Editor's Note:
The stock market's correction continued on Monday. The small cap Russell 2000 index closed under the 800 level while the S&P 500 broke down under the 1300 mark.

Our CPO play has been stopped out. I am suggesting an early exit from our EMC trade.

-James

Current Portfolio:


BULLISH Play Updates

Cheesecake Factory Inc. - CAKE - close: 29.62 change: -0.26

Stop Loss: 28.95
Target(s): 33.95, 37.00
Current Gain/Loss: - 6.0%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
06/06 update: CAKE is inching closer and closer to its 200-dma near $29.20. No new positions at this time. We'll wait and see if CAKE provides a bounce from the 200-dma.

Earlier Comments:
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

06/04 More conservative traders may want to exit early. We are expecting a drop to the 200-dma.

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


Dr. Pepper Snapple Group - DPS - close: 40.07 change: -0.23

Stop Loss: 38.95
Target(s): 44.90
Current Gain/Loss: - 0.4%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
06/06 update: DPS posted another decline and shares settled on round-number support at the $40.00 level. You could argue the stock is short-term oversold after a two-week drop and with the stock at support this could be used as a new bullish entry point. However, I'm concerned with the weakness in the market's major averages. Readers may want to wait for the market to find a bottom or wait for DPS to bounce before initiating new positions.

We have a stop at $38.95. More conservative traders may want to use a stop closer to $40 instead.

Current Position: Long DPS stock @ $40.25

- or -

Long Aug $45 call (DPS1120H45) Entry @ $0.30

06/04 new stop loss @ 38.95

Entry on June 3 at $40.25
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume: 2.1 million
Listed on May 14th, 2011


Ecolab Inc. - ECL - close: 53.88 change: -0.22

Stop Loss: 51.90
Target(s): 57.00, 59.90
Current Gain/Loss: + 1.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/06 update: ECL is still holding up reasonably well. Shares are hovering near $54.00. I don't see any changes from my prior comments. I would expect ECL to correct toward support near $53.00. No new positions at this time.

Current Position: Long ECL stock @ 53.35

- or -

Long July $55 call (ECL1116G55) Entry @ $0.60

06/04 new stop loss @ 51.90

Entry on May 26 at $53.35
Earnings Date 07/26/11 (unconfirmed)
Average Daily Volume: 1.5 million
Listed on May 18th, 2011


Electronic Arts Inc. - ERTS - close: 23.80 change: -0.24

Stop Loss: 23.45
Target(s): 26.25, 28.00
Current Gain/Loss: - 2.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/06 update: Today's close under $24.00 and its 10-dma is bearish. More conservative traders may want to exit early or raise their stop loss. Currently our stop is at $23.45. I am not suggesting new positions at this time.

Earlier Comments:
I am suggesting that we keep our position size small to limit our risk. Our targets are $26.25 and $27.00.

- Small Positions -

Current Position: Long ERTS stock @ $24.44

- or -

Long July $25 call (ERTS1116G25) Entry @ $0.90

06/04 New stop @ 23.45

Entry on June 1 at $24.44
Earnings Date 08/02/11 (unconfirmed)
Average Daily Volume: 5.8 million
Listed on May 31st, 2011


Expedia Inc. - EXPE - close: 26.93 change: -0.70

Stop Loss: 26.70
Target(s): 27.75, 29.75
Current Gain/Loss: + 4.1%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/06 update: EXPE has spent several days ignoring the market's decline. That changed today with EXPE falling -2.5%. I am repeating my earlier comments that more conservative traders will want to exit immediately. If there is any follow through lower tomorrow we will likely get stopped out at $26.70. I am not suggesting new positions at this time.

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

06/04 consider an early exit, especially if you have the June calls. Currently the bid on the June $25 call is $2.45 (+104%).
06/01 new stop loss @ 26.70
05/31 new stop loss @ 26.25
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: 55.83 change: -0.74

Stop Loss: 54.70
Target(s): 59.75, 62.50
Current Gain/Loss: - 0.9%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/06 update: The short-term trend of lower highs and lower lows continues. KSU is headed for its next level of support near $55 and its 50-dma. I am not suggesting new positions at this time.

Current Position: Long KSU stock @ $56.39

- or -

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

06/01 New stop loss @ 54.70

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


Rosetta Resources - ROSE - close: $45.97 change: -1.33

Stop Loss: 44.75
Target(s): 54.00
Current Gain/Loss: - 2.9%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/06 update: Energy stocks were underperformers today and ROSE was no exception. The stock lost -2.8%. If the sector continues to slide we will likely see ROSE hit our stop loss at $44.75 in the next day or two. I am not suggesting new positions at this time.

-Small Bullish Positions-

Current Position: Long ROSE stock @ $47.35

- or -

Long July $50 call (ROSE1116G50) Entry @ $1.95

06/04 new stop loss @ 44.75

Entry on May 26 at $47.35
Earnings Date 08/08/11 (unconfirmed)
Average Daily Volume: 967 thousand
Listed on May 25th, 2011


BEARISH Play Updates

Aon Corp. - AON - close: 51.49 change: -0.02

Stop Loss: 52.75
Target(s): 46.50
Current Gain/Loss: + 0.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/06 update: The intraday bounce in AON failed at resistance near $52. Shares are essentially bouncing sideways between the $51 and $52 levels. Readers could use today's failed rally as a new entry point or you could wait for AON to break support near $51.00.

Earlier Comments:
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

05/31 New stop loss @ 52.75
05/23 gap down entry @ 51.61

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


AO Smith Corp. - AOS - close: 39.80 change: +0.40

Stop Loss: 42.05
Target(s): 36.00, 33.00
Current Gain/Loss: + 0.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/06 update: AOS popped higher this morning but the rally failed near $41.00. I don't see any changes from my weekend comments and would still launch new bearish positions at this time. Our targets are $36.00 and $33.00.

FYI: The Point & Figure chart for AOS is bearish with a $33 target. Traders should also note that the most recent data listed short interest at 5% of the relatively small 38.2 million share float. That does raise the risk for a possible short squeeze and explains the volatile rallies in this stock.

NOTE: AOS does have options but the spreads appear too wide for us to trade them.

Current Position: short AOS stock @ $39.92

Entry on June 6 at $39.92
Earnings Date 07/20/11 (unconfirmed)
Average Daily Volume: 312 thousand
Listed on June 4th, 2011


Ford Motor Co. - F - close: 13.91 change: -0.10

Stop Loss: 15.15
Target(s): 13.25
Current Gain/Loss: + 3.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/06 update: Ford tried to bounce this morning and failed. The trend is down but the stock does look a little bit oversold here. I am not suggesting new positions at this time. We'll wait for another failed rally type of move. Currently our target is $13.25. I would keep our position size small to limit our risk.

Small Positions!

Current Position: Short F stock @ $14.40

- or -

Long July $15 PUT (F1116S15) Entry @ $0.90

Entry on May 25 at $14.40
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume: 57 million
Listed on May 24th, 2011


Honeywell Intl. - HON - close: 57.45 change: +0.20

Stop Loss: 60.15
Target(s): 54.00 & 200-dma
Current Gain/Loss: + 0.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/06 update: HON bucked the trend today and managed to close in positive territory. The stock remains under new resistance at its 100-dma and the $58.00 level. There is no change from my prior comments. Readers can launch new positions here or wait for a bounce/failed rally move near the $59.00 area.

Earlier Comments:
We do want to keep our position size small to limit our risk. Our targets are $54.00 and the simple 200-dma.

- Small Positions -

Current Position: short HON stock @ 57.65

- or -

Long July $55 PUT (HON1116S55) Entry @ $0.75

Entry on June 2 at $57.65
Earnings Date 07/22/11 (unconfirmed)
Average Daily Volume: 4.1 million
Listed on June 1st, 2011


St. Jude Medical - STJ - close: 48.04 change: -0.03

Stop Loss: 51.05
Target(s): 47.00, 45.75
Current Gain/Loss: + 5.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/06 update: I'm urging caution here. STJ failed to see any follow through on Friday's breakdown below the 100-dma. I suspect the stock is poised for another oversold bounce. We might see another entry point for bearish positions on a failed rally near $50 soon. I am not suggesting new positions at this time.

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

06/04 New stop loss @ 51.05, added second target at $45.75
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


Target Corp. - TGT - close: 47.36 change: -0.04

Stop Loss: 50.15
Target(s): 45.15
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
06/06 update: TGT tagged a new 52-week low but it also managed a meager bounce from the $47.00 level. We are actually expecting an oversold bounce and plan to launch bearish positions at $48.50. If triggered we'll use a stop loss at $50.15. Our first target is $45.15. FYI: The Point & Figure chart for TGT is bearish with a $43 target.

Trigger @ 48.50

Suggested Position: short TGT stock @ 48.50

- or -

buy the July $47 PUT (TGT1116S47) current ask $1.24

Entry on June x at $xx.xx
Earnings Date 08/18/11 (unconfirmed)
Average Daily Volume: 7.1 million
Listed on June 4th, 2011


CLOSED BULLISH PLAYS

Corn Products Intl. - CPO - close: 53.65 change: -1.23

Stop Loss: 53.60
Target(s): 59.90
Current Gain/Loss: - 4.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/06 update: Ouch! CPO underperformed on Monday with a -2.2% decline. The stock fell toward its 50-dma. The intraday low was $53.60, which just happens to be our stop loss. The trade is closed. I'm concerned that CPO may be forming a bearish double top pattern.

closed Position: Long CPO stock @ 56.28, exit 53.60 (-4.7%)

- or -

June $55 call (CPO1118F55) Entry @ $2.10, exit $0.45 (-78.5%)

06/06 stopped out @ 53.60

chart:

Entry on May 27 at $56.28
Earnings Date 07/25/11 (unconfirmed)
Average Daily Volume: 688 thousand
Listed on May 26th, 2011


EMC Corp. - EMC - close: 27.32 change: -0.61

Stop Loss: 26.90
Target(s): 29.95, 32.25
Current Gain/Loss: - 0.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/06 update: I am giving up on EMC. The stock underperformed today with a -2.1% decline and a close under the 50-dma. It's time for an early exit.

closed Position: Long EMC stock @ $27.55, exit 27.32 (-0.8%)

- or -

June $27.00 calls (EMC1118F27) Entry @ $1.35, exit $0.62 (-54.0%)

Second Option Position (listed 05/12/11)

June $29.00 calls (EMC1118F29) Entry @ $0.45, exit $0.03 (-93.3%)

06/06 exit early. EMC @ $27.32 (-0.8%)
06/04 consider an early exit now, especially if you're holding options. We will look for an exit from our option trade in the next few days.
06/01 new stop loss @ 26.90
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