Editor's Note:
The U.S. market's rally on Thursday triggered a few trades for us. CNC, DECK, and TPX are all open. FARO was stopped out. INCY was closed as planned.

Current Portfolio:


BULLISH Play Updates

Aruba Networks - ARUN - close: 17.35 change: +0.69

Stop Loss: 15.49
Target(s): 18.25
Current Gain/Loss: +7.6%
Time Frame: 2 to 4 weeks

Entry on August 09 at $16.13
Listed on August 8, 2011
Average Daily Volume = 3.4 million New Positions: see below

Comments:
08/16/12 update: It was a big day for ARUN. Shares traded up to $17.74 before paring its gains and settling with a +4.1% gain on the session. Please note that I am adjusting our exit target from $19.00 down to $18.25. Readers may want to raise their stops. Remember, we want to exit prior to the August 23rd earnings report.

Earlier Comments:
ARUN could see a short squeeze. The most recent data listed short interest at 24% of the 104.8 million-share float.

current position: Long ARUN stock @ $16.13

- or -

Long Sep $16 call (ARUN1222i16) Entry $1.55

08/16/12 adjust exit target to $18.25
08/09/12 new stop loss @ 15.49
08/09/12 triggered on gap higher at $16.13. Trigger was $15.75.



Centene Corp. - CNC - close: 41.04 change: +0.37

Stop Loss: 38.75
Target(s): 44.75
Current Gain/Loss: + 0.5%

Entry on August 16 at $40.85
Listed on August 15, 2011
Time Frame: 4 to 6 weeks
Average Daily Volume = 1.1 million
New Positions: see below

Comments:
08/16/12 update: Our new trade on CNC has been triggered. Shares continued to rally and hit new three-month highs and our entry point at $40.85. I would still consider new positions now at current levels.

Our multi-week target is $44.75. More aggressive traders could aim higher.

current Position: buy CNC stock @ $40.85

- or -

Long Sep $42.50 call (CNC1222i42.5) Entry $1.95

08/16/12 triggered @ 40.85



Deckers Outdoor - DECK - close: 48.42 change: +2.22

Stop Loss: 44.49
Target(s): 49.90
Current Gain/Loss: + 3.9%

Entry on August 16 at $46.60
Listed on August 15, 2011
Time Frame: 3 to 4 weeks
Average Daily Volume = 2.0 million
New Positions: see below

Comments:
08/16/12 update: DECK also delivered a strong performance today. Shares may have opened at $46.22 but quickly hit our entry point at $46.60. The stock closed up +4.79% on the day. Our exit target is only $49.90 but more aggressive traders may want to aim higher.

Earlier Comments:
DECK could see a short squeeze. The most recent data listed short interest at 27% of the relatively small 33.4 million share float.

current Position: Long DECK @ $46.60

- or -

Long Sep $47.50 call (DECK1222i47.5) Entry $2.45

08/16/12 triggered @ 46.60



Energy XXI Ltd. - EXXI - close: 34.89 change: +0.58

Stop Loss: 32.45
Target(s): 37.75
Current Gain/Loss: + 2.5%

Entry on August 15 at $34.05
Listed on August 11, 2011
Time Frame: 6 to 8 weeks
Average Daily Volume = 968 thousand
New Positions: see below

Comments:
08/16/12 update: EXXI is building on yesterday's bullish breakout with a +1.69% gain today. If you're looking for a new entry point consider waiting for a dip back toward $34.00.

current Position: Long EXXI stock @ $34.05

- or -

Long Sep $35 call (EXXI1222i35) Entry $1.45

08/15/12 triggered at $34.05



PulteGroup - PHM - close: 13.60 change: +0.82

Stop Loss: 11.80
Target(s): 14.50
Current Gain/Loss: +10.7%
Time Frame: 6 to 8 weeks

Entry on August 09 at $12.29
Listed on August 8, 2011
Average Daily Volume = 14.5 million New Positions: see below

Comments:
08/16/12 update: PHM was showing lots of strength today with a +6.4% gain and a new multi-year high. Readers may want to start taking some money off the table, especially if you hold the option (currently +95%). I am not suggesting new positions at this time.

Current Position: Long PHM stock @ $12.29

- or -

Long Oct $13 call (PHM1220j13) Entry $0.70

08/09/12 new stop loss @ 11.80
08/09/12 triggered on gap higher at $12.29. Trigger was $12.25.



Tempur Pedic Intl. - TPX - close: 32.76 change: +1.55

Stop Loss: 29.75
Target(s): 39.00
Current Gain/Loss: + 0.8%
Time Frame: 6 to 8 weeks

Entry on August 16 at $32.50
Listed on August 7, 2011
Average Daily Volume = 2.5 million New Positions: see below

Comments:
08/16/12 update: We have been patiently waiting for TPX to breakout to new relative highs. The stock finally cooperated today with a +4.9% gain on the session. TPX hit our entry point to open bullish positions at $32.50. I would still consider new positions at current levels.

Earlier Comments:
I do consider this somewhat of an aggressive trade so we will want to limit the size of our position. Our multi-week target is $39.00 since the $40.00 level is probably round-number resistance.

