou referendum fiasco last week nobody trusts Greece to continue in a trustworthy fashion and the clouds building over Italy are producing additional worries of a bigger problem down the road.

In stock news Groupon closed right at the low of the Day at $26 after pricing at $20 and trading as high as $31 at the open. The IPO was only 35 million shares but more than 50 million traded. Groupon only sold about 5% of the company in the IPO in order to artificially produce an opening day spike on short supply. That happened at the open but the afternoon was ugly. What happens next week when the spotlight moves on to other things is likely to be a disappointment to anyone holding shares. Employees have a six month lockup period so they will get to watch their dollars bleed away if the Groupon undercurrent does not fade. I can't remember an IPO where the company had so much negative press before the sale. If Groupon disappoints on their next earnings report it could be a disaster.

Groupon Chart

Berkshire Hathaway (BRK-A) posted earnings for Q3 of $3.8 billion or $2,309 per class A share. That was a +37% improvement over the same quarter in 2010. Berkshire also said its derivative losses spiked to $1.6 billion from $95 million in the year ago period. Buffett sold billions in index puts several years ago and Berkshire has to mark those to market every quarter. I believe they had a 20-year expiration date and will probably not expire until after the 81 year old Buffett has ceased to be Chairman. In the past Buffet has called derivatives "weapons of mass destruction." The paper loss was due to the markets declining to lows for the year at the end of September.

The Berkshire insurance businesses reported $1.1 billion in income compared to $199 million a year ago. The non insurance businesses reported operating earnings of $2 billion, up from $1.7 billion. Berkshire bought back $18 million in stock in the quarter using both the A and B shares. That is a rare occurrence but Buffett said he likes to buy things cheap and his stock was cheap. It was a token buyback. $18 million is pocket change for Berkshire. Cash on hand at the end of the quarter was $34.78 billion, down from $47.89 billion at the end of Q2. During the quarter Berkshire funded the purchase of Lubrizol and bought $5 billion in Bank of America shares.

Berkshire B Shares Chart

Jefferies Group (JEF) has been under pressure of late on worries they have similar exposure to Europe as MF Global. The shares declined from more than $15 last week to trade briefly under $10 on Thursday despite the firm repeatedly claiming it had no material exposure to Europe. Finally on Friday the company undertook an unprecedented action and actually disclosed all its positions. The revelation revealed a net $9 million short position on $2.4 billion in bonds from five countries. The company had $97 million in cash on hand and billions more in other positions. The president said "These are fragile times in the financial market and we decided the only way to conclusively dispel rumors, misinformation and misplaced concerns is with unprecedented transparency about internal information that is rarely, if ever, publicly disclosed." Also, "As is clear from this information, Jefferies has no meaningful credit risk in respect of the sovereign debt of these nations, and an insignificant risk related to interest rate movements."

Despite the revelations Sean Egan, managing director of Egan Jones, cut its ratings on Jefferies saying the company did not identify the counterparties on the short positions therefore the quality of the positions could not be determined. On Thursday Jefferies biggest shareholder bought another one million shares of Jefferies stock. Leucadia (LUK), a conglomerate that many compare to Berkshire only smaller, said the sell off was ridiculous and represented a significant buying opportunity. In response to the purchase Leucadia shares were knocked for more than a 10% loss but then recovered.

The financial moth, Meredith Whitney, always one to inject herself wherever a financial event can get her some press, said Jefferies management was conservative, the company takes few risks and it was being unfairly tarred with the MF Global brush. It was enough to get her some air time on CNBC.

Jefferies Chart

Of course the event causing all of this volatility was the MF Global crash. On Friday CEO Jon Corzine, former governor of New Jersey and executive at Goldman Sachs, resigned from the company. He said he would not seek any of the $12 million in severance pay he would have been due. I seriously doubt the bankruptcy court would give it to him but at least it was a good sound bite.

