Editor's Note:
Better than expected earnings from TOL helped fuel a rally in the homebuilders today. This produced a big move in our PHM trade.

Elsewhere our ARUN trade was stopped out and TSU was triggered. Both stocks moved on analyst comments.

Current Portfolio:


BULLISH Play Updates

Bank of America - BAC - close: 8.22 change: +0.03

Stop Loss: 7.90
Target(s): 9.25 or 9.75
Current Gain/Loss: - 0.4%

Entry on August 21 at $8.25
Listed on August 20, 2011
Time Frame: 6 to 9 weeks
Average Daily Volume = 103 million
New Positions: see below

Comments:
08/22/12 update: Believe it or not BAC managed to outperform the financial sector with a +0.3% gain today. Overall I don't see any changes from my prior comments. I'd be a little cautious here. Nimble traders might try buying a dip or a bounce near $8.05.

The plan was to use small positions to limit our risk.

current Position: Long BAC stock @ $8.25

- or -

Long 2013 Jan $9.00 call (BAC1319a9) Entry $0.47

08/21/12 triggered @ 8.25



Darden Restaurants, Inc. - DRI - close: 52.85 change: -0.30

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:
08/22/12 update: If DRI doesn't start showing some strength soon we will likely drop it. However, nimble traders might want to consider buying a dip near likely support near $52.00 and just use a tight stop loss. The newsletter will leave the entry trigger at $54.15 for now. 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: 47.00 change: +1.15

Stop Loss: 44.75
Target(s): 49.75
Current Gain/Loss: + 1.6%

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:
08/22/12 update: News that Discover Card (DFS) had partnered with PayPal to allow Discover customers to use paypal and bill it to their discover helped fuel gains for both DFS and EBAY (who owns PayPal). The news may have also prompted the analyst upgrade for EBAY today.

Shares of EBAY hit new highs near $48.00 before paring their gains.

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: 35.05 change: +0.25

Stop Loss: 32.45
Target(s): 37.75
Current Gain/Loss: + 2.9%

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:
08/22/12 update: Another round of buying the dip this morning helped lift EXXI to a +0.7% gain. There is no change from my prior comments. Readers might want to consider raising their stop closer to the $33.00 or $33.50 levels.

current Position: Long EXXI stock @ $34.05

- or -

Long Sep $35 call (EXXI1222i35) Entry $1.45

08/15/12 triggered at $34.05



Integra Life Sciences - IART - close: 40.00 change: -0.26

Stop Loss: 39.45
Target(s): 44.50
Current Gain/Loss: unopened

Entry on August xx at $ xx.xx
Listed on August 21, 2011
Time Frame: 6 to 8 weeks
Average Daily Volume = 171 thousand
New Positions: Yes, see below

Comments:
08/22/12 update: It almost looks like a bad tick but apparently IART saw a very brief spike down toward recent support near $39.00 before immediately bouncing back. Shares closed right on round-number support/resistance at the $40.00 mark.

I am suggesting a trigger at $40.60 as our entry point. We'll use a stop loss at $39.45. Our multi-week target is $44.50. FYI: The Point & Figure chart for IART is bullish with a long-term $61 target.

Trigger @ 40.60

Suggested Position: buy IART stock @ $40.60



Nuance Comm. - NUAN - close: 24.03 change: -0.29

Stop Loss: 22.90
Target(s): 28.00
Current Gain/Loss: - 1.9%

Entry on August 21 at $24.50
Listed on August 18, 2011
Time Frame: 6 to 8 weeks
Average Daily Volume = 4.1 million
New Positions: see below

Comments:
08/22/12 update: NUAN is still churning sideways between its 10-dma and its 200-dma. Readers may want to wait for a new rise past $24.50 before initiating positions.

current Position: Long NUAN stock @ $24.50

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

Long Oct $25 call (NUAN1220j25) Entry $1.30*

08/21/12 triggered @ 24.50
*option entry price is an estimate. it did not trade at the time our play was opened.



PulteGroup - PHM - close: 13.29 change: +0.50

Stop Loss: 12.45
Target(s): 14.50
Current Gain/Loss: + 8.1%
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:
08/22/12 update: A better than expected earnings report from homebuilder Toll Brothers (TOL) this morning helped fuel gains across the sector today. PHM rallied +3.9%. More conservative traders may want to take profits now or as PHM nears resistance at $14.00. 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: 35.17 change: +0.45

Stop Loss: 33.35
Target(s): 38.00
Current Gain/Loss: +1.2%

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:
08/22/12 update: The rally continues in STX with traders buying the dip near $34.00 for the second day in a row. Shares added +1.2%. I've already warned you that this is an aggressive trade due to STX being so overbought. Technical traders will note that the MACD indicator on the daily chart is about to turn bearish.

Readers may want to use a tighter stop loss.

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: 31.82 change: -1.22

Stop Loss: 29.75
Target(s): 39.00
Current Gain/Loss: - 2.1%
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:
08/22/12 update: Hmm... it was not a good day for TPX. Shares gave up -3.6% and closed under short-term support at $32.00. I didn't see any particular news to account for this relative weakness. More conservative traders may want to up their stop closer to the $31.00 level. I am not suggesting new positions at this time.

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: 41.41 change: +0.77

Stop Loss: 43.05
Target(s): 36.50
Current Gain/Loss: + 1.4%

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:
08/22/12 update: CLF managed a bounce from potential round-number support near $40.00 today. The stock should find new short-term resistance in the $42.00-42.50 area. 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

08/21/12 new stop loss @ 43.05



Suburban Propane Partners - SPH - close: 37.41 change: -0.19

Stop Loss: 38.05
Target(s): 35.50
Current Gain/Loss: + 3.5%
Time Frame: 6 to 8 weeks

Entry on August 08 at $38.76
Listed on August 6, 2011
Average Daily Volume = 625 thousand New Positions: see below

Comments:
08/22/12 update: There is nothing new to report on for SPH. The stock continues to drift lower. I am not suggesting new positions at this time.

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)



TIM Participacoes S.A. - TSU - close: 19.51 change: -1.10

Stop Loss: 21.25
Target(s): 17.50
Current Gain/Loss: + 1.55

Entry on August 22 at $19.80
Listed on August 21, 2011
Time Frame: 4 to 6 weeks
Average Daily Volume = 2.3 million
New Positions: see below

Comments:
08/22/12 update: Thankfully we did not have to wait long for TSU to hit our entry trigger. Shares got a push over the cliff today thanks to an analyst downgrade this morning. The stock plunged -5.3% and broke round-number, psychological support at the $20.00 mark. Our entry trigger was hit at $19.80. FYI: The Point & Figure chart for TSU is bearish with a $13.00 target.

current Position: short TSU stock @ $19.80 (Small Positions)

08/22/12 triggered @ 19.80



CLOSED BULLISH PLAYS

Aruba Networks - ARUN - close: 16.78 change: -0.56

Stop Loss: 16.75
Target(s): 18.00
Current Gain/Loss: +3.8%
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:
08/22/12 update: Less than bullish analyst comments on ARUN sparked some profit taking today. Shares fell -3.2% and hit our stop loss at $16.75 along the way.

closed position: Long ARUN stock @ $16.13 exit $16.75 (+3.8%)

- or -

Sep $16 call (ARUN1222i16) Entry $1.55 $1.80 (+16.1%)

08/21/12 prepare to exit tomorrow if ARUN doesn't hit our target
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.

chart: