Editor's Note:
The market was in rally mode on Monday and stocks produced a broad-based move higher.

The S&P 500 and the Dow Industrials both closed at new record highs. If this rally continues it could cause shorts to panic. We already saw a lot of short covering this morning. Everything that was sinking last week produced a big oversold bounce today. If this continues it's going to be hard to make any money on bearish trades.

CHK was triggered. SIX has been removed.
ACAT, BC, CRAY, and DSW were stopped out.
We want to exit our JCI trade tomorrow morning.


Current Portfolio:


BULLISH Play Updates

Allegheny Technologies - ATI - close: 42.35 change: +0.74

Stop Loss: 40.60
Target(s): to be determined
Current Gain/Loss: + 1.4%

Entry on May 08 at $41.75
Listed on May 03, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 2.2 million
New Positions: see below

Comments:
05/12/14: ATI managed to keep pace with the NASDAQ's rally and both closed up about +1.76%. This is a new 52-week closing high for ATI.

*small positions*

Current Position: Long ATI stock @ $41.75

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

Long Jul $40 call (ATI1419G40) entry $2.80

05/08/14 new stop @ 40.60
05/08/14 triggered @ 41.75



Chesapeake Energy - CHK - close: 30.33 change: +0.52

Stop Loss: 28.90
Target(s): to be determined
Current Gain/Loss: + 0.6%

Entry on May 12 at $30.15
Listed on May 10, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 8.5 million
New Positions: see below

Comments:
05/12/14: Our brand new play on CHK is open. Shares displayed relative strength with a +1.74% gain and a bullish breakout past resistance at $30.00. Our suggested entry point to open positions was hit at $$30.15.

I'm not setting an exit target yet but the Point & Figure chart for CHK is bullish with a $34.00 target.

current Position: Long CHK stock @ $30.15

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

Long Jul $30 call (CHK140719C30)* entry $1.53

05/12/14 triggered @ 30.15
*I've provided the more standardized option symbol format.
symbol-year-month-day-call-strike



Delta Air Lines - DAL - close: 38.65 change: +0.98

Stop Loss: 36.45
Target(s): to be determined
Current Gain/Loss: + 2.7%

Entry on May 05 at $37.65
Listed on May 03, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 13.5 million
New Positions: see below

Comments:
05/12/14: DAL surged +2.6% and set a new all-time closing high today. I am raising our stop loss to $36.45.

Current Position: long DAL stock @ $37.65

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

Long Sept $40 call (DAL1420i40) entry $2.20*

05/12/14 new stop @ 36.45
05/07/14 new stop @ 35.75
05/05/14 triggered @ 37.65
*option entry price is an estimate since the option did not trade at the time our play was opened.



BEARISH Play Updates

Johnson Controls Inc. - JCI - close: 45.32 change: +0.82

Stop Loss: 45.75
Target(s): to be determined
Current Gain/Loss: - 3.6%

Entry on April 28 at $43.75
Listed on April 26, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 3.5 million
New Positions: see below

Comments:
05/12/14: Shares of JCI also shot higher this morning. I do find it interesting that the rally stalled at its 20-dma. However, we are suggesting an immediate exit tomorrow morning.

Current Position: short JCI stock @ $43.75

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

Long Jul $40 PUT (JCI1419S40) entry $0.63*

05/12/14 prepare to exit tomorrow morning
04/28/14 triggered @ 43.75
*option entry price is an estimate since the option did not trade at the time our play was opened.



Noodles & Co. - NDLS - close: 32.44 change: +1.52

Stop Loss: 33.25
Target(s): to be determined
Current Gain/Loss: -4.4%

Entry on May 09 at $31.25
Listed on May 08, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 288 thousand
New Positions: see below

Comments:
05/12/14: Just about everything reversed higher today and NDLS was no exception. Short covering helped fuel a +4.9% bounce and a close back above the $32.00 level. More conservative traders may want to lower their stop loss. I am not suggesting new positions at this time.

