Editor's Note:
The market extended its gains on Friday with an impressive show of strength, especially following the jobs number. Stocks obviously want to go up but they're starting to look a little bit overbought. I am suggesting we sell our December Citigroup calls.

-James

Current Portfolio:


BULLISH Play Updates

Alcoa Inc - AA - close: 14.23 change: +0.14

Stop Loss: 12.90
Target(s): 14.95, 15.95
Current Option Gain/Loss: + 7.9%
Time Frame: 8 to 10 weeks
New Positions: Yes, but see below

Comments:
12/04 update: AA extended its gains to three days in a row with the stock up four out of the last five sessions. Friday was a new seven-month closing high and volume has been strong on the rally, which is normally a bullish signal. I would not chase new positions here. Wait for a dip back toward the $13.60-13.50 zone. (If we do see another entry point we might consider buying some call options).

Current Position: Long AA stock @ 13.18

chart:

Entry on November 16 at $13.18
Earnings Date 01/10/11 (unconfirmed)
Average Daily Volume: 26.1 million
Listed on November 6th, 2010


Alaska Air Group - ALK - close: 55.89 change: +0.57

Stop Loss: 51.90
Target(s): 59.75
Current Option Gain/Loss: + 1.7%
Time Frame: 8 to 9 weeks
New Positions: Yes, see below

Comments:
12/04 update: The XAL airline index is still sitting out this market rally but it is worth noting that the XAL has been forming a pennant shaped consolidation pattern. These are thought to be neutral patterns but more often than not the prevailing trend (that's upward in this case) continues. When the XAL breaks out higher ALK should participate. Speaking of ALK the stock is inching closer to a breakout past resistance near $56.00. I would prefer to launch new positions on a move (or a close) over $56.00. Nimble traders could try and buy a dip near $55.00 or $54.50 since ALK might retest the bottom last week's range again. More conservative traders might want to consider a stop closer to $54.

FYI: On Friday ALK reported that their November traffic was up +15.5% compared to last year. Planes were 83.9% full for the month.

Current Position: Long ALK stock @ $54.91

- or -

Long the 2011 January $60 calls (symbol: ALK1122A60) entry @ $1.60

chart:

Entry on November 22 at $54.91
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 331 thousand
Listed on November 20th, 2010


American Express - AXP - close: 44.88 change: -0.10

Stop Loss: 41.49
Target(s): 47.50, 49.85
Current Option Gain/Loss: unopened
Time Frame: 10 to 12 weeks
New Positions: Yes, see trigger

Comments:
12/04 update: AXP is our new candidate from Thursday night and I don't see any changes from my earlier comments. Now only have financials been showing strength but AXP has built an inverse H&S pattern. I'm suggesting we launch bullish positions on a dip at $43.50. If triggered we'll use a stop loss at $41.49, under the 200-dma. We will plan on taking profits at $47.50 and at $49.85. Our time frame is several weeks.

Trigger @ $43.50 Suggested Position: Buy AXP stock at $43.50

- or -

Buy the 2011 April $45 calls (AXP1116D45)

chart:

Entry on December xx at $xx.xx
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume: 9.0 million
Listed on December 2nd, 2010


Citigroup Inc - C - close 4.45 change +0.03

Stop Loss: 4.08
Target(s): 4.60, 4.75, 4.95
Current Option Gain/Loss: + 6.9%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/04 update: It has been a good week for Citigroup with a +8.5% rally off its lows near $4.10. Please note that I am suggesting we go ahead and exit our December $4.00 calls. December options only have two weeks left and if Citigroup sees any kind of profit taking this position could turn negative on us. Currently the call is bidding $0.42. Our entry point was $0.30.

If you're looking for a new entry point I would wait for a dip toward the $4.25-4.20 zone. If you like trading options I would look at February calls.

Current Position: Long C stock, entry was at $4.16

Closed Option Position:
Options Traders: Long December $4.00 CALL, entry @ 0.30, exit @ 0.42 (+40%)

12/04 Exit the December $4.00 calls (+40%)

chart:

Entry on October 27, 2010
Earnings Date 01/19/11 (unconfirmed)
Average Daily Volume: 523 million
Listed on October 25, 2010


Companhia Brasileira de Distribuicao - CBD - close: 41.77 change: -0.17

Stop Loss: 36.75
Target(s): 44.95, 49.00
Current Option Gain/Loss: + 3.7%
Time Frame: 10 to 12 weeks
New Positions: Yes, see below

Comments:
12/04 update: Friday was another mild session for CBD. Shares spent most of the day inside a 25-cent range. I don't see any changes from my prior comments. If you're looking for an entry point wait for a dip into the $40.50-40.00 zone. More conservative traders may want to consider a stop loss closer to $38.00. We have a wide stop because CBD can be so volatile. Bear in mind this is a higher-risk trade.

Current Position: Long CBD stock @ $40.25

chart:

Entry on November 23 at $40.25
Earnings Date 03/02/11 (unconfirmed)
Average Daily Volume: 608 thousand
Listed on November 20th, 2010


Genuine Parts Co. - GPC - close: 50.06 change: +0.46

Stop Loss: 46.85
Target(s): 51.50
Current Option Gain/Loss: + 3.7%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
12/04 update: GPC rallied for a third day and shares managed to close above round-number resistance near $50.00. Volume has been very strong on this move, which is encouraging. I am not suggesting new positions at these levels. GPC has significant resistance in the $51.60-51.75 zone. If we see a dip back toward $48.50 then we can look at new positions. Readers may want to buy the call options to leverage this play. FYI: The point & figure chart is bullish with a $52 target.

Current Position: Long GPC stock @ $48.24
- or -
Long the 2011 January $50.00 calls (GPC1122A50) Entry @ $0.40

chart:

Entry on November 29 at $48.24
Earnings Date 02/16/11 (unconfirmed)
Average Daily Volume: 763 thousand
Listed on November 27th, 2010


Hansen Natural Corp. - HANS - close: 52.75 change: -0.19

Stop Loss: 48.95
Target(s): 54.90, 57.45
Current Option Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/04 update: The action in HANS continues to look suspect. Is this just a normal correction? Why is HANS underperforming the rest of the market while the market rallies? The long-term trend for HANS is still very bullish. Currently I'm suggesting we wait for a dip toward the bottom of its rising channel and use a trigger at $51.00 to open positions.

Trigger @ 51.00

Suggested Position: BUY the stock

- or -

BUY the January $55.00 calls (symbol:HANS1122A55)

chart:

Entry on November xx
Earnings Date 11/04/10 (confirmed)
Average Daily Volume: 750 thousand
Listed on October 16, 2010


Lam Research - LRCX - close: 49.22 change: +0.67

Stop Loss: 44.90
Target(s): 48.50, 52.50
Current Option Gain/Loss: + 8.7%
Time Frame: 8 to 10 weeks
New Positions: Yes, see below

Comments:
12/04 update: The SOX semiconductor index broke out past major resistance last week near the 400 level. Yet now the SOX is looking a little bit overextended with a major move from 375 to 412 in just the last three weeks. Odds favor a pull back soon but broken resistance near 400 should be new support for the group. Meanwhile LRCX managed to hit a new two-year high on Friday at $49.44. If the sector pulls back I would look for LRCX toward the $47.50-47.00 zone. I am raising our stop loss to $44.90.

Current Position: Long LRCX stock @ 45.25
- or -
Current Position: Long the 2011 January $45 calls (LRCX1122A45) Entry @ $2.85

12/04 New stop loss @ $44.90
12/02 Target hit @ $48.50, LRCX +7.2%, option @ $4.55 (+59.5%)

chart:

Entry on November 30 at $45.25
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 4.5 million
Listed on November 18th, 2010


Microsoft Corp. - MSFT - close: 27.02 change: +0.13

Stop Loss: 24.70
Target(s): 27.45, 29.00
Current Option Gain/Loss: + 5.7%
Time Frame: 8 to 10 weeks
New Positions: Yes, see below

Comments:
12/04 update: MSFT has turned in a very strong performance with a +8% rally off its support near $25.00. The $27.00-27.50 zone is overhead resistance for MSFT so I would expect some profit taking soon. We can look for support and a new entry point to buy the dip on a pull back into the $26.00-25.50 area. Cautious traders may want to go ahead and take some money off the table with their January calls (currently bidding $2.26 +62%). Officially, our first target to take profits is at $27.45.
FYI: We may need to adjust our time frame and focus on three or four months for MSFT to pay off. If you're buying calls, keep that in mind.

Current Position: Long MSFT stock @ 25.55

- or -

Buy the 2011 January $25.00 calls (symbol: MSFT1122A25) Entry @ $1.39

11/29/10 New stop @ 24.70

chart:

Entry on November 17 at $25.55
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 68.4 million
Listed on November 15th, 2010


Peir 1 Imports - PIR - close: 10.30 change: +0.30

Stop Loss: 9.15
Target(s): 11.90
Current Option Gain/Loss: + 0.0%
Time Frame: 10 to 12 weeks
New Positions: No

Comments:
12/04 update: What a difference a day can make. On Thursday investors were not quite sure what to make of PIR's guidance. It looks like they decided they liked the news on Friday. PIR surged +3% and Thursday's bearish engulfing candlestick has been overshadowed by Friday's bullish engulfing candlestick. I would consider new positions now in the $10.30-10.00 zone. Let's add some March $10 calls to our play.

Investors should know that PIR is due to report earnings on December 16th. We plan to hold over that event. I consider holding over the earnings announcement a high-risk event. Keep that in mind as you plan your trades.

Current Position: Long PIR stock @ $10.24

- or

Buy the 2011 March $10.00 calls (PIR1119C10) current ask $1.60

chart:

Entry on December 2 at $10.24
Earnings Date 12/16/10 (confirmed)
Average Daily Volume: 2.3 million
Listed on December 1st, 2010


Sony Corp. - SNE - close: 36.32 change: -0.24

Stop Loss: 33.45
Target(s): 36.50, 39.00
Current Option Gain/Loss: unopened
Time Frame: 10 to 12 weeks
New Positions: Yes, see trigger

Comments:
12/04 update: The rally in SNE seems to have stalled. That's okay. We want to see a little correction. There is no change from my earlier comments on this stock. Our trigger to open bullish positions is $34.50.

Trigger @ $34.50

Suggested Position: Buy SNE stock
- or -
Buy the 2011 APRIL $35 calls (SNE1116D35) current ask $2.45

chart:

Entry on December xx at $xx.xx
Earnings Date 02/03/11 (unconfirmed)
Average Daily Volume: 888 thousand
Listed on November 23rd, 2010


Tractor Supply Co. - TSCO - close: 45.98 change: +0.54

Stop Loss: 39.90
Target(s): 47.50
Current Option Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Comments:
12/04 update: There is no change from my prior comments on TSCO. I regret not buying it near $42.00. Now shares are very short-term overbought. We don't want to chase it. We have moved the trigger to buy a dip at $43.00.

Buy-the-Dip Trigger @ $43.00

Suggested Position: Buy TSCO stock
- or -
Buy the 2011 January $45 calls (symbol:TSCO1122A45)

chart:

Entry on December xx at $xx.xx
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 751 thousand
Listed on November 11th, 2010


Wells Fargo & Co - WFC - close: 29.05 change: +0.27

Stop Loss: 26.40
Target(s): 29.25, 31.90
Current Option Gain/Loss: + 9.7%
Time Frame: 10 to 12 weeks
New Positions: Yes, see below

Comments:
12/04 update: Banking stocks continued to show strength on Friday. WFC extended its gains to five days in a row. Last week's breakout past the 200-dma is encouraging. Our first target to take profits is at $29.25. If you're looking for a new entry point I would wait for a dip toward $27.50.

Current Position: Long WFC stock @ $26.88

- or -

Long the 2011 January $27.50 call (WFC1122A27.5) Entry @ $1.16

chart:

Entry on November 30 at $26.88
Earnings Date 01/19/11 (unconfirmed)
Average Daily Volume: 32.7 million
Listed on November 29th, 2010


World Acceptance Corp. - WRLD - close: 48.70 change: +0.92

Stop Loss: 41.90
Target(s): 47.25, 49.75
Current Option Gain/Loss: +10.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
12/04 update: WRLD set new relative highs again on Friday hitting $49.29 intraday. The stock is quickly approaching our final target at $49.75. More aggressive traders may want to aim higher but I'm expecting significant resistance at the 2008 highs in the $50.00-50.50 zone. If you're holding the stock you don't have to exit but the newsletter will close this play at $49.75 and then look for a new entry point. Currently I would look for a new entry point on a dip near $46.00.

Current Position: Long WRLD stock @ 44.25
- or -
Long the 2011 January $45 calls (WRLD1122A45) Entry @ $2.40

12/01 First Target Hit @ $47.25 (+6.7%), Option @ $3.50 (+45.8%)
12/01 New stop @ 41.90

chart:

Entry on November 29 at $44.25
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 122 thousand
Listed on November 27th, 2010


CLOSED BULLISH PLAYS

Onyx Pharmaceuticals - ONXX - close: 29.37 change: -0.64

Stop Loss: 26.45
Target(s): 32.00, 34.50
Current Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Comments:
12/04 update: I am giving up on ONXX. The stock has been range bound in the $29.00-30.50 zone for weeks. Readers might want to keep it on their watch list for a breakout past $30.50. I am removing it from the play list to make room for something that is moving. Our trigger to open positions was never hit.

chart:

Entry on November xx at $xx.xx
Earnings Date 02/23/11 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on November 13th, 2010