Editor's Note:
The S&P 500 index ended a four-week winning streak with a pullback from its May 22nd highs. Stocks were overbought and due for a pullback. The question now is whether or not the rally returns or does the pullback have farther to go?

DLPH hit our stop. VSI was closed.


Current Portfolio:


BULLISH Play Updates

Electronic Arts - EA - close: 22.77 change: +0.12

Stop Loss: 21.90
Target(s): 25.75
Current Gain/Loss: unopened

Entry on May -- at $--.--
Listed on May 23, 2013
Time Frame: 4 to 6 weeks
Average Daily Volume = 6.0 million
New Positions: Yes, see below

Comments:
05/25/13: As expected shares of EA continued to show relative strength on Friday. Traders quickly bought the gap down on Friday morning and EA hit a new 52-week high. Yet EA did not breakout past the $23.00 level, probably because of the lackluster market action on Friday.

There is no change from my Thursday night comments. I am suggesting a trigger to launch bullish positions at $23.10. If triggered our target is $25.75. However, that is a slightly aggressive target. The $25.00 level has been resistance in the past and could be resistance again.

Trigger @ 23.10

Suggested Position: buy EA stock @ (trigger)

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

buy the Jul $25 call (EA1320G25) current ask $0.54

chart:



Molina Healthcare - MOH - close: 37.76 change: -0.45

Stop Loss: 37.40
Target(s): 42.00
Current Gain/Loss: unopened

Entry on May -- at $--.--
Listed on May 22, 2013
Time Frame: 6 to 8 weeks
Average Daily Volume = 660 thousand
New Positions: Yes, see below

Comments:
05/25/13: MOH was not immune to the market's pullback on Friday. Shares dipped to the bottom of their trading range. MOH did bounce off short-term support but I wouldn't buy it here. We are waiting for a bullish breakout higher.

I am suggesting small bullish positions if MOH can trade at $38.60 or higher. If triggered our target is $42.00. I want to repeat that we are suggesting small positions. If the broader market continues lower we could see MOH reverse.

Trigger @ 38.60 *Small Positions*

Suggested Position: buy MOH stock @ (the trigger)

chart:



Netnet, Inc. - NNI - close: 38.50 change: +0.40

Stop Loss: 35.90
Target(s): 39.50
Current Gain/Loss: +7.7%

Entry on May 14 at $35.75
Listed on May 13, 2013
Time Frame: 6 to 8 weeks
Average Daily Volume = 68.7 thousand
New Positions: see below

Comments:
05/25/13: NNI continues to flex its relative strength muscle. There was no spike lower on Friday morning and shares managed to drift to a new high by Friday's closing bell. I am not suggesting new positions at this time.

Earlier Comments:
I do want to urge traders to keep their position size small. NNI does not trade a lot of daily volume. If triggered our target is $39.50.

*small positions*

current Position: Long NNI stock @ $35.75

05/21/13 new stop loss @ 35.90
05/18/13 new stop loss @ 35.65

chart:



SunTrust Banks - STI - close: 31.94 change: +0.19

Stop Loss: 30.95
Target(s): 34.50
Current Gain/Loss: + 1.7%

Entry on May 16 at $31.40
Listed on May 15, 2013
Time Frame: 6 to 8 weeks
Average Daily Volume = 4.4 million
New Positions: see below

Comments:
05/25/13: From Wednesday's intraday high to Friday's intraday low shares of STI saw a -4.4% pullback. Traders bought the dip on Friday and STI outperformed the market with a +0.59% gain. More conservative traders might want to raise their stop loss toward Friday's low (31.25).

Earlier Comments:
I want to remind you that the 2011 highs near $33.00-33.15 could prove to be resistance. More conservative traders may want to exit near $33.00.

current Position: Long STI stock @ $31.40

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

Long Jul $32 call (STI1320G32) entry $0.78

05/20/13 new stop loss @ 30.95

chart:



BEARISH Play Updates

Rackspace Holdings - RAX - close: 39.19 change: +1.01

Stop Loss: 40.10
Target(s): 31.00
Current Gain/Loss: -3.1%

Entry on May 22 at $38.02
Listed on May 21, 2013
Time Frame: 6 to 8 weeks
Average Daily Volume = 3.0 million
New Positions: see below

Comments:
05/25/13: Warning! RAX outperformed the market on Friday with a +2.6%. Furthermore Friday's gain confirms the bullish reversal pattern from Thursday's rebound. Now RAX "should" have resistance at the $40.00 mark but if the broader market resumes the up trend then this trade could be in trouble.

More conservative traders may want to just abandon ship and exit immediately. The intraday chart (see the 15-minute chart below) shows an inverse head-and-shoulders pattern for RAX. A breakout past the "neckline" could signal a rebound toward $42.00. I am lowering our stop loss down to $40.10.

Earlier Comments:
If you're concerned about shorting RAX then buy the put option to limit your risk to the cost of your option.

current Position: short RAX stock @ $38.02

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

Long Jun $37.50 PUT (RAX1322r37.5) entry $1.60

05/25/13 new stop loss at $40.10, more conservative traders may want to exit early now.
05/24/13 RAX confirms the bullish reversal pattern.
05/23/13 RAX produced a bullish reversal candlestick.

chart:

15-minute chart:



CLOSED BULLISH PLAYS

Delphi Automotive - DLPH - close: 48.05 change: -0.30

Stop Loss: 47.75
Target(s): 49.75
Current Gain/Loss: + 2.1%

Entry on May 16 at $46.75
Listed on May 14, 2013
Time Frame: 4 to 8 weeks
Average Daily Volume = 2.2 million
New Positions: see below

Comments:
05/25/13: The dip in DLPH on Friday morning was just a little too deep. The stock traded down to $47.71 before bouncing. That was enough to hit our stop loss at $47.75. On the daily chart it looks like a test of the simple 10-dma and DLPH could definitely bounce from here.

While our trade has been closed I would keep DLPH on your watch list. A correction back toward the bottom of the larger up trend could be a great entry point to hop on board again.

closed Position: Long DLPH stock @ $46.75 exit $47.75 (+2.1%)

05/24/13 stopped out @ 47.75
05/21/13 new stop loss @ 47.75
05/20/13 new stop loss @ 46.75
05/18/13 new stop loss @ 45.95

chart:



CLOSED BEARISH PLAYS

Vitamin Shoppe, Inc. - VSI - close: 44.86 change: -0.04

Stop Loss: 45.75
Target(s): 40.25
Current Gain/Loss: - 0.3%

Entry on May 21 at $44.48
Listed on May 20, 2013
Time Frame: 6 to 8 weeks
Average Daily Volume = 587 thousand
New Positions: see below

Comments:
05/25/13: VSI was not cooperating so we decided in the Thursday night newsletter to exit on Friday morning at the open. Shares opened lower at $44.61, dipped to $43.84 and then rebounded. The stock looks poised to breakout past its simple 10-dma soon.

*Small Positions*

closed Position: short VSI stock @ $44.48 exit @ $44.61 (-0.3%)

05/24/13 scheduled exit at the open
05/23/13 prepare to exit tomorrow at the opening bell

chart: