Editor's Note:
The stock market is rolling over and looks poised to test or break down under its 2011 lows.

The tone of trading has definitely turned bearish again and investors need to stay defensive. Keep positions small. Adjust your stop losses.

-James

Current Portfolio:


BULLISH Play Updates

Bristol-Myers Squibb - BMY - close: 31.38 change: +0.26

Stop Loss: 29.90
Target(s): 33.50
Current Gain/Loss: +0.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
10/01 update: BMY displayed some relative strength on Friday and closed up +0.8%. Shares didn't quite get past their 2011 highs set two weeks ago but they're close. While the trend is bullish for BMY I would hesitate to launch new positions. Market weakness could pull BMY back down toward support at the $30.00 level.

current Position: Long BMY stock @ $31.15

- or -

Long 2012 Jan. $30 call (BMY1221A30) Entry $2.26

09/27 new stop loss @ 29.90
09/26 trade opened

chart:

Entry on September 26 at $31.15
Earnings Date 10/26/11 (unconfirmed)
Average Daily Volume = 13.6 million
Listed on September 22, 2011


PowerShares Gold Double Long - DGP - close: 52.52 change: +0.23

Stop Loss: 49.40
Target(s): 59.00, 64.00
Current Gain/Loss: -4.9%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
10/01 update: Gold is still trying to bounce after a painful two-week sell-off. The DGP is hovering near technical support at its exponential 200-dma. Volume has been declining as this ETF moves sideways. I would prefer to launch positions on a dip closer to $50.00 or wait for another bounce off the $50 mark before initiating positions.

- Small Positions -

current Position: long the DGP @ $55.26

09/27 trade opened
09/26 reload this trade. Buy the open tomorrow, new stop 49.40
09/26 Trade opened on gap down at $51.96.
Trade stopped out at $51.45 (-0.9% loss)

chart:

Entry on September 27 at $55.26
Earnings Date --/--/--

1st Attempt:

Entry on September 26 at $51.96
Exit on September 26 at $51.45 (-0.9%)


Average Daily Volume = 1.3 million
Listed on September 24, 2011


Red Hat Inc. - RHT - close: 42.26 change: -1.67

Stop Loss: 41.75
Target(s): 46.50, 48.00
Current Gain/Loss: -1.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
10/01 update: Warning! The action in the stock market and in shares of RHT this past week looks ominous. Early this past week RHT broke out past resistance at its 200-dma. Yet the rally stalled at the $45.00 mark. Now shares are back under the 200-dma again. On a short-term basis the stock has a bullish trend of higher lows. Yet long-term the action this past week looks like a failed rally at an old trendline (see weekly chart).

I am not suggesting new positions at this time. If the correction in RHT continues then we'll see it hit our stop loss at $41.75 soon.

Current Position: Long RHT stock @ $42.72

- or -

Long OCT $45 call (RHT1122J45) Entry $1.15

09/29 new stop loss @ 41.75
09/27 new stop loss @ 41.40

chart:

weekly chart:

Entry on September 26 at $42.72
Earnings Date 12/21/11 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on September 24, 2011


U.S. Oil ETF - USO - close: 30.49 change: -1.48

Stop Loss: 30.45
Target(s): 34.50
Current Gain/Loss: -0.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
10/01 update: Ouch! Crude oil's drop on Friday produced a -4.6% plunge in the USO and erased all of our gains. I am surprised that this trade is still open. The USO hit an intraday low of $30.46 on Friday. Our stop loss is at $30.45. Readers will want to seriously consider an early exit immediately. My concern right now is this sell-off continues over the weekend and the USO could gap open lower on Monday, which would exacerbate our loss (currently -0.7%). I am not suggesting new positions at this time.

current Position: Long the USO @ $30.71

- or -

Long NOV $32 call (USO1119K32) Entry $1.81

09/28 Cautious traders may want to exit early now
09/27 new stop loss @ 30.45
09/26 trade opened at $30.71
09/24 removed conditional entry, adjusted stop to $29.75.

chart:

Entry on September 26 at $30.71
Earnings Date --/--/--
Average Daily Volume = 10.7 million
Listed on September 22, 2011


BEARISH Play Updates

Avon Products Inc. - AVP - close: 19.60 change: -0.23

Stop Loss: 20.25
Target(s): 17.75, 15.50
Current Gain/Loss: +1.8%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
10/01 update: So far so good. AVP tried to rally on Friday but reversed near the $20.00 level. The stock looks poised to breakdown to new lows under $19.50 soon. I would still consider new positions now. Please note our new stop loss at $20.25.

Earlier Comments:
Our targets are $17.75 and $15.50. Readers may want to consider the November puts instead of Octobers. FYI: The Point & Figure chart for AVP is bearish with a $7.00 target.

