Editor's Note:
Good Evening. Our short positions have come back to life and I am expecting more downside this week. We may incur a bounce but I think any strength will be sold into. I've adjusted targets and stops on most positions and I want to ride the short positions as long as we can to exit at the best price possible. The targets I have listed are good areas to tighten stops on the way down. Please email me with any questions.

Below are the June results for all recommended trades. We had a phenomenal run during the last half of June and overall had a winning month.

Current Portfolio:


BULLISH Play Updates

Emulex Corp - ELX - close 9.44 change -0.49 stop 9.07 *NEW*

Target(s): 9.60, 10.04, 10.40, 10.85
Key Support/Resistance Areas: 11.40, 11.00, 10.50, 10.10, 9.70, 9.25
Current Gain/Loss: -3.18%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/17: ELX sold off hard today and the stock closed below its 20-day SMA. Conservative traders may want to consider exiting on any strength and I have listed two lowered targets that are areas readers should consider exiting or tightening stops. The stock is trading in a short term upward channel and has trend line support below so I am confident these targets can be hit. On Friday's pullback volume was lighter than the break out days on Wednesday and Thursday so this is a good sign. I've adjusted the stop down so that it is below the primary upward trend line which. NOTE: I view this as a potentially volatile trade so please use proper position size to limit risk. 7/15: ELX hit our trigger to enter long positions at $9.75 this morning. The stock tested the backside of the broken trend line and bounced hard. The good news is that ELX rallied off of its lows early this morning before the market and before the GS and leaking well news. I'm looking for a move up to the 50-day SMA. I've tightened the stop to $9.18. NOTE: I view this as a potentially volatile trade so please use proper position size to limit risk.

7/14: ELX broke out of a short term downtrend line today and has been making higher lows since its lows on 6/8. I like the volume patterns recently and over the past two days ELX has surged higher on much heavier volume than its daily average of 1.76 million. I've also been waiting for this stock to close above its 20-day SMA (currently $9.69) which it did today. I believe ELX will easily make a run up to its recent highs near $10.40 which is our first target. The stock may experience a some resistance at this level but ultimately I think it heads toward the $11.00 area. Today's candlestick could be considered a reversal pattern but I don't think ELX will trade below its 20-day SMA ($9.69) unless there is a big drop in the market which is certainly possible. However, I'm viewing the afternoon sell-off from its highs as a test of the 20-day SMA from above and a second chance to get on board the momentum ELX is building. In addition, the stock has made two consecutive higher weekly highs. Our initial stop will $8.95 which is below two upward trend lines. A tighter stop could be placed at $9.20 which is below yesterday's low. I would like to use a trigger of $9.75 to enter positions. NOTE: I view this as a potentially volatile trade so please use proper position size to limit risk. For options traders I am pushing the recommended option out to October as buying the additional time value is cheap.

Current Position: Long ELX stock, entry was at $9.75

Options Traders: October $10.00 CALLS

Annotated chart:

Entry on July 15, 2010
Earnings Date 8/5/10 (unconfirmed)
Average Daily Volume: 1.76 million
Listed on 7/14/10


Merck & Co - MRK - close 35.91 change -0.58 stop 35.38 *NEW*

Target(s): 36.30, 36.55, 36.95, 37.45
Key Support/Resistance Areas: 39.50, 38.75, 38.00, 36.35, 35.80
Current Gain/Loss: +0.17%
Time Frame: 1 to 2 weeks
New Positions: Yes, with the tighter stop

Comments:
7/17: MRK broke out to new daily highs on Friday not seen since April but the breakout failed and the stock looks vulnerable to the down side. The stock has long term horizontal support between $35.80 and $35.60 and its 20-day, 100-day, and 200-day SMA's (all right at $35.60) are below Friday's closing price. This should provide support for the stock but if this sell-off gains steam I doubt MRK can hang in at these levels. If this support is broken the next stop will most likely be somewhere just below $35.00 which could also set-up an inverse head and shoulders pattern(see ovals on chart). This area is also near an upward trend line and its 50-day SMA. So the question is should we adjust our stop down a bit and sit through a -2% to -3% pullback if the $35.60 support level breaks? Considering the broad market sell off on Friday when even the more defensive sectors like pharmaceuticals were down over -2%, I say no. I am going to keep a tight leash on this trade and raise the stop to $35.38 while also bringing down the targets to see if we can make this a winner. MRK may go test the aforementioned SMA's prior to bouncing and I suggest we sell positions into strength using the above targets. These are good areas to consider tightening stops to see how much we can get out of the position.

7/13: MRK closed above resistance of $36.35 and looks like it is headed towards our targets. If the broader market continues bouncing we should have no issues hitting our target(s) and MRK could also act as a defensive play if there is a pullback.

7/12: MRK traded down to $35.84 in early trading which triggered our long entry. The stock then drifted higher throughout the day. MRK appears to be forming a bull flag on its daily chart. A break above Thursday's high of $36.40 should get things moving higher relatively quick. Since we were able to get the lower entry trigger today I am going to offer a lowered 1st target of $37.20 which is a good place to consider at least consider tightening stops. I've also adjusted our primary target of $37.95 down 20 cents to $37.75.

