Editor's Note:
Our new trading candidates SAI and SWHC have both been opened.

Readers have a decision to make about PETS.

-James

Current Portfolio:


BULLISH Play Updates

Ball Corp. - BLL - close: 37.14 change: -0.50

Stop Loss: 39.00
Target(s): 36.25
Current Gain/Loss: + 1.6%
Time Frame: up to the earnings report (01/26)
New Positions: see below

Comments:
01/17 update: Hmm.... BLL underperformed the market on Tuesday. Shares failed at resistance near $38.00 and closed near short-term support at $37.00 and its simple 10-dma. I am not suggesting new positions at this time. We want to exit prior to the earnings report on January 26th. More conservative traders might want to raise their stops toward the $36.50 level or closer to the 10-dma.

Earlier Comments:
Our target is $39.00. More conservative traders may want to take profits early near $38.00 instead. FYI: The Point & Figure chart for BLL is currently bearish but a rally past $37.00 would produce a brand new buy signal.

current Position: Long BLL stock @ 36.55

- or -

Long Feb $35 call (BLL1221A35) entry 2.30

01/12/12 new stop loss @ 36.25
01/11/12 new stop loss @ 35.75
01/06/12 trade triggered at $36.55
01/05/12 adjusted stop loss to $35.35, plan to exit prior to earnings

Entry on January 06 at $36.55
Earnings Date 01/26/12 (confirmed)
Average Daily Volume = 985 thousand
Listed on January 03, 2011


Cisco Systems Inc. - CSCO - close: 19.31 change: +0.25

Stop Loss: 18.60
Target(s): 20.75
Current Gain/Loss: unopened
Time Frame: up to CSCO's February earnings
New Positions: Yes, see below

Comments:
01/17 update: CSCO is getting closer to our entry point. Shares rallied +1.2% today and closed at new relative highs. Traders could actually open positions now instead of waiting for our trigger at $19.35.

Earlier Comments:
We want to ride the stock up to its early February earnings report but exit prior to the announcement. FYI: The Point & Figure chart for CSCO is bullish with a long-term $27.00 target.

Trigger @ 19.35

Suggested Position: buy CSCO stock @ 19.35

- or -

buy the Feb $20 call (CSCO1218B20)

Entry on January xx at $ xx.xx
Earnings Date 02/08/12 (confirmed)
Average Daily Volume = 39.0 million
Listed on January 12, 2011


Harley-Davidson - HOG - close: 42.03 change: +1.28

Stop Loss: 39.40
Target(s): 44.50
Current Gain/Loss: + 2.6%
Time Frame: up to the earnings report (late January)
New Positions: see below

Comments:
01/17 update: Uh-oh! HOG delivered a very disappointing session. The stock popped higher and hit $42.82 before fading to a -1.4% decline. That doesn't bode well and might signal a correction back toward what should be support near $40.00. I am not suggesting new positions at this time.

HOG is tentatively scheduled to report earnings in late January and we do not want to hold over the announcement.

current Position: long HOG stock @ 40.35

- or -

Long Feb $40 call (HOG1221B40) entry $2.06

01/14/12 new stop loss @ 39.40. There is potential resistance in the $43.00-43.25 area.

Entry on January 10 at $40.35
Earnings Date 01/24/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on January 05, 2011


PetMed Express Inc. - PETS - close: 10.96 change: +0.14

Stop Loss: 10.45
Target(s): 11.90
Current Gain/Loss: + 3.4%
Time Frame: up to the January earnings report.
New Positions: see below

Comments:
01/17 update: It's decision time for traders here. PETS displayed relative strength with a +1.2% gain. Yet the stock stalled right underneath resistance near $11.00. There could be additional resistance at the simple and exponential 200-dma at $11.10 and $11.21. You have to decide do you exit now? Or do you hold on and expect a breakout past resistance.

The premise of our trade was to catch a short squeeze in PETS. That's why I am suggesting we hold on but we will raise our stop loss up to $10.45. I am not suggesting new positions at this time.

We do want to exit prior to the January 23rd earnings announcement.

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 26% of the very small 19.8 million-share float.

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

01/17/12 new stop loss @ 10.45, Readers have a decision to make with PETS near resistance at $11.00. Do you exit now or hold on?
01/14/12 new stop loss @ 10.29
01/11/12 new stop loss @ 10.20
01/10/12 new stop loss @ 10.10
01/04/12 readers may want to exit early. PETS is not cooperating and the action looks bearish.
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 01/23/12 (confirmed)
Average Daily Volume = 231 thousand
Listed on December 27, 2011


SAIC, Inc. - SAI - close: 13.04 change: +0.02

Stop Loss: 12.74
Target(s): 14.50
Current Gain/Loss: - 0.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/17 update: Our new trade on SAI is open. Shares rallied to $13.25 this morning before reversing lower. That's a big disappointing. Once again I would want to see both SAI and the S&P 500 both open positive before considering new bullish positions.

Our target is $14.50 but I have to warn you that I see potential resistance near $13.50, and the 150-dma, the exponential 200-dma and the simple 200-dma.

