Editor's Note:
Shares of Best Buy Inc. (BBY) are up following news that the company's founder might try and take it private. We are dropping BBY as a bearish candidate.

Our SPH trade was closed as planned.

Current Portfolio:


BULLISH Play Updates

Bank of America - BAC - close: 8.16 change: +0.01

Stop Loss: 7.90
Target(s): 9.25 or 9.75
Current Gain/Loss: - 2.2%

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:
08/27/12 update: There was no follow through on Friday's intraday bounce. BAC is now testing its simple 10-dma near $8.05. I am still expecting support at $8.00 but if the market accelerates lower we'll probably see BAC hit our stop loss at $7.90.

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



eBay Inc. - EBAY - close: 46.98 change: -0.12

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:
08/27/12 update: EBAY drifted sideways on Monday. I don't see any changes from my weekend comments. Readers may want to look for a dip toward the 10-dma or the $46.00 level as our next potential entry point to jump on board.

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: 33.40 change: -0.72

Stop Loss: 32.45
Target(s): 37.75
Current Gain/Loss: - 1.9%

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:
08/27/12 update: EXXI was showing relative weakness today with a -2.1% decline. The close under its 150-dma and what should have been support at $33.50 is certainly short-term bearish. Today's drop may have been a reaction to hurricane Isaac. EXXI is in the oil services industry and operates in the Gulf of Mexico. Right now much of the Gulf has been evacuated due to the storm and that might impact earnings.

I am not suggesting new positions.

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: 39.55 change: -0.05

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:
08/27/12 update: IART is still consolidating sideways. If shares don't show some movement in the next few days we will drop it as a candidate. I am suggesting we wait for a breakout higher. We'll use 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: 23.96 change: +0.07

Stop Loss: 23.40
Target(s): 28.00
Current Gain/Loss: - 2.2%

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:
08/27/12 update: The stock market's lack of direction has left shares of NUAN drifting sideways near the $24 level. I remain cautious here with NUAN under its 200-dma. I am not suggesting new positions at this time.

current Position: Long NUAN stock @ $24.50

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

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

08/25/12 new stop loss @ 23.40
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: 13.24 change: -0.27

Stop Loss: 12.45
Target(s): 13.90
Current Gain/Loss: + 7.7%
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:
08/27/12 update: Homebuilding stocks were underperformers today. PHM was no exception and shares lost -1.99%. The selling paused at the rising 10-dma, which is short-term technical support.

Our exit target is $13.90. I am not suggesting new positions. Readers may want to adjust their stop loss higher.

Current Position: Long PHM stock @ $12.29

- or -

Long Oct $13 call (PHM1220j13) Entry $0.70

08/25/12 adjust exit target to $13.90
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.



Theravance Inc. - THRX - close: 26.91 change: -1.00

Stop Loss: 25.90
Target(s): 31.00
Current Gain/Loss: - 2.7%

Entry on August 24 at $ 27.65
Listed on August 23, 2011
Time Frame: 4 to 8 weeks
Average Daily Volume = 492 thousand
New Positions: see below

Comments:
08/27/12 update: Uh-oh! The rally in THRX reversed sharply at resistance near $28.00 and its 30-dma. The stock fell to technical support at its rising 50-dma before trimming its declines. More conservative traders may want to raise their stops close to today's low, which was $26.51.

I am not suggesting new positions at this time.

Earlier Comments:
THRX is a biotech firm and the stock could see a short squeeze. The most recent data listed short interest at 22% of the 52.6 million-share float. We do want to keep our position size small.

*small positions*

current Position: Long THRX stock @ $27.65

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

Long Oct $30 call (THRX1220j30) entry $1.55



Tempur Pedic Intl. - TPX - close: 32.41 change: +0.15

Stop Loss: 29.75
Target(s): 39.00
Current Gain/Loss: - 0.3%
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:
08/27/12 update: TPX managed a minor gain on Monday (+0.4%). Thus far shares have been able to maintain the bullish pattern of higher lows. I would be tempted to launch new positions on this bounce. More conservative traders may want to up their stop closer to the $31.00 level.

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: 37.72 change: -1.17

Stop Loss: 40.05
Target(s): 36.50
Current Gain/Loss: +10.2%

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:
08/27/12 update: CLF continues to sink. The stock lost -3.0% today. Our exit target is $36.50 but readers might want to take profits now with the trade up +10%. We are lowering our stop loss down to $40.05. I am not suggesting new positions.

current Position: short CLF stock @ $41.99

- or -

Long Oct $40 PUT (CLF1220V40) Entry $2.20

08/27/12 new stop loss @ 40.05, readers may want to take profits now
08/25/12 new stop loss @ 41.60
08/21/12 new stop loss @ 43.05



Dolby Labs - DLB - close: 34.06 change: +0.09

Stop Loss: 35.11
Target(s): 30.15
Current Gain/Loss: - 1.4%

Entry on August 24 at $33.60
Listed on August 23, 2011
Time Frame: 6 to 8 weeks
Average Daily Volume = 992 thousand
New Positions: see below

Comments:
08/27/12 update: I don't see any significant changes from my weekend comments. The overall pattern remains bearish. I would still consider new positions now at current levels or you could wait for a new drop under $33.75 as another entry point.

*Small Positions*

current Position: short DLB stock @ $33.60

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

Long Sep $35 PUT (DLB1222u35) Entry $1.90



Navistar Intl. - NAV - close: 23.32 change: +0.34

Stop Loss: 25.15
Target(s): 20.25
Current Gain/Loss: +0.0%

Entry on August 28 at $ xx.xx
Listed on August 25, 2011
Time Frame: 6 to 8 weeks
Average Daily Volume = 1.7 million
New Positions: see below

Comments:
08/27/12 update: Shares of NAV popped higher at the open on news that the company had announced a new executive chairman and interim CEO since the current CEO said he was retiring immediately. The gap higher threw a wrench in our strategy because NAV gapped open above our stop loss.

This does not happen very often but in the past if a stock gaps open above our stop, I drop it, since the trade never should have opened. If you did launch bearish positions at the open this morning then the gap higher has proven to be a great entry point for you since shares are now down almost -6% from the open. We are still bearish on NAV so we're going to make some adjustments.

If you didn't start positions today then we'll initiate positions tomorrow with a stop loss at $25.15, which is just above today's high. Our target is unchanged at $20.25.

Suggested Position: short NAV stock @ (the open)

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

buy the Sep $20 PUT (NAV1222u20)

08/27/12 NAV gaps open above our stop loss, effectively negating our trade. We are reloading and trying again. Launch positions at the open tomorrow



Strayer Education - STRA - close: 64.89 change: -1.57

Stop Loss: 68.65
Target(s): 61.50
Current Gain/Loss: + 3.9%

Entry on August 23 at $67.50
Listed on August 22, 2011
Time Frame: 6 to 8 weeks
Average Daily Volume = 294 thousand
New Positions: see below

Comments:
08/27/12 update: STRA is performing very well. The stock is accelerating lower with another -2.3% drop today. The close under potential support at the $65.00 mark is another good sign for the bears. We are adjusting our stop loss down to $68.65.

Earlier Comments:
Part of our challenge is that the for-profit education stocks have been bearish for a while. The most recent data listed short interest in STRA at 41% of the very small 11 million share float. That raises our risk of a short squeeze. Given this risk I'd rather buy put options but the options spreads are too wide to trade. We'll try and limit our risk by keeping our position size small.

*Small Positions Only!*

current Position: short STRA stock @ $67.50

08/27/12 new stop loss @ 68.65
08/25/12 new stop loss @ 70.25



TIM Participacoes S.A. - TSU - close: 19.12 change: -0.57

Stop Loss: 20.55
Target(s): 17.50
Current Gain/Loss: + 3.4%

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:
08/27/12 update: Good news! There was no follow through on Friday's oversold bounce in TSU. The rebound has reversed. The stock gapped open lower and posted a -2.89% decline today. We will adjust our stop loss down to $20.55.

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

08/27/12 new stop loss @ 20.55
08/22/12 triggered @ 19.80



CLOSED BEARISH PLAYS

Best Buy Inc. - BBY - close: 17.87 change: +0.56

Stop Loss: 18.45
Target(s): 13.50
Current Gain/Loss: unopened

Entry on August xx at $ xx.xx
Listed on August 25, 2011
Time Frame: 6 to 8 weeks
Average Daily Volume = 12.6 million
New Positions: , see below

Comments:
08/27/12 update: BBY spiked higher at the open before slowing fading lower the rest of the day. Our trade has not opened yet and we're removing BBY based on this news.

The stock's strength was a reaction to news of an agreement with the company's founder Richard Schulze. It looks like Mr. Schulze is considering an offer to take the company private. BBY has agreed to provide due diligence information to facilitate his inquiry.

Our trade did not open.

08/27/12 removed from the newsletter. trade did not open.

Annotated chart:



Suburban Propane Partners - SPH - close: 38.05 change: +0.28

Stop Loss: 38.05
Target(s): 35.50
Current Gain/Loss: + 2.4%
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:
08/27/12 update: The strength in SPH on Friday looked like a warning signal so we decided to exit positions on Monday morning. The stock opened at $37.83 and then rallied to a +0.7% gain. into a loser. FYI: The current bid/ask on our option is $2.35/2.60.

closed Position: short SPH @ $38.76 exit $37.83 (+2.4%)

- or -

Sep $40 PUT entry @ $2.20 exit $2.30 (+4.5%)

08/27/12 planned exit at the open
08/25/12 prepare to exit on Monday morning
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: