Editor's Note:
Earnings are quickly approaching for some of our bullish candidates. We don't want to hold over the announcement. Be prepared to exit ahead of any earnings release.

Whether or not the market will correct is up for debate but I strongly suspect the market could get frothy. We can expect lots of sharp reversals both up and down that will frustrate both the bulls and the bears. Trading becomes a lot more challenging. We need to shorten our time frames on our trades. Use smaller position sizes to limit our risk. Tighten our stops and be quicker to take a profit and exit positions.

-James

Current Portfolio:


BULLISH Play Updates

Automatic Data Processing - ADP - close: 49.04 change: -0.05

Stop Loss: 47.90
Target(s): 49.75
Current Gain/Loss: + 4.9%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/22 update: ADP is still holding up pretty well. Shares actually tagged a new relative high Friday morning. The trend is up but momentum is slowing and I would not expect ADP to be immune to any wide market sell-off. This company is due to report earnings on January 26th before the opening bell. That gives us just two more trading days. We will plan to exit on Tuesday at the closing bell to avoid holding over earnings. I'm raising our stop loss to $47.90 to reduce our risk. I am not suggesting new positions at this time. We will exit completely if given the chance at $49.75.

Current Position: Long ADP stock @ $46.75

01/22: Two days left. new stop @ 47.90.
01/19: Take profits on Feb. call options @ $3.80 (+90%).
01/15: New stop loss @ 46.75
01/03: Entry @ $46.75
01/01: New stop loss @ 45.45
01/01: New entry point @ current levels, new option strike (Feb. $45)

chart:

Entry on January 3 at $46.75
Earnings Date 01/26/11 (confirmed)
Average Daily Volume: 2.8 million
Listed on December 16th, 2010


BE Aerospace Inc. - BEAV - close: 38.05 change: -0.57

Stop Loss: 37.75
Target(s): 43.40
Current Gain/Loss: - 2.1%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/22 update: Watch out! The action in BEAV this week has been very ugly. The breakout over $40 quickly reversed. Shares appear to have created a bearish reversal pattern. Friday saw BEAV give up -1.4% and close at short-term support near $38.00 and its trend of higher lows. I would seriously consider an early exit right here! I am not suggesting new positions. Odds of us getting stopped out on Monday are pretty good if the market doesn't rebound at the open. Our stop loss is at $37.75. The plan was to keep our position size small to limit our risk.

Current Position: BEAV stock @ $38.89

- or -

Long the 2011 February $40.00 calls (BEAV1119B40) Entry @ $1.35

01/15: new stop loss @ 37.75

chart:

Entry on January 11 at $38.89
Earnings Date 02/01/11 (unconfirmed)
Average Daily Volume: 542 thousand
Listed on January 10th, 2010


CA Technologies - CA - close: 25.31 change: -0.15

Stop Loss: 24.85
Target(s): 26.65, 27.90
Current Gain/Loss: + 0.4%
Time Frame: 6 to 7 DAYS
New Positions: see below

Comments:
01/22 update: We only have two days left. CA has been holding up reasonably well given the weakness in the tech sector. The company reports earnings after the market's close on January 25th. We plan to exit at the close on the 25th to avoid holding over the announcement. I am raising our stop loss to $24.85 to reduce our risk. No new positions at this time.

Current Position: Long CA stock @ $25.21

- or -

Long the 2011 February $25 calls (CA1119B25) Entry @ $1.00

01/22 New stop loss @ 24.85

chart:

Entry on January 18 at $25.21
Earnings Date 01/25/11 (confirmed)
Average Daily Volume: 2.4 million
Listed on January 15th, 2010


Walt Disney Co. - DIS - close: 39.74 change: +0.57

Stop Loss: 37.85
Target(s): 39.90, 42.50
Current Gain/Loss: + 3.9%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/22 update: DIS was showing relative strength on Friday with a +1.4% rally. I couldn't find any specific news behind the gain. Shares are now testing resistance at $40.00 again. The long-term trend is up but I would not open new bullish positions with DIS just under resistance.

