Editor's Note:
The rally in EXPE continued on Friday and shares hit one of our profit targets. Meanwhile STJ, a bearish candidate, hit our trigger to open positions on Friday morning.

-James

Current Portfolio:


BULLISH Play Updates

Cheesecake Factory Inc. - CAKE - close: 31.20 change: -0.39

Stop Loss: 28.95
Target(s): 33.95, 37.00
Current Gain/Loss: - 1.0%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
05/21 update: Nothing has changed from my Thursday's description on CAKE. Shares saw a -1.2% pull back on Friday. I would still consider new bullish positions here or you could wait for a dip into the $31-30 zone since stock seem vulnerable at the moment. The 2010 high peaked near $34.00 so we'll set our first target at $33.95. Given enough time I would expect CAKE to breakout to new highs. Our second, more aggressive target is $37.00.

Keep in mind that CAKE doesn't move very fast (at least not normally) so we'll need some patience for this trade to work. FYI: The Point & Figure chart for CAKE is bullish with a $59 target.

Current Position: Long CAKE stock @ $31.53

- or -

Long the July $33 call (CAKE1116G33) Entry @ $0.75

chart:

Entry on May 20 at $31.53
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume: 1.0 million
Listed on May 19th, 2011


Capital One Financial - COF - close: 55.07 change: -1.14

Stop Loss: 51.75
Target(s): 57.00, 59.50
Current Gain/Loss: + 3.7%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/21 update: Financials were showing relative weakness on Friday and the overall market weakness prompted profit taking in COF. Shares lost -2%. I wouldn't be surprised to see COF retest the $54.00 level as short-term support. I am not suggesting new positions at current levels.

Current Position: Long COF stock @ $53.07

- or -

Long the June $55 calls (COF1118F55) Entry @ $0.96

05/17 New stop loss @ 51.75

chart:

Entry on May 5 at $53.07
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume: 3.7 million
Listed on May 4th, 2011


Covidien Plc. - COV - close: 56.91 change: -0.57

Stop Loss: 55.40
Target(s): 63.50
Current Gain/Loss: - 0.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/21 update: COV gave back about -1% on Friday. Shares still look bullish here and I would consider launching positions now. Or you could wait for a dip closer to the $56 level. More conservative traders might want to raise their stop closer to the rising 20-dma. The $60 level might offer some resistance but I'm setting our target at $63.50.

Current Position: Long COV stock @ $57.34

- or -

Long the July $60 call (COV1116G60) Entry @ $0.65

chart:

Entry on May 19 at $57.34
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume: 3.5 million
Listed on May 18th, 2011


Discover Financial Services - DFS - close: 24.92 change: -0.76

Stop Loss: 23.90
Target(s): 27.25
Current Gain/Loss: + 3.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/21 update: Ouch! Profit taking on Friday shaved off -2.9% for DFS. Broken resistance at $25.00 should be support so readers could use this as a new entry point but cautious traders might want to wait for a bounce first.

(Small Positions)

Current Position: long DFS stock @ $24.10

05/19 exit May calls. closed @ $1.55 (+210%)
05/18 Plan on exiting May $24 call at Thursday's close
05/17 New stop loss @ 23.90
05/04 Triggered at $24.10.
04/30 Added an alternative entry point @ $25.25
04/26 New trigger @ 24.10, New stop loss @ 23.40

chart:

Entry on May 4 at $24.10
Earnings Date 06/23/11 (unconfirmed)
Average Daily Volume: 5.9 million
Listed on April 12th, 2011


Danaher Corp. - DHR - close: 54.66 change: -0.56

Stop Loss: 52.65
Target(s): 58.00-60.00 zone
Current Gain/Loss: - 0.9%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
05/21 update: After Thursday's move we were expecting a dip on Friday. DHR delivered a -1% decline. It may not be over yet. Readers may want to look for a pull back into the $54-53 zone before considering new bullish positions. DHR doesn't move super fast so we'll need patience. Our target is the $58-60 range.

Current Position: Long DHR stock @ $55.17

- or -

Long the Sept. $57.50 call (DHR1117I57.5) Entry @ $1.90

chart:

Entry on May 19 at $55.17
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume: 3.5 million
Listed on May 18th, 2011


Dr. Pepper Snapple Group - DPS - close: 42.10 change: -0.18

Stop Loss: 37.90
Target(s): 44.90
Current Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Comments:
05/21 update: DPS briefly tagged a new high on Friday afternoon before drifting lower. Shares still look a little bit overbought. We're waiting for a dip towards $40.00, which should be new support. I'm suggesting a buy-the-dip entry point at $40.25. If triggered we'll use a stop loss at $37.90. Our target is $44.90.

buy-the-dip Trigger @ $40.25

Suggested Position: buy DPS stock @ $40.25

- or -

Buy the August $45 call (DPS1120H45) current ask $0.80

chart:

Entry on May x at $xx.xx
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume: 2.1 million
Listed on May 14th, 2011


Ecolab Inc. - ECL - close: 52.38 change: -0.30

Stop Loss: 50.95
Target(s): 57.00, 59.90
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
05/21 update: Hmm... the action on Thursday is starting to look like a bull-trap pattern. ECL's intraday bounce today rolled over. Shares could be headed for the $51.25 level again. Currently our plan is to launch bullish positions at $53.35. If triggered we'll use a stop loss at $50.95. Our targets are $57.00 and $59.90.

Trigger @ 53.35

Suggested Position: buy ECL stock @ 53.25

- or -

buy the July $55 call (ECL1116G55) current ask $0.60

chart:

Entry on May x at $xx.xx
Earnings Date 07/26/11 (unconfirmed)
Average Daily Volume: 1.5 million
Listed on May 18th, 2011


EMC Corp. - EMC - close: 28.06 change: +0.07

Stop Loss: 26.45
Target(s): 29.95, 32.25
Current Gain/Loss: + 1.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/21 update: Friday was another quiet session for EMC. Shares hovered around the $28.00 strike price. If EMC can maintain the up trend the next level of resistance is the $28.75 area. Given the stock market's recent weakness I'm not suggesting new positions in EMC tonight.

Current Position: Long EMC stock @ $27.55

- or -

Long the June $27.00 calls (EMC1118F27) Entry @ $1.35

Second Option Position (listed 05/12/11)

Long the June $29.00 calls (EMC1118F29) Entry @ $0.45

05/12 New entry point. Added second option position.

chart:

Entry on May 3 at $27.55
Earnings Date 04/20/11
Average Daily Volume: 21.4 million
Listed on April 27th, 2011


Expedia Inc. - EXPE - close: 27.57 change: +0.32

Stop Loss: 24.74
Target(s): 27.75, 29.75
Current Gain/Loss: + 6.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/21 update: Target achieved. The short squeeze in EXPE continued on Friday. Shares made a run at resistance near $28.00 and hit $28.09 intraday. Our first target to take profits was hit at $27.75 (+7.3%). EXPE is very short-term overbought here. I would expect some profit taking soon. Please note our new stop loss at $25.40. I am not suggesting new positions at this time. Our final target is $29.75.

Current Position: Long EXPE stock @ 25.85

- or -

Long the June $25 call (EXPE1118F25) Entry @ $1.20

- or -

Long the July $27 call(EXPE1116G27) Entry @ $0.95

05/21 New stop loss @ 25.40
05/20 1st Target Hit @ 27.75 (+7.3%), June $25 call @ $2.70 (+125%), July $27 call @ $1.40 (+47.3%)

chart:

Entry on May 18 at $25.85
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume: 5.5 million
Listed on May 17th, 2011


Kansas City Southern - KSU - close: 56.80 change: -0.13

Stop Loss: 53.45
Target(s): 59.75, 63.50
Current Gain/Loss: + 0.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/21 update: KSU saw a strong intraday rally but trimmed its gains late Friday afternoon. Shares were up for the week and the weekly chart has produced a bullish engulfing candlestick pattern. I would be tempted to launch positions here but I suspect there is a pretty good chance KSU will dip into the $56.25-55.00 zone again. You may want to wait for the dip before launching positions. Our upside targets are $59.75 and $62.50.

Current Position: Long KSU stock @ $56.39

- or -

Long the June $60 call (KSU1118F60) Entry @ $0.53

chart:

Entry on May 19 at $56.39
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume: 1.0 million
Listed on May 18th, 2011


Riverbed Technology, Inc. - RVBD - close: 38.17 change: -0.67

Stop Loss: 34.95
Target(s): 39.90, 43.00
Current Gain/Loss: + 2.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/21 update: RVBD tagged a new eight-week high and then drifted lower on Friday. Readers may want to look for a bounce in the $37-36 zone as our next entry point. Cautious traders might want to consider a stop loss closer to the $36 level and its 50-dma. Our first target is $39.90.

Current Position: Long RVBD stock @ $37.25

- or -

Long the June $40 call (RVBD1118F40) Entry @ $1.15

chart:

Entry on May 12 at $37.25
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume: 5.1 million
Listed on May 11th, 2011


SAIC, Inc. - SAI - close: 17.51 change: -0.02

Stop Loss: 17.15
Target(s): 18.40
Current Gain/Loss: + 1.0%
Time Frame: 8 to 9 weeks
New Positions: see below

Comments:
05/21 update: SAI tried to rally on Friday but stalled at resistance near $17.60. Aggressive traders might want to launch new positions on a rally past $17.65. Otherwise I am suggesting we wait for a close over resistance at $17.60. Even if SAI does breakout I remain wary of this stock. Defense contractors could suffer once the budget cut talks resume in Washington.

We are moving the stop loss higher to $17.15, just under the bottom of its current trading range.

Current Position: long SAI stock @ $17.33

- or -

Long the August $18.00 call (SAI1120H18) entry @ $0.55

05/21 New stop loss @ 17.15
04/30 Warning, SAI has produced a reversal. consider an early exit
04/27 New stop loss @ 16.95

chart:

Entry on April 6 at $17.33
Earnings Date 06/02/11 (unconfirmed)
Average Daily Volume: 2.4 million
Listed on April 5th, 2011


Semiconductor HOLDRs - SMH - close: 36.13 change: -0.31

Stop Loss: 35.49
Target(s): 39.95
Current Gain/Loss: unopened
Time Frame: 8 to 12 weeks
New Positions: Yes, see trigger

Comments:
05/21 update: It was a bearish week for the semiconductor sector. Downgrades helped produce short-term lower lows and lower highs. Both the SOX and SMH look like they could roll over. If we see the SMH breakdown under its 50-dma near $35.00 we'll drop it as a potential candidate. At the moment our plan is to launch bullish positions on a move past resistance at $37.00 (trigger @ 37.05). Nimble traders may want to try buying a bounce from the $35.00 area.

The SMH doesn't move very fast so it could take several weeks for this play to work out. Our first target is $39.95. The Point & Figure chart for SMH is bullish with a $61 target.

FYI: The top ten components in the SMH are: TXN, INTC, AMAT, ALTR, ADI, LLTC, XLNX, KLAC, BRCM, and ATML.

Trigger @ 37.05

Suggested Position: buy the SMH @ $37.05

- or -

Buy the August $40 calls (SMH1120H40) current ask $0.61

chart:

Entry on May x at $xx.xx
Earnings Date --/--/--
Average Daily Volume: 9.8 million
Listed on May 12th, 2011


DENTSPLY Intl. - XRAY - close: 39.28 change: -0.81

Stop Loss: 37.30
Target(s): 42.00, 44.50
Current Gain/Loss: + 0.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/21 update: After a week of gains and a new two-year high XRAY reversed sharply on Friday with a -2.0% loss. This could be normal profit taking, especially since the $40 mark might be round-number resistance. XRAY should have some support in the $39-38 area. Let's watch for the bounce from support. I am not suggesting new positions at this time. Our profit targets are $42.00 and $44.50. FYI: The Point & Figure chart for XRAY is bullish with a $59 target.

NOTE: Readers may want to avoid the options. XRAY doesn't have a lot of option volume and the spreads are wide, which puts traders at a disadvantage.

Current Position: Long XRAY stock @ 39.00

- or -

Long the June $40 call (XRAY1118F40) Entry @ 0.60

chart:

Entry on May 12 at $39.00
Earnings Date 07/25/11 (unconfirmed)
Average Daily Volume: 904 thousand
Listed on May 7th, 2011


BEARISH Play Updates

St. Jude Medical - STJ - close: 50.82 change: -1.10

Stop Loss: 54.20
Target(s): 47.00
Current Gain/Loss: + 0.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/21 update: Our bearish play on STJ has been triggered. Thursday's reversal picked up speed on Friday morning. STJ spiked lower and broke down past its 50-dma and under its lows for the week. Our trigger to open bearish positions was hit at $51.00. I would still consider new positions now. Please note our new stop loss at $53.05. Our first target is $47.00.

I would keep our position size small (about half or less than a normal trade) to limit our risk.

(Small Positions)

Current Position: Short STJ stock @ 51.00

- or -

Long the June $50 PUT (SJT1118R50) Entry @ $1.00

chart:

Entry on May 20 at $51.00
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume: 2.6 million
Listed on May 16th, 2011


Valero Energy - VLO - close: 26.05 change: -0.46

Stop Loss: 27.05
Target(s): 23.00
Current Gain/Loss: unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
05/21 update: Oil stocks were mixed even though crude oil delivered a bounce on Friday. VLO is still trading with a trend of lower highs. More aggressive traders may want to launch bearish positions now. I am suggesting a trigger at $25.49, which might get hit on Monday if the market continues to slip. If triggered our target is $23.00 near the 200-dma.

Trigger @ $25.49

Suggested Position: Short VLO stock @ $25.49

- or -

buy the June $25 PUT (VLO1118R25) current ask $0.70

chart:

Entry on May x at $xx.xx
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume: 11 million
Listed on May 14th, 2011