Editor's Note:

The November jobs report on Friday morning delivered everything we wanted and more. Yet the stock market failed to move significantly. On a short-term basis (last few days) the S&P 500 is forming a broadening top or megaphone pattern, which is normally interpreted as a bearish topping formation.

I am cautiously optimistic here in spite of the pattern on the S&P 500 but traders need to be careful. I suggest readers scale back their position sizes to reduce risk. We can start taking normal-sized positions when the S&P finally breaks out of its current range.

The market won't move sideways forever. Lately Mondays have been consistently bullish for the market. Let's see if this Monday can set a new closing high for the S&P 500. Investors can take some encouragement by the bullish breakout in the small cap Russell 2000 index, the relative strength in the SOX semiconductor index, and bullish breakout in the transportation index.


BULLISH Play Updates

Best Buy Inc. - BBY - close: 43.79 change: +0.25 stop: 39.85

Once again BBY tagged a new high for the year and once again it failed to hold it. Retail stocks trended lower on Friday in spite of the bullish jobs data. If the labor market is improving that's a bullish sign for retailers so it was odd to see the retailers down on Friday but the did hit new 52-week highs just a few days ago. BBY is slowly drifting higher. More conservative traders might want to inch up their stops toward the $41.00 level. I am still not suggesting new bullish positions at this time.

Our first target is $46.00. Our second target is $49.80. Our time frame is several weeks.

Annotated chart:

Entry on  November 10 at $42.20
Change since picked:     + 1.59   			
Earnings Date          12/15/09 (unconfirmed)    
Average Daily Volume:       5.1 million 
Listed on  November 09, 2009    


Bank of Hawaii - BOH - close: 45.62 change: +0.74 stop: 43.90

Financials were mixed on Friday. BOH out performed the S&P 500 with a 1.6% gain but shares traded inside Thursday's range. At this point I would wait for a move over 46.50 before launching new positions.

Our first target is $49.85. I'm adding a second target at $53.50. FYI: The Point & Figure chart is bullish with a $59 target.

Annotated chart:

Entry on  November 18 at $46.20 
Change since picked:     - 0.58   			
Earnings Date          01/25/10 (unconfirmed)    
Average Daily Volume:       424 thousand
Listed on  November 17, 2009    


Johnson & Johnson - JNJ - close: 64.36 change: +0.20 stop: 59.90

As expected the rally in JNJ struggled with the $65.00 level. Shares hit $65.28 and reversed. The stock looks a little overbought here and probably due for a dip. I would look for a bounce near the $62.00 level before considering new bullish positions. Our target first target is $67.50.

Annotated chart:

Entry on  November 23 at $63.05
Change since picked:     + 1.31   			
Earnings Date          01/26/10 (unconfirmed)    
Average Daily Volume:      12.6 million 
Listed on  November 21, 2009    


Potlatch Corp. - PCH - close: 31.64 change: +1.39 stop: 27.95

PCH was on the move again. Friday saw shares really out perform with a 4.5% gain. I didn't see any specific news behind the rally. There were some analyst comments released but they were essentially neutral on the stock. This is a new three-month high. More conservative traders might want to raise their stops.

Our first target to take profits is at $33.60. We will cautiously set a secondary target at $35.75. FYI: The Point & Figure chart is bullish with a $56 target.

Annotated chart:

Entry on  November 16 at $30.30
Change since picked:     + 1.34   			
Earnings Date          02/11/10 (unconfirmed)    
Average Daily Volume:       503 thousand
Listed on  November 11, 2009    


Renolds American - RAI - close: 53.04 change: +1.99 stop: 49.49

RAI soared to new 2009 highs on Friday thanks to an upgrade and a new $59 price target by a Citigroup analyst. Shares gapped open higher at $51.87 and hit $53.37 intraday. This is a bullish breakout on strong volume. I am raising our target to exit from $54.50 to $54.90. More aggressive traders may just want to let it run and keep adjusting your stops. No new positions at this time.

Annotated chart:

Entry on  November 14 at $50.32 
Change since picked:     + 2.72   			
Earnings Date          02/11/10 (unconfirmed)    
Average Daily Volume:       1.6 million 
Listed on  November 14, 2009    


Starbucks Corp. - SBUX - close: 21.60 change: +0.48 stop: 20.95

SBUX managed a 2.2% gain but shares are still stuck in a $21-22 trading range. I'm suggesting a trigger to buy the stock at $22.25. If triggered our first target is $24.90.

Annotated chart:

Entry on  November xx at $xx.xx <-- TRIGGER @ 22.25
Change since picked:     + 0.00   			
Earnings Date          01/28/10 (unconfirmed)    
Average Daily Volume:      10.9 million 
Listed on  November 30, 2009    


Symantec - SYMC - close: 17.88 change: -0.08 stop: 17.24

Be really careful here. SYMC finally broke through resistance near the $18.20 level and shares reversed lower anyway. The stock hit $18.28. We had recently raised our trigger to buy the stock to $18.25. Our trade is now open. However, I'm not suggesting new positions with SYMC under the $18.00 mark. If we don't see some strength soon it might be a good idea to exit early.

Our first target to take profits is at $19.90. The $20.00 level will probably act as round-number resistance. Our second target, with a much longer time frame, is $21.75. Currently the Point & Figure chart is bullish with a $23 target.

Annotated chart:

Entry on  December 04 at $18.25 
Change since picked:     - 0.37   			
Earnings Date          01/27/10 (unconfirmed)    
Average Daily Volume:      11.8 million 
Listed on  November 16, 2009    


Travelers Companies - TRV - close: 51.04 change: -0.40 stop: 49.75

Trading in TRV has been bearish the last few days. Shares managed to bounce from support near $50.00 but it's not very convincing. Technically this is an entry point with the rebound from $50.00 and its trendline of higher lows. Our target is $57.40.

Annotated chart:

Entry on  November 27 at $51.94 /gap down entry point 
Change since picked:     - 0.90   			
Earnings Date          01/27/10 (unconfirmed)    
Average Daily Volume:       5.3 million 
Listed on  November 07, 2009    


Texas Instruments - TXN - close: 26.85 change: +0.41 stop: 24.40

The semiconductor sector has continued to show strength and TXN has helped lead the way. The stock hit a new high for the year on Friday. Traders can be patient when it comes to new entries. The SOX is nearing resistance at its 2009 highs and looks due for a pull back. TXN will probably retest the $26.00 level. I'd look for a new entry point near $26.00. Our first target is $29.75.

Annotated chart:

Entry on  December 02 at $26.15
Change since picked:     + 0.70   			
Earnings Date          01/26/10 (unconfirmed)    
Average Daily Volume:      12.6 million 
Listed on  December 01, 2009    


Warner Chilcott - WCRX - close: 25.80 change: -0.03 stop: 22.90

Friday turned out to be a relatively quiet session for WCRX. The stock traded sideways on below average volume. I don't see any changes from my prior comments. Look for a bounce near $24.50-24.00 as a new entry point. Our first target is $27.40. Our second target is $29.45.

Annotated chart:

Entry on  December 01 at $24.77 gap open entry point (small positions)
Change since picked:     + 1.03   			
Earnings Date          02/25/10 (unconfirmed)    
Average Daily Volume:       1.8 million 
Listed on  November 28, 2009    


Wyndham Worldwide - WYN - close: 20.55 change: +1.28 stop: 17.85

WYN displayed lots of relative strength on Friday with a 6.6% rally and a breakout over potential resistance at the $20.00 mark. Volume was strong at more than six million shares. I couldn't find any company specific news to account for the strength. The close over $20 is certainly bullish but I wouldn't want to chase it here, at least not with the S&P 500 still struggling near resistance.

Our first target to take profits is at $21.00. I am adding a second target to exit completely at $22.40. The plan was to use small positions (1/2 a position).

Annotated chart:

Entry on  November 10 at $18.88 (1/2 position) /gap open higher
Change since picked:     + 1.67   			
Earnings Date          02/11/10 (unconfirmed)    
Average Daily Volume:       3.5 million 
Listed on  November 10, 2009    


Financial SPDR - XLF - close: 14.63 change: +0.27 stop: 14.15

There was no follow through on Thursday's bearish reversal but the financial sector still appears to be in danger. The XLF bounced near its rising 100-dma but shares never traded outside of its range from Thursday's session. I want to see a move over Thursday's high (near $15.00) before launching new positions. Our target is $16.40.

Annotated chart:

Entry on  December 03 at $14.85 
Change since picked:     - 0.22   			
Earnings Date          --/--/-- (unconfirmed)    
Average Daily Volume:        82 million 
Listed on  December 02, 2009    


BEARISH Play Updates

Activision-Blizzard - ATVI - close: 11.03 change: -0.27 stop: 12.01

Last night rival video game developer TTWO issued an earnings warning and sparked a wave of analyst downgrades for the company. Traders decided to paint ATVI with the same brush and shares of ATVI broke down under support and hit our trigger to open small bearish positions at $11.15. The trend is bearish for ATVI in spite of all the good news surrounding its blockbuster Call of Duty game released last month.

Our first target is $10.05. Our second target is $9.25. Our time frame is several weeks. FYI: The Point & Figure chart is currently forecasting a $7.50 target.

Annotated chart:

Entry on  December 04 at $11.15
Change since picked:     - 0.12   			
Earnings Date          02/04/10 (unconfirmed)    
Average Daily Volume:        20 million 
Listed on  November 28, 2009    


Bank of New York - BK - close: 26.93 change: +0.18 stop: 27.16

BK shot higher on Friday morning but immediately reversed. We are still in a wait and see mode while we look for a breakdown under support.

I'm suggesting a trigger to open bearish positions at $25.49. More cautious trader could wait for a drop under $25.00 since it might be round-number support.

If the newsletter is triggered at $25.49 our first target is $22.25. Our second target is $20.50. Our time frame is several weeks.

Annotated chart:

Entry on  November xx at $xx.xx <-- TRIGGER @ 25.49
Change since picked:     + 0.00   			
Earnings Date          01/20/10 (unconfirmed)    
Average Daily Volume:      11.4 million 
Listed on  November 21, 2009    


CLOSED BULLISH PLAYS

Du Pont - DD - close: 32.34 change: -2.49 stop: 33.95

Our bullish play on DD didn't last very long. We were triggered on Thursday and stopped out on Friday morning. Before the bell Friday DD announced that its Pioneer Hi-Bred seed division was going to delay the launch of its new corn and soybeen hybrid seeds. Shares opened down at $34.30 and quickly hit our stop loss at $33.95.

chart:

Entry on  December 03 at $35.55
Change since picked:     - 1.60 <-- stopped out @ 33.95 (-4.5%)
Earnings Date          01/27/10 (unconfirmed)    
Average Daily Volume:       5.8 million 
Listed on  December 01, 2009    


Southern Copper Corp. - PCU - close: 35.16 change: -1.24 stop: 33.80

It has been a very volatile week for the dollar and we can blame the dollar for PCU's weakness. Friday's jobs report was stronger than expected. It was so strong investors worried that the Fed might have to raise rates sooner than expected. Higher rates mean a stronger currency. There are tons of traders short the dollar so the sudden risk of a higher currency sparked a short squeeze in the dollar. Normally a stronger dollar means lower prices for commodities and commodities retreated on Friday and shares of PCU followed copper prices lower.

PCU broke support near $34.00 and hit our stop at $33.80. Our plan called for small positions (25% to 50% your normal size).

chart:

Entry on  November 04 at $33.80
Change since picked:     + 0.00 <-- stopped @ 33.80 (-0.00%)

2nd Entry December 02 at $36.28 /gap down entry
Change since picked:     - 2.48 <-- stopped @ 33.80 (-6.8%)
Earnings Date          10/22/09 (confirmed)    
Average Daily Volume:       3.5 million 
Listed on  November 03, 2009    


CLOSED BEARISH PLAYS

Liberty Global - LBTYA - close: 20.53 change: +0.66 stop: 21.26

There is still a chance that LBTYA rolls over under the $21.00 level and its old trendline of higher lows. However, I'm suggesting an early exit following Friday's relative strength and close back above $20.00.

chart:

Entry on  November 24 at $19.85
Change since picked:     + 0.68 <-- early exit @ 20.53 (+3.4%)
Earnings Date          02/24/10 (unconfirmed)    
Average Daily Volume:       2.5 million 
Listed on  November 21, 2009    


Metlife Inc. - MET - close: 35.33 change: +1.22 stop: 36.05

Shares of MET are still trading under resistance near $36.00 and its 50-dma but I'm going to go ahead and suggest an early exit. More aggressive traders can let it ride with a stop loss above resistance. I'm cautiously bullish on the market and MET's recent action makes it less attractive as a bearish candidate.

chart:

Entry on  November 21 at $34.39 /gap higher entry
                           /originally listed at $33.90
Change since picked:     + 0.94 <-- early exit @ 35.33 (+2.7%)
Earnings Date          02/04/10 (unconfirmed)    
Average Daily Volume:       7.2 million 
Listed on  November 21, 2009