Editor's Note:

You may have noticed that the S&P 500 index appears to be building a bearish head-and-shoulders pattern. The neckline to this pattern is near the 880 support area. Should the S&P 500 breakdown under this neckline then the H&S pattern would forecast a drop toward the 810-800 zone, which comes close to the 50% retracement of its bounce from the March lows.

Should the S&P 500 break that neckline I would exit any bullish positions that don't get stopped out in the process. Traders may want to start planning now how they can take advantage of this bearish formation. An easy way to play it would be bearish positions on the SPY or bullish positions on the SDS (double short ETF).


BULLISH Play Updates

Andersons Inc. - ANDE - close: 30.89 change: -0.45 stop: 29.45 *new*

The trend in ANDE is still up but if the S&P 500 truly breaks down we have to expect ANDE to follow it. Currently shares of ANDE are close to testing potential resistance at its early June highs near $32.00. If ANDE fails here it would look like a bearish double top. Considering the market's weakness I am not suggesting new positions at this time. The simple 10-dma is at $29.64. I'm raising our stop loss to $29.45. Our first target is $34.00. My time frame is less than four weeks.

Annotated chart:

Entry on      June 25 at $29.95 
Change since picked:     + 0.94   			
Earnings Date          08/06/09 (unconfirmed)    
Average Daily Volume:       379 thousand
Listed on  June 25, 2009    


A.O.Smith Corp. - AOS - close: 33.63 change: -0.41 stop: 30.85

After a big rally on Wednesday AOS hit some profit taking on Thursday. More conservative traders may want to raise their stops. Broken resistance near $32.00 should offer some support. I'm not suggesting new positions at this time. Please note that I'm readjusting our first target to take profits to $34.50. Our second target is unchanged at $37.00 but we will plan to exit ahead of the July 17th earnings report.

Annotated chart:

Entry on      June 23 at $30.25 *triggered       
Change since picked:     + 3.38   			
Earnings Date          07/17/09 (confirmed)    
Average Daily Volume:       195 thousand
Listed on  June 20, 2009    


Bank of America - BAC - close: 12.64 change: -0.41 stop: 11.85

It's not surprising to see BAC retreat under technical resistance at its 200-dma, especially with the financials showing weakness on Thursday. A dip near $12.50 or $12.00 can be used as a new bullish entry point but we will plan to exit ahead of the July 17th earnings report.

Our first target is $14.50, which is where we want to sell 50% to 75% of our position. Our second target is $16.45.

Annotated chart:

Entry on      June 04 at $12.24 /gap higher entry
                              /listed at $11.87
Change since picked:     + 0.40   			
Earnings Date          07/17/09 (confirmed)    
Average Daily Volume:       537 million 
Listed on   May 19, 2009    


Bank of Montreal - BMO - close: 41.93 change: -1.10 stop: 39.90

We need to be cautious here. Last Tuesday produced a bearish reversal candlestick pattern. Wednesday produced an "inside" day showing indecision. Thursday was a break lower from the inside day, which is bearish. I expect a pull back to $41.00 and probably a dip near $40.00. Wait for that decline near $40.00 before considering new bullish positions. Our first target to take profits is $44.90. Our second target is $48.00. This could take six to eight weeks.

Annotated chart:

Entry on      June 25 at $41.38 
Change since picked:     + 0.55   			
Earnings Date          08/25/09 (unconfirmed)    
Average Daily Volume:       729 thousand
Listed on  June 25, 2009    


Bally Tech. - BYI - close: 29.67 change: -0.97 stop: 27.45

BYI continues to out perform its peers in the gambling sector. Thursday the stock suffered some profit taking with a 3% decline. I would still consider new bullish positions in the $30.00-29.00 zone but considering this market's weakness we're probably better off waiting for that dip near $29.00 before evaluating an entry point. More conservative traders might want to consider adjusting your stop loss to the $27.90-28.50 zone. Our first target is $32.90. Our second target is $34.90. My time frame is six to eight weeks.

Annotated chart:

Entry on      June 26 at $30.10 *triggered       
Change since picked:     - 0.43   			
Earnings Date          08/19/09 (unconfirmed)    
Average Daily Volume:       859 thousand
Listed on  June 24, 2009    


Dell Inc. - DELL - close: 12.97 change: -0.42 stop: 12.45

The rally in DELL could be in trouble. The stock lost 3.1% on Thursday on strong volume. That's not a good sign. I would still consider buying a bounce from $12.50. However, I want to point out that on DELL's weekly chart last week just produced a bearish reversal pattern. It still needs confirmation but we can turn more defensive. Our first target to take profits is $14.90. We have a second target at $15.95 but we want to take most of our money off the table at $14.90. My time frame is about eight weeks. FYI: The Point & Figure chart is bullish with a $20 target but it's also showing potential resistance near $14.50. More conservative traders may want to start taking profits near $14.50.

Annotated chart:

Entry on      June 09 at $12.55 
Change since picked:     + 0.42   			
Earnings Date          08/27/09 (unconfirmed)    
Average Daily Volume:        29 million 
Listed on  June 06, 2009    


Energizer Holdings - ENR - close: 52.25 change: -1.85 stop: 49.90

Right on cue shares of ENR pulled back and hit our trigger to buy it at $52.75. I suspect that if we showed more patience that ENR will hit $51.50 or even $51.00 soon. Keep an eye on the 100-dma as technical support. Wait for a bounce if you're looking for a new entry point. Our first target is $55.75. The Point & Figure chart is bullish with a $64 target. We'll set our second target at $59.95.

Annotated chart:

Entry on      July 02 at $52.75 *triggered       
Change since picked:     - 0.50   			
Earnings Date          07/28/09 (unconfirmed)    
Average Daily Volume:       781 thousand
Listed on  July 01, 2009    


3x Energy Bear ETF - ERY - close: 24.67 change: +0.24 stop: 19.95

The ERY did not disappoint and showed some fireworks on Thursday. Weakness in crude oil and thus the oil stocks helped fuel an 11.2% rally in the ERY. Shares gapped open at $23.24 and quickly hit our trigger to buy it at $23.30.

This is a very volatile (triple-leveraged) ETF so we're using a wide stop loss and I'm suggesting readers only trade half (or less) their normal position size. If triggered at $23.30 our first target is $27.40. Our second target is $29.90. My time frame is four to six weeks or less.

Annotated chart:

Entry on      July 02 at $23.30 *triggered       
Change since picked:     + 1.37   			
Earnings Date          00/00/00 
Average Daily Volume:       4.0 million 
Listed on  July 01, 2009    


MEDNAX Inc. - MD - close: 42.80 change: -0.59 stop: 39.85

In a sideways or bullish market I would use the bounce from $42.00 as a new bullish entry point for MD. Considering the action we saw in the market on Thursday I would wait for a dip near $41.00 or even closer to $40.00 and its 50-dma before buying MD. Our first target is $47.40.

Annotated chart:

Entry on      July 01 at $43.01 *triggered       
Change since picked:     - 0.21   			
Earnings Date          08/03/09 (unconfirmed)    
Average Daily Volume:       367 thousand
Listed on  June 30, 2009    


Morgan Stanley - MS - close: 26.99 change: -1.37 stop: 24.75 *new*

Financials were some of the weakest performers on Thursday. Shares of MS broke down with a 4.8% decline and closed under its rising 50-dma. The action is short-term bearish and MS hit our stop loss at $26.95.

I still see opportunity in MS. We're going to record our loss but traders should keep their eye on MS. Shares have a strong trendline of support near its 100-dma and it should line up near the $25.00 level. I am suggesting readers buy MS again but this time at $25.25. We'll try and limit our risk with a tight stop at $24.75. If triggered at $25.25 our first target is $27.75. Our second target is $29.75. We don't want to hold over the late July earnings so the play may close early.

Annotated chart:

--New Trade, buy dip @ 25.25 --
Entry on      July xx at $xx.xx *triggered       
Change since picked:     - 0.00   			
Earnings Date          07/22/09 (unconfirmed)    
Average Daily Volume:      29.4 million 
Listed on  June 23, 2009    

** First Trade Stopped Out @ 26.95 **
Entry on      June 26 at $28.60 *triggered       
Change since picked:     - 1.65<-- stopped out @ 26.95 (-5.7%)
Earnings Date          07/22/09 (unconfirmed)    
Average Daily Volume:      29.4 million 
Listed on  June 23, 2009    


Vodafone Group - VOD - close: 19.06 change: -0.63 stop: 18.85

European markets were hammered pretty hard on Thursday. The weakness accelerated into the close as investors reacted to the disappointing U.S. employment numbers. Shares of VOD gapped open lower as the stock adjusted to trading overseas. Shares spent the rest of the session clinging to support near $19.00. The intraday low was $18.91. The $19.00 level is short-term support and it's supported by the 50-dma and 200-dma. The English stock market managed a minor bounce on Friday so I'm not willing to let go of VOD just yet. This may end up being a great entry point to buy VOD but remember this is an aggressive trade with VOD under resistance at $20.00.

Our first target is $20.75. Our second target is $21.85. The P&F chart is bullish with a $23 target.

