Editor's Note:
The S&P 500 suffered its worst decline in six months as investors reacting to rising violence in north Africa and concerns over access to the world's oil supplies.

REMINDER: I am away from the office this week for a seminar. Play updates will be brief and we might see fewer new positions added to the newsletter.

-James

Current Portfolio:


BULLISH Play Updates

Alcoa Inc - AA - close: 16.54 change: -0.74

Stop Loss: 15.95
Target(s): 18.50, 19.75
Current Gain/Loss: - 6.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/22 update: Ouch! It looks like an ugly breakdown with AA's -4.2% drop on Tuesday. The huge spike in oil prices spooked investors who are worried that rising fuel costs will put too much pressure on consumers around the globe and slow down the economy and thus demand for other commodities. Plus, a bounce in the dollar also puts pressure on commodities. Even though AA has broken its three-month trendline of higher lows the stock is still inside its longer-term rising channel.

My concern is that AA might dip to its rising 50-dma and then bounce. The 50-dma is currently at $16.13. I am suggesting we move our stop loss from $16.25 to $15.95. I would consider opening new positions on a dip (or a bounce) near the $16.25-16.00 zone.

Current Position: Long AA stock @ $17.65

- or -

Long the March $17.00 calls (AA1119C17) Entry @ $0.98

02/22 Adjust the stop loss to $15.95
02/18 AA provides another entry point
02/14 AA hits our breakout trigger @ 17.65, Stop @ 16.25

Entry on February 14 at $17.65
Earnings Date 04/11/11 (unconfirmed)
Average Daily Volume: 41 million
Listed on February 2nd, 2010


Adobe Systems Inc. - ADBE - close: 33.74 change: -1.65

Stop Loss: 32.95
Target(s): 37.45
Current Gain/Loss: - 0.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/22 update: Whoa! ADBE just erased four days of gains with Tuesday's -4.6% loss. The bullish breakout from its consolidation just vanished. We can look to buy a dip (or bounce) near $33.00 or wait for ADBE to rebound back above the $34.25 area before considering new positions. Over the weekend we raised the stop to $32.95. Our target is the $37.45 mark. FYI: The Point & Figure chart for ADBE is bullish with a $49.00 target.

Current Position: Long ADBE stock @ $34.00

- or -

Long the April $35 calls (ADBE1116D35) Entry @ $1.34

02/19 new stop loss @ 32.95

Entry on February 16 at $34.00
Earnings Date 03/22/11 (unconfirmed)
Average Daily Volume: 5.0 million
Listed on February 15th, 2010


Autodesk, Inc. - ADSK - close: 42.10 change: -1.30

Stop Loss: 40.95
Target(s): 46.00
Current Gain/Loss: + 0.0%
Time Frame: 2 weeks
New Positions: see below

Comments:
02/22 update: I hate to say it but ADSK has been a waste of time. The market-wide decline on Tuesday pushed ADSK back to our entry point at $42.10. More conservative traders may want to exit immediately! I am not suggesting new positions. Right now our plan is to exit on Thursday at the closing bell to avoid holding over earnings that night.

Current Position: Long ADSK stock @ 42.10

- or -

Long the March $45 call (ADSK1119C45) Entry @ $0.90

02/22 Conservative traders should consider an early exit.
02/19 New stop loss @ 40.95

Entry on February 9 at $42.10
Earnings Date 02/24/11 (confirmed)
Average Daily Volume: 2.5 million
Listed on February 7th, 2010


AnnTaylor Stores - ANN - close: 24.61 change: +0.60

Stop Loss: 22.40
Target(s): 25.90, 27.85
Current Gain/Loss: + 3.1%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/22 update: Hmmm... ANN surprised us today. Shares outperformed the market with a +2.49% gain. I couldn't find any headlines to explain the relative strength. The breakout from its recent trading range is a very welcome event. We will raise our stop loss to $22.40.

Our targets are $25.90 and $27.85.

Small Positions

Current Position: Long ANN stock @ $23.86

- or -

Long the March $22.50 calls (ANN1119C22.5) Entry @ $2.35

02/22 New stop loss @ 22.40

Entry on February 14 at $23.86
Earnings Date 03/11/11 (confirmed)
Average Daily Volume: 3.0 million
Listed on February 8th, 2010


Allied Nevada Gold Corp. - ANV - close: 29.11 change: -1.13

Stop Loss: 27.40
Target(s): 33.00, 34.75
Current Gain/Loss: - 2.4%
Time Frame: 2+ weeks
New Positions: see below

Comments:
02/22 update: Gold ticked higher as a safe-haven trade but the gold miners were not afforded that luxury. Shares of ANV sold off with the rest of the market. ANV actually produced a bearish engulfing candlestick reversal signal. So now it's a battle of which technical tool will win? Will the bearish reversal win or will traders step in and buy the dip near support at the $29.00 level. Readers may want to wait and see if ANV actually bounces at $29.00 first and then consider positions.

We want to keep our position size small because gold mining stocks can be very volatile. Our first target is $33.00. However, we may have to exit early. I've found two different earnings report dates for ANV but the most likely report date is Feb. 28th and we do not want to hold over the announcement.

- Small Bullish positions -

Current Position: Long ANV stock @ $29.85

- or -

Long the March $30 calls (ANV1119C30) Entry @ $1.45

Entry on February 17 at $29.85
Earnings Date 02/28/11 (unconfirmed)
Average Daily Volume: 689 thousand
Listed on February 16th, 2010


Baxter Intl. - BAX - close: 52.30 change: -0.73

Stop Loss: 49.90
Target(s): 54.90, 57.50
Current Gain/Loss: + 0.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/22 update: Our new play in BAX has been triggered. Shares hit our entry point to launch bullish positions at $52.00. I would still consider new positions now or you can wait and watch since there is a decent chance that BAX might test short-term support near $51.00 soon. We want to keep our position size small to limit our risk.

FYI: The Point & Figure chart for BAX is bullish with a $73 target.

(small positions only)

Current Position: Long BAX stock @ 52.00

- or -

Long the May $55 call (BAX1121E55) Entry @ $1.05

chart:

Entry on February 22 at $52.00
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume: 5.8 million
Listed on February 19th, 2010


BMC Software - BMC - close: 49.01 change: -1.97

Stop Loss: 47.95
Target(s): 54.50
Current Gain/Loss: - 0.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/22 update: Yuck! It was a painful day for BMC. The stock's -3.8% loss just erased about two week's worth of gains. Broken resistance near $49.00 should be new support so technically this dip looks like a new entry point to open bullish positions. Readers may want to wait for a bounce first. Our first target is $54.50.

Current Position: Long BMC stock @ 49.30

- or -

Long the March $50 call (BMC1119C50) Entry @ $1.40

02/19 New stop loss @ 47.95

Entry on February 11 at $49.30
Earnings Date 05/05/11 (unconfirmed)
Average Daily Volume: 1.9 million
Listed on February 10th, 2010


Hansen Natural Corp. - HANS - close: 55.69 change: -1.58

Stop Loss: 53.75
Target(s): 59.50
Current Gain/Loss: + 0.2%
Time Frame: just a couple of weeks left.
New Positions: see below

Comments:
02/22 update: HANS was no exception to the market's widespread decline. If we had more time we could look for a new entry point but right now the plan is to exit on Thursday, Feb. 24th at the closing bell to avoid earnings. Given the market's new weakness more conservative traders will want to consider an early exit right now to limit or avoid any losses!

- Small Positions to limit our risk -

Current Position: HANS stock @ $55.54

02/22 Consider an early exit now!
02/12 New stop loss @ 53.75
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


Lincare Holdings Inc. - LNCR - close: 29.32 change: -0.06

Stop Loss: 27.45
Target(s): 29.90, 31.75
Current Gain/Loss: + 3.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/22 update: LNCR held up pretty well. Shares closed virtually unchanged on the session, which is impressive given the market's widespread losses. Traders bought the dip near $29.00 intraday. I am raising our stop loss to $27.95. More conservative traders may want to raise their stops even higher. I am not suggesting new bullish positions at this time.

FYI: The Point & Figure chart for LNCR is bullish with a $40 target. Plus, investors will be interested to note that LNCR has relatively high short interest. The most recent data listed short interest at 11.6% of the 86-million share float. With the recent breakout this stock could see a short squeeze.

- Small Bullish Positions -

Current Position: Long LNCR stock @ 28.37

- or -

Long the March $29.00 calls (LNCR1119C29) Entry @ $0.75

02/22 New stop loss @ 27.95
02/19 New stop loss @ 27.45
02/12 Adjusted entry point to current levels.

Entry on February 14 at $28.37
Earnings Date 04/19/11 (unconfirmed)
Average Daily Volume: 932 thousand
Listed on February 9th, 2010


Oracle Corp. - ORCL - close: 33.68 change: +0.67

Stop Loss: 31.65
Target(s): 34.90
Current Gain/Loss: - 0.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/22 update: Tuesday's -3.4% just erased any gains we had in ORCL. The stock is still inside its recent trading range but I would expect a dip toward what should be support near $32 and its 50-dma. Wait for the dip or the bounce before considering new bullish positions.

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

small positions to limit our risk.

Current Position: ORCL stock @ $32.62

- or -

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

02/12 New stop loss @ 31.65
02/10 ORCL is improving. This looks like a new entry point.
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


Paychex Inc. - PAYX - close: 32.93 change: -0.67

Stop Loss: 32.49
Target(s): 35.90, 37.90
Current Gain/Loss: - 1.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/22 update: Whew! Our new play on PAYX was almost stopped out. Shares opened at $33.37 and then dropped to $32.76 before finding some support and rebounding. I would open very small bullish positions here. However, I think our stop might be a little too tight. Let's move it from $32.75 down to $32.49. Our upside target is $35.90. We will plan to exit ahead of the late March earnings report.

FYI: The Point & Figure chart for PAYX is bullish with a $50 target.

Current Position: Long PAYX stock @ 33.37

- or -

Long the March $34 calls (PAYX1119C34) Entry @ $0.35

02/22 Adjusted stop loss to $32.49

Entry on February 22 at $33.37
Earnings Date 03/23/11 (unconfirmed)
Average Daily Volume: 2.1 million
Listed on February 19th, 2010


Signet Jewelers Limited - SIG - close: 43.96 change: -1.25

Stop Loss: 42.40
Target(s): 49.75
Current Gain/Loss: - 2.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/22 update: SIG has provided us a dip near $44.00. I would take advantage of it as an entry point to launch new positions. Our first target is $49.75.

FYI: The Point & Figure chart for SIG is bullish with a $79 target.

Current Position: Long SIG stock @ $45.25

- or -

Long the March $45 calls (SIG1119C45) Entry @ $1.85

Entry on February 18 at $45.25
Earnings Date 03/30/11 (unconfirmed)
Average Daily Volume: 436 thousand
Listed on February 16th, 2010


UnitedHealth Group - UNH - close: 42.96 change: +0.12

Stop Loss: 41.80
Target(s): 44.75
Current Gain/Loss: + 4.4%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
02/22 update: UNH outperformed the market and closed in positive territory thanks to an analyst upgrade before the bell this morning. Shares gapped open higher and hit $44.33 intraday before paring its gains significantly ahead of the close. I remain cautious. No new positions at this time. I am raising our stop loss to $41.80.

Current Position: UNH stock @ $41.15

02/22: New stop loss @ 41.80
02/17: New stop loss @ 41.49
02/12: New stop loss @ 41.25
02/12: Exit the call options early (bid $1.47 +22.5%)
02/08: New stop loss @ 40.75

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


CLOSED BULLISH PLAYS

AK Steel Holding Corp - AKS - close: 15.88 change: -1.32

Stop Loss: 15.90
Target(s): 19.75, 22.00
Current Gain/Loss: - 7.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/22 update: Resource and material names were hammered lower on Tuesday. AKS gave up -7.6% and hit our stop loss at $15.90.

Closed Position: Long AKS stock @ $17.25, Exit @ $15.90 (-7.8%)

- or -

March $18.00 calls (AKS1119C18) Entry @ $0.65, exit @ $0.24 (-63%)

- or -

June $20.00 calls (AKS1118F20) Entry @ $0.85, exit @ $0.49 (-42.3%)

02/22 Stopped out @ 15.90 (-7.8%), Options @ -63% and -42%

chart:

Entry on February 18 at $17.25
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume: 8.7 million
Listed on February 17th, 2010


Garmin Ltd. - GRMN - close: 32.14 change: -0.88

Stop Loss: 31.85
Target(s): 35.95
Current Gain/Loss: - 3.5%
Time Frame: six trading days
New Positions: see below

Comments:
02/22 update: The market's decline pushed GRMN to a -2.6% loss. Shares hit $31.79 intraday and we had just recently raised our stop loss to $31.85 so the play was stopped out almost first thing this morning. We were planning to exit anyway because GRMN was due to report earnings tomorrow.

Small Positions

Closed Position: Long GRMN stock @ $33.01, exit $31.85 (-3.5%)

- or -

March $34 calls (GRMN1119C34) Entry @ $1.23, exit @ 0.68 (-44.7%)

02/22 Stopped out @ 31.85 (-3.5%), Option @ -44.7%
02/19 Plan to exit on Tuesday, Feb. 22nd at the close
02/17 new stop loss @ 31.85

chart:

Entry on February 14 at $33.01
Earnings Date 02/23/11 (confirmed)
Average Daily Volume: 1.1 million
Listed on February 12th, 2010


Kennametal Inc. - KMT - close: 39.01 change: -1.50

Stop Loss: 39.90
Target(s): 44.90
Current Gain/Loss: - 3.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/22 update: The market was poised for declines this morning and KMT gapped open lower at $39.83. That was under our stop loss at $39.90 so the play was closed immediately. This move lower is a very bearish breakdown for KMT. Shares are now under support at $40, under support at its 50-dma and its trendline of higher lows.

- Small Bullish Positions -

Closed Position: KMT stock @ 41.35, Exit @ 39.83 (-3.6%)

chart:

Entry on February 15 at $41.35
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume: 960 thousand
Listed on February 14th, 2010


Solutia Inc. - SOA - close: 23.54 change: -1.36

Stop Loss: 23.65
Target(s): 27.25, 29.50
Current Gain/Loss: - 6.3%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
02/22 update: Crash! Anything related to chemicals got crushed on Tuesday thanks to skyrocketing oil prices. Oil can be a costly component for chemical production. SOA opened at $24.52 and then plunged to a -5.4% loss. The stock broke through support at its 50-dma and hit our stop loss at $23.65.

Closed Position: Long SOA stock @ $25.25, Exit $23.65 (-6.3%)

- or -

March $25 calls (SOA1119C25) Entry @ $1.35, Exit @ 0.40 (-70.3%)

- or -

June $25 calls (SOA1118F25) Entry @ $2.50, Exit @ 1.40 (-44%)

02/22 Stopped out @ 23.65 (-6.3%), Options @ -70% and -44%

chart:

Entry on February 11 at $25.25
Earnings Date 01/26/11
Average Daily Volume: 1.7 million
Listed on February 10th, 2010


Toll Brothers - TOL - close: 20.76 change: -1.08

Stop Loss: 20.95
Target(s): 23.45
Current Gain/Loss: - 2.5%
Time Frame: 6 trading days
New Positions: see below

Comments:
02/22 update: We were planning to exit TOL at the close on Tuesday but shares hit our stop loss instead. TOL opened lower and continued to sink throughout the day until they finally broke down under the $21.00 level.

- Small Positions -

Closed Position: Long TOL stock @ $21.49, Exit @ 20.95 (-2.5%)

- or -

March $22.50 calls (TOL1119C22.5) Entry @ $0.50, Exit @ 0.25 (-50%)

02/22 Stopped out @ 20.95 (-2.5%), Option @ -50%
02/19 Prepare to exit on Tuesday @ the close.
02/17 New stop loss @ 20.95

chart:

Entry on February 14 at $21.49
Earnings Date 02/23/11 (confirmed)
Average Daily Volume: 2.6 million
Listed on February 12th, 2010