Current Position: short the stock @ $19.96

- or -

Long OCT $20 PUT (AVP1122V20) Entry $0.79

10/01 new stop loss @ 20.25

chart:

Entry on September 29 at $19.96
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 3.9 million
Listed on September 28, 2011


CSX Corp. - CSX - close: 18.67 change: -0.91

Stop Loss: 20.26
Target(s): 18.10, 16.25
Current Gain/Loss: + 4.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/01 update: The railroad stocks continue to underperform. CSX lost -4.6% on Friday. The stock looks poised to hit our first exit target at $18.10 soon. I would still consider new positions now but you may want to tighten your stop loss if you open new plays.

Earlier Comments:
Our first target is $18.10. Our second, much more aggressive target is $16.25, which could take a few weeks to get there.

Current Position: short CSX stock @ $19.65

- or -

Long OCT $20 PUT (CSX1122V20) Entry $1.20

chart:

Entry on September 28 at $19.65
Earnings Date 10/18/11 (confirmed)
Average Daily Volume = 12.4 million
Listed on September 27, 2011


Phillip Morris Intl. - PM - close: 62.38 change: -1.63

Stop Loss: 64.25
Target(s): 60.25, 57.50
Current Gain/Loss: +2.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
10/01 update: It looks like the sell-off in PM might be accelerating. The stock normally does not move that fast but shares fell -2.5% on Friday. I would still consider new positions now or you could wait for a new failed rally under the $64.00 level. Please note that we're lowering our stop loss down to $64.25. More aggressive traders will want to keep their stop above $65 and its 200-dma instead.

Current Position: short PM stock @ 64.21

- or -

Long NOV $60 PUT (PM1119W60) Entry $1.60

10/01 new stop loss at $64.25

chart:

Entry on September 29 at $64.21
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 10.9 million
Listed on September 28, 2011


CLOSED BULLISH PLAYS

Energy XXI Ltd. - EXXI - close: 21.48 change: -1.09

Stop Loss: 20.85
Target(s): 25.00
Current Gain/Loss: - 4.1%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
10/01 update: It was another volatile day for EXXI. Shares were slowly consolidating lower most of the day. Then late in the afternoon there was a spike down and shares fell -3.5% in less than two minutes only to rebound just as fast. That intraday spike hit our stop loss at $20.85.

I am concerned about the recent trend and a breakdown under $20.00 would be very bearish for EXXI and could signal a drop toward $15.

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

closed Position: Long EXXI stock @ $21.75, exit $20.85 (-4.1%)

- or -

OCT $23 call (EXXI1122J23) Entry $1.15, exit $0.80 (-30.4%)

09/30 stopped out at $20.85
09/27 readers may want to take profits now
EXXI +8.4%, option bid @ $1.85 (+60.8%)

chart:

Entry on September 26 at $21.75
Earnings Date 10/26/11 (unconfirmed)
Average Daily Volume = 983 thousand
Listed on September 22, 2011


Human Genome Sciences Inc. - HGSI - close: 12.69 change: -1.04

Stop Loss: 12.89
Target(s): 16.25, 17.50
Current Gain/Loss: -9.9%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
10/01 update: HGSI suffered a -7.5% plunge due to negative news on an European government reimbursement for patients using one of their drugs. The stock broke down under its 20 and 30-dma and the $13.00 level to hit our stop loss at $12.89.

(Small Positions)

Closed Position: Long HGSI @ $14.31, exit $12.89 (-9.9%)

- or -

OCT $15 call (HGSI1122J15) Entry $0.83, exit $0.31 (- 62.6%)

09/30 stopped out at $12.89

chart:

Entry on September 26 at $14.31
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 4.8 million
Listed on September 24, 2011


iShares Russell 2000 ETF - IWM - close: 64.30 change: -2.03

Stop Loss: 63.40
Target(s): 69.75
Current Gain/Loss: +0.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/01 update: We are throwing in the towel for IWM. It looks like the bulls have lost this fight. The bearish reversal that began a few days ago has pushed IWM back toward its 2011 lows. This small cap ETF looks poised to breakdown. I am suggesting an early exit immediately.

Last week's low was $63.49. Traders may want to open new bearish positions on a drop below $63.40.

closed Position: Long IWM @ $64.25, exit $64.30 (-0.0%)

- or -

NOV $68 call (IWM1119K68) Entry $2.69, exit $2.69 (+0.0%)

10/01 exit immediately
09/29 Planned to sell half at the open.
IWM @ 66.73 (+3.8%)
bid NOV $68 call $3.56 (+32.3%)
09/28 Sell HALF of our positions now!
09/27 readers may want to exit/take profits now
IWM (+5.5%), option bid @ $4.35 (+61.7%)
09/26 new stop loss @ 63.40

chart:

Entry on September 23 at $64.25
Earnings Date --/--/--
Average Daily Volume = 76.7 million
Listed on September 22, 2011