Annotated chart:

Entry on      June 29 at $19.52 
Change since picked:     - 0.46   			
Earnings Date          11/10/09 (unconfirmed)    
Average Daily Volume:       4.2 million 
Listed on  June 29, 2009    


Western Digital - WDC - close: 26.22 chg: -0.58 stop: 23.95

We did get a dip near $26.00, which would normally look like a bullish entry point. Unfortunately, I'm concerned by the action in the S&P 500 on Thursday. If study the daily chart WDC should have stronger support near its rising 40-dma near $24.60. I would wait for a dip near $24.60 and use it as a bullish entry point to buy WDC. Our first target is $29.75.

Annotated chart:

Entry on      June 25 at $26.10 *triggered       
Change since picked:     + 0.12   			
Earnings Date          07/23/09 (unconfirmed)    
Average Daily Volume:       4.6 million 
Listed on  June 24, 2009    


Wellpoint Inc. - WLP - close: 49.75 change: -1.50 stop: 47.85

Healthcare stocks were not immune to the profit taking on Thursday. WLP broke down under its $50.00 mark and its 10-dma. I would expect a dip into the $49.00-48.00 zone. Wait for a bounce and use it as our next bullish entry point. Our first target is $54.00. Our second target is $57.40.

Annotated chart:

Entry on      June 22 at $49.25 *triggered       
Change since picked:     + 0.50   			
Earnings Date          07/29/09 (unconfirmed)    
Average Daily Volume:       4.4 million 
Listed on  June 20, 2009    


U.S. Steel - X - close: 34.00 change: -0.79 stop: 33.35

This is it. The up trend in X is at a crucial test. The stock dipped to $33.50 near its rising 40-dma and bounced. The bounce wasn't very inspiring but X still pared its losses as the rest of the market accelerated lower. I'm surprised we were not stopped out after news hit that CLF was deferring iron ore production due to requests by steelmakers to better manage their inventory.

I would use a bounce from here (over $35.00 or over $35.50) as a new bullish entry point. Unfortunately if the S&P 500 continues to sink on Monday X will probably hit our stop loss at $33.35. This play has been an aggressive, higher-risk trade and the plan was to trade only half or less than our normal position size. Our first target is $39.95. Our second target is $42.50.

Annotated chart:

Entry on      June 27 at $37.39 /gap higher entry
                              /originally listed at $36.91
Change since picked:     - 3.39   			
Earnings Date          07/28/09 (unconfirmed)    
Average Daily Volume:      17.8 million 
Listed on  June 27, 2009    


Dentsply Intl. - XRAY - close: 29.84 change: -0.64 stop: 29.40 *new*

The breakdown and close under $30.00 is definitely a short-term bearish development. Yet XRAY should still have support near $29.50 where the 20, 30, 40-dma and its exponential 200-dma all converge. I'm raising our stop loss to $29.40. Wait for a bounce back above $30.00 before considering new bullish positions. Our first target to take profits is $33.90. The Point & Figure chart is very bullish with a $47 target.

Annotated chart:

Entry on      June 25 at $30.87 
Change since picked:     - 1.03   			
Earnings Date          07/29/09 (unconfirmed)    
Average Daily Volume:       1.0 million 
Listed on  June 25, 2009    


BEARISH Play Updates

DuPont - DD - close: 24.78 change: -1.02 stop: 27.05

So far so good. More conservative traders may want to lower their stops to just above new resistance near $26.25. I'm leaving the stop above the 200-dma near $27.00. Thursday's decline looks like a new bearish entry point. Our first target $22.25. Our second target is $20.25.

Annotated chart:

Entry on      June 16 at $25.20 
Change since picked:     - 0.42   			
Earnings Date          07/21/09 (unconfirmed)    
Average Daily Volume:       9.1 million 
Listed on  June 16, 2009    


iShares Mexico - EWW - close: 36.18 change: -1.01 stop: 38.05

The bounce in EWW is finally rolling over. This looks like a new lower high and a new entry point to launch bearish positions. More conservative traders can lower their stop toward Wednesday's high of $37.61. Our target is $30.25.

Annotated chart:

Entry on      June 22 at $34.92 
Change since picked:     + 1.26   			
Earnings Date          00/00/00 
Average Daily Volume:       3.9 million 
Listed on  June 22, 2009    


Gamestop - GME - close: 21.07 change: -1.39 stop: 24.25 *new*

After several days of churning sideways GME finally broke down again. I am lowering the stop loss to $24.25. If you haven't taken any profits yet you may want to do so now. The stock has already hit our first target at $22.05. Our second target to take profits is $20.25. Our third target is $18.15.

