Editor's Note:
The U.S. stock market delivered widespread gains to open the first day of trading in 2012.

We had both the PETS and TRN trades get triggered. PCAR was stopped out.

-James

Current Portfolio:


BULLISH Play Updates

GlaxoSmithKline - GSK - close: 46.28 change: +0.65

Stop Loss: 44.40
Target(s): 49.25
Current Gain/Loss: + 1.1%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/03 update: It was a bullish day for GSK. The stock has broken out past resistance near $46.00 to close at new multi-year highs. Traders may want to use this as a new entry point.

Our multi-week target is $49.25 (GSK doesn't move very fast).
FYI: The Point & Figure chart for GSK is bullish with a $56 target.

current Position: long GSK stock @ 45.75

- or -

Long Feb $46 call (GSK1218B46) entry $1.05

Entry on December 23 at $45.75
Earnings Date --/--/?? (unconfirmed)
Average Daily Volume = 2.5 million
Listed on December 22, 2011


Lam Research - LRCX - close: 36.75 change: -0.27

Stop Loss: 35.75
Target(s): 39.75
Current Gain/Loss: - 0.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/03 update: Warning! I am urging caution here on LRCX. Today's move looks bearish with a failed rally at this morning's high. Traders need to decide how much pain they are willing to endure. Are you willing to hold on while LRCX dips back toward what appears to be strong support near $35.00? Or would you rather get stopped out sooner and reconsider jumping back in if LRCX bounces off the $35.00 level down the road?

We are raising our stop loss up to $35.75. More conservative traders may just want to exit now. I am not suggesting new positions at this time.

(small positions)

current Position: Long LRCX stock @ $37.02

- or -

Long 2012Jan $38 call (LRCX1221A38) entry $0.60

01/03/12 new stop loss @ 35.75
12/23/11 trade opened.
12/22/11 trade not open yet. try again.

Entry on December 23 at $37.02
Earnings Date 01/25/12 (unconfirmed)
Average Daily Volume = 4.0 million
Listed on December 21, 2011


PetMed Express Inc. - PETS - close: 10.38 change: +0.10

Stop Loss: 9.90
Target(s): 11.90
Current Gain/Loss: - 1.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/03 update: It was a volatile day for PETS. The stock gapped open higher at $10.59, spiked toward $11.00, only to reverse and barely close positive with an eight-cent gain. We had a trigger to open bullish positions at $10.45 so the play was opened this morning (at 10.59). I am concerned that today's move is a failed rally and bearish reversal pattern. I am not suggesting new positions at this time and more conservative traders may want to raise their stops tonight!

Earlier Comments:
A breakout could spark a short squeeze. The stock could see a short squeeze due to the high amount of short interest. The most recent data listed short interest is almost 29% of the very small 19.8 million-share float.

PETS has potential technical resistance at the simple 150-dma at $10.35. I would keep our position size small to limit our risk. The simple and exponential 200-dma could be significant overhead resistance and PETS struggled with resistance near $11.50 in the past.

NOTE: I would prefer to trade the stock over the options but we're listing the options as an alternative.

(small positions)

current Position: Long PETS stock @ $10.59

- or -

Long Feb $10 call (PETS1218B10) entry $0.74

01/03/12 PETS gapped higher at $10.59, which is above our trigger at $10.45.

Entry on January 03 at $10.59
Earnings Date 01/24/12 (unconfirmed)
Average Daily Volume = 231 thousand
Listed on December 27, 2011


Starbucks Corp. - SBUX - close: 45.29 change: -0.73

Stop Loss: 43.75
Target(s): 49.75
Current Gain/Loss: - 1.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/03 update: Last year's winners like SBUX and MCD were underperformers today. I cautioned readers this past weekend that SBUX could see a pull back. What concerns me is that today's drop (-1.5%) is technically a bearish engulfing candlestick (reversal) pattern.

I would wait for a bounce off $45.00 or $44.00 before considering new bullish positions.

NOTE: In the news today there were several headlines regarding SBUX's plans to raise prices in several regions due to rising commodity costs. The Northeast and most of the Southern states would all see a rise (about 1%). According to an AP article the price for a "tall" would rise about 10 cents.

Earlier Comments:
Broken resistance near $45.00 should be new support. The same can be said for the $44 level. Our multi-week target is $49.75. FYI: The Point & Figure chart for SBUX is bullish with a long-term $75 target.

current Position: long SBUX stock @ $46.08

- or -

Long FEB $47 call (SBUX1218B47) entry $1.56

Entry on December 29 at $46.08
Earnings Date 01/25/12 (unconfirmed)
Average Daily Volume = 5.1 million
Listed on December 28, 2011


Trinity Industries - TRN - close: 30.47 change: +0.41

Stop Loss: 28.75
Target(s): 34.75
Current Gain/Loss: - 1.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/03 update: We need to be cautious here with TRN. Our trade is open but the stock saw a sharp pull back from its intraday highs. The plan was to open bullish positions at $30.85 but TRN gapped open higher at $31.08. The rally reversed at $31.84 but shares still closed up +1.3%.

