Editor's Note: Good Evening. I think the S&P 500 may have a little more upside left, but not too much until it runs into formidable resistance. The 61.8% retracement from the April highs to May lows is at 1,150, while the 50% retracement is at 1,130. There is also the 50-day, 100-day, and 20-week SMA's all in the 1,130 to 1,140 area. I anticipate all of these levels holding as resistance before we see more downside in the markets. As such, I am starting to position the model portfolio with more bias to the short side, especially as these levels approach. Current long positions should be managed with tight stops and I suggest being quick to take profits as targets are reached. I have made several adjustments to our long positions. Please email me with any questions.

Current Portfolio:


BULLISH Play Updates

Cisco Systems - CSCO - close 23.49 change +0.32 stop 22.20

Target(s): 23.55, 24.20
Key Support/Resistance Areas: 23.65, 22.55
Time Frame: 1 to 2 weeks

Comments:
I'm sticking with our set-up on CSCO and waiting for $22.85. If there is a pullback in the market this a stock I feel comfortable owning and will be looking for a bounce. Hopefully we can get filled this week so let's see what the market gives us. The stock hit a low of $23.05 on Thursday which was another entry for more aggressive traders. CSCO remains in the base it has built for the past 3 to 4 weeks and is trading in a $1 range (4.5%) between $22.55 and $23.55. $22.50 is key pivot level for the stock dating back to 2006. If the stock trades up to $23.80 and breaks higher out of the base that could also be used a trigger to enter for aggressive traders, but until that happens we are playing for a pullback. The remainder of my comments remain the same from the play release. CSCO looks stable here with a lot of support and I suggest we take advantage of the reliable price pattern that is being built. I would like to use $22.85 as a trigger to enter long positions. If triggered readers should be able to purchase July $22.00 calls for about $1.30 (current ask is $1.73). If CSCO then proceeds to rally to the top of its base at $23.55 we should make about 55 cents on the position for a +40% gain. If CSCO breaks out it could rally to fill a gap which is up near our more aggressive 2nd target of $24.40 and below the stock's 200-day SMA. Another entry could be considered at $23.05. Our stop will be $22.20. NOTE: I view this trade as potentially being quick.

Suggested Position: Long CSCO stock if it trades down near $22.85

Option Traders:
Suggested Position: Buy July $22.00 CALL, current ask $1.73, estimated ask at entry $1.30

Annotated Chart:

Entry on June xx
Earnings Date 8/5/10 (unconfirmed)
Average Daily Volume: 69 million
Listed on 6/16/10


GMX Resources Inc. - GMXR - close 8.00 change +0.21 stop 7.15 *NEW*

Target(s): 8.12, 8.40, 8.85, 9.40
Key Support/Resistance Areas: 7.52, 8.20, 8.50, 9.00, 9.50
Current Gain/Loss:
Time Frame: Several weeks
New Positions: Yes

Why We Like It:
GMXR traded down to $7.51 in early trading, triggering our entry to buy the stock. This was almost to the penny of Wednesday's lows and is a great example of the powerful double bottom pattern. I chose the entry trigger of $7.55 because it was near various intraday highs in May and June, as well as Wednesday's low after GMX broke out of the most recent downward trend line. So far we have been rewarded with more than +5% bounce off of those lows. Now that we are in the position at the lower trigger price I would like to offer two additional targets of $8.12 (below Wednesday's high) and $8.40 (near mid-April lows). These are areas where readers can also used to tighten stops to protect profits. Hitting these targets would constitute +7.5% and +11.2% gains, respectively. I would also like to move up our stop to $7.15 to limit risk in case there is a reversal. A tighter stop could even be placed in the $7.60 area or just below the double bottom in the $7.30 to $7.40 area, and if you get stopped out you can always re-enter at a better price when the stock finds its footing. I would rather protect profits than hang on and see a winner turn into a loser. I believe this play has a lot of upside potential but I also believe there is risk of a hard reversal in the overall market. GMXR has broken three longer term downward trend lines (starting on 10/16, 2/2, and 3/12) and appears to be ready to break out of recent resistance at $8.20. The stock has made a series of higher lows on the daily chart and is forming an ascending triangle. GMXR has closed above its 50-day SMA the past four days and may also be forming a bull flag. Volume has been noticeably higher in recent weeks, especially on days when the stock is advancing as opposed to pulling back. This signals that institutional money may be acquiring the stock which is a bullish indicator. NOTE: The options have a wide spread so I am going to refrain from officially suggesting an option position. The August $5 calls which are DITM look fine but trading the stock is suggested.

