Editor's Note:
Investors were in a selling mood on Monday. Stocks were down across the board. Our COV trade has been stopped out. Plus, bearish trades on AON and VLO have been triggered.

-James

Current Portfolio:


BULLISH Play Updates

Cheesecake Factory Inc. - CAKE - close: 30.98 change: -0.22

Stop Loss: 28.95
Target(s): 33.95, 37.00
Current Gain/Loss: - 1.7%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
05/23 update: CAKE managed a bounce off its morning spike lower but still closed down -0.7%. Given the market's current weakness readers may want to wait for a dip near $30.00 in CAKE before considering new bullish positions. The $30 level should be underpinned by its 50 and 100-dma.

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

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: 54.09 change: -0.98

Stop Loss: 51.75
Target(s): 57.00, 59.50
Current Gain/Loss: + 1.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/23 update: I cautioned readers to expect a dip back toward $54.00. This should be short-term support. If this level fails then COF is probably looking at another test of its 50-dma (currently near $52.50). 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

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


Discover Financial Services - DFS - close: 24.43 change: -0.49

Stop Loss: 23.90
Target(s): 27.25
Current Gain/Loss: + 1.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/23 update: Hmm... Friday's big drop and today's decline is starting to make last week's breakout past resistance look like a bull-trap pattern. More conservative traders may want to exit early. I am not suggesting new positions at this time.

(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

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: 53.72 change: -0.94

Stop Loss: 52.65
Target(s): 58.00-60.00 zone
Current Gain/Loss: - 2.6%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
05/23 update: It seems the popular move today was a gap open lower. DHR followed the crowd and settled with a -1.7% decline. Shares look headed for potential support near $53.00 and its 50-dma. I would wait for that dip or better yet a bounce near this area before considering new 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

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: 41.90 change: -0.20

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

Comments:
05/23 update: DPS only saw a minor decline and managed an intraday bounce from its 10-dma. 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

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: 52.67 change: +0.29

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:
05/23 update: Positive analyst comments helped ECL buck the trend and post a gain today. We are still waiting for a breakout past resistance. 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

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: 27.44 change: -0.62

Stop Loss: 26.45
Target(s): 29.95, 32.25
Current Gain/Loss: - 0.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/23 update: Ouch! Profit taking pushed EMC to a -2.2% decline. Shares are testing their short-term trend of higher lows. I am still not suggesting new positions at this time.

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.

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: 27.55 change: -0.02

Stop Loss: 24.74
Target(s): 27.75, 29.75
Current Gain/Loss: + 6.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/23 update: Lack of any serious profit taking in EXPE is impressive. Shares gapped open lower and then rallied back to virtually unchanged. I would still expect a pull back soon. 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%)

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: 55.53 change: -1.27

Stop Loss: 53.45
Target(s): 59.75, 63.50
Current Gain/Loss: - 1.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/23 update: Railroad stocks were not immune to the sell-off today. As expected KSU dipped toward the $55 level. Normally this intraday bounce from support would look like an entry point but I'm concerned the market's decline isn't over yet. Readers may want to wait for a dip closer to $54 before considering new bullish positions here. 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

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: 37.55 change: -0.62

Stop Loss: 34.95
Target(s): 39.90, 43.00
Current Gain/Loss: + 0.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/23 update: RVBD gave up -1.6%. Shares look like they're headed back toward short-term support near $36.00. More conservative traders may want to tighten their stops. I'm not suggesting new positions at this time. Let's see if RVBD can bounce at the $36 level.

Current Position: Long RVBD stock @ $37.25

- or -

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

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: 17.31 change: -0.20

Stop Loss: 17.15
Target(s): 18.40
Current Gain/Loss: - 0.1%
Time Frame: 8 to 9 weeks
New Positions: see below

Comments:
05/23 update: SAI gapped open lower and closed down -1.1%. Shares are in the middle of their $17.20-17.60 trading range. I am not suggesting new positions at this time.

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

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: 35.20 change: -0.70

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

Comments:
05/23 update: Semiconductor stocks struggled on Monday. Many gapped open lower this morning. The SMH is on the verge of breaking down under technical support at its 50 and 100-dma. If we see the SMH close under $35.00 we will drop it as a bullish candidate. I am not suggesting new positions at this time. Currently our plan is waiting for a breakout past $37.00 but we might consider buying a bounce if SMH rallies from support.

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

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


DENTSPLY Intl. - XRAY - close: 38.68 change: -0.60

Stop Loss: 37.30
Target(s): 42.00, 44.50
Current Gain/Loss: - 0.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/23 update: There are no surprises here. We were expecting a dip into the $39-38 area. I'd wait for a bounce near $38.00 before considering new positions. 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

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

Aon Corp. - AON - close: 51.83 change: -0.40

Stop Loss: 53.05
Target(s): 46.50
Current Gain/Loss: - 0.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/23 update: Our new trade on AON is open. Shares gapped open lower at $51.61. The trigger to open bearish positions was $51.75. The afternoon bounce lifted AON back toward $52.00, which should be new resistance. I would still consider new bearish positions now if you missed the entry this morning.

Our target is the $46.50 level. I would expect some support near $50.00 and the 100-dma so don't be surprised to see an initial bounce near this area. NOTE: The option spreads on AON are a little wide. Conservative traders may not want to play the options.

(small positions only)

Current Position: short AON stock @ 51.61

- or -

Long the June $50 PUT (AON1118R50) entry @ $0.45

05/23 gap down entry @ 51.61

Annotated chart:

Entry on May 23 at $51.61
Earnings Date 07/29/11 (unconfirmed)
Average Daily Volume: 1.7 million
Listed on May 21st, 2011


LyondellBasell Industries - LYB - close: 38.90 change: -1.10

Stop Loss: 42.05
Target(s): 36.00, 33.00
Current Gain/Loss: + 0.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/23 update: The gap down this morning has impacted our entry point. LYB opened at $38.91 and after a brief dip near $38.00 shares closed virtually where they opened with a -2.7% loss. I would be tempted to wait for a new failed rally move near $40 or even the 50-dma before initiating new positions. The plan was to keep our bearish positions very small to limit our risk. Our targets are $36.00 and $33.00 (or the simple 200-dma).

NOTE: While the options are likely to be very volatile you can limit your risk easier than shorting LYB stock. Buying a put limits your risk to what you paid for the option.

-Small Bearish Positions-

Current Position: short LYB stock @ $38.91

- or -

Long June $40 PUT (LYB1118R40) Entry @ $2.25

05/23 Gap down entry @ 38.91

Entry on May 23 at $38.91
Earnings Date 05/02/11 (confirmed)
Average Daily Volume: 5.0 million
Listed on May 21st, 2011


St. Jude Medical - STJ - close: 49.30 change: -1.52

Stop Loss: 52.26
Target(s): 47.00
Current Gain/Loss: + 3.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/23 update: STJ is accelerating lower. The close under the $50.00 level is bearish. The stock lost almost -3% today. I am not suggesting new positions at this time. We can wait for a new failed rally pattern under $51.00 before considering new positions. Please note our new stop loss at $52.26. Currently our target is $47.00. More aggressive traders may want to aim lower.

Earlier Comments:
We wanted to 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

05/23 New stop loss @ 52.26

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: 25.93 change: -0.12

Stop Loss: 27.05
Target(s): 23.00
Current Gain/Loss: - 1.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/23 update: VLO spiked down to a new relative low this morning. Shares hit $25.21 before trimming its losses to just -0.4%. Our trigger to open bearish positions was hit at $25.49. I would still consider new positions now or you could wait for a new failed rally under the 10-dma. Our target is $23.00 near the 200-dma.

Current Position: Short VLO stock @ $25.49

- or -

Long June $25 PUT (VLO1118R25) Entry @ $0.90

05/23 Triggered @ 25.49.

chart:

Entry on May 23 at $25.49
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume: 11 million
Listed on May 14th, 2011


CLOSED BULLISH PLAYS

Covidien Plc. - COV - close: 55.39 change: -1.52

Stop Loss: 55.40
Target(s): 63.50
Current Gain/Loss: - 3.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/23 update: After the bell there was a headline that Applied Medical had filed a patent infringement lawsuit against COV. Now we don't know if this news hit the market this morning or after the closing bell. Shares were weak this morning with a gap open lower and a drop past its 20-dma, which had been recent support. Our stop loss was hit at $55.40.

closed Position: Long COV stock @ $57.34, exit $55.40 (-3.3%)

- or -

July $60 call (COV1116G60) Entry @ $0.65, exit 0.20 (-69.2%)

05/23 stopped out @ 55.40 (-3.3%), option @ -69.2%

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