Editor's Note:
Shares of CSCO outperformed the major indices as it rallied toward the closing bell and posted a +1.1% gain. The company delivered better than expected profits and revenue numbers yet the after hours rally has faded. It was the newsletter's plan to exit at the closing bell tonight.

Current Portfolio:


BULLISH Play Updates

Autodesk, Inc. - ADSK - close: 38.36 change: +0.02

Stop Loss: 36.50
Target(s): 39.90
Current Gain/Loss: + 5.1%
Time Frame: up to the late Feb. earnings report
New Positions: see below

Comments:
02/08 update: The early morning rally in ADSK ran out of steam and shares drifted back toward unchanged on the session. I am raising our stop loss to $36.50 (breakeven). I am not suggesting new positions at this time.

Our target is $39.90 but more aggressive traders could definitely aim higher. We do not want to hold over the late February earnings report. FYI: The Point & Figure chart for ADSK is bullish with a long-term $49.00 target.

current Position: Long ADSK stock @ 36.50

- or -

Long Feb $37 call (ADSK1218B37) Entry $1.08

02/08/12 new stop loss @ 36.50
02/07/12 new stop loss @ 36.25
02/02/12 new stop loss @ 35.75
02/01/12 new stop loss @ 35.25
01/26/12 the action today looks like a potential top or bearish reversal. Be careful!

Entry on January 26 at $36.50
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 2.5 million
Listed on January 24, 2011


Discover Financial Services - DFS - close: 28.78 change: -0.16

Stop Loss: 27.25
Target(s): 31.50
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
02/08 update: DFS did produce a dip just as expected. Yet the dip was not low enough. DFS found support at $28.41 and bounced. I'm not convinced the pull back is over. We will adjust our buy-the-dip entry point to $28.15. I am moving our stop loss to $27.25. Our multi-week target is $31.50.

buy a dip trigger at $28.15

Suggested Position: buy DFS stock @ (entry trigger)

- or -

buy the MAR $28 call (DFS1217C28)

02/08/12 new trigger @ 28.15, stop loss 27.25
02/07/12 still not open. Adjust strategy to buy a dip at $28.30, stop loss at $27.40
02/06/12 not open yet. try again.

Entry on February xx at $ xx.xx
Earnings Date 03/22/12 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on February 04, 2011


Emulex Corp. - ELX - close: 10.99 change: -0.02

Stop Loss: 10.59
Target(s): 12.10
Current Gain/Loss: unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Comments:
02/08 update: ELX spent the session consolidating sideways. I do not see any changes from my prior comments.

Shares of ELX are without a doubt overbought given its surge from $7.00 in early January to $11.00. Yet the momentum doesn't seem to be slowing. I do consider this an aggressive trade and we want to keep our position size small to limit our risk.

I am suggesting a trigger to open positions at $11.15 with a stop loss at $10.59. Our exit target is $12.10. The Point & Figure chart for ELX is bullish with a long-term $19.50 target.

Trigger @ $11.15 (small positions)

Suggested Position: buy ELX stock @ (trigger)

- or -

buy the Mar $11 call (ELX1217C11)

Entry on February xx at $ xx.xx
Earnings Date 04/25/12 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on February 07, 2011


Eaton Corp. - ETN - close: 51.65 change: +0.36

Stop Loss: 48.40
Target(s): 54.75
Current Gain/Loss: + 2.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/08 update: ETN drifted higher all day long. The trend is up but I am not suggesting new positions at this time.

FYI: The Point & Figure chart for ETN is bullish with a long-term $67 target.

current Position: Long ETN stock @ $50.25

- or -

Long FEB $50 call (ETN1218B50) Entry $1.00

- or -

Long MAR $50 call (ETN1221C50) Entry $1.70

02/06/12 new stop loss @ 48.40

Entry on February 03 at $50.25
Earnings Date 01/26/12
Average Daily Volume = 3.7 million
Listed on January 28, 2011


Flextronics Intl. Ltd. - FLEX - close: 6.94 change: -0.03

Stop Loss: 6.80
Target(s): 8.00
Current Gain/Loss: - 1.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/08 update: Today looked a lot like the second half of Tuesday. Shares churned sideways in a narrow range under the $7.00 level. More conservative traders may want to inch up their stop toward $6.85 or $6.88. I am not suggesting new positions at this time.

Our multi-week target is $8.00. FYI: The Point & Figure chart for FLEX is bullish with a $9.00 target.

(small positions)

current Position: Long FLEX stock @ $7.03

- or -

Long Feb $7.00 call (FLEX1218B7) Entry $0.22

02/04/12 new stop loss @ 6.80
02/03/12 trade opened. FLEX opened at $7.03
02/02/12 not open yet. try again.

Entry on February 03 at $7.03
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 6.0 million
Listed on February 01, 2011


Gulfport Energy - GPOR - close: 36.16 change: +0.05

Stop Loss: 33.75
Target(s): 37.00
Current Gain/Loss: + 5.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/08 update: GPOR managed to eke out a small gain after traders bought the dip near $35.00 this morning. Readers may want to start taking profits now. Our exit target is $37.00.

Current Position: long GPOR stock @ 34.15

- or -

Long FEB $35 call (GPOR1218B35) Entry $1.25

02/06/12 new stop loss @ 33.75
02/02/12 new stop loss @ 31.85
01/26/12 Trade finally opened. GPOR @ 34.15
01/25/12 trade did not open. try again.
01/24/12 trade did not open. try again.

Entry on January 26 at $34.15
Earnings Date 03/12/12 (unconfirmed)
Average Daily Volume = 522 thousand
Listed on January 23, 2011


J.P.Morgan Chase & Co - JPM - close: 38.30 change: +0.43

Stop Loss: 36.90
Target(s): 42.50
Current Gain/Loss: + 1.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/08 update: Banking stocks were showing some relative strength today. JPM helped lead the charge with a +1.1% gain. The close back above $38.00 is positive but I am not suggesting new positions at this time.

Earlier Comments:
More conservative traders may want to wait for JPM to actually close over $38.00 before launching new positions. Our multi-week target is $42.50. FYI: The Point & Figure chart for JPM is bullish with a long-term $56 target.

Current Position: Long JPM stock @ $38.05

- or -

Long Feb $38 call (JPM1218B38) Entry $1.00

- or -

Long Mar $38 call (JPM1217C38) Entry $1.50

02/04/12 new stop loss @ 36.90
02/02/12 new stop loss @ 36.45
01/26/12 triggered at $38.05
01/24/12 still not open. adjust strategy to use a trigger @ 38.05
01/23/12 trade not open yet, S&P 500 opened negative. Try again.

Entry on January 26 at $38.05
Earnings Date 01/13/12
Average Daily Volume = 35.2 million
Listed on January 21, 2011


Marvell Technology - MRVL - close: 16.43 change: +0.15

Stop Loss: 15.40
Target(s): 19.00
Current Gain/Loss: + 0.1%
Time Frame: exit ahead of earnings on Feb. 23rd.
New Positions: see below

Comments:
02/08 update: The early morning rally in MRVL faded but shares still outperformed the major indices with a +0.9% gain. More conservative traders may want to raise their stops closer to the $15.75-16.00 area.

Earlier Comments:
Let's keep our position size small. Keep an eye on the $18.00 area as potential overhead resistance. FYI: The Point & Figure chart for MRVL is bullish with a $21.00 target.

(small positions)

current Position: Long MRVL stock @ 16.40

- or -

Long Feb $17 call (MRVL1218B17) Entry $0.25

- or -

Long May $17 call (MRVL1219E17) Entry $1.06

02/02/12 triggered at $16.40
01/28/12 adjusting our entry trigger to $16.40
01/27/12 MRVL issued an earnings warning

Entry on February 02 at $16.40
Earnings Date 03/23/12 (confirmed)
Average Daily Volume = 14.1 million
Listed on January 25, 2011


Morgan Stanley - MS - close: 20.44 change: +0.18

Stop Loss: 19.25
Target(s): 21.25
Current Gain/Loss: + 6.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/08 update: MS continues to churn sideways in the $20.00-20.50 zone. The stock floated to the top of this range with a +0.8% gain today. More conservative traders may want to exit immediately to lock in gains.

Please note that I am adjusting our exit target to $21.25. I am raising our stop loss to $19.25.

I am not suggesting new positions at this time. Our multi-week target $21.90 but more aggressive traders can aim for the $24.00 area instead.

current Position: Long MS stock @ $19.19

- or -

Long FEB $20 call (MS1218B20) Entry $0.35

- or -

Long APR $20 call (MS1221D20) Entry $1.16

02/08/12 new stop loss @ 19.25 . adjusted exit target to $21.25
02/06/12 readers may want to take profits on the Feb. 20 calls (+154%)
02/04/12 new stop loss @ 18.65
02/02/12 new stop loss @ 18.25
02/01/12 Trade opened on MS' gap open higher at $19.19, above our trigger of $19.05

Entry on February 01 at $19.19
Earnings Date 04/23/12 (unconfirmed)
Average Daily Volume = 25.5 million
Listed on January 28, 2011


Smith & Wesson Holding Corp. - SWHC - close: 5.25 change: -0.00

Stop Loss: 4.90
Target(s): 5.60
Current Gain/Loss: + 8.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/08 update: Hmm... both SWHC and RGR were down sharply this morning. Both have been strong performers in recent weeks. I couldn't find any specific news out to account for the volatility although SWHC did file its late 8-K form with the SEC. Looks like bulls took the opportunity to buy the dip and SWHC bounced back to unchanged on the session. RGR was not so lucky.

The intraday low today was $4.93 so our trade is still open. I am not suggesting new positions at this time. More conservative traders may want to take profits now.

