Editor's Note:
Last week the major indices had rallied right to resistance. Today the market was stepping back.

We saw CNC and STRA get stopped out.

Current Portfolio:


BULLISH Play Updates

Aruba Networks - ARUN - close: 17.26 change: -0.19

Stop Loss: 16.75
Target(s): 18.00
Current Gain/Loss: +7.0%
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:
08/20/12 update: We only have a couple of days left. I am raising our stop loss to $16.75. If ARUN does not hit our target at $18.00 or our stop in the next two days then we will plan to exit on Wednesday at the closing bell.

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

08/20/12 new stop loss @ 16.75, plan to exit on Wednesday at the close
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.



Darden Restaurants, Inc. - DRI - close: 53.87 change: +0.03

Stop Loss: 52.90
Target(s): 58.50
Current Gain/Loss: unopened

Entry on August xx at $ xx.xx
Listed on August 18, 2011
Time Frame: 6 to 8 weeks
Average Daily Volume = 1.3 million
New Positions: Yes, see below

Comments:
08/20/12 update: DRI dipped to short-term support at its rising 10-dma. If we see a close under $53.00 we might drop DRI as a candidate. Right now the plan is to wait for a breakout past resistance at $54.00. We have a trigger at $54.15. If triggered we will aim for $58.50. More aggressive traders could aim higher. FYI: The Point & Figure chart for DRI is bullish with a $65 target.

Trigger @ 54.15

Suggested Position: buy DRI stock @ (trigger)

- (or for more adventurous traders, try this option) -

Buy the Oct $55 call (DRI1220J55)



eBay Inc. - EBAY - close: 46.40 change: -0.47

Stop Loss: 44.75
Target(s): 49.75
Current Gain/Loss: + 0.3%

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:
08/20/12 update: EBAY spiked lower this morning but traders bought the dip several times near $46.15 today. Broken resistance near $46.00 should be support so readers can use this pullback as a new bullish entry point.

current Position: Long EBAY stock @ $46.25

- or -

Long Oct $47 call (EBAY1220J47) Entry $1.89

08/17/12 triggered at $46.25



Energy XXI Ltd. - EXXI - close: 34.23 change: -0.30

Stop Loss: 32.45
Target(s): 37.75
Current Gain/Loss: + 0.5%

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:
08/20/12 update: EXXI is also seeing some mild profit taking. The stock has pulled back to the $34.00 level. Broken resistance in the $33.50-34.00 area should be new support in addition to the simple 10-dma. Nimble traders could buy dips in the $34.00-33.75 area.

current Position: Long EXXI stock @ $34.05

- or -

Long Sep $35 call (EXXI1222i35) Entry $1.45

08/15/12 triggered at $34.05



Nuance Comm. - NUAN - close: 23.88 change: -0.19

Stop Loss: 22.90
Target(s): 28.00
Current Gain/Loss: unopened

Entry on August xx at $ xx.xx
Listed on August 18, 2011
Time Frame: 6 to 8 weeks
Average Daily Volume = 4.1 million
New Positions: Yes, see below

Comments:
08/20/12 update: NUAN spent Monday consolidating sideways under the $24.00 level. There is no change from my weekend comments.

I am suggesting a trigger to launch bullish positions at $24.50. Our multi-week target is $28.00.

Trigger @ $24.50

Suggested Position: buy NUAN stock @ (trigger)

- (or for more adventurous traders, try this option) -

buy the Oct $25 call (NUAN1220j25)



PulteGroup - PHM - close: 13.01 change: -0.37

Stop Loss: 12.45
Target(s): 14.50
Current Gain/Loss: + 5.9%
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:
08/20/12 update: Ouch! PHM continues to see profit taking after last week's reversal under resistance near $14.00. Shares dipped to the simple 10-dma before paring its losses today. I am raising our stop loss up to $12.45. 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

08/20/12 new stop loss @ 12.45
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.



Seagate Technology - STX - close: 35.08 change: -0.59

Stop Loss: 33.35
Target(s): 38.00
Current Gain/Loss: +0.9%

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:
08/20/12 update: Shares of STX gapped down at the open this morning thanks to a downgrade issued before the opening bell. Fortunately, STX didn't move much and spent the day in a narrow range. I would still consider buying dips in 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



Tempur Pedic Intl. - TPX - close: 32.75 change: -0.77

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:
08/20/12 update: Profit taking in TPX produced a -2.2% decline today. Yet traders were buying the dip midday. Broken resistance near $32.00 should be support so I would use this pullback as another bullish entry point.

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: 41.64 change: -0.59

Stop Loss: 45.30
Target(s): 36.50
Current Gain/Loss: + 0.8%

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:
08/20/12 update: CLF tagged a new two-week low this morning before trimming its losses. The path of least resistance still appears to be down. I would consider new positions at current levels.

current Position: short CLF stock @ $41.99

- or -

Long Oct $40 PUT (CLF1220V40) Entry $2.20



Suburban Propane Partners - SPH - close: 37.50 change: -0.11

Stop Loss: 38.05
Target(s): 35.50
Current Gain/Loss: + 3.3%
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:
08/20/12 update: SPH continues to drift lower after failing at resistance near $38.00. I am not suggesting new positions at this time.

I do have good news on the option, which has seen its bid/ask spread normalize at $2.55/2.85.

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: 20.40 change: +0.61

Stop Loss: 20.65
Target(s): 17.00
Current Gain/Loss: - 4.6%

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:
08/20/12 update: Ouch! STMP is definitely not cooperating. Shares rallied 60 cents on Friday and another 61 cents today. The oversold bounce is now four days old. The breakout back above $20.00 is short-term bullish. If there is any follow through higher tomorrow then STMP will likely hit our stop loss at $20.65. I am not suggesting new positions.

Current Position: short STMP @ $19.50

- or -

Long Sep $20 PUT (STMP1222u20) Entry $1.85

08/14/12 triggered @ 19.50



CLOSED BULLISH PLAYS

Centene Corp. - CNC - close: 39.90 change: -1.91

Stop Loss: 38.75
Target(s): 44.75
Current Gain/Loss: - 5.1%

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:
08/20/12 update: Our CNC trade was looking pretty strong. Unfortunately some M&A activity in the healthcare sector sent shares spiking lower. News that Aetna (AET) was buying Coventry Health Care for $5.7 billion sent CNC plunging. Why did shares fall? Investors are worried that we won't see any more big healthcare mergers. Guess they were hoping that CNC was a buyout target.

CNC hit our stop loss at $38.75 this morning.

closed Position: buy CNC stock @ $40.85 exit $38.75 (-5.1%)

- or -

Sep $42.50 call (CNC1222i42.5) Entry $1.95 exit $1.05 (-46.1%)

08/20/12 stopped out at $38.75
08/16/12 triggered @ 40.85

chart:



CLOSED BEARISH PLAYS

Strayer Education - STRA - close: 70.01 change: -0.85

Stop Loss: 71.55
Target(s): 62.50
Current Gain/Loss: - 3.7%

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:
08/20/12 update: STRA continues to look weak and closed down -1.1% today. Unfortunately the early morning spike higher was strong enough to hit our stop loss at $71.55, closing this trade. Readers may want to reload and try again if STRA trades under $69.00 again.

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*

closed Position: short STRA stock @ $69.00 exit $71.55 (-3.7%)

chart: