Editor's Note:
The market rally continues and the major indices broke out to new two-year highs. This is obviously great news for the bulls. Shorts rushed to cover, which only exaggerated the move. We had two bearish plays get stopped out.

-James

Current Portfolio:


BULLISH Play Updates

Walt Disney Co. - DIS - close: 39.88 change: +1.01

Stop Loss: 37.85
Target(s): 39.90, 42.50
Current Gain/Loss: + 4.2%
Time Frame: 10 to 12 weeks
New Positions: see below

Comments:
02/01 update: DIS bounced back toward resistance near $40 again. Shares might breakout soon if the rally can keep the momentum alive. I am not suggesting new positions at this time.

- Current Positions -

Long DIS stock @ 38.25

01/31: Update option exit: Feb call @ 0.41 (-8.8%) Apr. call @ 1.06 (-3.6%)
01/29: Exit call positions. Feb call @ 0.38 (-15.5%) April call @ 1.02 (-7.2%)
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

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: 32.15 change: +1.11

Stop Loss: 30.40
Target(s): 30.90, 33.00
Current Option Gain/Loss: +10.4%
Time Frame: exit before earnings
New Positions: see below

Comments:
02/01 update: FLIR produced a huge more higher today. Shares valuted past its summer and spring highs from 2010 and closed with a +3.5% gain on healthy volume. I am raising our stop loss to $30.40. More conservative traders may want to take profits now. At the moment our exit target is $33.00 but we plan to exit ahead of the Feb. 9th earnings announcement.

Current Position: Long FLIR stock @ $29.10

02/01: New stop loss @ 30.40
01/29 Exit remaining call positions. option @ 1.80 (+12.5%)
01/29: New stop loss @ 29.75
01/28: 1st Target Hit @ 30.90 (+6.1%), option @ $2.00 (+25%)
01/25: New stop @ 28.90
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

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


Hansen Natural Corp. - HANS - close: 57.95 change: +1.31

Stop Loss: 53.40
Target(s): 59.50
Current Gain/Loss: + 4.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/01 update: HANS rallied to new multi-year highs with Tuesday's +2.3% gain. If you're looking for a new entry point I'd wait for a dip near the $56 area. Small positions only to limit our risk.

- Small Positions to limit our risk -

Current Position: HANS stock @ $55.54

01/29 Exit call positions early. @ $1.15 (-23.3%)
01/26 the CBOE listed the MAR $60 call's open @ $1.50

Entry on January 26 at $55.54
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume: 654 thousand
Listed on January 25th, 2010


Oracle Corp. - ORCL - close: 33.24 change: +1.21

Stop Loss: 31.40
Target(s): 34.90
Current Gain/Loss: + 1.9%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/01 update: ORCL turned things around pretty fast and shares actually hit a new multi-year high this afternoon. I'd probably look for a dip in the $31.75-31.50 zone as a new entry point.

Our target on ORCL is the $34.90 mark since $35.00 looks like the next level of resistance.

small positions

Current Position: ORCL stock @ $32.62

- or -

Long the 2011 March $33 calls (ORCL1119C33) Entry @ $0.80

01/29 Consider an early exit, especially the calls.
01/27 The CBOE listed the open for our calls at $0.80

Entry on January 27 at $32.62
Earnings Date 03/24/11 (unconfirmed)
Average Daily Volume: 27 million
Listed on January 26th, 2010


UnitedHealth Group - UNH - close: 42.07 change: +1.02

Stop Loss: 40.45
Target(s): 44.75
Current Gain/Loss: + 2.2%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
02/01 update: UNH added +2.4% to outperform the S&P 500. More conservative traders may want to raise their stop loss now. Given the trend higher we could launch new positions on a dip near $41.25.

Current Position: UNH stock @ $41.15

- or -

Long the 2011 March $42 calls (UNH1119C42) Entry @ $1.20

Entry on January 28 at $41.15
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume: 5.9 million
Listed on January 20th, 2010


BEARISH Play Updates

Endo Pharmaceuticals - ENDP - close: 34.45 change: +1.23

Stop Loss: 35.75
Target(s): 31.00, 30.10
Current Gain/Loss: - 0.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/01 update: ENDP produced a big bounce today (+3.7%) but the rebound stalled right at resistance. More conservative traders may want to exit early or at least strongly consider lowering your stop loss (maybe to the $34.75 area). I am adjusting our stop loss down to $35.40, just above the January 18th high. I am not suggesting new positions at this time. Our targets are $31.00 and $30.10.

