Editor's Note:
Stocks continue to tick higher on Friday. Financials remain the largest spot of relative strength. HANS continued to sink and hit our stop loss. LRCX is still climbing and looking overbought here. We've dropped TSCO to make room for something else.

-James

Current Portfolio:


BULLISH Play Updates

Alcoa Inc - AA - close: 14.25 change: +0.11

Stop Loss: 12.90
Target(s): 14.95, 15.95
Current Option Gain/Loss: + 8.1%
Time Frame: 8 to 10 weeks
New Positions: Yes, but see below

Comments:
12/11 update: AA managed a bounce even though commodities ticked lower on Friday. Shares of AA seem to have found some support near $14.00 this past week. AA still looks a little bit overbought. I would prefer to launch new positions on a dip near $13.60. (If we do see another entry point we might consider buying some 2011 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: 56.37 change: +0.34

Stop Loss: 53.90
Target(s): 59.75
Current Option Gain/Loss: + 3.7%
Time Frame: 8 to 9 weeks
New Positions: see below

Comments:
12/11 update: The XAL airline index struggled this past week and has been hovering near technical support at its 50-dma the last few days. A breakdown under this moving average would confirm the short-term downtrend. If the XAL index does slip I would expect another -5% drop, which would weigh on shares of ALK. Speaking of ALK the stock is still showing relative strength and pretty much ignoring the XAL for now. ALK managed to close at new multi-year highs. The relative strength in ALK suggests we could initiate new bullish positions now but we have to keep an eye on the XAL, which might sabotage our trade. Please note our new stop loss at $53.90.

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: 46.26 change: +0.45

Stop Loss: 41.95
Target(s): 47.50, 49.85
Current Option Gain/Loss: unopened
Time Frame: 10 to 12 weeks
New Positions: Yes, see trigger

Comments:
12/11 update: Forbes ran an interesting article on AXP this Friday. The author claims that if AXP loses its antitrust fight with the U.S. government it could see a significant impact in its stock price. You can read the article here. Meanwhile shares of AXP continue to soar thanks to the widespread rally in the financial sector. The move in financials is very bullish but the group can't keep up this pace forever. Eventually banks will see a little profit taking. I am raising our entry point. We wait to buy AXP or calls on AXP on a dip to $44.50. We'll raise our stop loss to $41.95.

Trigger @ $44.50 Suggested Position: Buy AXP stock at $44.50

- 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 4.77 change +0.08

Stop Loss: 4.35
Target(s): 4.60, 4.85
Current Option Gain/Loss: +14.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/11 update: The rally in Citigroup has been impressive. Now that the U.S. government has dumped its stake in it everyone wants the stock now. Shares are setting new seven-month highs. Citigroup is up +16% from its late November lows. I am not suggesting new positions at this time. Officially our exit target is $4.85 but cautious traders may want to exit now. I am raising our stop loss to $4.35.

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

12/07: Target achieved @ $4.60 (+10.5%)
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: 39.57 change: -0.44

Stop Loss: 36.75
Target(s): 44.95, 49.00
Current Option Gain/Loss: - 1.6%
Time Frame: 10 to 12 weeks
New Positions: Yes, see below

Comments:
12/11 update: It was a down week for the Brazilian stock market but the Bovespa did manage a gain on Friday. We can't blame CBD's relative weakness on Friday for the action back home. Trading this past week in CBD certainly looks bearish and the breakdown under its trendline of higher lows is worrisome. So far CBD has seen a -6% correction. I would still suggest using this dip as an entry point but if you're patient we might get an even better entry point closer to $38.00.

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


City National Corp. - CYN - close: 60.24 change: +1.18

Stop Loss: 54.75
Target(s): 60.00, 64.00
Current Option Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/11 update: Another day, another gain for CYN. The banks have soared this past week. They can't keep up this pace forever. We need to adjust our entry point strategy. We don't want to chase CYN but waiting for it to tag $55.50 may not happen. Broken resistance near $58.00 could be new support but I want to focus on the early November highs near $57.00. Let's move our trigger to buy CYN (or calls) to $57.00 and we'll move our stop loss to $54.75. FYI: The Point & Figure chart is bullish with a $77 target.

