Editor's Note:
Stocks continued to fall into the weekend with no relief on Friday's half day of trading.

Most of our bullish candidates are holding up relatively well but we did see CSL get stopped out on Friday. Readers may want to start taking profits on our bearish AFL trade.

The market's weakness the last few days has been ugly. I find it interesting that the S&P 500 closed at 1158 on Friday. In the Wednesday night new plays section of this newsletter I suggested readers watch the 50% retracement at 1158 or the 1150 level as potential support.

-James

Current Portfolio:


BULLISH Play Updates

AutoNation Inc. - AN - close: 34.06 change: +0.00

Stop Loss: 32.45
Target(s): 39.50
Current Gain/Loss: - 1.1%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
11/26 update: AN is holding up reasonably well. Shares closed unchanged on Friday. I would still consider new bullish positions here at current levels but readers may want to make sure AN and the S&P 500 index both open positive on Monday before opening new positions.

Earlier Comments:
Our multi-week target is $39.50. More conservative traders may want to exit in the $37.75 region instead.

current Position: Long AN stock @ $34.45

- or -

Long Jan $35 call (AN1221A35) Entry $1.95

chart:

Entry on November 22 at $34.45
Earnings Date 02/02/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on November 21, 2011


Hi Tech Pharmacal Co. - HITK - close: 38.00 change: -0.76

Stop Loss: 35.80
Target(s): 44.00
Current Gain/Loss: + 0.4%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
11/26 update: HITK gave up almost -2% on Friday. A little profit taking isn't surprising with shares hitting new highs earlier in the week. Look for a dip near the 10-dma (in the 37.25-37.00 zone) as a new bullish entry point.

Earlier Comments:
The stock could see a short squeeze. The most recent data listed short interest at 14% of the very small 9.9 million-share float. The $40.00 level might be resistance but if HITK does see a short squeeze I am expecting a much bigger move. FYI: The Point & Figure chart for HITK is bullish with a $58.00 target. NOTE: We do not want to hold over the December earnings report so we only have two or three weeks.

current Position: Long HITK stock @ $37.84

- or -

Long DEC $40 call (HITK1117L40) Entry $1.65

chart:

Entry on November 22 at $37.84
Earnings Date 12/08/11 (unconfirmed)
Average Daily Volume = 180 thousand
Listed on November 21, 2011


Kodiak Oil & Gas - KOG - close: 7.74 change: -0.01

Stop Loss: 7.38
Target(s): 9.75
Current Gain/Loss: + 3.0%
Time Frame: two to three months
New Positions: see below

Comments:
11/26 update: The lack of profit taking in KOG on Friday is a show of strength. However, I am still concerned that shares look overbought here. The last few days the trading has turned more neutral with a pattern of higher lows and lower highs.

I am not suggesting new positions at this time. More conservative traders may want to exit now to lock in a gain or consider raising your stop loss closer to the $7.50 level. If we do happen to get stopped out (current stop is $7.38) I would look for a dip back toward $7.00 as a new entry point to consider bullish positions again.

Earlier Comments:
Our multi-month target is $9.75. FYI: The Point & Figure chart for KOG is bullish with a $13.75 target. KOG is a potential takeover target.

current Position: Long the stock @ 7.51

- or -

Long 2012 MAR $7.50 call (KOG1217C7.5) Entry $1.25

11/23 new stop loss @ 7.38
11/15 gap down at 7.41 and hit 7.21 before bouncing.
11/14 new stop loss @ 7.20
11/14 KOG announces plans to sell an additional 37.5 million shares of new stock
11/08 trade opened at $7.51.

chart:

Entry on November 08 at $ 7.51
Earnings Date 03/05/12 (unconfirmed)
Average Daily Volume = 6.6 million
Listed on November 5, 2011


Blue Nile Inc. - NILE - close: 33.51 change: -0.25

Stop Loss: 31.70
Target(s): 39.75
Current Gain/Loss: unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Comments:
11/26 update: Early reports are suggesting that Black Friday sales volume has been a lot stronger than retailers or analysts were expecting. That could bode well for retail stocks on Monday. Of course there is also the "Cyber Monday" phenomenon. NILE could get a boost if Cyber Monday gets a lot of good press.

The high on Friday was $34.52. We're still waiting. I am suggesting we open small bullish positions with a trigger at $34.60. If triggered we'll use a stop loss at $31.70. Readers should consider this an aggressive, higher-risk trade. If triggered our target is $39.75. More conservative traders may want to exit at the 50 or 100-dma instead.

Trigger @ $34.60 (small positions)

Suggested Position: buy NILE stock @ 34.60

- or -

buy the 2012Jan $35 call (NILE1221A35)

chart:

Entry on November xx at $ xx.xx
Earnings Date 02/09/12 (unconfirmed)
Average Daily Volume = 491 thousand
Listed on November 22, 2011


Stamps.com - STMP - close: 25.39 change: -0.50

Stop Loss: 24.75
Target(s): 32.50
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
11/26 update: Our STMP is not open yet. Both the stock and the S&P 500 opened lower on Friday morning so no entry. Shares did rally to an intraday high of $26.77 on Friday before reversing into a -1.9% loss. The relative weakness is a bit worrisome but shares found support near $25.00 and its 50-dma.