The headline all week was the supposed disappearance of $659 million in customer funds from custodian accounts. The CME released a statement on Friday saying a compliance audit completed just a week earlier showed that MF was in compliance with obligations to safely segregate customer funds. "It now appears that the firm made subsequent transfers of customer segregated funds in a manner that may have been designed to avoid detection." Oops! Late Friday there was a rumor the funds had been found in an account at JP Morgan. The account reportedly held $658.8 million. There was no confirmation from JPM.

The alphabet cops, SEC, CFTC, SIPC and FBI along with the Federal Government have all launched investigations into the missing funds and practices at MF Global. Corzine better plan a couple of vacations quick because he could eventually end up a cell mate with Madoff if he authorized the money shuffle.

Managers at MF are trying to claim the money was inadvertently comingled as the company raced to close more than $27 billion in outstanding positions as margin calls overwhelmed the operations. The CME said it would complete the transfer of about 50,000 accounts worth $1.45 billion by the end of day on Friday although only 5,300 had been transferred by midday. The CME also temporarily lowered initial margin requirements on futures to ease the transition of accounts to new brokers.

Yahoo (YHOO) shares declined last week after news broke that Yahoo's founder Jerry Yang was trying to work a recapitalization deal with multiple private equity firms rather than orchestrate a sale. Shares declined -$2 to $14.70 before finding support. On Friday a major shareholder, Daniel Loeb, who owns a 5.2% stake in Yahoo through a fund called Third Point, sent a letter to the Yahoo board demanding seats on the board and the removal of Jerry Yang from the board. Loeb thinks Yang is more interested in keeping Yahoo in friendly hands and him in control rather than selling to the highest bidder in what would be more beneficial to shareholders. The letter list five private equity firms currently in discussions with Yang.

Yang only owns 3.6% of Yahoo and less than Loeb but Yang has a far bigger influence as a director and prior CEO. Loeb said he would finance a shareholder rebellion similar to the one Icahn accomplished two years ago if Yang did not step down. Loeb believes Yang is trying to sell a minority stake in Yahoo to a PE firm that would include Yang as a potential investor. Then that firm would try to force Yahoo to leverage up and buy back all its shares thereby turning their minority stake into a majority stake.

Yahoo Chart

Crude prices continued to buck the trend with oil closing at $94.42 after trading within 7-cents of $95. The volatility has been strong but it refuses to roll over despite the economic worries in Europe. The declining distillate inventories and the failure of Libya to restart any materials quantities of crude appears to be providing support. Also helping is the sudden increase in news headlines about the IAEA and revelations about nuclear weapon efforts in Iran. Repotedly eleven nations, including Britain, Israel, France and the USA are considering preemptive military action. I don't believe that because they would not telegraph their actions in advance. Why warn Iran they are coming unless they are trying to push Iran back to the negotiating table with the rumors.

Oil is just under the 200-day average and a break over $95 could easily run to $100. Crude has been consolidating in the $92-$94 range for two weeks and a breakout could be imminent.

Crude Oil Chart

The S&P ended with a losing week but that would have been a sure bet if you had asked any ten traders last week. The +19% rebound in October was sure to see some serious profit taking once fund managers moved into their new fiscal year on November 1st. Even without the Oct-31st fiscal year end scenario any 19% gain over four weeks would have been due for a rest.

The S&P did decline -5% to the lows on Tuesday and then recovered to neutral territory at 1250 at the close on Friday. That was well off support at 1225 and well below resistance at 1285. This was neutral ground to wait for the results of the Greek confidence vote. I am positive for the markets for next week. As long as Italy's PM is not evicted over the next couple days we should have a week of relative calm.

Many analysts are calling the October gains a bear market rally and we will retest the lows. I don't see that at all. I believe the macroeconomic picture is too strong for another serious decline. Earnings have been good despite a few high profile disappointments. Those will happen in any earnings cycle.

The proof as they say will be in the pudding. As long as the S&P does not close below 1225 the bullish case has validity. A move over 1300 will find some short covering but 1350 remains strong resistance and it may take more than wishful thinking to actually move to new highs. Personally I would be thrilled to just move up to 1350 and hold there until year end. That would get us past the super committee mess and hopefully to a new stage in Europe.