Trigger @ $57.00

Suggested Position: buy CYN stock @ $57.00

- or -

Buy the 2011 February $60 calls (cyn1119B60)*

*Caution: most of the option spreads on CYN seem a little too wide. I consider the options a more aggressive trade. You may want to keep your position size small.

chart:

Entry on December xx at $xx.xx
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 223 thousand
Listed on December 4th, 2010


Lam Research - LRCX - close: 51.61 change: +0.34

Stop Loss: 47.75
Target(s): 48.50, 52.50
Current Option Gain/Loss: +14.0%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
12/11 update: Readers will want to seriously consider an early exit in LRCX. I said it on Thursday. Officially our exit target is $52.50 and LRCX continues to show strength. Yet the rally in the SOX semiconductor index acts like it's stalling. I was concerned that the $50.00-50.75 zone would be tough resistance but LRCX has soared right past it. This has pushed the bid on our call option to $6.90 (up 142%).

I am not suggesting new positions at this time. We're raising our stop loss to $47.75.

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

12/11 New stop loss @ $47.75
12/09 New stop loss @ $45.90
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: 27.34 change: +0.26

Stop Loss: 25.45
Target(s): 27.45, 29.00
Current Gain/Loss: + 7.0%
Time Frame: 8 to 10 weeks
New Positions: Yes, see below

Comments:
12/11 update: MSFT almost made it to our target. Shares hit $27.40 on Friday. Our first exit target is $27.45. Readers may want to go ahead and take some money off the table now. I am raising our stop loss to $25.45. If you're looking for a new entry point I would wait for a dip toward the $26.00 area.
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

12/11/10 New stop @ 25.45
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: 10.54 change: +0.08

Stop Loss: 9.75
Target(s): 11.90
Current Option Gain/Loss: + 2.9%
Time Frame: 10 to 12 weeks
New Positions: No

Comments:
12/11 update: Earnings are coming up on Thursday. PIR actually reports before the opening bell. We have to decide by Wednesday's close if we want to hold over this high-risk event. Currently I am tempted to close this position ahead of the earnings report. I'm not suggesting new positions at this time. Please note that I am raising our stop loss to $9.75.

Current Position: Long PIR stock @ $10.24

- or

Buy the 2011 March $10.00 calls (PIR1119C10) Entry @ $1.55

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


Starbucks Corp. - SBUX - close: 32.59 change: +0.19

Stop Loss: 29.90
Target(s): 34.75
Current Option Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Comments:
12/11 update: Traders bought the initial dip to SBUX's 10-dma. While this is encouraging I still want to wait for a dip toward $31.00. Officially our trigger to launch positions is $31.25. If triggered our first target is $34.75.

FYI: SBUX is currently in a legal battle with Kraft Foods (KFT) over distribution of SBUX's ground coffee brand but investors seem to be ignoring it.

Trigger @ $31.25

Suggested Position: Buy SBUX stock @ $31.25

- or -

Buy the 2011 January $32.00 call (SBUX1122A32)
Buy the 2011 April $33.00 call (SBUX1116D33)

chart:

Entry on December xx at $xx.xx
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume: 7.1 million
Listed on December 8th, 2010


Sara Lee Corp - SLE - close: 16.00 change: +0.16

Stop Loss: 14.70
Target(s): 17.00, 17.90
Current Option Gain/Loss: + 2.0%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
12/11 update: SLE continues to show strength. The stock set another two-year closing high. The breakout past the $15.00-15.50 zone is significant and suggest a new leg higher. If you're looking for a new position I would prefer to buy a dip near $15.50.
FYI: the Point & Figure chart is suggesting a long-term bullish target of $32 for SLE.

Current Position: Long SLE stock @ $15.68

- or -

Long the 2011 April $15.00 calls (SLE1116D15) Entry @ $1.35

chart:

Entry on December 8 at $15.68
Earnings Date 02/03/11 (unconfirmed)
Average Daily Volume: 7.6 million
Listed on December 7th, 2010


Sony Corp. - SNE - close: 35.83 change: -0.37

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:
12/11 update: SNE has finally broken short-term support near $36.00. Now we have a stronger chance of seeing this stock correct toward its bullish trendline of higher lows. Currently our plan is to launch bullish positions on a dip at $34.50.

Trigger @ $34.50

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

chart:

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


Trimble Navigation - TRMB - close: 41.26 change: +0.24

Stop Loss: 36.40
Target(s): 41.00, 43.00
Current Option Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Comments:
12/11 update: I'm losing patience on TRMB as well. The relative strength is great to see but not when you're waiting for a correction to hop on board. I'm going to keep TRMB on the newsletter for a couple of more days. If we don't see a correction soon we'll drop it. I would not chase this move. Currently our plan is to launch bullish positions at $38.50.

Trigger @ $38.50

Suggested Position: Buy TRMB stock @ $38.50

- or -

Buy the 2011 February $40.00 calls (TRMB1119B40) current ask $2.35

chart:

Entry on December xx at $xx.xx
Earnings Date 02/02/11 (unconfirmed)
Average Daily Volume: 435 thousand
Listed on December 4th, 2010


Wells Fargo & Co - WFC - close: 30.27 change: +0.20

Stop Loss: 27.90
Target(s): 29.25, 31.90
Current Option Gain/Loss: +12.6%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
12/11 update: The rally in banking stocks this past week has been very impressive. Yet they can't keep this pace up forever. Sooner or later the group will see some profit taking. If you're looking for a new entry point I would wait for WFC to pull back and redefine short-term support. That support might be $29.25 or it could be the 200-dma near $28.00. Our final target to exit is $31.90.

Current Position: Long WFC stock @ $26.88

- or -

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

12/09: New stop loss @ $27.90
12/08: Target Hit $29.25 (+8.8%), Option @ $2.30 (+98.2%)

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 Wrestling Entertainment - WWE - close: 14.36 change: +0.11

Stop Loss: 13.75
Target(s): 14.95, 16.40
Current Option Gain/Loss: unopened
Time Frame: 10 to 12 weeks
New Positions: Yes, see trigger

Comments:
12/11 update: The market is out to get me. Do you ever feel that way? Thursday night I added WWE to the play list with a trigger to buy the dip at $14.10. I looked at the stock on Friday night and thought, "you have got to be kidding me!" I could not find any specific news to account for WWE's relative strength and +3.3% gain or the volume that was approaching three times the norm. We do not want to chase this move. We'll leave our trigger to buy the dip at $14.10 for now but it could take days before WWE corrects back to this level. If we see WWE pull back and find new support near $14.50 we'll reconsider our entry point strategy.

Trigger @ $14.10

Suggested Position: Buy WWE stock @ $14.10

- or -

Buy the 2011 April $15.00 calls (WWE1116D15)

*Note: The call options on WWE have very large spreads, making them a higher-risk trade.

chart:

Entry on December xx at $xx.xx
Earnings Date 02/10/11 (unconfirmed)
Average Daily Volume: 242 thousand
Listed on December 9th, 2010


CLOSED BULLISH PLAYS

Hansen Natural Corp. - HANS - close: 49.07 change: -1.03

Stop Loss: 48.95
Target(s): 54.90, 57.45
Current Option Gain/Loss: - 4.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
12/11 update: It was not a good week for shares of HANS. The stock was downgraded on Dec. 8th and shares have been falling ever since. HANS tested the bottom of its channel on Wednesday. It broke the channel and its 50-dma on Thursday. Friday saw HANS breakdown under the $50.00 mark and hit our stop loss at $48.95 closing this trade. This breakdown is bearish and readers may want to look for shorts soon. A failed rally at the bottom of the channel could be used as an aggressive entry point for bearish positions.

Closed Position: Long HANS stock @ $51.00, exit @ $48.95 (-4.0%)

- or -

Long the January $55.00 calls (HANS1122A55) Entry @ $0.65, exit @ 0.40 (-38.4%)

chart:

Entry on December 8th @ $51.00
Earnings Date 11/04/10 (confirmed)
Average Daily Volume: 750 thousand
Listed on October 16, 2010


Tractor Supply Co. - TSCO - close: 47.67 change: +0.86

Stop Loss: 39.90
Target(s): 47.50
Current Option Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: no

Comments:
12/11 update: I am giving up on TSCO. I'm sorry to report we missed the entry point in late November-early December. I don't want to chase this rally. It doesn't look like TSCO is going to correct any time soon. I'm dropping it as a bullish candidate but would keep this stock on your watch list should it ever correct.

Play never opened.

chart:

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