(small positions)

current Position: Long TPX stock @ $32.50

- or -

Long Sep $33 call (TPX1222I33) Entry $1.75

08/16/12 triggered @ 32.50



BEARISH Play Updates

Cliffs Natural Resources - CLF - close: 42.42 change: +0.81

Stop Loss: 45.30
Target(s): 36.50
Current Gain/Loss: - 1.0%

Entry on August 15 at $41.99
Listed on August 14, 2011
Time Frame: 6 to 8 weeks
Average Daily Volume = 5.3 million
New Positions: see below

Comments:
08/16/12 update: The stock market's widespread rally today helped CLF to a +1.9% bounce. I would expect to see some short-term resistance near $44.00. I'm not suggesting new positions at this time.

current Position: short CLF stock @ $41.99

- or -

Long Oct $40 PUT (CLF1220V40) Entry $2.20



Suburban Propane Partners - SPH - close: 37.71 change: -0.07

Stop Loss: 38.05
Target(s): 35.50
Current Gain/Loss: + 2.7%
Time Frame: 6 to 8 weeks

Entry on August 08 at $38.76
Listed on August 6, 2011
Average Daily Volume = 144 thousand New Positions: see below

Comments:
08/16/12 update: Given the market's widespread gains today I am surprised that our SPH trade was not stopped out. Short-term resistance at the $38.00 level held. That doesn't mean SPH won't break higher if the market continues to rise tomorrow. Readers may want to exit early now. I'm not suggesting new positions at this time.

Editor's note: When we listed this trade the spread on the option was only 30 cents. Today the spread is $2.30. How or why the exchanges let ridiculous spreads like this exist is extremely frustrating! If it doesn't change soon it could negatively impact our exit price.

If you own the option and plan to exit, you might want to risk a limit order and place it between the current spread. Sometimes you can get filled throughout the day but there is no guarantee!

current Position: short SPH @ $38.76

- or -

Long Sep $40 PUT entry @ $2.20

08/14/12 I repeat, readers may want to lock in gains now and exit early
08/13/12 new stop loss @ 38.05
08/09/12 new stop loss @ 39.15
08/08/12 triggered on gap down at $38.76 (trigger was 39.75)



Stamps.com Inc. - STMP - close: 19.19 change: +0.06

Stop Loss: 20.65
Target(s): 17.00
Current Gain/Loss: + 1.6%

Entry on August 14 at $19.50
Listed on August 9, 2011
Time Frame: 3 to 6 weeks
Average Daily Volume = 319 thousand
New Positions: see below

Comments:
08/16/12 update: STMP's lack of participation in the market's rally today is very good news for the bears. Yet I would hesitate to launch new positions given the market's new strength.

FYI: The Point & Figure chart for STMP is bearish with an $11 target.

Current Position: short STMP @ $19.50

- or -

Long Sep $20 PUT (STMP1222u20) Entry $1.85

08/14/12 triggered @ 19.50



Strayer Education - STRA - close: 69.37 change: +0.37

Stop Loss: 71.55
Target(s): 62.50
Current Gain/Loss: - 0.5%

Entry on August 15 at $69.00
Listed on August 14, 2011
Time Frame: 3 to 6 weeks
Average Daily Volume = 306 thousand
New Positions: see below

Comments:
08/16/12 update: STRA posted a gain today (+0.5%) but the action actually looks bearish. The rally attempt this morning failed under the $71.00 level. Today's move actually looks like a new bearish entry point. However, with the market's major indices on the rise you may want to wait on launching new positions.

Earlier Comments:
This should be considered a higher-risk trade. Lots of investors are already bearish on STRA. The for-profit secondary education industry has had its share of troubles in recent years. The most recent data listed short interest at 41% of STRA's very small 11.0 million-share float. That does raise the risk of a short squeeze. If you look at a daily chart you can see the short squeeze that happened in late June.

Limit your risk by using small positions.

*Small Positions*

current Position: short STRA stock @ $69.00



CLOSED BEARISH PLAYS

FARO Technologies - FARO - close: 36.25 change: +0.94

Stop Loss: 36.55
Target(s): 30.50
Current Gain/Loss: - 4.5%

Entry on August 14 at $ 34.97
Listed on August 13, 2011
Time Frame: 3 to 4 weeks
Average Daily Volume = 238 thousand
New Positions: see below

Comments:
08/16/12 update: The rebound in FARO continued today with a +2.6% gain. Shares traded high enough intraday to hit our stop loss at $36.55.

closed Position: short FARO stock @ $34.97 exit $36.55 (-4.5%)

- or -

Long Sept $35 PUT (FARO1222u35) Entry $2.10 exit $0.90 (-57.1%)

chart:



Incyte Corp - INCY - close: 18.77 change: +0.27

Stop Loss: 18.65
Target(s): 14.00
Current Gain/Loss: - 5.7%
Time Frame: 6 to 8 weeks

Entry on August 08 at $17.50
Listed on August 7, 2011
Average Daily Volume = 2.0 million New Positions: see below

Comments:
08/16/12 update: We decided yesterday that it was time to exit our INCY trade. The plan was to exit at the open this morning. The stock opened at $18.51.

Earlier Comments:
I do consider this an aggressive trade since INCY is already considered oversold at this point. Our target is $14.00.

(small positions)

closed Position: short INCY stock @ $17.50 exit $18.51 (-5.8%)

- or -

Sep $17.50 PUT (INCY1222I17.5) Entry $1.30 exit $0.35 (-73.0%)

08/15/12 prepare to exit at the open tomorrow
08/08/12 triggered @ 17.50
*remember, small positions to limit risk!

chart: