Editor's Note:
The U.S. market's major indices closed near their lows on Wednesday. Has the rally finally run out of steam? The overall trend is still up but stocks remain overbought.

Our new ADM trade has been opened. Readers may want to go ahead and take profits on our KBH and SWHC trades.

Current Portfolio:


BULLISH Play Updates

Archer-Daniels-Midland Co - ADM - close: 31.04 change: -0.11

Stop Loss: 29.75
Target(s): 34.00
Current Gain/Loss: - 0.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/15 update: It looks like our ADM trade is getting off on the wrong foot. The trade was opened this morning as both ADM and the S&P 500 opened positive. ADM rallied to new multi-month highs at $31.54 only to reverse and close lower on the session. Today's intraday move looks like a potential short-term top.

I am not suggesting new positions at this time. We can look for short-term support near $30.50 and reconsider new positions there.

Earlier Comments:
More conservative traders might want to consider waiting to buy a dip near ADM's rising 10-dma. FYI: The Point & Figure chart for ADM is bullish with a $40.00 target.

current Position: Long ADM stock @ $31.21

- or -

Long Mar $32 call (ADM1217C32) Entry $0.47

Entry on February 15 at $31.21
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 5.6 million
Listed on February 14, 2011


Autodesk, Inc. - ADSK - close: 38.65 change: -0.14

Stop Loss: 36.95
Target(s): 39.90
Current Gain/Loss: + 5.8%
Time Frame: exit prior to the Feb 23rd earnings announcement
New Positions: see below

Comments:
02/15 update: The stock market's major indices hit some profit taking today and look like they could trade lower tomorrow. More conservative traders may want to exit our ADSK trade early to lock in gains. Please note that I am raising our stop loss to $36.95. I am not suggesting new positions at this time.

current Position: Long ADSK stock @ 36.50

02/15/12 new stop loss @ 36.95
02/10/12 closed Feb. $37 calls, bid @ $1.02 (-0.5%)
02/09/12 prepare to exit Feb. $37 calls, current bid $1.65 (+52.7%)
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: 29.01 change: +0.53

Stop Loss: 27.75
Target(s): 31.50
Current Gain/Loss: + 3.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/15 update: DFS rallied to new highs thanks to positive credit card trends. The company's net charge offs (uncollectable debt) in January fell to 2.75% down from 3.15% in December. A year ago these were at -5.75%. The number of customers that were behind on their payments fell to -2.31% down from 2.32% in December.

The stock shot higher to $29.35 intraday but pared its gains thanks to the market's weakness. I am raising our stop loss up to $27.75.

Current Position: Long DFS stock @ $28.15

- or -

Long MAR $28 call (DFS1217C28) Entry $1.10

02/15/12 new stop loss @ 27.75
02/10/12 triggered at $28.15
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 10 at $28.15
Earnings Date 03/22/12 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on February 04, 2011


Digital River - DRIV - close: 17.91 change: -0.06

Stop Loss: 17.45
Target(s): 21.50
Current Gain/Loss: unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Comments:
02/15 update: The stock market's lack of progress today left DRIV churning sideways. We are still waiting for a breakout from this trading range.

DRIV can definitely see some volatility so we want to keep our position size small to limit our risk. I am suggesting bullish positions if DRIV can trade at $18.50 or higher. There potential price resistance at $20.00. There is potential technical resistance at the 150-dma and exponential 200-dma (see chart below).

