Editor's Note:
Most of our bullish candidates are still showing relative strength but the stock market's lack of follow through higher is a very ugly development. The S&P 500 index has reversed yesterday's end of day gains. Now we're faced with the prospect of retesting and possibly breaking yesterday's lows.

I heard several traders and analysts suggesting that investors should exit this market immediately. There is no strength and no one knows where the bottom is. They were hoping that Monday's session and the Tuesday morning drop was the capitulation bottom but evidently that's not the case yet. Meanwhile investor sentiment numbers are still too bullish to indicate a bottom.

Yet after hours we are not seeing a lot of action in the S&P 500. Cautious traders will want to sit out tomorrow!

-James

Current Portfolio:


BULLISH Play Updates

Alexion Pharmaceuticals - ALXN - close: 48.74 change: -1.11

Stop Loss: 46.25
Target(s): 54.00, 57.00
Current Gain/Loss: unopened
Time Frame: 2 to 5 weeks
New Positions: see below

Comments:
08/10 update: ALXN did its part but the S&P 500 did not cooperate. We need both the stock and the S&P500 to open positive before we opened bullish positions. ALXN opened at $51.04 but the S&P500 opened negative. Shares of ALXN were pretty volatile day but shares did close off their lows. Once again this stock could be facing a drop toward support near $45 and its 200-dma.

I am removing our entry point strategy for this trade. Tomorrow we will just wait and watch to see where the market goes. Nimble traders could try buying a dip near the $46-45 zone if ALXN dips that low.

No Trade Tomorrow. Wait and Watch.

08/09 new entry point strategy, new stop loss, new targets.

Entry on August xx at $ xx.xx
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on August 8, 2011


Caribou Coffee Inc. - CBOU - close: 16.28 change: +0.04

Stop Loss: 12.95
Target(s): --.--, 18.00
Current Gain/Loss: +15.7%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
08/10 update: The relative strength in CBOU is very impressive but even a helium balloon will go down if it's stuck in an elevator. I am suggesting readers take profits now. CBOU hit $16.69 intraday. Our first target was $16.75. Instead of waiting for $16.75 let's take some money off the table now. The stock is up +15.7%. The Sept. $15 call has a bid at $2.05 (+57.6%).

I am concerned that CBOU could drop back toward the $14.00 area if the market accelerates lower again. Nimble traders could look to buy a dip in that area.

Earlier comments:
I do want to point out that one of my biggest concerns, aside from the wider market issues, is that CBOU's IPO opening price and all-time high is essentially $15.50. This level could be significant resistance.

- (small positions) -

Current Position: Long CBOU stock @ $14.06

- or -

Long SEP $15 call (CBOU1117I15) Entry $1.30

08/10 CBOU almost hit our first target at $16.75. Don't wait. Go ahead and take profits now.
CBOU @ $16.28 (+15.7%), Sept.$15 call @ $2.05bid (+57.6%)
08/08 new stop loss @ 12.95

Entry on August 8 at $14.06
Earnings Date 11/10/11 (unconfirmed)
Average Daily Volume = 756 thousand
Listed on August 6, 2011


Carpenter Technology - CRS - close: 45.76 change: -1.55

Stop Loss: 43.45 (stock)
Target(s): 52.25, 57.50
Current Gain/Loss: unopened
Time Frame: 1 to 3 weeks
New Positions: see below

Comments:
08/10 update: Our new trade in CRS is not open. Both the S&P500 and CRS opened lower this morning. I am encouraged that CRS found support near $44 and managed to close above technical support at its 200-dma. However, the market's major indices look vulnerable. Honestly, I don't think anyone has any idea how the market will open tomorrow. Right now, after hours the S&P500 is flat.

We will keep our trade strategy active. If both CRS and the S&P 500 open positive then we'll open bullish positions but investors need to trade really small here.

More conservative traders will want to wait. The next level of support is the $40 area.

Earlier Comments:
I am not using a stop loss on the option position. We do want to keep our position size small to limit our risk. We are listing the August calls but keep in mind these expire in less than two weeks.

If the S&P500 and CRS open positive, then open positions.

Suggested Position: buy CRS stock @ the open

- or -

buy the AUG $50 call (CRS1120H50) current ask $0.95

Entry on August xx at $ xx.xx
Earnings Date 10/26/11 (unconfirmed)
Average Daily Volume = 622 thousand
Listed on August 9, 2011


Changyou.com Ltd. - CYOU - close: 41.27 change: -0.32

Stop Loss: 37.45
Target(s): 43.75, 47.50
Current Gain/Loss: + 4.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
08/10 update: CYOU is holding up pretty well. The stock briefly traded over resistance at its 50-dma before succumbing to the market's final hour drop. I am concerned that CYOU could retest its lows or even the 200-dma if the market accelerates lower. I am not suggesting new positions at this time. However, aggressive traders may want to open positions if CYOU and the market's major indices open positive tomorrow morning.

FYI: CYOU does have options but the spreads are a little too wide.

Current Position: Long CYOU stock @ $39.31

08/08 new stop loss @ 37.45

Entry on August 8 at $39.31
Earnings Date 10/24/11 (unconfirmed)
Average Daily Volume = 417 thousand
Listed on August 6, 2011


Motorola Mobility Holdings, Inc. - MMI - close: 23.09 chg: -0.03

Stop Loss: 20.70
Target(s): 25.75, 27.75
Current Gain/Loss: - 1.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/10 update: MMI was also showing relative strength intraday. The stock hit $24.59 before trimming its gains to close virtually unchanged. Compared to the market's -4% drop today that's definitely strength. Unfortunately today is also a new lower high. MMI could easily retest the $21.50-21.00 area. I am not suggesting new positions at this time. However, aggressive traders may want to open positions if MMI and the market's major indices open positive tomorrow morning.

Earlier Comments:
Our first target is $25.75. Our secondary, more aggressive target is $27.75. We do want to keep our position size small to limit our risk.

- small positions-

Suggested Position: long MMI stock @ 23.34

- or -

Long SEP $25 call (MMI1117I25) Entry @ $1.05

Entry on August 5 at $23.34
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 5.9 million
Listed on August 4, 2011


BEARISH Play Updates

None. No bearish plays currently.