Editor's Note:

Good evening traders. In my market update this afternoon I alluded to the fact that trying to squeeze out more gains to the upside is becoming more and more stressful. As the markets appear to be continuing their melt-up - closing higher 8 out of the last 9 weeks - traders will be looking for reasons to take profits on their long positions in the coming days/weeks. This thought process enabled us to sell BRCM into strength today for a nice gain. However, we were also stopped out of CXW as the stock reversed hard. So until the next larger directional move becomes clear traders need to be nimble when managing positions.

Current Portfolio:


BULLISH Play Updates

AU Optronics - AUO - close: 11.40 change: -0.18 stop: 10.90

Buyers stepped into AUO today around the $11.20 area which also corresponds to the low from April 8. This may have formed a double bottom and AUO looks poised to rally, although I am cautious of a broader market sell-off. We need AUO to break above $12.00 for this trade to work and hit our target $13.25. If it breaks below $11.00 we will honor our stop at $10.90 and step aside to preserve capital. Aggressive traders could still consider entering the trade as I believe there is a lot of support with the SMA's just below AUO. Our time frame is one to two weeks. Note: I consider this an aggressive trade and recommend small position size to limit risk.

Current Position: AUO stock @ 11.77

Entry on April 05 at $11.77
Earnings Date 04/22/10 (unconfirmed)
Average Daily Volume: 2.5 million
Listed on April 3rd, 2010


BorgWarner Inc. - BWA - close: 38.89 change: +0.15 stop: 37.95 *NEW*

BWA closed up +0.39% today. I am viewing this trade as an aggressive trade at this point. If the overall market rallies it should work just fine, however, I don't want the stock to trigger our entry and then reverse. Officially our trigger to open positions is at $40.25. If triggered our target is $44.75. If triggered I am moving our stop loss up to $37.95 to limit our risk in the trade. Aggressive traders may consider opening positions if BWA stays above $38.40 but I would view this as a quick trade with a tight stop. The Point & Figure chart looks very bullish and is forecasting a long-term $55 target.

Trigger to open bullish positions $40.25

Suggested Position: BWA stock @ 40.25 (unopened)

Option Traders:
Suggested Position: Buy CALL May $40.00 (BWA 10E40.00) current ask $1.10

Entry on April xx at $xx.xx
Earnings Date 04/29/10 (unconfirmed)
Average Daily Volume: 1.8 million
Listed on April 3rd, 2010


Cash America - CSH - close: 40.48 change: -0.25 stop: 38.99

CSH closed down -0.61% today and continues to find resistance just below the $41.00 level which is about break-even for our trade. CSH still looks poised to continue its rally and we are looking for the stock to at least retest its highs from last week at $41.50. If the stock trades to this level conservative traders should begin to tighten stops or sell into strength. We need to see CSH follow through or we will be looking exit our position. I am not suggesting new positions at this time. Our target on CSH is $42.90.

Current Position: CSH stock at $41.05

Entry on April 06 at $41.05
Earnings Date 04/22/10 (unconfirmed)
Average Daily Volume: 263 thousand
Listed on April 5th, 2010


MAXIMUS Inc. - MMS - close: 62.60 change: +0.27 stop: 59.75

MMS followed through with another 52-week high today and is still above our key $62.00 level. The stock looks poised to continue breaking out. This is another new all time high for MMS so I am suggesting readers be careful. I would like to place a stop at $59.75 to give this some room but if there is overall market weakness readers may want to exit the position early. Our time frame is several weeks. I would like to lower our target on MMS to $64.75. This has nothing to do with the relative strength in the stock but more to do with managing an overbought market and being nimble. I want to remind traders that this is a somewhat aggressive trade since we normally do not trade stocks with average volume under 250K a day.

Current Position: MMS stock at $62.25

Entry on April 9 at $62.25
Earnings Date 05/06/10 (unconfirmed)
Average Daily Volume: 83 thousand
Listed on March 31st, 2010


Patterson Companies - PDCO - close: 31.23 change: +0.20 stop: 29.95

PDCO backed off of the $31.30 level again today. The ascending triangle on its daily chart remains intact. We are waiting for PDCO to breakout to new relative highs prior to initiating long positions. I suspect that if the market continues to rally we will get triggered in the coming days. Our stop of $29.95 is below PDCO's 20-day and 50-day SMA's as well below a prior support and resistance level from early March and late February, respectively. I am suggesting we open bullish positions at $31.50. If triggered we'll use a stop at $29.95. Our multi-week target is the $34.50 level.

Trigger to open bullish positions at $31.50

Suggested Position: PDCO stock at $31.50(unopened)

Entry on April xx at $xx.xx
Earnings Date 05/17/10 (unconfirmed)
Average Daily Volume: 975 thousand
Listed on April 6th, 2010


Powershares UltraShort Real Estate - SRS - close: 5.34 change: -0.28 stop: 4.95 *NEW*

Real estate stocks are not taking a breather and I am re-thinking our strategy on SRS. I suspect there will be one more push lower in SRS (higher in RE stocks) to shake out the weak hands and I am suggesting opening bullish positions in SRS to take advantage of it if it happens. We will use a very tight stop and will be right out of trade if it doesn't work. Here is what I am thinking: use a trigger to open long positions in SRS (which is a bearish play on RE stocks) at $5.25. Our first target will be $6.10 which is just below the highs from March 22. Our 2nd target will be $6.85 which is prior support from December. Our third more aggressive target will be $7.15 which is just below the low on January 19. Aggressive traders can consider positions at current levels.

This is a very aggressive play so please use smaller position size to limit risk. If triggered, our stop will be $4.95 which is just below the recent swing low on March 25. Our time frame is about two to three weeks. *NOTE: Although this is listed as a long position in our portfolio, this is a bearish position on real estate stocks*

Trigger to open long positions at $5.25

Suggested Position: Buy SRS if it trades to $5.25, Stop Loss $4.95 (unopened)

Entry on (unopened)
Earnings Date Not Applicable
Average Daily Volume: 11.0 million
Listed on April 8, 2010


BEARISH Play Updates

Powershares QQQQ Trust - QQQQ - close: 49.32 change: +0.25 stop: 50.95

After opening lower and selling off to $48.86, QQQQ closed higher by about +.50% today. We need QQQQ to trade below $48.86 get this trade going on our direction. Intel reported earnings after the bell and the futures were higher at the time of this writing. They may gap higher tomorrow which I think will give traders an excuse to take profits. When Intel reported on January 14 the markets traded initially higher and then sold off which sparked a -9% decline in the ensuing weeks. Time will only tell if something similar happens this time around. QQQQ moving averages will also provide support if it sells off. Our target remains $47.00 which is just above the lows from March 15. Our stop is $50.95.

Current Position: Short QQQQ at $49.05, Stop Loss $50.95

Option Traders:
Suggested Position: Buy PUT May $49.00, Ask at entry, $1.00

Entry on (unopened)
Earnings Date Not Applicable
Average Daily Volume: 49.4 million
Listed on April 10, 2010


Warner Chilcott - WCRX - close: 25.68 change: +0.22 stop: 26.26

WCRX continues to look bearish and we are waiting for the stock to break below $24.80 to initiate bearish positions. The stock has been bouncing off of the $25.00 level since late January and appears to be forming a descending triangle. Its 20-day, 50-day, and 100-day SMA are all overhead. At this point we need the overall market to cooperate.

I am suggesting we use a trigger to open bearish positions at $24.80. If triggered our first target is $23.00. The 200-dma is nearing the $23.00 region and could offer technical support. Our second, more aggressive target is the $20.25 mark.

Trigger to open bearish positions @ 24.80

Suggested Position: SHORT WCRX stock at $24.80 (unopened)

Option Traders:
BUY the MAY $25.00 PUT (WCRX 10P25.00) current ask $1.00, estimated ask at trigger price $0.60

Entry on March xx at $xx.xx
Earnings Date 05/11/10 (unconfirmed)
Average Daily Volume: 1.5 million
Listed on March 29th, 2010


CLOSED BULLISH PLAYS

Broadcom Corp. - BRCM - close: 34.51 change: +0.45 stop: 33.25

BRCM hit our new target of $34.40 today and we are now flat on the position. I believe lowering our target from $34.95 to $34.40 and locking in our +5.33% gain today was the right thing to do. The market feels toppy and is way overdue for a correction, even it is just a small one. Plus with Intel reporting earnings after the bell I wanted to reduce our risk in this trade. The last time Intel reported earnings on January 14 the market began a -9% correction in the ensuing weeks. Time will only tell if something similar happens. But when there is a sell-off in the semiconductors we will be looking for more bullish set-ups.

Closed Position: BRCM stock @ 34.40, entry was $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


CLOSED BEARISH PLAYS


Corrections Corp. of America - CXW - close: 20.52 chg: +0.81 stop: 20.55

Ouch! CXW reversed hard today closing up +4.11%. I couldn't find any news causing the stock to rally. In any event, the market makers found our stops at $20.55 (-3.27% loss) and we are stepping aside as the stock could keep running from here. It convincingly closed above its 20-day and 50-day SMA's, however, it is also currently at trend line resistance. If it breaks above this trend line we don't want to be involved. If traders still have a position I would place a new stop just above today's high at $20.76.

Closed Position: Stopped out of SHORT CXW stock @ 20.55, entry was 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