Earlier Comments:
I do consider this a very aggressive trade and we want to keep our position size small. 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

02/08/12 big intraday dip and bounce, low was $4.93
02/04/12 new stop loss @ 4.90, adjust exit to $5.60
02/02/12 new stop loss @ 4.75
01/28/12 new stop loss @ 4.65
01/24/12 new stop loss @ 4.55

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: 31.72 change: -0.04

Stop Loss: 30.95
Target(s): 34.00
Current Gain/Loss: + 3.6%
Time Frame: exit prior to earnings on Feb. 14th
New Positions: see below

Comments:
02/08 update: Today was a non-event for TGH. The stock chopped sideways to close almost unchanged on the session. I remain cautious here. We plan to exit prior to earnings on Feb. 14th. I am not suggesting new positions at this time.

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

02/07/12 new stop loss @ 30.95
02/04/12 new stop loss @ 30.80, exit prior to earnings (Feb 14th)
01/28/12 new stop loss @ 30.60
01/25/12 new stop loss @ 29.90
01/19/12 new stop loss @ 29.40
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 02/14/12 (confirmed)
Average Daily Volume = 172 thousand
Listed on January 11, 2011


Metals & Mining ETF - XME - close: 55.47 change: -0.26

Stop Loss: 53.95
Target(s): 64.75
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
02/08 update: Our XME trade is not open yet. This ETF opened higher but the S&P 500 did not. XME is nearing short-term support at its trend of higher lows. More aggressive traders may want to go ahead and launch bullish positions now no matter what the market is doing. I am suggesting we try again and only open positions if both the XME and the S&P 500 open positive tomorrow morning. Remember, small positions only.

I do consider this an aggressive, higher-risk trade. The XME could still have resistance at its simple 200-dma near $58.50 and price resistance near the $60.00 level. We will need some patience for this trade to pay off. Our multi-week target is $64.75. FYI: The Point & Figure chart for XME is bullish with a long-term $76 target.

Do not enter position unless XME and the S&P 500 are both positive at the open

(small positions)

Suggested Position: buy XME @ the open

- or -

buy the MAR $60 call (XME1217C60)

02/08/12 not open yet. try again.
02/07/12 not open yet. try again.
02/06/12 not open yet. try again.

Entry on February xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 3.2 million
Listed on February 04, 2011


Zumiez Inc. - ZUMZ - close: 29.41 change: +0.02

Stop Loss: 27.90
Target(s): 32.25 or 34.50
Current Gain/Loss: + 2.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/08 update: The recent action in ZUMZ looks like a neutral pennant formation of higher lows and lower highs. This coiling pattern should see a breakout pretty soon since it's getting so narrow.

The simple 50-dma has been support for several weeks now and it's currently at $28.68. I am raising our stop loss to $27.90. I'm suggesting readers way to for a rise past $30.30 before considering new bullish positions.

Earlier Comments:
I am setting two different targets. Conservative traders can exit at $32.25. More aggressive traders can exit at $34.50.

current Position: Long ZUMZ stock @ 28.75

- or -

Long Feb. $30 call (ZUMZ1218B30) Entry $1.00

02/08/12 new stop loss @ 27.90
02/01/12 Trade opened with ZUMZ gapping higher at $28.75

Entry on February 01 at $28.75
Earnings Date 03/12/12 (unconfirmed)
Average Daily Volume = 627 thousand
Listed on January 31, 2011


BEARISH Play Updates

None. We do not have any active bearish trades.


CLOSED BULLISH PLAYS

Cisco Systems Inc. - CSCO - close: 20.43 change: +0.23

Stop Loss: 19.60
Target(s): 21.75
Current Gain/Loss: + 5.4%
Time Frame: exit ahead of the Feb. 8th earnings report
New Positions: see below

Comments:
02/08 update: Traders bought the intraday dip twice at $20.09 and CSCO rallied toward the closing bell and its earnings report. It was our plan to exit positions at the closing bell tonight.

CSCO managed to beat Wall Street's estimates by four cents. Revenues also came in better than expected at $11.23 billion. Management also raised the company's cash dividend from 6 cents to 8 cents. The after hour's rally in this stock has faded.

closed Position: Long CSCO stock @ 19.37, exit $20.43 (+5.4%)

- or -

Feb $20 call (CSCO1218B20) Entry $0.43 exit $0.88 (+104.6%)

02/08/12 planned exit at the close
02/07/12 new stop loss @ 19.75, exit tomorrow at the close
02/06/12 new stop loss @ 19.60, Two days left, exit Feb. 8th at the close
02/04/12 new stop loss @ 19.25
01/24/12 new stop loss @ 18.95, target adjusted to $21.75
01/18/12 trade opened on gap higher at $19.37

chart:

Entry on January 18 at $19.37
Earnings Date 02/08/12 (confirmed)
Average Daily Volume = 39.0 million
Listed on January 12, 2011