Current Portfolio:


BULLISH Play Updates

Cypress Semiconductor - CY - close 11.11 change -0.28 stop 10.35

Target(s): 11.95, 12.25, 12.95
Key Support/Resistance Areas: 12.40, 12.00, 11.75, 11.40, 11.00, 10.75
Current Gain/Loss: -0.80%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
CY hit our trigger to enter long positions at $11.20 late today as the market sold off. My comments from the play release remain valid so I'll leave them for convenience. CY has found a long term support/resistance area in the $10.50 to $11.00 range that dates back to August 2009. This area was prior resistance in July, August, and September of 2009 and again in December 2009. The stock broke out of the resistance in January and again in February of this year after the February 5 lows, which were just below $10.50. There is a lot of congestion in this area over the past year that is now providing solid support for the stock. I am looking for CY to trade down near the $11.20 area which is where I suggest readers initiate long positions. This would also be an area that would form a bullish inverse head and shoulders pattern (see ovals on chart) which may be a catalyst for CY to trade higher in the coming days. CY also remains above its 200-day SMA. On Tuesday when the S&P 500 double bottomed with February lows, CY peeked its head below the 200-day SMA and then rallied up to its 20-day SMA where it reversed on Friday. The stock has also retaken its long term upward trend line drawn from the lows of 11/08 to 11/09. Finally, CY has broken out of its recent downward trend line and has some room to rally up into the $12.00 area, or higher if the overall market can continue its bounce off of Tuesday's lows. A 75 cent rally from our anticipated entry would constitute a +6.75% gain. I have listed three targets above as areas to take profits or tighten stops. We'll use an initial stop $10.35, but a more conservative stop could be placed at $10.70 which is just below the opening print from Tuesday.

Current Position: Long CY stock at $11.20

Option Traders:
Suggested Position: Buy July $11.00 CALL

Entry on 6/1/2010
Earnings Date 7/22/10 (unconfirmed)
Average Daily Volume: 4.7 million
Listed on 5/29/10


Diana Shipping, Inc - DSX - close 13.31 change -0.25 stop 12.90

Target(s): 14.00, 14.35, 14.75
Key Support/Resistance Areas: 15.00, 14.40, 14.15, 13.50, 13.25, 13.00
Current Gain/Loss: -1.41%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
DSX is hanging on to a key support level at $13.30. In reality it is closer to $13.25 so I have changed that level above. I mentioned a pullback to $13.25 is possible in the play release and that's what DSX did today. This fills the opening gap higher from last Tuesday to Wednesday and I am looking for DSX to bounce from here. I have also listed a lowered target to $14.00 for readers looking for a quicker exit. This level is just below last Thursday's highs of $14.16 and is a good area to consider tightening stops. Our stop remains at $12.90. My comments from the weekend remain mostly the same. DSX found long term support near the $12.35 area and has bounced nicely. The stock broke through its recent downtrend line and I am looking for it to retrace some of the recent gains prior to entering long positions. DSX has good fundamentals trading at a PE below 10 and has beaten earnings estimates in recent quarters. I am looking for a pullback near $13.50 which I suggest readers use as a trigger to enter long positions. This would also be a logical area for the stock to make a higher low and then proceed higher, although a pullback to $13.25 is possible as well. We are looking to make about a dollar in this trade.

Current Position: Long DSX stock at $13.50

Option Traders:
Suggested Position: Buy July $12.50 CALL

Entry on 5/28/10
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 1.4 million
Listed on 5/27/10, 2010


K12 Inc - LRN - close 25.03 change +0.01 stop 23.65 *NEW*

Target(s): $27.35, 28.25
Key Support/Resistance Areas: 25.35, 24.40, 24.00
Time Frame: 1 to 2 weeks

Comments:
We are waiting to be triggered on LRN and my comments from the play release remain the same. Except that I would like to move up the lower trigger to $24.70 and move up the stop to $23.65 to protect capital should we get triggered. The new lower trigger is 1 penny above today's highs. LRN is a relative strength play that continues to make higher lows despite the recent weakness in the market. I am looking for LRN to break out above its recent highs and then test its prior highs from 2007 and 2008, which are near our targets of $27.25 and $28.25. The stock's volume has been increasing in recent weeks as the price has been increasing which signals accumulation and may indicate institutional money is being put to work in LRN. This is normally a bullish indicator. We'll use one of two triggers to enter long positions. If LRN trades down near $24.70 or if it trades up to $25.50 which would be the highest print of the past 52 weeks. Our stop will be $23.65 which is below the LRN's 20 and 50-day SMA's. *NOTE: LRN's average volume is about 200,000 shares. Therefore I consider this an aggressive trade so please use proper position size to manage risk.*

Suggested Position: Long LRN stock if it trades down near $24.70 or up to $25.50, whichever occurs first.

Entry on June xx
Earnings Date 9/9/10 (unconfirmed)
Average Daily Volume: 200,000
Listed on 5/29/10


Rino International - RINO - close 11.92 change -0.99 stop 11.70

Target(s): 13.25, 13.65, 14.00, 14.50, 15.95, 16.90
Key Support/Resistance Areas: 15.00, 14.50, 13.75, 12.75, 11.75
Current Gain/Loss: -33%
Time Frame: Several weeks
New Positions: Yes, with a tight stop

Comments:
RINO had a terrible day probably because China's PMI Manufacturing report came in at a 3 month low and we are close to being stopped out of this position. If the market gaps down tomorrow we will use our gap rule to manage the stop in RINO. When there is an opening gap up or down through, or very close to stops/targets/entries we have a rule for exiting/entering positions. For long positions that gap below stops here is the rule of thumb: If a stock gaps down below the stop that has been established, wait for the first 15 minutes of trading before doing anything. Then place a new protective stop just under the low of that first 15 minutes of trading. Reverse the entire scenario for shorts. The reason I do this is because I want to measure the real strength or weakness in the stock. I don’t want a Good Til Cancelled (GTC) stop to be unnecessarily triggered at the open because often times stocks gap and reverse immediately, which keeps us in the position and looking for a better exit. Considering today's weakness I've listed a couple more lower targets of $13.25 and $13.65 for readers looking for a quicker exits. Fundamentally, RINO trades at a low PE ratio of about 5 and I think there is a lot of room to for this stock to run. But the overall market weakness is proving too much for RINO, at least for now. If RINO breaks here we'll probably see $10.70 or lower in the near future so I urge readers to not hang on to positions hoping for a rebound.

Current Position: Long RINO stock at $12.70

Option Traders:
Suggested Position: July $12.50 CALL

Entry on May 27, 2010
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 926,000
Listed on 5/25/10, 2010


BEARISH Play Updates

Smith International, Inc - SII - close 34.45 change -3.11 stop 35.75 *NEW*

Target(s): 34.55 (hit), 33.60, 32.15
Key Support/Resistance Areas: 42.00, 40.90, 39.00, 37.00, 34.00
Current Gain/Loss: +3.50%
Time Frame: 1 to 2 weeks
New Positions: No

Comments:
SII gapped below our trigger of $36.90 to enter short positions so we implemented the gap rule similar to the one mentioned in the RINO position. I strongly urge readers to consider devising a gap rule similar to the ones I have been utilizing and writing about in the updates over the last several weeks. These rules are especially helpful when markets are as volatile as they have been recently. In SII's case, when the stock broke below the first 15 minute bar it showed the overall relative weakness of the stock and gave the green light to enter short positions, otherwise we would not have entered. We are now short SII stock at $35.70, or long July $37.00 PUTS at $3.30 for options traders. The stock traded all the way down to our first target of $34.55. I have listed a higher second target of $33.60 which would complete the gap fill in February. I suggest readers take profits or tighten stops at this level if SII trades down here. The oil service sector could reverse on a dime on any good news so I urge readers to protect profits. My comments from the play release remain valid so I'll leave them. SII looks vulnerable and is on the verge of possibly filling a gap all the way down to the $34.00 area. The oil services sector has been beaten down recently and SII has not been spared. SII remains below its downtrend line and if it trades below $36.95 there is a lot of air underneath. I'm looking for SII to fill this gap and I suggest readers initiate short positions if the stock trades up near $38.95 or down to $36.90, whichever occurs first. I view this trade as a good candidate to buy options as opposed to simply shorting the stock so that you know how much money is at risk. Our new stop is $35.75 which should be breakeven trade if the stop is hit. *NOTE: I view this trade as aggressive so please use proper position size to manage risk.

Current Position: Short SII stock at $35.70; For options traders: Long July $37.00 PUT, entry at $3.30

Entry on 6/1/2010
Earnings 7/28/10 (unconfirmed)
Average Daily Volume: 7.6 million
Listed on May 29, 2010


CLOSED BULLISH PLAYS

Console Energy - CNX - close 36.48 change -0.62 stop 34.50 *STOOPED OUT*

Target(s): 37.50, 38.25, 38.80, 40.75
Key Support/Resistance Areas: 41.00, 39.50, 37.55, 35.80, 34.90
Current Gain/Loss: -4.83%
Time Frame: 1 to 2 weeks
New Positions: Stopped Out

Comments:
CNX fell out of bed with all other energy stocks today and our stop was hit for a -4.83% loss. For readers who may have still have positions the above support/resistance areas can be used as a guide to exit positions. There is not much more short term support below until $32.30 so please don't hang on to positions hoping for a reversal, especially if the overall market is weak like today.

Closed Position: Long CNX stock at $34.50, entry was at $36.25

Annotated Chart:

Entry on 5/28/10
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 7.0 million
Listed on 5/25/10, 2010


CLOSED BEARISH PLAYS

Perrigo Company - PRGO - close 56.52 change -2.89 stop 61.75

Target(s): 59.05 (hit), 58.25 (hit), 57.25 (hit), 56.10, 54.30
Key Support Areas: 59.00, 58.00, 57.00, 56.00
Key Resistance Areas: 60.50, 61.50
Current Gain/Loss: +3.94% Time Frame: Closed
Comments:
PRGO gapped lower and quickly traded to our target of $57.25 which is where we closed short positions. The stock proceeded to regain almost all of the morning losses before reversing and closing at $56.52 which is below our morning exit. We have another target at $56.10 (raised from $56.00) which is also a good place to take profits or tighten stops. This would close the gap higher from 5/25 to 5/26. I also want to urge readers to protect profits as PRGO could just as easily reverse higher from here as it could continue lower. I'll leave some of my comments from the weekend as they are still valid. If the market reverses lower from here which is a possibility I think PRGO could trade down to our original target at $54.30. However, I'm anticipating a higher low to be made in the market and I suggest buying short PRGO positions back an any weakness in the stock. I've also tightened the stop to preserve capital if PRGO doesn't turn down from here. Technically, PRGO is testing its 20-day SMA from below and it appears it wants to put in a lower high. If this in fact happens we will have a winner, but if it doesn't we need to step aside at our stop price of $61.75. The stock was stuck in the middle of its 20-day and 50-day SMA but broke lower today.

Closed Position: Short PRGO stock at $57.25, entry was at $59.60

Annotated Chart:

Entry on May 27, 2010
Earnings More than 2 months (unconfirmed)
Average Daily Volume: 1.3 million
Listed on May 22, 2010