Editor's Note:
I am suggesting traders buckle your seat belts and fasten your crash helmets. The next couple of days could be volatile as investors react to the FOMC decision on any QE program.

-James

Current Portfolio:


BULLISH Play Updates

Boyd Gaming - BYD - close 8.56 change +0.22 stop 7.80

Target(s): 8.55, 8.70, 8.90
Key Support/Resistance Areas: 9.60, 9.25, 8.75, 8.00, 7.40
Current Gain/Loss: +4.39%
Time Frame: 1 to 2 weeks
New Positions: Neutral

Comments:
11/2 (James): BYD continues to inch higher and the market-wide rally today helped BYD post a +2.6% gain. Shares hit our first target at $8.55 again. The trend of higher lows is bullish but we're not seeing any volume behind the move. I believe we're not seeing any volume because investors are waiting on the election results and the FOMC announcement tomorrow. I'm not suggesting new bullish positions at this time. More conservative traders may want to consider raising their stop loss toward $8.00 or even $8.10.

11/1: Make that 5 days BYD has consolidated between support at $8.10 and resistance at $8.50 to $8.75. All of the comments below remain valid. Use strength to take profits or tighten stops to protect them. I've narrowed the targets slightly and our stop is just below to control losses if the stock breaks lower.

Current Position: Long BYD stock, entry was at $8.20

Entry on October 14, 2010
Earnings 10/27/10 (unconfirmed)
Average Daily Volume: 1.8 million
Listed on October 9, 2010


Citigroup Inc - C - close 4.17 change +0.02 stop 3.78

Target(s): 4.60, 4.75, 4.90
Key Support/Resistance Areas: 4.30, 4.00
Current Gain/Loss: -0.24%
Time Frame: 3 to 4 weeks
New Positions: Yes

Comments:
11/2 (James): Moody's issued some bearish comments on the banks this morning, which pushed the financial sector lower. Shares of C dipped toward $4.10 before bouncing back and the stock churned sideways in a very narrow range for the rest of the session. The trend of higher lows in C is bullish but banks have been lagging the market for weeks. Personally I'm too cautious on the financials right now to launch new bullish positions. More cautious traders may want to consider upping their stops close to the $4.00 level.

11/1: News broke today that the SEC is investigating a CDO deal that involved JP Morgan. I bring this up because C was frequently involved in CDO transactions and if there is an inquiry at JPM maybe there will be one at C. There is now headline risk in the position, and considering a possible market correction may be on the horizon, readers should use caution. Tighter stops could be considered just under $4.00.

Suggested Position: Long C stock, entry was at $4.16
Options Traders: Long December $4.00 CALL

Entry on October 27, 2010
Earnings Date More than two months (unconfirmed)
Average Daily Volume: 523 million
Listed on October 25, 2010


Hansen Natural Corp. - HANS - close: 51.23 change: -0.26 stop: 43.90

Target(s): 50.00, 52.50,
Key Support/Resistance Areas: 45.00, 47.50, 50.00, etc.
Current Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below for details

Comments:
11/2 (James): There is no change from our prior comments. We're waiting for a correction! Don't forget that HANS is due to report earnings on November 4th, after the closing bell. With the stock at multi-year highs I think odds are good it could see some post-earnings profit taking.

10/30 (James) & 11/1: HANS is one of those stocks that has continued to run away from us. We don't want to chase it. The good news is that I'm expecting a market correction soon, following the FOMC announcement on Wednesday. The bad news is that HANS can be a volatile stock. While I agree that the $48.00 level should be support I suspect that HANS will fall further than $48. I'm adjusting our trigger to open positions to $45.50 (down from $48.25). We'll move our stop loss to $43.90. Hopefully we'll get triggered in the next week or two.

Suggested Position: BUY the stock at $45.50

- or -

BUY the December $50.00 calls (on a dip at $45.50).

Entry on October xx
Earnings Date 11/04/10 (unconfirmed)
Average Daily Volume: 4.5 million
Listed on October 16, 2010


TJX Companies - TJX - close 46.34 change +0.49 stop 44.75

Target(s): 46.70, 47.20, 47.95
Key Support/Resistance Areas: 48.50, 47.00, 45.40, 43.50
Current Gain/Loss: +1.80%
Time Frame: 2 to 4 weeks
New Positions: No

Comments :
11/2 (James): TJX continues to inch higher and shares closed near four-month highs. Bigger picture TJX looks poised to move higher but its direction probably depends on how investors choose to react to the FOMC announcement tomorrow.

11/1: TJX closed relatively flat on the day. I do not see many changes from the comments below and believe this is the best strategy. We have a tight stop below if TJX doesn't head higher from here. I would use strength as an opportunity to take profits or tighten stops to protect them.

10/30 (James): I am urging caution in TJX. The bullish breakout on October 25th lasted about four days. The action in just the last couple of days looks like a short-term bearish reversal. I would look for a pull back toward the $45.40 level again. I'm adjusting our stop loss even higher to $44.75. FYI: Earnings are due out around Nov. 16th.

Suggested Position: Long TJX stock if it trades to $45.52

Entry on October xx
Earnings Date 11/16/10 (unconfirmed)
Average Daily Volume: 3 million
Listed on October 18, 2010


iPath S&P500 Short-Term VIX ETF - VXX - close: 12.86 change: -0.36 stop: 11.99

Target(s): 15.00, 17.50
Key Support/Resistance Areas: 12.00, 14.00, 15.00, 17.50. 20.00
Current Gain/Loss: -1.83%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
11/2 (James): Tomorrow is the big event. If you want to take a chance on volatility surging on the FOMC announcement then you need to initiate positions ahead of the 2:00 p.m. (probably 2:15) announcement. I consider this an aggressive, higher-risk trade. Hopefully we'll be in and out in just a few days. The reverse split is approaching quickly.

11/1: Volatility started to climb after the initial gap higher and early strength in the S&P 500. However, the early strength failed after the first 45 minutes of trading. We are long VXX per the play release below and are looking for a quick move higher.

10/30: I want you to look at a two-year chart of the VXX. That's what happens when volatility contracts from record levels. Plus, this ETN has been sabotaged by contango issues. Contango happens when future contracts are more expensive than spot (short-term) contracts. This VIX ETN lost money every time they had to replace expiring contracts with higher price ones. With that in mind we do NOT want to hold this ETN for very long.

This is a very short-term bet that volatility is going to spike significantly come this Wednesday after the FOMC announcement regarding any QE program. You can launch positions on Monday morning (with the newsletter) or you can wait until Wednesday. The key is to have bullish positions open ahead of the FOMC announcement. I'm only expecting to hold this position for a week maybe a little longer. I'm suggesting a stop loss at $11.99. Our first target is $15.00. Our second target is $17.50. More aggressive traders could aim higher.

FYI: You need to know that Barclays is planning a 1-for-4 reverse split for this ETN scheduled for November 9th, 2010. Hypothetically, if the VXX was trading at $13.00 on November 8th and you had 40 shares. On November 9th you would have 10 shares worth $52 each. It is possible we will be in and out of this trade before the reverse split occurs.

Current Position: Long the VXX (ETN), entry was $13.10

Entry on November 1, 2010
Earnings Date N/A (unconfirmed)
Average Daily Volume:
Listed on October 30, 2010


BEARISH Play Updates

Cree Inc. - CREE - close: 51.44 change: +1.33 stop: 54.05

Target(s): 48.00, 42.50
Key Support/Resistance Areas: 54.00, 52.00, 50.00, 48.00, 46.00, 40.00
Current Gain/Loss: +0.41%
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
11/2 (James): CREE managed to erase most of Monday's losses with a +2.6% bounce. The market-wide rally certainly didn't help us any. Fortunately, the rebound stalled under short-term resistance near $52.00. I would still consider new bearish positions here at current levels.

11/1: Short positions in CREE were opened this morning. The stock gapped higher at the open and them immediately turned lower. CREE closed about -3% lower from its opening high and looks to be headed lower. $48.00 is the immediate target which is where the stock found support in September and October. A break below $47.30 should send the stock to $46.00 with ease.

10/30: Traders were unhappy with CREE's recent earnings report and shares collapsed to their 2010 lows. The oversold bounce has stalled under new resistance near $52.00. Given the stock's under performance I expect shares to break support near $48.00 and hit new lows before November is over. I'm suggesting new bearish positions now. We'll use a stop at $54.05. Our first target to take some money off the table is $48.00. Our second, longer-term target is $42.50.

FYI: Traders may want to buy the puts on CREE instead of shorting the stock. There were some rumors last month that CREE was a takeover candidate. If a bid for the company appears it could be very painful for those short the stock. The put limits your risk to what you paid for the option. Plus, CREE already has a high amount of short interest (about 24% of the float) so any unexpected rallies could turn into short squeezes. For this reason you may want to limit your position size.