Current Position: Long MRK stock, entry was at $35.85

Options Traders: August $36.00 CALLS

Annotated chart:

Entry on July 12, 2010
Earnings Date 7/30/10 (unconfirmed)
Average Daily Volume: 18 million
Listed on 7/10/10


BEARISH Play Updates

Lululemon Athletica Inc. - LULU - close 38.00 change -1.60 stop 40.42

Target(s): 38.00 (hit), 37.25, 35.80, 34.55
Key Support/Resistance Areas: 42.25, 39.75, 37.00, 35.16, 32.75
Current Gain/Loss: +2.94%
Time Frame: 1 week
New Positions: Yes

Comments:
7/17: My comments from 7/15 haven't materially changed so I am adding to them in the 7/17 post. LULU is being contained by its 20-day and 50-day SMA's and the backside of its broken upward trend line that began in February. I expect this resistance to hold and LULU to turn lower. Friday's -4% decline took away 6 prior days gains. Our target of $38.00 was hit on Friday but I am looking for more downside. $37.25 is now the immediate target below but if LULU breaks its upward trend line that began last July this could gain steam to the downside towards the 200-day SMA. I've tightened the stop to $40.42.

7/13: LULU managed to eek out a 26 cent gain today as the market catapulted higher. This is under performance and confirms my bearish outlook for the stock. We could get a little more bounce in this position but when the market pulls back LULU should go lower relatively quick. However, in the spirit of following the market we need to be careful and not get too greedy by expecting LULU to simply rollover and give us a big gain. As such, I've added $37.95 as the first target which just above yesterday's low. This level is -3% lower from our entry price and if you bought options they should return about +15% at $37.95. Tightening stops at this level is suggested to see if we cn get more out off the position.

Current Position: Short LULU stock, entry was at $39.15

Option Traders: August $35.00 PUTS

Annotated chart:

Entry on July 12, 2010
Earnings 9/9/2010 (unconfirmed)
Average Daily Volume: 1.89 million
Listed on July 1, 2010


PowerShares QQQQ Trust - QQQQ - close 44.34 change -1.26 stop 46.10 *NEW*

Target(s): 44.40 (hit), 43.75, 43.25, 42.55
Key Support/Resistance Areas: 46.77, 45.25, 44.46, 43.50, 42.50, 41.00
Current gain/loss: -0.09%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/17: QQQQ hit our target of $44.40 and we are now approaching breakeven on the trade. I've moved the stop down to $46.10 which just above last week's highs. I'm comfortable giving this some room to work and suggest we ride it as far down as we can. Friday didn't really give us a good reference point to place a tighter stop but there is an intraday congestion area between $45.00 and $45.40 so a tighter stop could be placed above there. QQQQ may bounce and retrace some of Friday's losses but I expect the selling to resume. I've adjusted the targets above and suggest readers tighten stops as they are hit to protect against a reversal. $43.25 is a high area of interest to tighten stops or take profits. This level should give us a nice +30% gain.

7/15: Google is down -$20 in the after hours after their earnings report. This should keep the Q's in check tomorrow. However, the good news about the GS settlement and the oil spill in the gulf is boosting sentiment despite the terrible economic data that was released today. My comments from 7/13 remain the same except I would place the tighter stop at $46.25 as opposed to $46.15. QQQQ's close on 12/31 was $45.75 which is near the highs of the past two days. We are at the bottom of January's congestion area and this is an important reference point. We've got some wiggle room and think the market moves lower prior to any significant move higher. I've tightened the targets and added $45.00 which is just above QQQQ's 20-day SMA. This is good place tighten stops. Current Position: Short QQQQ stock, entry was at $44.30

Options Traders: August $45.00 PUTS

Annotated chart:

Entry on July 8, 2010
Earnings N/A (unconfirmed)
Average Daily Volume: 100 million
Listed on July 7, 2010


Starbucks Corp. - SBUX - close 25.35 change -0.78 stop 26.05 *NEW*

Target(s): 25.30, 24.85, 24.25, 23.70
Key Support/Resistance Areas: 26.50, 26.00, 25.25, 24.80, 24.00, 23.60, 22.50
Current Gain/Loss: -2.42%
Time Frame: 1 to 2 weeks
New Positions: Yes, with a tight stop

Comments:
7/17: On Friday morning SBUX closed its gap lower on 6/29 (referred to in the update below) and then took a nose dive and closed its gap higher from 7/13. All of the stock's weekly gains were essentially erased with Friday's -3% loss. Similar to the Q's above SBUX didn't give us a good reference point on Friday to place tighter stop so I have moved the stop down to the top of last week's congestion area at $26.05. This should be enough room to see how far we can ride SBUX back down so we can turn this trade into a winner. The targets can be used as a guide to for potential bounce points on the way down.

7/15: SBUX was headed for our target this morning but reversed with the broader market. The stock has retraced about 50% of its recent decline and is below its 50-day SMA. We need a reversal and are looking to exit. I've tightened the targets and suggest readers exit on weakness. Ultimately SBUX should fill its gap higher on 7/13 (near $25.30) and I think it will prior to moving much higher. But the stock may be headed for $26.40 to close the gap down on 6/29. This is about +1% higher than current levels. I suggest being patient and waiting for a pull back to exit positions.

Current Position: Short SBUX stock, entry was at $24.25

Options Traders: August $25.00 PUTS

Annotated chart:

Entry on July 8, 2010
Earnings 7/21/2010 (unconfirmed)
Average Daily Volume: 10 million
Listed on July 3, 2010