This is one of those market setups that does not require any in-depth analysis. A move below 1225 is bearish and a continued more over 1250 is bullish. Even the E*Trade baby could trade this.

S&P Chart

The Dow gave us a solid bounce off the 100-day average for the second time in the last two weeks. Friday's close was technically over the 200-day average at 11,974 but only by nine points so we really can't count it. The closing high last week was 12,231 so we are only one good day away from retesting that level. If the Greek confidence vote is perceived as positive and the conditions leading up to it as a step in the right direction then we could test that high on Monday. The banks should rally on any chance of a resolution and that will lift the indexes.

Dow 11,650 appears to be support with 12,230 as resistance.

Dow Chart

The Nasdaq was pressing upside resistance at 2700 on both Thursday and Friday despite the events in Europe. If the clouds clear and blue sky appears on Monday we could easily move over that resistance and test the recent highs at 2750.

I think Friday's minimal 12 point decline was a draw. It was a fitting end to a week of profit taking and appears to be perfectly positioned for a breakout on good news. Now all we need is good news.

Nasdaq Chart - 60 min

Nasdaq Chart - Daily

Still no signs or clues from the Russell. Until the Russell 2000 becomes the index leader we are just passing time.

Russell 2000 Chart

I am cautiously bullish for next week but we are still facing headline risk from Europe. If those headlines slow then we can expect the super committee headlines to appear so either way there is headline risk. However, assuming there is no disaster I think the markets will want to move higher. Watch for a continued move over S&P 1250 or a break below 1225 for directional signals.

If your reading this on Saturday night don't forget to set your clocks back an hour.

Jim Brown

Send Jim an email

"I try to take one day at a time, but sometimes several days attack me at once."
Ashleigh Brilliant


New Plays

General Stores & Construction

by James Brown

Click here to email James Brown

Editor's Note:

In addition to tonight's new candidates I would keep my eye on this list below for potential trades this week.

HPQ, MS, PETM, GHL, DISCK, ALTR, PAY, TRMB, ESRX, and NILE.

NILE - After a two-week consolidation shares of NILE look poised to rally. I am tempted to open bullish positions on a move past $45.50 but I am worried about holding over earnings on November 8th (after the closing bell).

HPQ - The stock gapped down on Tuesday but spent the rest of the week in rebound mode. I was tempted to buy HPQ here but we're looking for a dip back toward $26.00

GHL - This stock looks like it's poised to break some long-term resistance. Shares failed near the 100-dma a few days ago. The stock has above average short interest. A breakout past $40.00 and the 100-dma could spark a short squeeze.

-James


NEW BULLISH Plays

Casey's General Stores - CASY - close: 50.07 change: -0.17

Stop Loss: 47.70
Target(s): 54.50
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
You could call this a momentum trade but CASY doesn't actually move that fast. Shares have been consistently trending higher. Traders bought the dip twice this past week near $48.00. Now CASY looks poised to breakout past resistance near $50.00. If that happens we could see the stock make a run towards the $55 area.

I am suggesting we open bullish positions in CASY now but only if both CASY and the S&P 500 index open positive on Monday morning. If triggered we'll use a stop loss at $47.70. Our target is $54.50. FYI: The Point & Figure chart for CASY is bullish with a $70.00 target.

*see Entry Details above*

Suggested Position: buy CASY stock @ the open

- or -

buy the DEC $50 call (CASY1117L50) current ask $2.60

Annotated chart:

Entry on November xx at $ xx.xx
Earnings Date 12/06/11 (unconfirmed)
Average Daily Volume = 250 thousand
Listed on November 5, 2011


Dycom Industries - DY - close: 19.49 change: -0.84

Stop Loss: 18.40
Target(s): 22.25
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks or until earnings.
New Positions: Yes, see below

Company Description

Why We Like It:
DY is a construction company. Last month shares broke out past resistance in the $19.00 area. Now DY has spent the last several days digesting gains (albeit in a very volatile fashion). You can see that DY still has a bullish trend of higher lows. Friday's dip looks like a new entry point. However, we want to keep our position size small because DY can be so volatile.