Annotated chart:

Entry on      June 02 at $24.32 
Change since picked:     - 3.25
                              /1st target hit @ 22.05 (-9.3%)
Earnings Date          08/20/09 (unconfirmed)    
Average Daily Volume:       6.3 million 
Listed on  June 02, 2009    


Gen-Probe - GPRO - close: 41.54 change: -1.38 stop: 44.05

After weeks of slowly churning sideways GPRO finally looks ready to begin the next leg lower after last week's failed rally near $44.00 and its 200-dma. Our first target is $38.05. Our second target is $35.25. FYI: The P&F chart is bearish with a $32.00 target.

Annotated chart:

Entry on      June 23 at $42.03 /gap higher entry
                             /originally listed at $41.64
Change since picked:     - 0.49   			
Earnings Date          07/30/09 (unconfirmed)    
Average Daily Volume:       449 thousand
Listed on  June 23, 2009    


iShares Materials - MXI - close: 45.86 change: -1.23 stop: 48.05 *new*

If you dissect the action in MXI last week you'll see a small bearish reversal engulfing candlestick on Tuesday. A failed rally and inside day on Wednesday and a confirming breakdown under $46.00 and its 50-dma and exponential 200-dma on Thursday. This looks like a new entry point for bearish positions. I'm lowering our stop loss to $48.05. MXI has already hit our first target at $44.00. Our second target is $41.00.

Annotated chart:

Entry on      June 16 at $47.55 
Change since picked:     - 1.69
                              /1st target hit 44.00 (-7.4%)
Earnings Date          00/00/00 
Average Daily Volume:       170 thousand
Listed on  June 16, 2009    


Raytheon - RTN - close: 43.01 change: -1.88 stop: 45.75 *new*

Defense stocks sold off hard on Thursday and RTN lost more than 4%. Shares broke down from their sideways consolidation and dropped toward the 100-dma. I am lowering our stop loss to $45.75. Our first target is $40.25. The P&F chart is very bearish with a $13 target.

Annotated chart:

Entry on      June 24 at $44.22 
Change since picked:     - 1.21  			
Earnings Date          07/23/09 (unconfirmed)    
Average Daily Volume:       3.5 million 
Listed on  June 24, 2009    


Homebuilders ETF - XHB - close: 11.36 change: -0.41 stop: 12.55

The homebuilders are rolling over. The XHB spent most of last week failing to breakout over the $12.00 level. This looks like a new lower high inside its bearish pattern. More conservative traders might want to consider a tighter stop near last week's high of $12.08.

Our target is $10.10. I am tempted to set a longer-term target in the $9.00-8.00 region.

Annotated chart:

Entry on       May 23 at $11.96 
Change since picked:     - 0.60   			
Earnings Date          00/00/00
Average Daily Volume:        10 million 
Listed on   May 23, 2009    


CLOSED BULLISH PLAYS

Joy Global - JOYG - close: 34.33 change: -1.92 stop: 28.70

I'm pulling JOYG off the play list. The plan was to buy a dip at $31.00, which has not yet happened. So why pull it now? JOYG is a very high beta name. What does that mean? It's going to move twice as fast as the rest of the market. It's just a suspicion but if the S&P 500 breaks down from its bearish head-and-shoulders pattern JOYG will overshoot the $31.00 level and potentially trade near $27.50. I'd rather move JOYG to the watch list and wait for a dip into the $28.00-27.00 zone. Nimble traders could try bearish positions but at this point wait I'd wait for a failed rally near $36.00 to open bearish plays.

chart:

Entry on      June xx at $xx.xx <-- see TRIGGER  
Change since picked:     + 0.00   			*never opened*
Earnings Date          09/03/09 (unconfirmed)    
Average Daily Volume:       5.3 million 
Listed on  June 23, 2009    


Legg Mason - LM - close: 24.00 change: -0.59 stop: 23.49

I'm also removing LM as a bullish candidate. We've been waiting for shares to hit our trigger at $25.75. I'm starting to think a better entry point might be a dip near $22.00 or even $20.00 of the market really corrects. Consider putting this stock on your watch list.

chart:

Entry on      June xx at $xx.xx <-- see TRIGGER  
Change since picked:     + 0.00   			*never opened*
Earnings Date          07/23/09 (unconfirmed)    
Average Daily Volume:       5.2 million 
Listed on  June 27, 2009    


Pharma Prod. Dev. - PPDI - close: 21.87 chg: -0.88 stop: 21.95

I thought that the action on Wednesday looked rather ominous. PPDI's retreat on Thursday produced a 3.8% decline and the stock hit our stop loss at $21.95.

chart:

Entry on      June 18 at $23.38 /gap higher entry
                              /originally listed at $23.05
Change since picked:     - 1.43<-- stopped out @ 21.95 (-6.1%)
Earnings Date          07/21/09 (unconfirmed)    
Average Daily Volume:       1.5 million 
Listed on  June 18, 2009