Our first target has already been hit. We're currently aiming for $42.50.

- Current Positions -

Long DIS stock @ 38.25

- or -

Long the 2011 February $40.00 calls (DIS1119B40) Entry @ $0.45

- or -

Long the 2011 April $40.00 calls (DIS1116D40) Entry @ $1.10

01/19: Consider an early exit from the option positions.
01/15: New stop loss @ 37.85
01/05: 1st Target Hit. Stock @ 39.90 (+4.3%)
01/05: 1st Target Hit. Feb. call @ $1.20 (+166%). April call @ 1.80 (+63.6%)
01/05: new stop loss @ 37.49
01/04: Play triggered @ 38.25

chart:

Entry on January 4 at $38.25
Earnings Date 02/08/11 (confirmed)
Average Daily Volume: 8.6 million
Listed on December 25th, 2010


FLIR Systems Inc. - FLIR - close: 29.37 change: +0.10

Stop Loss: 28.49
Target(s): 30.90, 33.00
Current Option Gain/Loss: + 0.9%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/22 update: FLIR is still consolidating sideways. I don't see any changes from my prior comments. The trend is still up but momentum has almost vanished. I'm tempted to raise our stop closer to the $29.00 level but we'll leave it at $28.49 today. I am not suggesting new positions at this time.

Current Position: Long FLIR stock @ $29.10

- or -

Long the 2011 April $30.00 calls (FLIR1116D30) Entry @ $1.60

01/19: Consider an early exit from the option position (bid $1.30)
01/15: New stop loss @ 28.49
01/10: FLIR provided another entry point near $28.50
01/08: New stop loss @ 27.90

chart:

Entry on December 22 at $29.10
Earnings Date 02/09/11 (confirmed)
Average Daily Volume: 1.6 million
Listed on December 18th, 2010


Microsoft Corp. - MSFT - close: 28.02 change: -0.33

Stop Loss: 27.85
Target(s): 27.45, 29.75
Current Gain/Loss: + 9.6%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/22 update: Warning! MSFT appears to be rolling over. Shares lost -1.1% and dipped back toward support near $28.00. If there is any follow through lower on Monday we will probably get stopped out at $27.85. I am not suggesting new positions at this time. MSFT is due to report earnings after the closing bell on Thursday this week.

Current Position: Long MSFT stock @ 25.55

01/19/11 New stop loss @ 27.85
01/15/11 New stop loss @ 27.49
01/14/11 Follow up. Exit Jan $25 calls @ 3.25 (+133.9%)
01/13/11 Plan to exit our January calls tomorrow at the close.
01/06/11 raised final exit target to $29.75
01/06/11 new stop loss @ 26.95
12/25/10 new stop @ 25.95
12/18/10 new stop @ 25.70
12/14/10 Target hit @ 27.45 (+7.4%), option @ $2.55 (+83.4%)
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 (confirmed)
Average Daily Volume: 68.4 million
Listed on November 15th, 2010


NASDAQ OMX Group - NDAQ - close: 24.30 change: +0.29

Stop Loss: 23.49
Target(s): 26.50
Current Gain/Loss: + 1.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/22 update: The NDAQ bounced back toward short-term resistance near $24.50 on Friday. The larger trend is up but I'm reluctant to launch new positions given the weakness in the major market indices. Please note our new stop loss at $23.49. It was our plan to keep positions very small to limit our risk.

Current Position: Long NDAQ stock @ $24.00

01/22: New stop loss @ 23.49

chart:

Entry on January 19 at $24.00
Earnings Date 02/02/11 (unconfirmed)
Average Daily Volume: 1.5 million
Listed on January 18th, 2010


SXC Health Solutions - SXCI - close: 44.97 change: -0.10

Stop Loss: 43.40
Target(s): 49.00
Current Gain/Loss: + 1.5%
Time Frame: 8 to 9 weeks
New Positions: see below

Comments:
01/22 update: I need to urge caution on SXCI. The stock may have just run out of relative strength. Shares rallied toward the early December high near the $45.70-45.75 area and then reversed lower. A failure here would make this look like a bearish double top. I would expect a pull back toward $44.00. However, I want to reduce our risk so I'm raising our stop loss to $43.40. I'm not suggesting new bullish positions at this time.

Cautious traders might want to exit the February $45 calls now for a small gain (current bid $1.60).

NOTE: Buying the options is a higher-risk trade. The calls on SXCI have wider than normal spreads put option traders at a disadvantage here.

Suggested Positions: Long SXCI stock @ $44.31

- or -

Long the 2011 February $45.00 calls (SXCI1119B45) Entry @ $1.44

01/22: New stop loss @ 43.40, Consider an early exit.
01/19: New stop loss @ 42.65

chart:

Entry on January 10 at $44.31
Earnings Date 03/03/11 (unconfirmed)
Average Daily Volume: 292 thousand
Listed on January 8th, 2010


UnitedHealth Group - UNH - close: 40.41 change: +0.10

Stop Loss: 36.90
Target(s): 42.00
Current Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Comments:
01/22 update: UNH managed to post another gain on Friday. The relative strength is encouraging but we don't want to chase it. I don't see any changes from my Thursday night comments. Shares of UNH should have support near broken resistance at $38.00. I am suggesting we launch bullish positions on a dip at $38.10 with a stop loss at $36.90. Our multi-week target is the $42.00 level.

Buy-the-Dip Trigger @ $38.10

Suggested Position: Buy UNH stock @ $38.10

- or -

Buy the 2011 March $40 calls (UNH1119C40) current ask $1.74

chart:

Entry on January xx at $xx.xx
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume: 5.9 million
Listed on January 20th, 2010


WellCare Health Plans, Inc. - WCG - close: 30.45 change: -0.63

Stop Loss: 29.85
Target(s): 33.75, 37.75
Current Gain/Loss: - 0.9%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
01/22 update: Warning! The relative strength in WCG seems to have vanished. Shares were hitting new multi-month highs on Tuesday but WCG has since fallen three days in a row. Broken resistance at $30.00 should be support and WCG is quickly approaching this level. Even though this should be support I'm somewhat reluctant to launch new positions near $30.00.

Keep in mind that investors will have to decide whether or not they are willing to take the risk of holding over WCG's earnings report in late February.

Current Position: WCG stock @ $30.75

- or -

Long the 2011 March $35.00 calls (WCG1119C35) Entry @ $0.60

01/15: new stop loss @ 29.85
01/06: Play triggered @ 30.75.

chart:

Entry on January 6 at $30.75
Earnings Date 02/17/11 (unconfirmed)
Average Daily Volume: 410 thousand
Listed on January 4th, 2010


CLOSED BULLISH PLAYS

Alaska Air Group - ALK - close: 61.25 change: -1.43

Stop Loss: 59.95
Target(s): 59.75, 64.75, (option exit 61.75)
Current Gain/Loss: + 9.1%
Time Frame: 8 to 9 weeks
New Positions: see below

Comments:
01/22 update: The profit taking in ALK continued on Friday. Shares broke support at $60.00 and hit our stop loss at $59.95 closing this trade. Readers might want to keep ALK on their watch list for a dip to what should be support near $55.00.

Current Position: Long ALK stock @ $54.91

01/21: Stopped out @ 59.95 (+9.1%)
01/19: More conservative traders may want to exit now @ 62.68
01/15: New stop loss @ 59.95, Final Target adjusted to $64.75
01/12: New stop loss @ 58.75
01/08: New stop loss @ 57.75. New target at $64.90
01/07: Option Target Hit @ 61.75. Option @ $3.00 (+87.5%). 01/05: Target hit at $59.75 (+8.8%)
12/21: First target is 59.75, adding second target at $64 for ALK stock.
12/21: Adjusting our only exit target on the calls to $61.75.

chart:

Entry on November 22 at $54.91
Earnings Date 01/25/11 (confirmed)
Average Daily Volume: 331 thousand
Listed on November 20th, 2010