I am suggesting small bullish positions at the open on Monday but only if both DY and the S&P 500 index can open positive. We will use a stop loss at $18.40 and our target is $22.25. More aggressive traders could aim higher. FYI: The Point & Figure chart for DY is bullish with a $32.50 target.

NOTE: We will probably choose to exit ahead of the earnings report to avoid holding over the announcement in late November.

*see Entry Details above*

Suggested Position: buy DY stock @ the open

- or -

buy the DEC $20 call (DY1117L20) current ask $1.35

Annotated chart:

Entry on November xx at $ xx.xx
Earnings Date 11/22/11 (unconfirmed)
Average Daily Volume = 379 thousand
Listed on November 5, 2011



In Play Updates and Reviews

NetApp Inc. (NTAP) Still Climbing

by James Brown

Click here to email James Brown

Editor's Note:
One of our best performers last week was NTAP. Overall results were mixed on Friday but the semiconductor stocks were showing some relative strength.

Please note that we have removed the IWM and JJC trades unopened.

-James

Current Portfolio:


BULLISH Play Updates

Beazer Homes - BZH - close: 2.04 change: -0.02

Stop Loss: 1.75
Target(s): 3.25
Current Gain/Loss: -6.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
11/05 update: BZH essentially spent a week consolidating sideways. The stock just spent the last five days in the $2.15-2.00 range, at least most of the week. You could choose to see this as a positive sign that BZH is building a base near support at the $2.00 level.

If you're still concerned about a dip in the market then wait for BZH to dip into the $1.90-1.80 zone as your entry point. Alternatively you could wait for a new breakout past $2.15 as your entry point. We do need to keep an eye on the simple 100-dma near $2.28, which might be technical resistance.

Earlier Comments:
We have listed a very high target at $3.25 but I anticipate scaling that down. This is sort of a just-in-case BZH delivers better than expected earnings and the stock explodes kind of target. This industry is very heavily shorted so a short squeeze is a definite possibility.

Please note we are going to take the unusual step and hold over BZH's earnings in November. Normally we try to always exit ahead of earnings to avoid holding over the announcement.

FYI: You could buy calls but the spreads are so wide they could actually increase your risk (but they'll definitely leverage any move higher).

current Position: Long BZH stock @ $2.19

- or -

Long 2012 Jan $3.00 call (BZH1221A3) Entry $0.15

chart:

Entry on October 31 at $2.19
Earnings Date 11/15/11 (confirmed)
Average Daily Volume = 2.4 million
Listed on October 29, 2011


CEMEX - CX - close: 4.68 change: +0.19

Stop Loss: 3.89
Target(s): 4.95
Current Gain/Loss: + 4.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
11/05 update: CX displayed relative strength on Friday. A positive market back home in Mexico provided a stable backdrop for CX. The stock rallied to $4.83 intraday before settling at a new six-week high and a +4.2% gain on Friday. I would not chase it here. Our exit target is only $4.95 and support is down at the 10-dma near $4.18. We will raise our stop loss to $3.97. More aggressive traders may want to aim higher for their exit.

*See Entry Details Above*

current Position: Long CX stock @ $4.48

- or -

Long Jan $5 call (CX1221A5) Entry $0.45

11/05 new stop loss @ 3.97
11/03 CX gapped open to $4.48 (+6.3%)

chart:

Entry on November 3 at $ 4.48
Earnings Date 10/26/11
Average Daily Volume = 20.3 million
Listed on November 2, 2011


Healthstream Inc. - HSTM - close: 15.73 change: -0.26

Stop Loss: 14.25
Target(s): 18.00
Current Gain/Loss: - 0.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
11/05 update: After a strong two-day bounce HSTM hit some profit taking on Friday (-1.6%). If you're looking for a new entry point I'd wait for a dip near its rising 10-dma or the $15.00 level.

Earlier Comments:
Our plan was to keep position sizes small to limit risk. Our target is $18.00. FYI: The Point & Figure chart for HSTM is bullish with a $17.50 target. NOTE: HSTM does have options but the spreads are too wide to trade.

(small positions)

current Position: Long HSTM @ $15.79

11/03 HSTM gapped open higher at $15.79

chart:

Entry on November 3 at $15.79
Earnings Date 10/24/11
Average Daily Volume = 134 thousand
Listed on November 2, 2011


IMAX Corp. - IMAX - close: 19.29 change: -0.14

Stop Loss: 17.70
Target(s): 24.50
Current Gain/Loss: - 0.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
11/05 update: IMAX has spent the last couple of days consolidating sideways. I don't see any changes from my prior comments. More conservative traders may want to wait for a dip into the $19.00-18.50 zone as their entry point.

Earlier Comments:
Our multi-week target is $24.50. Keep in mind that the exponential 200-dma could be resistance near $22.25ish. FYI: The Point & Figure chart for IMAX is bullish with a $28.00 target.

Current Position: Long IMAX @ $19.38

- or -

Long DEC $20 call (IMAX1117L20) Entry $1.27

chart:

Entry on November 3 at $19.38
Earnings Date 10/27/11
Average Daily Volume = 1.2 million
Listed on November 2, 2011


Juniper Networks - JNPR - close: 23.98 change: +0.02

Stop Loss: 21.90
Target(s): 29.00
Current Gain/Loss: + 1.1%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
11/05 update: JNPR has essentially traded sideways in the $22.80-24.00 range the last four days. If you look closely you can see a bullish trend of higher lows. The stock has found some technical support at its 10-dma. Yet it is also struggling with some short-term resistance near $24.00 and its 100-dma.

At the moment I am neutral on launching new positions. If stocks correct then JNPR is likely to retest the $22.00 level. If stocks continue to rise then we need to see JNPR breakout past $24.00 soon. Readers could use a move past $24.10 as an entry point but if you do I would consider raising your stop loss!

The plan was to keep positions small to limit our risk.

(small positions)

current Position: Long JNPR stock @ $23.72

- or -

Long JAN $25 call (JNPR1221A25) Entry $1.50

11/02 trade is open. JNPR opened at $23.72
11/01 Try again. New strategy. Buy JNPR if stock and S&P500 opens positive tomorrow, stop loss @ 21.90.
11/01 trade opened at $23.46, stopped out @ 22.75 (-3.0% loss)
option opened @ $1.80, exit $1.36 (-24.4%)
10/29 alternative entry point: dip at $23.00

chart:

Entry on November 2 at $23.72
Earnings Date 10/18/11
Average Daily Volume = 13 million
Listed on October 29, 2011


NetApp Inc. - NTAP - close: 42.63 change: +0.67

Stop Loss: 39.90
Target(s): 43.90
Current Gain/Loss: + 7.2%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
11/05 update: NTAP continues to rock and roll with another strong session on Friday. Shares bucked the trend and added +1.6%. Friday's session is also a breakout past resistance near $42 and its simple 100-dma.

Please note that I see potential resistance at the exponential 200-dma, currently at $44.19. Therefore, I am adjusting our exit target down to $43.90. We will move our stop loss higher to $39.90.

I am not suggesting new positions at this time. More conservative traders may want to take profits now, especially if you're holding the calls.

Earlier Comments:
This is going to be a short-term trade. We do not want to hold over the November 16th earnings report.

current Position: Long NTAP stock @ 39.75

- or -

Long NOV $40 call (NTAP1119K40) Entry $1.71

11/05 new stop loss @ 39.90, adjusted target to $43.90
11/03 new stop loss @ 38.40
11/01 new stop loss @ 37.25
11/01 NTAP gaps open lower at $39.75, our new entry point.

chart:

Entry on November 1 at $39.75
Earnings Date 11/16/11 (confirmed)
Average Daily Volume = 6.8 million
Listed on October 31, 2011


Financial SPDR ETF - XLF - close: 13.29 change: -0.19

Stop Loss: 12.45
Target(s): 14.00
Current Gain/Loss: unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Comments:
11/05 update: The XLF did see a dip on Friday but it was not deep enough. Shares slipped to $13.12 before the XLF pared its losses. Aggressive traders may want to go ahead and open bullish positions now. I am willing to wait. We do not know what sort of headlines might emerge over the weekend.

I am leaving our buy-the-dip trigger at $12.90. More aggressive trades could up their trigger to $13.10 while more conservative traders could place their trigger near $12.70, just above the 50-dma instead.

FYI: normally I would consider placing the trigger at $13.00 or $13.05 but the financials can be a volatile bunch and if stocks correct I expect the XLF to over correct a little. That's why our trigger is at $12.90.

buy the dip Trigger @ $12.90 (small positions)

Suggested Position: buy the XLF @ $12.90

- or -

buy the 2012 Jan $13 call (XLF1221A13)

chart:

Entry on November xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 137 million
Listed on November 3, 2011


Xilinx Inc. - XLNX - close: 32.85 change: +0.43

Stop Loss: 31.40
Target(s): 35.75
Current Gain/Loss: + 1.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
11/05 update: Semiconductor stocks were showing relative strength on Friday. XLNX was helping lead the way with a +1.3% gain. The close over its simple 200-dma is technically bullish. I would still consider new positions now.

Earlier Comments:
The plan was to keep our position size small to limit risk. Our multi-week target is $35.75. FYI: The Point & Figure chart for XLNX is bullish with a $46 target.

(small positions)

Current Position: Long XLNX stock @ 32.50

- or -

Long Jan $35 call (XLNX1221A35) Entry $0.95

chart:

Entry on November 1 at $32.50
Earnings Date 10/19/11
Average Daily Volume = 5.0 million
Listed on October 29, 2011


BEARISH Play Updates

Dish Network - DISH - close: 23.48 change: -0.20

Stop Loss: 24.55
Target(s): 21.25
Current Gain/Loss: +7.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
11/05 update: It's time to play defense. Monday could be very exciting. DISH is due to report earnings on Monday morning before the opening bell. Odds are the stock will gap open higher or lower in reaction to its results. I am not suggesting new positions at this time.

Please note I am inching our stop loss down to $24.55. Readers may want to consider an exit at wherever DISH opens at on Monday morning. Currently our exit target is $21.25.

Earlier Comments:
FYI: The Point & Figure chart for DISH is bearish with a $16 target.

current Position: short DISH stock @ $25.38

- or -

Long NOV $25 PUT (DISH1119W25) Entry $1.20

11/05 new stop loss @ 24.55
11/01 new stop loss @ 24.75

chart:

Entry on October 28 at $25.38
Earnings Date 11/07/11 (confirmed)
Average Daily Volume = 3.0 million
Listed on October 27, 2011


CLOSED BULLISH PLAYS

iShares Russell 2000 ETF - IWM - close: 74.60 change: -0.37

Stop Loss: 67.49
ETF target: 75.75
November Call Target: 73.75
January Call Target: 75.75
Current Gain/Loss: unopened
Time Frame: 2 to 8 weeks
New Positions: see below

Comments:
11/05 update: The IWM never hit our trigger at $69.50. While the market's trend is still higher I'm not willing to chase the IWM at current levels. We're going to drop this play unopened but readers may want to keep this ETF on their watch list.

Trigger @ 69.50 (small positions)

Trade Never Opened.

chart:

Entry on November xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 84 million
Listed on November 1, 2011


Copper ETN - JJC - close: 46.17 change: -0.41

Stop Loss: 41.90
Target(s): 48.00
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
11/05 update: Copper has been consolidating sideways the last couple of days. The JJC has been stuck under technical resistance at the simple 50-dma. Nimble traders may want to keep this trade alive. I am removing it. The JJC never hit our entry point at $44.35 but I am keeping it on my watch list just in case we do see the JJC retest what should be support near $44.00.

buy the dip Trigger @ 44.35

Our Trade Never Opened.

chart:

Entry on November xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 438 thousand
Listed on November 1, 2011