Editor's Note:
The U.S. markets produced a widespread oversold bounce thanks to some better than expected economic data. This bounce could last a few days, which could be painful for our bearish trades. Double check your stop loss placement.

-James

Current Portfolio:


BULLISH Play Updates

Cheesecake Factory Inc. - CAKE - close: 30.78 change: +0.60

Stop Loss: 28.95
Target(s): 33.95, 37.00
Current Gain/Loss: - 2.3%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
06/14 update: If you bought the dip near CAKE's 200-dma like we suggested you're in pretty good shape right now. Today's +1.9% rally lifted CAKE back above its 30-dma and 20-dm. If you're looking for a new entry point I'd wait for a new bounce from the $30.00 level.

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

06/09 CAKE is bouncing from the 200-dma as expected.
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: 41.12 change: +0.35

Stop Loss: 39.40
Target(s): 44.90
Current Gain/Loss: + 2.1%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
06/14 update: DPS continues to drift higher and gained +0.8% on the session. Volume has been slightly above average on this bounce from $40, which is a good sign. Please note our new stop loss at $39.40. I remain cautious. If you're looking for a new entry point consider waiting for another dip or bounce near $40.50 and its 50-dma.

Current Position: Long DPS stock @ $40.25

- or -

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

06/14 new stop loss @ 39.40
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: 55.14 change: +1.10

Stop Loss: 51.90
Target(s): 57.00, 59.90
Current Gain/Loss: + 3.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/14 update: ECL displayed relative strength today with a +2.0% gain and a new all-time high. I am no longer expecting a dip near $53.00. Readers could buy this bounce or wait for a dip near the $54.50 area.

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


Nanometrics Inc. - NANO - close: 17.69 change: +1.09

Stop Loss: 15.85
Target(s): 19.25, 22.00
Current Gain/Loss: + 5.1%
Time Frame: 6 to 8 weeks or more
New Positions: see below

Comments:
06/14 update: NANO was flexing its relative strength muscles today. Shares soared +6.5% to close at new six-week highs. Volume was above average on the move. I wouldn't chase it here.

We'll start with multi-week targets at $19.25 and $22.00. FYI: NANO does have options but the spreads are so wide I wouldn't trade them.

Current Position: Long NANO stock @ $16.82

Entry on June 13 at $16.82
Earnings Date 08/04/11 (unconfirmed)
Average Daily Volume: 467 thousand
Listed on June 11th, 2011


NVIDIA Corp. - NVDA - close: 17.14 change: +0.15

Stop Loss: 16.59
Target(s): 19.50
Current Gain/Loss: - 1.4%
Time Frame: 1 to 2 weeks
New Positions: see below

Comments:
06/14 update: The action in NVDA today was disappointing. The stock gained less than half (+0.8%) of what the SOX did today (+1.9%). NVDA saw its bounce fail at $17.50. The stock looks unhealthy here and I am not suggesting new bullish positions. Our plan was to keep our position size small to limit our risk.

- Small Positions Only -

Current Position: Long NVDA stock @ $17.40

- or -

Long July $18 call (NVDA1116G18) Entry @ $0.68

06/13 adjust stop loss from 16.70 to 16.59

Entry on June 10 at $17.40
Earnings Date 08/11/11 (unconfirmed)
Average Daily Volume: 19.8 million
Listed on June 9th, 2011


BEARISH Play Updates

Aon Corp. - AON - close: 50.99 change: +0.52

Stop Loss: 52.75
Target(s): 46.50
Current Gain/Loss: + 1.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/14 update: I had cautioned readers to expect a bounce near $50. AON added +1.0% on top of yesterday's bounce. The stock should have overhead resistance near $51.00 and near $52.00. Keep in mind that our June put will expire after Friday. Cautious traders may want to exit early. I am not suggesting new positions at this time.

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: 40.06 change: +1.02

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:
06/14 update: Ouch! Today's +2.6% gain in AOS has erased our gains. Shares briefly traded above technical resistance at their 200-dma but eventually trimmed its gains. This bounce may not be over yet. More conservative traders might want to lower stops closer to the $41 level. I am not suggesting new positions at this time.