(Small Positions)

Suggested Position: long SAI stock @ $13.10

- or -

Long Feb $12 call (SAI1218B12) Entry $1.30

Entry on January 17 at $13.10
Earnings Date 03/22/12 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on January 14, 2011


Starbucks Corp. - SBUX - close: 47.71 change: +0.35

Stop Loss: 45.75
Target(s): 49.75
Current Gain/Loss: + 3.5%
Time Frame: up to the January earnings report.
New Positions: see below

Comments:
01/17 update: SBUX continues to set new highs. Shares rallied toward the $48.00 level this morning. Readers can look for short-term support at the rising 10-dma. I am inching our stop loss up to $45.95.

Shares held up pretty well considering news out this morning that coffee production in Colombia, a major producer of coffee beans, saw its coffee been crop shrink to its lowest level since 1976. A shortage of coffee could raise input prices on SBUX's products and thus squeeze margins.

I am not suggesting new positions at this time.

current Position: long SBUX stock @ $46.08

- or -

Long FEB $47 call (SBUX1218B47) entry $1.56

01/17/12 new stop loss @ 45.95
01/14/12 new stop loss @ 45.75, plan to exit prior to earnings
01/12/12 new stop loss @ 44.90
01/11/12 new stop loss @ 44.60
01/07/12 new stop loss @ 43.95

Entry on December 29 at $46.08
Earnings Date 01/26/12 (confirmed)
Average Daily Volume = 5.1 million
Listed on December 28, 2011


Smith & Wesson Holding Corp. - SWHC - close: 4.69 change: -0.11

Stop Loss: 4.45
Target(s): 5.65 or 6.40
Current Gain/Loss: - 2.9%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/17 update: Our aggressive trade on SWHC is not off to a very good start. Shares opened higher at $4.83 so the trade is open but the stock reversed at $4.89 and closed down -2.2%. The relative weakness is a bit troubling. Readers may want to wait for a dip or a bounce in the $4.55-4.50 area before considering new positions.

Earlier Comments:
I do consider this a very aggressive trade and we want to keep our position size small. The $5.00 level could be resistance but we're going to aim higher. I am setting two different targets depending on your risk tolerance. I'd aim for $5.65 or $6.40. FYI: The Point & Figure chart for SWHC is bullish with a long-term $9.50 target.

(Small Positions)

Suggested Position: long SWHC stock @ $4.83

Entry on January 17 at $4.83
Earnings Date 03/12/12 (unconfirmed)
Average Daily Volume = 962 thousand
Listed on January 14, 2011


Textainer Group Holdings - TGH - close: 29.79 change: +0.27

Stop Loss: 28.95
Target(s): 34.00
Current Gain/Loss: - 2.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/17 update: TGH spent Tuesday's session consolidating sideways but it did close near its high for the session. I remain cautious. We'll wait for another rally past $30.60 before considering new positions.

Earlier Comments:
A breakout could spark some short covering. The most recent data listed short interest at 11% of the very small 12.8 million share float. That raises the risk of a short squeeze. Plus, TGH should appeal to the high-yield crowd since shares sport a 4.7% yield. NOTE: TGH does have options but the spreads are a little wide.

current Position: Long TGH stock @ 30.60

01/13/12 TGH hit our trigger at $30.60 and reversed in less than one second. I am suggesting caution here.

Entry on January 13 at $30.60
Earnings Date 02/09/12 (unconfirmed)
Average Daily Volume = 172 thousand
Listed on January 11, 2011


Vertex Pharmaceuticals - VRTX - close: 36.51 change: -0.30

Stop Loss: 33.95
Target(s): 39.50
Current Gain/Loss: unopened
Time Frame: up to the February earnings
New Positions: Yes, see below

Comments:
01/17 update: VRTX underperformed the market today with a -0.8% decline. Shares are nearing short-term support at $36.00.

Earlier Comments:
I am suggesting we open bullish positions at $35.05 and use a stop loss at $33.95. I would keep our position size small. We have less than three full weeks before we plan to exit to avoid VRTX's early February earnings report.

Trigger @ 35.05 (small positions)

Suggested Position: buy VRTX stock @ 35.05

- or -

buy the Feb $35 call (VRTX1218B35)

01/14/12 adjusted strategy: trigger @ 35.05, stop loss 33.95.

Entry on January xx at $ xx.xx
Earnings Date 02/02/12 (unconfirmed)
Average Daily Volume = 3.0 million
Listed on January 10, 2011


BEARISH Play Updates

Target Corp. - TGT - close: 49.88 change: +0.06

Stop Loss: 50.50
Target(s): 46.05
Current Gain/Loss: - 3.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/17 update: TGT is still hovering near resistance at the $50.00 level. I remain bearish on the stock with TGT below $50 and its simple 200-dma and I would still consider new positions now.

(small positions)

current Position: short TGT stock @ 48.00

- or -

Long Feb $50 PUT (TGT1218B50) entry $2.65

01/05/12 new stop loss @ 50.50
01/05/12 Our trade was opened on the gap down at $48.00 instead of our trigger at $49.45 thanks to TGT's missed same-store sales numbers and an earnings warning.

Entry on January 05 at $48.00
Earnings Date 02/22/12 (unconfirmed)
Average Daily Volume = 4.6 million
Listed on January 04, 2011