Editor's Note:
Shares of DECK have been surging higher the last two days. The stock hit our exit target on Friday. We also saw EBAY and STX hit our triggers for new positions.

Current Portfolio:


BULLISH Play Updates

Aruba Networks - ARUN - close: 17.45 change: +0.10

Stop Loss: 15.49
Target(s): 18.00
Current Gain/Loss: +8.2%
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:
08/18/12 update: Broken resistance near $17.00 is holding up as new short-term support. We only have a few days left. ARUN is due to report earnings on Aug. 23rd and we don't want to hold over the announcement. Thus I am adjusting our exit target to $18.00.

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

08/18/12 adjust exit target to $18.00
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.

chart:



Centene Corp. - CNC - close: 41.81 change: +0.77

Stop Loss: 38.75
Target(s): 44.75
Current Gain/Loss: + 2.4%

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:
08/18/12 update: The bullish breakout in CNC continues with shares hitting new three-month highs on Friday. More conservative traders may want to adjust their stop loss closer to the $40.00 level. If you're looking for a new entry point I'd wait for a dip.

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

chart:



eBay Inc. - EBAY - close: 46.87 change: +1.08

Stop Loss: 44.75
Target(s): 49.75
Current Gain/Loss: + 1.3%

Entry on August 17 at $46.25
Listed on August 16, 2011
Time Frame: 4 to 6 weeks
Average Daily Volume = 12.3 million
New Positions: see below

Comments:
08/18/12 update: Our new trade on EBAY has been opened. Positive analyst comments before the opening bell helped fuel the rally on Friday. EBAY gapped open higher at $46.25, which just happened to be our entry point to initiate positions. The stock outperformed the market with a +2.3% gain.

current Position: Long EBAY stock @ $46.25

- or -

Long Oct $47 call (EBAY1220J47) Entry $1.89

08/17/12 triggered at $46.25

chart:



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

Stop Loss: 32.45
Target(s): 37.75
Current Gain/Loss: + 1.4%

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:
08/18/12 update: After a strong two-day advance EXXI pulled back a little bit on Friday (-1.0%). I would still consider new positions now or readers could look for a dip closer to the $34.00 level.

current Position: Long EXXI stock @ $34.05

- or -

Long Sep $35 call (EXXI1222i35) Entry $1.45

08/15/12 triggered at $34.05

chart:



PulteGroup - PHM - close: 13.60 change: +0.82

Stop Loss: 11.95
Target(s): 14.50
Current Gain/Loss: + 8.9%
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:
08/18/12 update: Heads up! Readers may want to take profits now. I suggested traders take some money off the table in Thursday's newsletter. Shares of PHM are seeing some profit taking after trading close to its 2010 highs near $14.00 on Friday morning. If the market breaks out I am expecting PHM to follow suit.

I am raising our stop loss to $11.95. We will leave our multi-week target at $14.50 for now. 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

08/18/12 new stop loss @ 11.95
08/17/12 PHM stalls/reverses at resistance near $14.00
08/09/12 new stop loss @ 11.80
08/09/12 triggered on gap higher at $12.29. Trigger was $12.25.

chart:



Seagate Technology - STX - close: 35.67 change: +1.05

Stop Loss: 33.35
Target(s): 38.00
Current Gain/Loss: +2.6%

Entry on August 17 at $34.75
Listed on August 16, 2011
Time Frame: 6 to 8 weeks
Average Daily Volume = 11.6 million
New Positions: see below

Comments:
08/18/12 update: The nearly non-stop rally in STX continues. Shares are up ten out of the last eleven weeks (that's a correction from my previous update). The stock hit our trigger to open bullish positions at $34.75 on Friday. STX outperformed the market with a +3.0% gain.

If you missed the entry point then you might want to wait for a pullback into the $34.75-34.50 area.

Earlier Comments:
STX is arguably overbought here and overdue for a correction. I am suggesting we keep our position size small to limit our risk.

current Position: Long STX stock @ $34.75

- or -

Long Dec $37 call (STX1222L37) Entry $2.35

08/17/12 triggered @ 34.75

chart:



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

Stop Loss: 29.75
Target(s): 39.00
Current Gain/Loss: + 3.1%
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:
08/18/12 update: TPX initially showed weakness on Friday morning. Traders bought the dip near $32. It was another example of prior resistance acting as new support. The stock outperformed the major indices with a +2.3% gain.

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

chart:



BEARISH Play Updates

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

Stop Loss: 45.30
Target(s): 36.50
Current Gain/Loss: - 0.6%

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:
08/18/12 update: Shares of CLF continue to disappoint. Traders were selling into strength on Friday and the stock reversed at its 10-dma. I would consider new bearish positions at this time but readers may want to wait and see if the S&P 500 breaks out to new highs on Monday before initiating a new trade here.

current Position: short CLF stock @ $41.99

- or -

Long Oct $40 PUT (CLF1220V40) Entry $2.20

chart:



Suburban Propane Partners - SPH - close: 37.61 change: -0.10

Stop Loss: 38.05
Target(s): 35.50
Current Gain/Loss: + 3.0%
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:
08/18/12 update: For a third day in a row SPH was unable to breakout past short-term resistance at the $38.00 level. This is great news if you're bearish. However, I would not get too confident. If the market's major indices breakout to new highs it could fuel some short covering across the market. 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 between the bid and the ask is $1.60 (that's down from $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.

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)

chart:



Stamps.com Inc. - STMP - close: 19.79 change: +0.60

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:
08/18/12 update: Our STMP trade could be in trouble. The oversold bounce was picking up speed on Friday with shares gaining +3.1%. The low was the week was $18.62. That's awfully close to the October 2011 low of $18.60.

The fact that STMP is seeing an oversold bounce isn't that surprising after the mid August plunge. We just have to wait and see if broken support near $20.00 will hold as new resistance like it should. Wait for this bounce to reverse before considering new bearish positions.

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

chart:



Strayer Education - STRA - close: 70.86 change: +1.50

Stop Loss: 71.55
Target(s): 62.50
Current Gain/Loss: - 2.7%

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:
08/18/12 update: STRA is not cooperating. There was no follow through on Thursday's failed rally. Instead STRA climbed +2.1% on Friday, thanks in part to the market's widespread gains. It may have also been influenced by option expiration. Shares remain under short-term technical resistance at the simple 10-dma. The question is if STRA will see any follow through higher on Monday. If so then STRA will most likely hit our stop loss.

I am not suggesting any new positions at this time.

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

chart:



CLOSED BULLISH PLAYS

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

Stop Loss: 44.49
Target(s): 49.90
Current Gain/Loss: + 7.1%

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:
08/18/12 update: Target achieved.

It didn't take long for short covering to push shares of DECK toward resistance at the $50.00 level. Shares actually broke out past this level. Our exit target was hit at $49.90.

current Position: Long DECK @ $46.60 exit $49.90 (+7.1%)

- or -

Sep $47.50 call (DECK1222i47.5) Entry $2.45 exit $4.05 (+65.3%)

08/17/12 target hit at $49.90
08/16/12 triggered @ 46.60

chart: