Editor's Note:
As stocks enter their sixth weekly decline you could argue we're seeing more oversold conditions. Of course that doesn't mean the market can't get more oversold. Instead of chasing declines consider waiting for a bounce and then consider bearish positions near resistance.

Our EXPE and KSU plays have been stopped out. Readers may want to exit early out of our ROSE trade. Meanwhile most of our bearish trades are gaining traction.

-James

Current Portfolio:


BULLISH Play Updates

Cheesecake Factory Inc. - CAKE - close: 29.31 change: -0.32

Stop Loss: 28.95
Target(s): 33.95, 37.00
Current Gain/Loss: - 7.0%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
06/08 update: This is it! We've been expecting CAKE to decline toward technical support at its 200-dma. The stock hit that level today and bounced this morning. The bad news is that the bounce is already failing and the stock closed on its 200-dma. Given the disappointing performance today readers may want to wait for CAKE to rebound back above $30.00 (or even close back above $30.00) before considering new bullish positions. We have a stop at $28.95.

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: 39.74 change: -0.43

Stop Loss: 38.95
Target(s): 44.90
Current Gain/Loss: - 1.2%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
06/08 update: Warning! DPS is breaking support at the $40.00 level. There is still a chance DPS will bounce from its 50-dma near $39.65 but the close under $40 today is bearish. I am not suggesting new positions at this time. We'll wait for a bounce and then re-evaluate. We have a stop at $38.95.

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: 53.58 change: -0.52

Stop Loss: 51.90
Target(s): 57.00, 59.90
Current Gain/Loss: + 0.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/08 update: ECL gave up -0.9% and closed under its 10-dma. Although this isn't much of a surprise. We've been expecting shares to fall 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


Rosetta Resources - ROSE - close: $45.32 change: -0.20

Stop Loss: 44.75
Target(s): 54.00
Current Gain/Loss: - 4.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/08 update: I am growing more concerned about the energy sector. Crude oil saw a +2% rally today but oil stocks didn't move. More conservative traders may want to exit our ROSE trade immediately. If we don't see this stock bounce tomorrow I'll drop it in the Thursday night newsletter. 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

06/08 consider an early exit!
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: 50.55 change: -1.08

Stop Loss: 52.75
Target(s): 46.50
Current Gain/Loss: + 2.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/08 update: Bingo! AON accelerated lower after yesterday's failed rally. The stock broke down under short-term support at $51.00 and at its 100-dma. The $50.00 level might offer some support but the trend is down.

Earlier Comments:
Our target is the $46.50 level. 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: 39.52 change: -0.18

Stop Loss: 42.05
Target(s): 36.00, 33.00
Current Gain/Loss: + 1.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/08 update: AOS is still slowly drifting sideways albeit with a bearish trend of lower highs. There is no change from my prior comments. I would consider new positions at current levels. 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: 13.70 change: -0.25

Stop Loss: 15.01
Target(s): 13.25
Current Gain/Loss: + 4.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/08 update: Ford sank to new two-month lows with today's -1.79% decline. I am lowering our stop loss to $15.01. More conservative traders may want to consider a stop somewhere in the $14.75-14.50 zone instead. Bears should be encouraged. Ford has closed under its March low of $13.75. The next stop should be our target at $13.25. I am considering adding a secondary target in the $12.50-12.00 area but for now we will exit completely at $13.25. The plan was to 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

06/08 new stop loss @ 15.01

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: 56.07 change: -0.78

Stop Loss: 60.15
Target(s): 54.00
Current Gain/Loss: + 2.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/08 update: HON sank to new multi-week lows with today's -1.3% decline. The stock is headed for what should be support near $55.00 and near $54.00. More conservative traders may want to take profits early near $55.00. I am consolidating our two targets ($54 and the 200-dma) to just one at $54.00.

Earlier Comments:
We do want to keep our position size small to limit our risk.

- 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


Marriott Intl. Inc. - MAR - close: 34.78 change: -0.76

Stop Loss: 37.55
Target(s): 30.50
Current Gain/Loss: + 1.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/08 update: Our new MAR play is off to a good start. Shares opened at $35.39 and then fell to a -2.1% decline. Volume has been rising on the sell-off, which is normally a bearish signal. If you don't feel like chasing MAR here then wait for a bounce or a failed rally near $36.00.

The April lows near $33.50 might offer some support but we're aiming for the $30.00 area. I'll set our exit target at $30.50. FYI: The Point & Figure chart for MAR is bearish with a $25 target.

Current Position: Short MAR stock @ $35.39

- or -

Long July $33 PUT (MAR1116S33) Entry @ $0.60

Entry on June 8 at $35.39
Earnings Date 07/13/11 (unconfirmed)
Average Daily Volume: 3.7 million
Listed on June 7th, 2011


St. Jude Medical - STJ - close: 48.71 change: -0.09

Stop Loss: 51.05
Target(s): 47.00, 45.75
Current Gain/Loss: + 4.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/08 update: It was a quiet session for STJ with the stock slowly drifting higher off its morning lows. The stock remains under its 100-dma. Readers may want to wait for a failed rally under $50.00 before initiating new positions.

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: 46.86 change: -0.20

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

Comments:
06/08 update: We are waiting for an oversold bounce back toward resistance. The plan is 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

Expedia Inc. - EXPE - close: 27.15 change: +0.26

Stop Loss: 26.70
Target(s): 27.75, 29.75
Current Gain/Loss: + 3.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/08 update: EXPE dipped to $26.67 and bounced. Our stop loss was at $26.70. Our trade is closed but I'd keep EXPE on your watch list. A bounce from its 200-dma or a close over $28.00 might be new bullish entry points.

closed Position: Long EXPE stock @ 25.85, exit 26.70 (+3.2%)

- or -

July $27 call(EXPE1116G27) Entry @ $0.95, exit 0.85 (-10.5%)

06/08 stopped out @ 26.70 (+3.2%), July $27 call @ -10.5%
06/07 Exit our June $25 calls. bid @ $1.85 (+54.1%)
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%)

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: 54.30 change: -1.14

Stop Loss: 54.70
Target(s): 59.75, 62.50
Current Gain/Loss: - 3.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/08 update: KSU continues to underperform the market and its peers. Shares lost -2.0% and broke down under support at $55.00 and its 50-dma today. Our stop loss was hit at $54.70.

closed Position: Long KSU stock @ $56.39, exit 54.70 (-3%)

- or -

June $60 call (KSU1118F60) Entry @ $0.53, exit $0.05 (-90.5%)

06/08 stopped out @ 54.70 (-3%), option -90.5%
06/01 New stop loss @ 54.70

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