Current Position: Short ENDP stock @ 34.50

- or -

Long the 2011 February $35 PUT (ENDP1119N35) Entry @ $1.30

02/01 New stop loss @ 35.40

Entry on January 27 at $34.50
Earnings Date 02/22/11 (unconfirmed)
Average Daily Volume: 1.3 million
Listed on January 24th, 2010


Riverbed Technology - RVBD - close: 35.49 change: -0.38

Stop Loss: 38.15
Target(s): 31.75, 28.00
Current Gain/Loss: - 0.1%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
02/01 update: RVBD tried to bounce this morning and failed. The relative weakness today is very encouraging if you're bearish. However, I would be reluctant to launch new positions given the market's overwhelmingly bullish breakout higher.

Our targets for RVBD are $31.75 and $28.50. This is an aggressive, higher-risk trade. Keep your position size small.

Readers need to know that the latest data listed short interest at 7.6% of the 135 million share float. That's relatively high short interest and raises the risk on this trade. You may want to buy put options instead. FYI: The Point & Figure chart for HITT has turned bearish.

- Small Positions to Limit our Risk -

Current Position: Short RVBD stock @ 35.55

- or -

Long the 2011 Feb. $35 puts (RVBD1119N35) Entry @ $1.05

- or -

Long the 2011 Mar. $35 puts (RVBD1119O35) Entry @ $1.75

Entry on January 31 at $35.55
Earnings Date 01/27/11
Average Daily Volume: 5.1 million
Listed on January 29th, 2010


Timken Co. - TKR - close: 48.58 change: +1.56

Stop Loss: 50.25
Target(s): 45.05, 42.00
Current Gain/Loss: - 1.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/01 update: We were looking for a bounce in TKR and we got it today. Shares gained +3.3%. The rally stalled near $49.00, which is short-term resistance. Our trigger to launch bearish positions was hit at $48.00 so the play is open. However, I would hesitate to open new positions given the market's move higher. Readers may want to wait and see if TKR continues to bounce or if overhead resistance holds. Our exit targets are $45.05 and $42.00.

Current Position: short TKR stock @ $48.00

- or -

Long the March $45 puts (TKR1119O45) Entry @ $0.85

chart:

Entry on February 1 at $48.00
Earnings Date 01/27/11 (confirmed)
Average Daily Volume: 857 thousand
Listed on January 31st, 2011


CLOSED BEARISH PLAYS

Hittite Microwave Corp. - HITT - close: 61.43 change: +1.65

Stop Loss: 62.05
Target(s): 56.15, 53.50
Current Gain/Loss: - 3.8%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/01 update: HITT briefly traded above the $62.00 level and hit our stop loss at $62.05. I'm not convinced the correction in HITT's stock is over but for now our play is over.

Editor's note: The options on HITT have relative wide spreads making them a significantly higher-risk trade for us.

Current Position: short HITT stock @ 59.76

- or -

2011 March $55 PUTS (HITT1119O55) Entry @ $1.65, Exit $0.65 (-60%)

02/01 Stopped out HITT @ 62.05 (-3.8%) Option @ -60%

chart:

Entry on January 31 at $59.76
Earnings Date 02/17/11 (confirmed)
Average Daily Volume: 166 thousand
Listed on January 29th, 2010


Reliance Steel - RS - close: 53.74 change: +1.45

Stop Loss: 55.05
Target(s): 45.05
Current Gain/Loss: - 4.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/01 update: RS spiked toward short-term resistance near $54 again. While the stock failed to close above this level I'm suggesting an early exit anyway. A move over $55.00 might be a bullish entry point.

Closed Position: Short RS stock @ $51.41, Exit $53.74 (-4.5%)

- or -

February $50 PUT (RS1119N50) Entry @ $1.35, Exit @ 0.50 (-62.9%)

02/01 Exit early. RS @ 53.74 (-4.5%), Option -62.9%
01/29 New entry point for bearish positions.
01/24 CBOE listed the $50 PUT opening price at $1.35

chart:

Entry on January 24 at $51.41
Earnings Date 02/17/11 (unconfirmed)
Average Daily Volume: 654 thousand
Listed on January 22nd, 2010


Virgin Media, Inc. - VMED - close: 26.06 change: +0.90

Stop Loss: 26.15
Target(s): 22.25
Current Gain/Loss: - 4.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/01 update: The market's rally was strong enough to push VMED past its recent high and above resistance near $26.00 and its 50-dma. Shares hit $26.19 at its best levels and our stop loss was at $26.15. The play is closed.

Closed Position: short VMED stock @ 25.08, Exit $26.15 (-4.2%)

- or -

2011 Feb. $24 puts (VMED1119N24) Entry @ $0.51, exit $0.15 (-70.5%)

- or -

2011 Mar. $22.50 puts (VMED1119O22.5) Entry @ $0.45, exit $0.20 (-55.5%)

02/01 Stopped out. VMED -4.2%
02/01 Feb. option @ -70.5%, Mar. option @ -55.5%

chart:

Entry on January 31 at $25.08
Earnings Date 02/17/11 (unconfirmed)
Average Daily Volume: 3.0 million
Listed on January 29th, 2010