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: 13.43 change: +0.29

Stop Loss: 14.26
Target(s): final target @ 12.55
Current Gain/Loss: + 6.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/14 update: Ford's oversold bounce began yesterday and the rebound continued into Tuesday's session. The stock actually gapped open higher at $13.29 but the rebound struggled near $13.50. More conservative traders may want to exit completely right here. The overall trend is down but I will point out that Ford has produced a three-day (three candle) bullish reversal pattern.

I am not suggesting new positions at this time. We have a stop at $14.26. If you don't exit early then consider a lower stop. 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

06/13 New stop loss @ 14.26. Final target at $12.55
06/13 Take Profits Now! Ford @ 13.14 (+8.75%), Option @ $1.89 (+110%)
06/11 new targets at $12.75 and TBD.
06/11 new stop loss @ 14.55
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: 57.19 change: +1.48

Stop Loss: 60.15
Target(s): 54.00
Current Gain/Loss: + 0.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/14 update: HON has produced a sharp oversold bounce (+2.6%) that has erased most of our gains. Look for a bounce or a failed rally near resistance at $58.00 and the 100-dma before considering new bearish positions.

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


Kohl's Corp. - KSS - close: 50.23 change: +0.43

Stop Loss: 51.75
Target(s): 47.50, 45.25
Current Gain/Loss: - 0.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/14 update: The May retail sales were negative but they were still better than expected. Based on the report I am surprised that KSS didn't see a bigger rebound. Shares added +0.8% but stalled at their simple 10-dma. Aggressive traders could use this move as a new entry point. I'd rather see a new drop under $50.00 before initiating positions.

The plan was to keep our position size small to limit our risk. FYI: The Point & Figure chart for KSS is bearish with a $43 target.

- Small Positions-

Current Position: short KSS stock @ $49.80

- or -

Long July $47.50 put (KSS1116S47.5) Entry @ $0.75

Entry on June 13 at $49.80
Earnings Date 08/11/11 (unconfirmed)
Average Daily Volume: 4.1 million
Listed on June 11th, 2011


Marriott Intl. Inc. - MAR - close: 34.62 change: +0.85

Stop Loss: 36.55
Target(s): 33.65, and 30.50
Current Gain/Loss: + 2.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/14 update: Right on cue MAR produced an oversold bounce. Shares struggled with resistance near $34.50 midday but eventually inched higher to close up +2.5%. I cautioned readers earlier that MAR could see an oversold bounce back to $35 or higher. I am not suggesting new positions at this time.

Current Position: Short MAR stock @ $35.39

- or -

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

06/13 1st Target Hit @ $33.65 (+4.9%), Option @ 0.90 (+50%)
06/13 New stop loss @ 36.55
06/11 Adjusted exit targets to $33.65 and 30.50

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


Charles Schwab - SCHW - close: 16.31 change: +0.30

Stop Loss: 17.55
Target(s): 15.25
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see trigger

Comments:
06/14 update: So far so good. We are expecting an oversold bounce in SCHW to carry the stock back toward resistance near its 200-dma and the $17.00 level. I am suggesting we use a trigger to launch bearish positions at $16.75. More conservative traders could wait for a failed rally under $17.00 instead before launching positions. If triggered we'll use a stop loss at $17.55 and aim for a drop to $15.25. This could take several weeks but we do not want to hold over the mid July earnings report.

Trigger @ 16.75

Suggested Position: short SCHW stock @ $16.75

- or -

Buy the July $17.00 PUT (SCHW1116S17)

Entry on June x at $xx.xx
Earnings Date 07/18/11 (unconfirmed)
Average Daily Volume: 10.2 million
Listed on June 13th, 2011


St. Jude Medical - STJ - close: 49.13 change: +0.19

Stop Loss: 51.05
Target(s): 47.00, 45.75
Current Gain/Loss: + 3.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
06/14 update: STJ underperformed with only a +0.3% gain today. The trend is still down but I will note that the MACD indicator on the daily chart is close to a new buy signal. I am not suggesting new positions at this time. We'll wait and see if shares fail at overhead resistance near $50.00 or at the $51.00 levels.

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: 47.29 change: +0.86

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

Comments:
06/14 update: My comments on KSS apply here as well. Better than expected May retail sales gave the retailers a boost. The plan is to wait for an oversold bounce back toward what should be new resistance in the $48.50-49.00 area. I'm suggesting a trigger to open 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