At this time I would look for TRN to fill the gap. That means look for shares to dip into the $30.20-30.00 zone and either buy the dip or buy a bounce out of this region. More conservative traders might want to raise their stop loss.

FYI: The Point & Figure chart has turned bullish with today's intraday move and is pointing to a $40 target.

current Position: Long TRN stock @ $31.08

- or -

Long Jan $30 call (TRN1221A30) entry $2.14

01/03/12 TRN gapped open higher at $31.08, which is above our trigger at $30.85
12/28/11 adjusted entry point strategy to use a trigger at $30.85

Entry on January 03 at $31.08
Earnings Date 02/15/12 (unconfirmed)
Average Daily Volume = 633 thousand
Listed on December 24, 2011


BEARISH Play Updates

EZchip Semiconductor - EZCH - close: 29.40 change: +1.07

Stop Loss: 30.10
Target(s): 25.50
Current Gain/Loss: - 3.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/03 update: The stock market's widespread gains produced a strong bounce in EZCH (+3.7%). The close above short-term resistance at $29.00 is a bit worrisome but EZCH still has additional resistance near $30.00. I am not suggesting new positions at this time. Let's wait for the stock to roll over again.

Earlier Comments:
We want to keep our position size small to limit our risk. The $26.60 level has been support in the past but we're aiming for $25.50. More aggressive trades may want to aim for $23 over the next several weeks. FYI: The Point & Figure chart for EZCH is bearish with a $24 target.

Suggested Position: short EZCH @ 28.38

- or -

Long Jan $28 PUT (EZCH1221M28) entry $0.95

Entry on December 29 at $28.38
Earnings Date 02/08/12 (unconfirmed)
Average Daily Volume = 280 thousand
Listed on December 28, 2011


Kohl's Corp. - KSS - close: 48.03 change: -1.32

Stop Loss: 50.60
Target(s): 45.50
Current Gain/Loss: + 3.1%
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
01/03 update: Several of the retail names underperformed on Tuesday. KSS was one of them with a -2.6% plunge. The stock stalled right at short-term support near $48.00 hit last month. The relative weakness is encouraging but I would not open new positions with the stock sitting on support.

FYI: The Point & Figure chart for KSS is bearish with a $41.00 target.

current Position: short KSS stock @ 49.60

- or -

Long 2012Jan $50 PUT (KSS1221M50) entry $1.60

Entry on December 30 at $49.60
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 4.4 million
Listed on December 29, 2011


Netgear Inc. - NTGR - close: 35.51 change: +1.94

Stop Loss: 34.60
Target(s): 30.25
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
01/03 update: I could not find any news to explain NTGR's relative strength today. The stock surged +5.7% to close above both its 200-dma and 50-dma. Today's rally also break the three-week trend of lower highs. If shares post another gain tomorrow we will most likely drop NTGR as a bearish candidate. Currently we have at trigger to open bearish positions at $33.20.

Trigger @ 33.20

Suggested Position: short NTGR stock @ 33.20

- or -

buy the Jan $32 PUT (NTGR1221M32)

Entry on December xx at $ xx.xx
Earnings Date 02/09/12 (unconfirmed)
Average Daily Volume = 317 thousand
Listed on December 31, 2011


CLOSED BEARISH PLAYS

PACCAR Inc. - PCAR - close: 38.80 change: +1.33

Stop Loss: 38.25
Target(s): 32.50
Current Gain/Loss: + 1.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/03 update: The stock market's widespread gains on Tuesday morning was too much for shorts in PCAR. The stock was even downgraded this morning but shares still gapped open higher above resistance near $38.00. We had a stop loss at $38.25 but PCAR gapped higher at $38.57 immediately closing our trade.

NOTE: Our 2012Jan $36 puts are now $35.30 puts thanks to the recent dividend.

(Small Positions)

closed Position: short PCAR stock @ $39.11, exit 38.57 (+1.3%)

- or -

2012Jan $35.30 PUT (PCAR1221M35.3) Entry $0.80 exit 0.05 (-93.7%)

01/03/12 stopped out on PCAR's gap open higher at $38.57
12/22/11 readers may want to exit early now
12/19/11 new stop loss @ 38.25
12/17/11 new stop loss @ 39.05
12/15/11 thanks to a 70-cent dividend our 2012Jan $36 puts are now 35.30 puts.

chart:

Entry on December 09 at $39.11
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on December 08, 2011