Current Position: Long GMXR stock at $7.55

Annotated Chart:

Entry on June 18, 2010
Earnings Date 8/3/10 (unconfirmed)
Average Daily Volume: 1.6 million
Listed on 6/17/10


Northern Oil & Gas - NOG - close 14.07 change +0.07 stop 13.42

Target(s): 14.75, 14.90
Key Support/Resistance Areas: 15.00, 14.35, 13.60, 13.15
Current Gain/Loss: +0.43% Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
We are long NOG stock at Friday's open at $14.01. My opening price data is conflicting but all of my intraday charts and time and sales data I could find show $14.01 so this is what I have used as the opening print. If any readers have something different please let me know and I will make the adjustment. NOG is holding the upward trend line that has formed with the lows from 5/25 and 6/8 and the stock's 20-day SMA (currently $13.79) is below and turning up. The stock also has solid support at $13.80 and $13.60 which are prior resistance areas from earlier this year which should now act as support. We are counting on all of this to hold as support and provide a bounce in NOG. Ideally, I would like to see the stock make a trip up to its 50-day SMA in the coming days, which is also near the June 3 and 15 highs. Our targets are $14.75 and $14.90 (adjusted) which are below the aforementioned highs and the 50-day SMA. If the trade plays out how we expect the gain will be about 5% to 6%. NOTE: I consider this a volatile stock and industry so please use proper position size to limit risk.

Current Position: Long NOG stock $14.01

Option Traders:
Suggested Position: Buy July $12.50 CALL

Annotated Chart:

Entry on June 18, 2010
Earnings Date 8/13/10 (unconfirmed)
Average Daily Volume: 670,000
Listed on 6/8/10


Ormat Technologies - ORA - close 29.67 change +0.06 stop 27.25

Target(s): 30.37, 30.95, 31.80
Key Support/Resistance Areas: 32.00, 30.60, 29.00, 27.50
Current Gain/Loss: +1.44%
Time Frame: Several weeks
New Positions: Yes

Comments:
ORA closed above its 50-day SMA for the fourth consecutive day and is forming a bull flag on its intraday and daily charts. I am looking for a move to $30.37 (adjusted first target) this week which is just below the 100-day SMA. This is an area where I suggest tightening stops to see if we can get more out of the stock. If it breaks through the 100-day SMA there is little resistance until our next two targets. Ultimately, I think ORA can make it up to the $31.80 area but it may take some time depending on the overall strength or weakness in the broader market. ORA has been stubborn to pullback so I wouldn't be surprised to see some sort of retracement before proceeding higher. We are keeping a wide stop to account for volatility and will adjust it this week. If readers want to keep a tighter leash on the trade a stop could be placed below the 20-day SMA or just below our entry price if you want it really tight.

Current Position: Long ORA stock at $29.25

Option Traders:
Suggested Position: Buy July $30.00 CALL

Annotated Chart:

Entry on June 16, 2010
Earnings Date 8/4/10 (unconfirmed)
Average Daily Volume: 345,000
Listed on 6/15/10


BEARISH Play Updates

Mohawk Industries - MHK - close 52.33 change -0.10 stop 58.05

Target(s): 52.05 (hit), 51.50, 50.40, 49.10
Key Support/Resistance Areas: 55.00, 52.00, 50.00
Current Gain/Loss: +1.88%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
We are looking for MHK to fill the gap below its current price which is just above the 200-day SMA. If there is any weakness in the market this should happen relatively quick. Since the lower end of the gap corresponds with its 200-day SMA this is a logical place for the stock to bounce. I suggest taking profits at this level or at least tightening stops to protect them. Our first target of $52.05 has been hit and I've listed another target just above Thursday's lows at $51.50 which is also a good area to tighten stops. I've moved the stop to $56.15 which is still wide to account for volatility. MHK has made a series of lower highs on the intraday charts and still looks vulnerable. My comments from the play release remain mostly the same. MHK has rallied +14% from its 6/8 lows and finds itself in a resistance and congestion area between $53.00 and $55.00. The stock has also hit its 100-day and 20-day SMA's and has been stopped. I believe it is time for the stock to turn back down from here and fill the gap higher between 6/11 and 6/14. MHK is a residential and commercial manufacturer of floor products in the US and Europe. The construction industry is struggling on both continents and consumer spending is weak. Any bad news about the industry or lowered guidance warnings could send the stock tumbling. Fundamentally, the company trades at about 28 times trailing earnings which I think is too high. NOTE: This stock is volatile so please use proper position size to limit risk.

Current Position: Short MHK stock at $53.33

Option Traders:
Suggested Position: Buy August $50.00 PUT

Annotated Chart:

Entry on June 17, 2010
Earnings 7/20/2010 (unconfirmed)
Average Daily Volume: 975,000
Listed on July 29, 2010