Current Position: Short CREE stock, entry was at $51.65
Options Traders: Long 2010 December $50 PUT (CREE1018X50) entry @ $2.83

Entry on November 1, 2010
Earnings Date more than two months (unconfirmed)
Average Daily Volume: 4.9 million
Listed on October 30, 2010


Leggett & Platt, Inc. - LEG - close 20.35 change +0.37 stop 21.75

Target(s): 19.80, 19.20
Key Support/Resistance Areas: 22.00, 21.70, 21.50, 21.30, 20.55, 19.70, 19.00
Current Gain/Loss: +0.68%
Time Frame: 1 to 3 weeks
New Positions: No

Comments:
11/2 (James): Financial stocks continue to weaken but LEG managed an oversold bounce from round-number support near $20.00 and shares gained +1.8%. I don't see any changes from our prior comments.

11/1: LEG lost nearly -2% today and came within 9 cents of reaching our first target. If the broader market corrects we should be able to take profits this week. Readers may want to consider a tighter stop near $20.75.

10/30 (James): Whew! LEG's chart is ugly but I'm not sure I would launch new bearish positions at these levels. There has not been much of an oversold bounce yet and that's a positive for us. At the same time, how much of the bad news has already been factored in? The path of least resistance is probably down but I might wait for a new failed rally before considering new positions.

Current Position: Short LEG stock, entry was at 20.49
Options Traders: Long December $20.00 PUT

Entry on October 25, 2010
Earnings Date: More than two months (unconfirmed)
Average Daily Volume: 1.5 million
Listed on October 23, 2010


Mechel OAO - MTL - close 23.90 change +0.22 stop 24.60

Target(s): 22.30, 21.25, 20.25
Key Support/Resistance Areas: 24.25, 24.00, 23.60
Current Gain/Loss: -2.58%
Time Frame: 1 to 3 weeks
New Positions: Yes

Comments:
11/2 (James): We need to be nimble here. The $23.50-24.25 zone should be overhead resistance for MTL. The stock has managed to rally past $23.50 and its 200-dma and today saw shares challenge its 50-dma and $24.25 area. This could be a new bearish entry point but I'd like to see the stock roll over first!

11/1: Friday's bounce in MTL continued on Monday and the stock closed above its 200-day SMA. The stock rallied up to touch its 50-day SMA from below for the first time since it broke below on 10/21, which is where today's selling began. There is resistance at current levels but we are going to need to see the broader market correct to see MTL make new lows and reach our targets. .

10/30 (James): Bingo! MTL has rebounded back toward short-term resistance near $23.50 and its 200-dma. Our trigger to launch bearish positions was hit at $23.30. If you missed the entry point I would still consider bearish positions today or you could wait for a bounce toward $24.00 and technical resistance at its 50-dma. Please note I am adjusting the stop loss to $24.65.

Current Position: Short MTL stock, entry was at $23.30
Options Traders: Long December $23.00 PUT (entry @ $1.30)

Entry on October 29, 2010
Earnings Date: More than two months (unconfirmed)
Average Daily Volume: 2.1 million
Listed on October 27, 2010


SPDR S&P Retail ETF - XRT - close: 43.75 change: +0.55 stop: 44.55

Target(s): 41.40, 40.60
Key Support/Resistance Areas: 44.30, 42.50, 41.20, 40.40, 50-day SMA
Current Gain/Loss: -0.46%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
11/2 (James): I agree with Scott's assessment on Monday. This retail ETF does have a lot of potential to correct lower although more conservative traders may want to look for a move under $43.00 to initiate positions.

Weak personal income and spending data released today, along with weak consumer sentiment that was released on Friday, could be hinting at another slow holiday shopping season. Throw in an overbought market and retailers are ripe for some profit taking. I suggest readers initiate short positions in XRT at current levels. XRT has support at $42.50 so conservative traders may want to wait for this level to break prior to entering positions. However, we also have a good reference point just above the recent highs to place a tight protective stop if XRT decides to move higher first. Our targets are -4% and -6% lower than current levels.

Current Position: Short XRT @ 43.55 Options Traders: Buy December $43.00 PUT, entry @ $1.55

Entry on November 2nd @ 43.55
Earnings Date N/A (unconfirmed)
Average Daily Volume: 10 million
Listed on November 1, 2010