Trigger @ $18.50 (small positions)

Suggested Position: buy DRIV stock @ (trigger)

- or -

buy the Mar $18 call (DRIV1217c18)

Entry on February xx at $ xx.xx
Earnings Date 04/30/12 (unconfirmed)
Average Daily Volume = 727 thousand
Listed on February 13, 2011


Eaton Corp. - ETN - close: 50.87 change: -0.87

Stop Loss: 49.75
Target(s): 54.75
Current Gain/Loss: + 1.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/15 update: Uh-oh! ETN underperformed the market today with a -1.6% decline and a close under its simple 10-dma. The stock should find support near the $50.00 level but I am not suggesting new positions at this time.

current Position: Long ETN stock @ $50.25

- or -

Long MAR $50 call (ETN1221C50) Entry $1.70

02/10/12 exited Feb $50 calls at the open. Bid @ $1.10 (+10%)
02/09/12 new stop loss @ 49.75
02/09/12 exit the Feb $50 calls at the open tomorrow, current bid is $1.95 (+95%).
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


Jos. A. Bank Clothiers - JOSB - close: 51.67 change: -0.09

Stop Loss: 49.75
Target(s): 55.00
Current Gain/Loss: + 1.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/15 update: It looks like JOSB's rally may have temporarily run out of gas. The stock rallied to 452.39 this morning before turning lower and posting a minor decline. JOSB was up six days in a row so it was due for a little pull back. I wouldn't be surprised to see another decline tomorrow. If the market sell-off gets bad look for support near $50.00.

Earlier Comments:
Further gains could spark a short squeeze. The most recent data listed short interest at 19.8% of the 27.5 million-share float.

current Position: long JOSB stock @ $50.75

- or -

Long Mar $50 call (JOSB1217C50) Entry $1.90

02/14/12 new stop loss @ 49.75

Entry on February 13 at $50.75
Earnings Date 03/29/12 (unconfirmed)
Average Daily Volume = 301 thousand
Listed on February 11, 2011


KB Home - KBH - close: 12.39 change: -0.03

Stop Loss: 10.75
Target(s): 13.50
Current Gain/Loss: +11.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/15 update: Hmm... is this a short-term top in KBH? The housing market index, an assessment of builder confidence, rose for its fifth month in a row this February. Analyst thought this confidence index would rise from 25 to 26 but February's reading saw a jump to 29. This news helped push shares of KBH to a new multi-month high at $12.91 but the gains didn't last. KBH closed virtually unchanged on the session but it still looks like a short-term top.

Readers will want to seriously consider an early exit right now to lock in gains. I would not be surprised to see a dip back toward the simple 10-dma near $11.35. I am not suggesting new positions at this time.

Earlier Comments:
A breakout higher could produced another short squeeze. The most recent data listed short interest at 41% of the 65 million-share float. Bear in mind that KBH can be a volatile stock. Readers may want to keep their position size small. Our exit target is $13.50. FYI: The Point & Figure chart for KBH is bullish with a long-term $20.00 target.

current Position: Long KBH stock @ $11.10

- or -

Long Mar $12 call (KBH1217C12) Entry $0.50

02/13/12 readers may want to start taking profits now (+11.6%). The call option is +122%
02/09/12 new stop loss @ 10.75

Entry on February 09 at $11.10
Earnings Date 04/05/12 (unconfirmed)
Average Daily Volume = 7.8 million
Listed on February 08, 2011


Smith & Wesson Holding Corp. - SWHC - close: 5.23 change: -0.08

Stop Loss: 4.90
Target(s): 5.60
Current Gain/Loss: + 8.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/15 update: SWHC spent the first half of Wednesday drifting sideways before it broke lower around lunchtime. Shares underperformed with a -1.5% decline.

There is no change from my prior comments. More conservative traders may want to up their stop loss or take profits now. I am not suggesting new positions at this time.

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 $10.25 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


Zumiez Inc. - ZUMZ - close: 30.38 change: -0.63

Stop Loss: 28.45
Target(s): 32.25 or 34.50
Current Gain/Loss: + 5.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/15 update: ZUMZ rallied to new four-week highs this morning before reversing lower and closing down -2.0%. Look for a bounce near $30.00 or its 50-dma near $29.30 before considering new bullish positions.

It was our plan to exit our February calls at the closing bell tonight.

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, exit $0.55 (-45%)

02/15/12 exited Feb. $30 calls. bid @ $0.55 (-45%)
02/14/12 prepare to exit Feb. $30 calls at the close tomorrow
02/11/12 new stop loss @ 28.45
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.