Editor's Note:

The action in the stock market this past week offers some warning signals that the rally is extremely tired. I would look at the recent intraday failed rallies as another clue the market's rally could be ready for a correction. More conservative traders may want to adjust their stops higher or just take their money off the table. We only have three days left for the first quarter and stocks might end up drifting sideways as fund managers run out the clock.

Current Portfolio:


BULLISH Play Updates

Broadcom Corp. - BRCM - close: 33.12 change: -0.43 stop: 31.75

The SOX semiconductor index has been slipping the last three days after rising to a new 52-week high last Tuesday. Shares of BRCM have been following the sector lower. The $34.30 region appears to be new resistance and with Friday's one-week low I am expecting a pull back toward support near $32.00. I am not suggesting new bullish positions at current levels. Wait for a bounce from $32.00 before considering new positions. Our first target is $34.95. Our second, more aggressive target is $37.40 with a time frame of several weeks.

Current Position: BRCM stock @ 32.66

Annotated chart:

Entry on March 11 at $32.66
Earnings Date 04/21/10 (unconfirmed)
Average Daily Volume: 8.0 million
Listed on March 10th, 2010


Check Point Software - CHKP - close: 34.70 change: -0.14 stop: 33.90

CHKP hit a new four-day low on Friday but traders were back to buying the dip Friday afternoon. Technical indicators look like most of the market with momentum oscillators starting to turn bearish. If you look at the weekly chart it appears that CHKP may have formed a bearish reversal this past week with the failed rally above $35.00. We should use this information as a warning that the rally could be nearing an end and keep our positions small.

Right now the plan is to buy CHKP if shares hit $35.35. If triggered our target is $37.95 with a stop at $33.90. I would also be tempted to buy a bounce if shares dip toward the $33.50 level since CHKP should find some support in the $33.00-33.50 zone.

Trigger to open bullish positions at $35.35

Suggested Position: BUY CHKP stock at $35.35 (unopened)

Option Traders:
Suggested Position: BUY APRIL $35 call (CHKP 10D35.00) current ask $0.65

Annotated chart:

Entry on March xx at $xx.xx
Earnings Date 04/27/10 (unconfirmed)
Average Daily Volume: 1.6 million
Listed on March 23rd, 2010


CITRIX Systems - CTXS - close: 48.09 change: +0.05 stop: 46.75 *new*

Shares of CTXS continue to drift sideways. The consolidation is narrowing, which suggest we should get a breakout one way or the other pretty soon. My concern is that CTXS could be just running out the clock for the first quarter to end before correcting. I am upping our stop loss to $46.75. We are not suggesting new bullish positions at this time. Currently our target to take profits is at $49.65. More aggressive traders may want to aim for the $52.00 area.

Current Position: CTXS stock @ 46.08

Annotated chart:

Entry on March 10 at $46.08
Earnings Date 04/29/10 (unconfirmed)
Average Daily Volume: 4.5 million
Listed on March 9th, 2010


EMC Corp. - EMC - close: 18.56 change: -0.17 stop: 18.45

Shares of EMC have retreated back to the bottom of their $18.50-19.00 trading range. The action this past week, especially with Thursday's failed rally and Friday's decline, makes it look like EMC is reversing. I am suggesting we stick to our plan, which is to use a trigger for bullish positions at $19.11. If we see EMC lose under $18.50 we'll drop it as a bullish candidate.

If triggered our first target is $20.00, since this level has been resistance in the past. Our second target is $21.00 but that could take a few weeks to achieve. EMC doesn't really move that fast so you'll need patience to trade it.

Trigger to buy the stock at $19.11

Suggested Position: BUY EMC stock at $19.11 (unopened)

Annotated chart:

Entry on March xx at $xx.xx
Earnings Date 04/21/10 (unconfirmed)
Average Daily Volume: 20.4 million
Listed on March 23rd, 2010


Fortune Brands Inc. - FO - close: 49.06 change: -0.23 stop: 44.70

FO continues to digest gains with a sideways consolidation under resistance at $50.00. The lack of profit taking could be considered a bullish development. I suspect that fund managers are just waiting until after the quarter ends before locking in any gains. Our plans haven't changed. We want to open bullish positions on a dip at $46.00. More nimble traders could try and jump in near the $45.00 level. Longer-term the stock looks poised for a new leg higher but short-term FO is overbought after a 20% rally from its February lows.

If triggered our first target is $49.95. Our second target is $53.50 given enough time, which could take a few weeks. FYI: The Point & Figure chart is very bullish with a $60 target.

Use a trigger to buy the dip at $46.00

Suggested Position: FO stock @ 46.00 (unopened)

Annotated chart:

Entry on March xx at $xx.xx
Earnings Date 04/30/10 (unconfirmed)
Average Daily Volume: 805 thousand
Listed on March 20th, 2010


Linear Tech. - LLTC - close: 27.96 change: +0.05 stop: 27.45

The minor profit taking in semiconductors the last three days seems to have been a little more exaggerated in shares of LLTC. The breakdown and close under the $28.00 level and its 100-dma is a bearish development. I am very tempted to raise our stop loss toward Friday's low of $27.75. However, we'll keep the stop at $27.45 for now. More conservative traders may want to cut their losses early right here. I would want to see a new bounce over $28.50 before considering new bullish positions again. Our first target is $29.95. Our second target is $30.95.

Current Position: LLTC stock @ 28.25

Option Traders:
Current Position: CALL APR 28.00 (LLTC 10D28.00) @ $1.00

Annotated chart:

Entry on March 16 at $28.25
Earnings Date 04/13/10 (unconfirmed)
Average Daily Volume: 3.9 million
Listed on March 11th, 2010


Palomar Medical Tech. - PMTI - close: 11.00 change: -0.22 stop: 10.60

The profit taking in PMTI continues. We've been expecting this pull back and shares settled at potential round-number support near $11.00, which is bolstered by the rising 10-dma. If the market breaks down any further I would expect PMTI to stop us out. The next level of support appears to be the $10.50-10.40 region. More conservative traders may want to exit immediately.

I am not suggesting new positions at this time. PMTI has already hit our first target at $11.45. Our second and final target is $12.75. We expect to see resistance and probably a pullback near $12.00 and its 200-dma.

Current Position: PMTI stock @ 10.55

1st Target Hit (03/22/10) @ 11.45

Annotated chart:

Entry on March 16 at $10.55
Earnings Date 04/29/10 (unconfirmed)
Average Daily Volume: 132 thousand
Listed on March 13th, 2010


Shaw Group - SHAW - close: 35.35 change: -0.37 stop: 33.90

Nothing has changed for us with SHAW. Shares broke out over key resistance near $36.00 on Thursday only to reverse lower. Our trigger was hit at $36.25 in this bull-trap move. I warned readers to expect weakness on Friday and SHAW could easily correct toward the bottom of its trading range near $34.00. While I would be tempted to buy a bounce (small positions) near the $34.00 level I'm not suggesting new positions at this time. Let's wait for a new close over $36.00.

Our target to exit is $39.90. FYI: The point & figure chart is bullish with a $49 target. Please note that we will plan to exit ahead of the April 7th earnings report so we only have a couple of weeks.

Current Position: SHAW stock @ 36.25

Annotated chart:

Entry on March 25 at $36.26
Earnings Date 04/07/10 (unconfirmed)
Average Daily Volume: 669 thousand
Listed on March 24th, 2010


BEARISH Play Updates

Corrections Corp. of America - CXW - close: 19.61 chg: -0.03 stop: 21.26

CXW operates one of the largest prison systems in the country. Shares began to falter this month as investors react to news that CXW could be losing "customers" as more states cut back on expenses. Technically the stock produced a bearish breakdown from a pennant shaped consolidation. I would look for a failed rally near $20.00 or the $20.50 level before launching new bearish positions. Our target is $18.00. The low in February 2010 was $17.50.

Current Position: SHORT CXW stock @ 19.90

Annotated chart:

Entry on March 19 at $19.90
Earnings Date 05/06/10 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on March 17th, 2010


CLOSED BEARISH PLAYS

Bally Technologies - BYI - close: 39.38 change: +0.72 stop: 40.05

I am giving up on BYI and throwing in the towel. The gambling/casino sector has been showing too much strength. While the overall trend and pattern for BYI is bearish shares have produced a sharp rebound this past week. There is plenty of resistance at $40.00 and at the 50 and 100-dma overhead but I am not willing to bet these levels will hold as resistance. I'm suggesting an early exit.

Early exit!

Closed Position: SHORT BYI stock @ 39.38
Entry at $37.63

Annotated chart:

Entry on March 16 at $37.63
Earnings Date 05/06/10 (unconfirmed)
Average Daily Volume: 1.9 million
Listed on March 15th, 2010