Earlier Comments:
There are already a lot of bears in the name with the most recent data listing short interest at 27% of the 21.2 million share float. That does raise our risk of a short squeeze and investors might want to buy puts instead of shorting the stock.

current Position: short NDLS stock @ $31.08

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

Long Jun $30 PUT (NDLS14R30) entry $1.55*

05/09/14 triggered on gap down at $31.08, suggested entry point was $31.25
*option entry price is an estimate since the option did not trade at the time our play was opened.



Pacific Ethanol, Inc. - PEIX - close: 11.43 change: +0.77

Stop Loss: 13.05
Target(s): to be determined.
Current Gain/Loss: +13.7%

Entry on May 05 at $13.25
Listed on May 01, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 2.2 million
New Positions: see below

Comments:
05/12/14: PEIX bounced from technical support at its 100-dma. After plunging in the prior two weeks the stock produced a pretty hefty bounce today with a +7.2% gain. More conservative investors may want to exit immediately. I am not suggesting new positions at this time.

Earlier Comments:
PEIX is short-term oversold here and could very well bounce. Our target to exit the rest of our positions is $8.50.

This should be considered an aggressive, higher-risk trade. You may want to use the put options to limit your risk. There are already a lot of shorts in this name with the latest data listing short interest at 17.7% of the very small 17.4 million share float.

*small positions*

current Position: short PEIX stock @ $13.25

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

Long Jun $12.50 PUT (PEIX1421R12.5) entry $1.15*

05/09/14 1st target hit to sell half at $10.50
PEIX exit (1/2) at $10.50 (+20.7%)
PEIX Jun $12.50 PUT exit (1/2) at $10.50, option $2.65 (+130.4%)
option exit price is an estimate since the option did not trade at the time our play was closed.
05/07/14 new stop @ 13.05
We want to exit HALF of our position(s) at $10.50
05/06/14 new stop @ 13.75
05/05/14 triggered @ 13.25
*option entry price is an estimate since the option did not trade at the time our play was opened.



Prothena Corp. - PRTA - close: 20.86 change: +1.48

Stop Loss: 20.15
Target(s): to be determined
Current Gain/Loss: unopened

Entry on May -- at $--.--
Listed on May 10, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 682 thousand
New Positions: Yes, see below

Comments:
05/12/14: Biotech stocks were some of the market's best performers today. PRTA outperformed its peers with a +7.6% bounce. If you look at the intraday chart you'll notice that the rebound had a lot of trouble with resistance in the $21.00-21.20 zone. Currently we are still on the sidelines. If the bounce continues tomorrow we'll likely remove PRTA as a candidate.

Earlier Comments:
Tonight we're suggesting small bearish positions if PRTA trades at $18.40. You could use options to try and limit your risk but the option spreads are so wide we do not want to play them.

Trigger @ $18.40 *small positions*

Suggested Position: short PRTA stock @ (trigger)



Youku Tudou Inc. - YOKU - close: 21.30 change: +0.33

Stop Loss: 22.40
Target(s): to be determined
Current Gain/Loss: + 9.2%

Entry on April 28 at $23.45
Listed on April 26, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 4.1 million
New Positions: see below

Comments:
05/12/14: The Chinese stock market had a big bounce today so I was surprised to see that YOKU did not produce a bigger move. The stock did bounce and gained +1.5% but remains under short-term resistance at its 10-dma.

I am not suggesting new positions at this time.

Earlier Comments:
I would consider this an aggressive trade because YOKU can be a volatile stock and the most recent data listed short interest at 8% of the 80.6 million share float. FYI: The P&F chart is very bearish and forecasting at $10 target.

*small positions*

current Position: short YOKU stock @ $23.45

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

Long Jun $20 PUT (YOKU1421R20) entry $1.05

05/10/14 new stop @ 22.40
05/08/14 new stop @ 22.60
05/07/14 testing the $20.00 level, readers may want to take profits right here!
05/05/14 new stop @ 23.60
04/28/14 triggered @ 23.45




CLOSED BULLISH PLAYS

Six Flags Entertainment - SIX - close: 40.96 change: -0.03

Stop Loss: 38.90
Target(s): 49.00
Current Gain/Loss: unopened

Entry on May -- at $--.--
Listed on May 07, 2014
Time Frame: 9 to 12 weeks
Average Daily Volume = 807 thousand
New Positions: see below

Comments:
05/12/14: I was surprised to find SIX underperforming the market today. Shares churned sideways and closed virtually unchanged. I couldn't find any news to explain the relative weakness.

Big picture the trend on SIX still looks bullish. Patient investors may want to give SIX more time. The stock seems to be moving too slow for the newsletter.

Trade did not open.

05/12/14 removed from the newsletter, suggested trigger was $41.50

chart:



CLOSED BEARISH PLAYS

Arctic Cat Inc. - ACAT - close: 40.63 change: +2.03

Stop Loss: 40.55
Target(s): to be determined
Current Gain/Loss: - 2.2%

Entry on May 07 at $39.75
Listed on April 29, 2014
Time Frame: Exit PRIOR to earnings on May 15th
Average Daily Volume = 159 thousand
New Positions: see below

Comments:
05/12/14: The blue-chip rally to new highs sparked some short covering in ACAT. The stock surged +5.25% and broke through resistance near $40 and its 10-dma. Our stop loss was hit at $40.55.

closed Position: short ACAT stock @ $39.66 exit $40.55 (-2.2%)

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

May $40 PUT (ACAT1417Q40) entry $2.15* exit $1.60** (-25.5%)

05/12/14 stopped out
**option exit price is an estimate since the option did not trade at the time our play was closed.
05/10/14 new stop $ 40.55
05/07/14 opened @ 39.66, suggested trigger was $39.75
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:



Brunswick Corp. - BC - close: 41.60 change: +2.31

Stop Loss: 41.15
Target(s): 32.00
Current Gain/Loss: - 5.0%

Entry on May 07 at $39.20
Listed on May 06, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 1.0 million
New Positions: see below

Comments:
05/12/14: BC also saw some short covering this morning. The stock gapped open higher at $39.71 and then sprinted toward its exponential 200-dma. Shares surged to a +5.8% gain. Our stop loss was hit at $41.15.

closed Position: short BC stock @ $39.20 exit $41.15 (-5.0%)

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

Jun $40 PUT (BC1421R40) entry $1.95* exit $0.85 (-56.4%)

05/12/14 stopped out
05/07/14 triggered @ 39.20
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:



Cray Inc. - CRAY - close: 27.41 change: +1.33

Stop Loss: 27.25
Target(s): to be determined
Current Gain/Loss: + 1.4%

Entry on May 06 at $27.65
Listed on May 05, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 464 thousand
New Positions: see below

Comments:
05/12/14: I have been warning investors that the $25 level could be support. The market's big bounce today sparked some short covering in CRAY and shares surged +5.0%. Our stop loss was hit at $27.25.

closed Position: short CRAY stock @ $27.65 exit $27.25 (+1.4%)

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

Jul $25 PUT (CRAY1419S25) entry $1.55 exit $1.50* (-3.2%)

05/12/14 stopped out
*option exit price is an estimate since the option did not trade at the time our play was closed.
05/08/14 new stop @ 27.25
05/07/14 readers may want to take some money off the table
05/06/14 triggered@ 27.65

chart:



DSW Inc. - DSW - close: 34.71 change: +1.41

Stop Loss: 34.10
Target(s): to be determined
Current Gain/Loss: - 0.2%

Entry on April 21 at $34.02
Listed on April 19, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 1.25 million
New Positions: see below

Comments:
05/12/14: DSW also saw short covering this morning. When the stock broke through resistance the oversold bounce accelerated. The stock closed the session with a +4.2% gain. Our stop loss was hit at $34.10.

closed Position: short DSW stock @ $34.02 exit $34.10 (-0.2%)

05/12/14 stopped out
05/07/14 caution, DSW could be forming a bullish double bottom
05/06/14 new stop loss @ 34.10
04/26/14 new stop loss @ 34.55

chart: