Editor's Note:
Good Evening. We closed 3 positions today and dropped IPI. We were stopped out of MRK for a small loss and closed LULU for a nice gain. SBUX hit our $24.85 target at the open and we are flat for small loss. The net gains on the 3 closed positions was about +2%.

The market volatility remains extremely difficult to deal with and it is not a healthy environment. It seems we go from overbought to oversold in a matter of hours. Until a direction is resolved I urge readers to use small position size to properly manage risk and be quick to tighten stops and protect capital as positions are moving in the right direction. We'll keep releasing plays with good set-ups and try to stay one step ahead of the market. Please email me with any questions.

Current Portfolio:


BULLISH Play Updates

Emulex Corp - ELX - close 9.70 change +0.17 stop 9.21 *NEW*

Target(s): 9.59(hit), 9.89, 10.04, 10.25
Key Support/Resistance Areas: 11.40, 11.00, 10.50, 10.10, 9.70, 9.25
Current Gain/Loss: -0.51%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/20: ELX benefited from the reversal in the market today and the stock looks poised to make a trip up to our more aggressive targets and possibly its 50-day SMA which is near our final target of $10.25 (lowered 4 cents). ELX reversed immediately from its lows and blew through our conservative target. There was no real pullback to hit a stop so we remain in the position. ELX closed right on a downtrend line from last Thursday so there could be a little pullback in the morning. If the market can follow through with today's gains ELX should fine. The above targets are areas where ELX may find some resistance. Readers should consider tightening stops to see how much mosr we can get out of the position.

7/19: ELX traded down to our key support level at $9.25 and then bounced closing almost +1% higher. ELX traded to within 1 penny of our lowered target before backing off. Traders are not enthused with IBM earnings and the S&P 500 futures are currently down about -8 points from their 4:00 PM close. This is sure to put pressure on ELX in the morning. Today's pullback in the morning was on significantly lighter volume than the afternoon rally which is good for a bullish case. Our stop is below the primary upward trend line and I expect this hold. I've adjusted the targets above which are key levels to consider tightening stops or taking profits.

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

Options Traders: October $10.00 CALLS

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


BEARISH Play Updates

PowerShares QQQQ Trust - QQQQ - close 45.26 change +0.54 stop 46.10

Target(s): 45.05, 44.85, 44.60, 44.40 (hit 7/17, 7/20), 43.75
Key Support/Resistance Areas: 46.77, 45.25, 44.46, 43.50, 42.50, 41.00
Current gain/loss: -2.17%
Time Frame: 1 weeks
New Positions: Yes

Comments:
7/20: QQQQ gapped lower and traded to within 11 cents of our $43.75 target. The market looked ugly and after an early bounce and the Q's even retreated to retest its lows. For intraday traders a stop should have place above the first 30 minute high of $44.12 which would have protected small profits in this position. After this level was broken the Q's proceeded to bounce and never looked back, surging +3% from its lows. Will there be follow though? It appears there will be some with AAPL's earnings report which is boosting the NASDAQ 100 futures +0.50% in the aftermarket. This equates to about 23 cents in QQQQ which is below our stop and last week's highs. It is amazing how things changed on a whim this morning which we have seen a lot of lately, and it has helped and hurt our positions. This time it is painful but we have a plan and we need to stay nimble to find a proper exit. So I have listed additional immediate targets above which are intraday support/resistance areas. QQQQ should retrace some of these gains and these are areas where the ETF may find support. They are good areas to tighten stops or exit positions. It wouldn't surprise me to see QQQQ retrace a good portion today's gains and retest its declining 20-day SMA (currently $44.51 and declining). The Q's are also below two downtrend lines and its 200-day and 50-day SMA's. It will be interesting to see how it plays out.

7/19: The NASDAQ 100 futures are down over -1% compared to the 4:00 PM close after IBM and Texas Instruments earnings. This should put pressure on QQQQ and get the ETF moving towards our more aggressive targets. As these targets approach I suggest readers tighten stops to see how much more we can get out of the position.

Current Position: Short QQQQ stock, entry was at $44.30

Options Traders: August $45.00 PUTS

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


CLOSED BULLISH PLAYS

Intrepid Potash, Inc. - IPI - close 23.07 change +0.90 stop 20.90

Target(s): 22.85, 23.20, 23.80
Key Support/Resistance Areas: 23.25, 22.00, 21,00
Time Frame: 1 to 2 weeks
*DROPPED*

Comments:
7/20: IPI traded within 6 cents of our entry trigger again today but didn't let us in. The stock proceed to gain over +5.5% off of its lows and has already hit our first target. We came close but I can not chase the stock at these levels so I have to drop the play. Frustrating!

7/19: IPI traded to within 6 cents of our entry before bouncing. I anticipate getting filled tomorrow. Futures are down in the aftermarket so readers may want to consider entering at a lower price in the $21.50 to $21.60 area depending on the strength of the weakness tomorrow. Our official entry remains at $21.80 which is -1.5% lower than current prices.

Suggested Position: Long IPI stock if it trades to $21.80

Suggested Position: Buy August $22.00 CALLS, current ask $1.30, estimated ask at entry $1.10

Annotated chart:

Entry on July xx
Earnings Date 8/4/10 (unconfirmed)
Average Daily Volume: 1.0 million
Listed on 7/17/10


Merck & Co - MRK - close 35.66 change -0.14 stop 35.38

Target(s): 36.30, 36.55, 36.95, 37.45
Key Support/Resistance Areas: 39.50, 38.75, 38.00, 36.35, 35.80
Final Gain/Loss: -1.13%
Time Frame: 1 to 2 weeks
New Positions: Closed

Comments:
7/20: Today's early morning weakness got us and we were stopped out of MRK at the open. The stock came within 15 cents of hitting our target on Friday and then proceeded to shed more than -4% to this morning's low. MRK broke through its 200-day, 100-day, and 20-day SMA's early and then rallied to retest them from below. It's not a pattern I like and I suggest readers who may still have positions to keep a tight leash on this trade. I would be a seller into any further strength or at least trail stops up to protect capital.

7/19: MRK had a relatively quiet day and remains above its 200-day, 50-day, and 20-day SMA's. My comments from 7/17 have not changed.

Closed Position: Long MRK stock at $35.38, 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


CLOSED BEARISH PLAYS

Lululemon Athletica Inc. - LULU - close 38.28 change +0.39 stop 40.42

Target(s): 38.00 (hit), 37.35 (hit), 35.80, 34.55
Key Support/Resistance Areas: 42.25, 39.75, 37.00, 35.16, 32.75
Final Gain/Loss: +4.60%
Time Frame: 1 week
New Positions: Closed

Comments:
7/20: LULU opened near our target of $37.35 and oscillated around it most of the morning before breaking out with the rest of the market. The stock could not break below its upward trend line mentioned below and is just not ready to let go yet so protecting capital and closing the position for a gain was the right move. LULU has a lot of resistance up to the $40.00 to $41.00 area which could be another opportunity for a short play.

7/19: LULU came within 8 cents of our 2nd target where it found support and reversed higher. As such I'm going to raise the target 10 cents to $37.35. We currently have +3.2% gains and the new target should produce a winning trade. LULU is getting close to touching its a upward trend line from last July and the next target is a good place to tighten stops to see if we can get more out of the trade. If LULU breaks this trend line the stock could pick-up steam to the downside towards the 200-day SMA.

Closed Position: Short LULU stock at $37.35, entry was at $39.15

Annotated chart:

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


Starbucks Corp. - SBUX - close 25.77 change +0.28 stop 26.05

Target(s): 25.30 (hit), 25.00 (hit), 24.85 (hit), 24.40
Key Support/Resistance Areas: 26.50, 26.00, 25.25, 24.80, 24.00, 23.60, 22.50
Final Gain/Loss: -0.40%
Time Frame: 1 to 2 days
New Positions: Closed

Comments:
7/20: SBUX gapped open lower and hit our target of $24.85. Per yesterday's updates we were looking for an exit and this was the best we could get prior to earnings tomorrow. In the end, I had too loose of stop on this trade and we should have been out earlier, but we were able to limit losses as much as possible.

7/19: SBUX reports earnings after the bell on Wednesday and I suggest readers exit positions prior to the close on Wednesday. Today the stock was down about -1% in early trading and I'm looking for more weakness tomorrow. We have 3 near term targets listed above which are good areas to consider exiting positions tightening stops to ride this down as far as we can prior to earnings. For options traders, I strongly encourage you to exit prior to earnings as the volatility could get sucked out of the premium.

Closed Position: Short SBUX stock at $24.85, entry was at $24.25

Annotated chart:

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