The short-term trend of lower highs is also a bit troubling. I am suggesting that if we do eventually open positions in STMP that we keep those positions small to limit our risk.

Nimble traders may want to be prepare to open bearish positions if we see STMP breakdown under $25.00. I haven't given up yet on a big bounce higher. I am suggesting we try again. The plan is to open small bullish positions but only if both STMP and the S&P 500 index open position on Monday morning. Readers may want to consider an alternative entry strategy like a trigger to buy STMP at $27.00 instead. (FYI: if the S&P500 opens flat then we'll go off of STMP's open alone).

NOTE: STMP could see a short squeeze if the market bounces. The most recent data listed short interest at more than 10% of the very small 12.3 million-share float.

*See Entry Details Above*

Suggested Position: buy STMP stock @ the open

- or -

buy the Feb $30 call (STMP1218C30)

11/26 No change in our strategy. Trade not open yet. Readers may want to consider alternatives listed in tonight's update.
11/23 STMP gapped down again. Trade not open.
11/22 trade did not open. STMP opened lower by one cent.
11/21 trade not open. try again. Move stop loss to $24.75

chart:

Entry on November xx at $ xx.xx
Earnings Date 02/09/12 (unconfirmed)
Average Daily Volume = 646 thousand
Listed on November 19, 2011


BEARISH Play Updates

AFLAC Inc. - AFL - close: 39.05 change: -0.44

Stop Loss: 42.05
Target(s): 38.00
Current Gain/Loss: + 7.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
11/26 update: Readers may want to start taking profits now and scaling out of our bearish positions. Although I will note that Friday's performance is definitely bearish with a failed rally at resistance near $40.00 and its 50 and 100-dma. We are lowering our stop loss down to $42.05. I am raising our exit target to $38.00.

I am not suggesting new positions at this time.

Earlier Comments:
The plan was to keep our position size small to limit risk.

(Small Positions)

current Position: Short AFL stock @ 42.12

- or -

Long DEC $40 PUT (AFL1117x40) Entry $1.52

11/26 new stop loss @ 42.05, new exit target at $38.00
More conservative traders may want to take profits now
11/23 new stop loss @ 43.55
11/21 new stop loss @ 44.05

chart:

Entry on November 18 at $42.12
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 4.3 million
Listed on November 17, 2011


Forest Labs Inc. - FRX - close: 28.63 change: -0.14

Stop Loss: 30.55
Target(s): 25.25
Current Gain/Loss: + 1.1%
Time Frame: 9 to 12 weeks
New Positions: see below

Comments:
11/26 update: FRX sank to new relative lows on Friday at $28.56 but I am still concerned that shares look a little oversold and due for a bounce. We are not suggesting new positions at this time.

Earlier Comments:
Our multi-week target is $25.25. FRX doesn't move very fast so we have to give it some time. FYI: The Point & Figure chart for FRX is bearish with a $19 target.

NOTE: You may want to trade the options instead of the stock to limit risk. FRX has about 6 or 7 days worth of short interest (approximately 9% of the float). Looking at the chart you can see the super sharp bounces caused by short covering.

current Position: short FRX stock @ 28.95

- or -

Long FEB $30 put (FRX1218N30) Entry $2.25

chart:

Entry on November 21 at $28.95
Earnings Date 01/17/12 (unconfirmed)
Average Daily Volume = 2.5 million
Listed on November 19, 2011


CLOSED BULLISH PLAYS

Carlisle Companies - CSL - close: 39.73 change: -0.20

Stop Loss: 39.85
Target(s): 49.50
Current Gain/Loss: - 4.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
11/26 update: Shares of CSL gapped open lower on Friday morning at $39.75. That's 10 cents under our stop loss. The trade was closed immediately. The breakdown under $40.00 is bearish but shares are still holding above the 100-dma for now. Unfortunately, looking at the weekly chart the recent highs look like a new lower high in CSL's big picture.

Earlier Comments:
We want to keep our position size small to limit our risk on this aggressive entry point.

(small positions)

closed Position: Long CSL stock @ $41.75, exit 39.75 (-4.7%)

11/25 stopped out on CSL's gap open lower at $39.75
11/21 trade opened at $41.75
11/19 moved our trigger down to $41.75
11/17 adjusted entry point to trigger @ 42.25, stop loss to $39.85
11/16 adjusted entry point strategy to use a trigger at $45.05

chart:

Entry on November 21 at $41.75
Earnings Date 02/07/12 (unconfirmed)
Average Daily Volume = 327 thousand
Listed on November 14, 2011