Stocks look short-term overbought but we can expect any pull back to be shallow.


CALL Play Updates

Alcon Inc. - ACL - close: 139.65 change: -0.06 stop: 129.49

There appears to be a bad tick at the open on Friday morning with ACL at $133.25. The rest of the day was spent between $139.00 and $140.50. The market looks a little overbought and if the S&P 500 corrects ACL could dip back toward the $136 or $134 levels. I encourage readers to wait for a dip before launching new positions. Our first target is $142.50. Our second target is $148.00.

Suggested Options:
If ACL provides a new entry point I would buy the October or November calls.

Annotated Chart:

Picked on September 10 at $136.75
Change since picked:       + 2.90
Earnings Date            10/21/09 (unconfirmed)
Average Daily Volume =        299 thousand 
Listed on September 10, 2009         


Allegheny Tech. - ATI - close: 34.86 change: -0.39 stop: 30.99

ATI also looks overbought with the rally from its September lows. If shares correct look for support near its 100-dma and exponential 200-dma or prior resistance near $32.00. I'm not suggesting new positions at this time. ATI has already exceeded our first target. We're currently aiming for $37.00.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on   August 31 at $ 30.25 *triggered         
Change since picked:      + 4.61
                               /1st target hit @ 33.85 (+11.9%)
Earnings Date           10/21/09 (unconfirmed)
Average Daily Volume =       2.7 million  
Listed on August 27, 2009         


CF Industries - CF - close: 90.19 change: +0.13 stop: 84.75

CF gapped open on Friday morning and almost hit $92.00. Shares spent the rest of the day bouncing around the $90-92 zone. Technically the close above $90 is bullish but if the market corrects I would expect another dip towards $86.00. Wait for another bounce near $86 before considering new bullish positions. Our first target to take profits is at $92.50. Our second target is $98.00. FYI: The P&F chart has a quadruple-top bullish breakout buy signal with a $99 target.

FYI: Agrium (AGU) is trying to buy CF but CF keeps rejecting the offer calling it too late. At the same time CF is trying to buy Terra Industries (TRA) and TRA keeps rejecting the offer calling it too low. Eventually one of these companies is going to give up or they're finally going to make a big enough offer or somebody else might step in and start bidding. There is a risk that someone bids too much and the market could think they overpaid, which might push the stock lower. This M&A dance has been going on for months and it will probably continue for months so I'm not expecting it to have much short-term impact on the stock. However, it's worth noting that CF recently filed a lawsuit to force TRA to hold their annual shareholder meeting. This way CF can try and vote some members onto the board of directors.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on September 05 at $ 85.93
Change since picked:       + 4.26
Earnings Date            10/27/09 (unconfirmed)
Average Daily Volume =        653 thousand 
Listed on September 05, 2009         


Compass Minerals - CMP - close: 59.50 chg: +1.33 stop: 54.75

CMP displayed some relative strength with a 2.2% gain and a bounce from the $58 level near its rising 10-dma. The $60.00 level could be round-number resistance and I would look for a dip back towards $56.00 before considering new positions. CMP has already hit our first target at $59.75. Our second and final target is $64.00. FYI: The Point & Figure chart has turned bullish with a $69 target.

Suggested Options:
No new positions at this time. If CMP provided a new entry point I'd use the October or December calls.

Annotated Chart:

Picked on September 03 at $ 55.55
Change since picked:       + 3.95
                               /1st target hit @ 59.75 (+7.5%)
Earnings Date            10/28/09 (unconfirmed)
Average Daily Volume =        415 thousand 
Listed on September 02, 2009         


Danaher Corp. - DHR - close: 68.15 change: -0.46 stop: 63.95 *new*

DHR has been looking overbought and vulnerable for a few days now. It's small and a little hard to see but Friday's session did produce a bearish engulfing candlestick pattern. I would expect a correction toward the $65.00 level. Wait for the bounce before considering new positions. I'm upping our stop loss to $63.95. Our first target is $69.50. The Point & Figure chart is bullish with a $77 target.

Currently we only have half a position open to limit our risk given the aggressive entry point.

Suggested Options:
No new positions at this time. If DHR provided a new entry point I'd use the October or December calls.

Annotated Chart:

Picked on September 05 at $ 66.37 (buy 1/2 position)
               /originally listed at $65.76, gap higher entry @ 66.37
Change since picked:       + 1.78
Earnings Date            10/15/09 (unconfirmed)
Average Daily Volume =        2.4 million  
Listed on September 05, 2009         


Diamond Offshore - DO - close: 93.99 change: -1.37 stop: 88.49 *new*

A bounce in the dollar took some area out of crude oil and the oil service stocks hit some profit taking. DO has some very short-term support at $92.00 and should find stronger support near $90.00 with its rising 50-dma and its trendline of higher lows. I would buy calls on a bounce from either (92 or 90). Please note I'm raising the stop loss to $88.49. The plan was to use small position sizes.

We will take some money off the table at $99.90 (1st target). Our second target is $104.50. More aggressive traders can aim for $110. The P&F chart is forecasting a $114 target.

Suggested Options:
I would use the October or December calls if DO does bounce from one of the support levels listed. My preference would be the $90 or $95 calls.

Annotated Chart:

Picked on September 15 at $ 94.69 *adjusted entry point
Change since picked:       - 0.70
Earnings Date            10/22/09 (unconfirmed)
Average Daily Volume =        1.8 million  
Listed on September 12, 2009         


General Dynamic - GD - close: 64.61 change: +0.18 stop: 57.85

The defense sector indices have broken out to new highs and look even more overbought than the major market averages. When these correct I expect GD to follow them lower. That's why we're waiting for a dip to buy calls at $61.00.

Our first target is $64.90. Our second target is $69.00. Investors with a longer-term time frame may want to aim a lot higher. GD has produced an inverse H&S pattern that is forecasting an $85

Suggested Options:
At this point I prefer the November calls and if GD hits our trigger I'd favorite would be the November $60 (GD-KL) or $65 (GD-KM) strikes.

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER @ 61.00
Change since picked:       + 0.00
Earnings Date            10/28/09 (unconfirmed)
Average Daily Volume =        2.3 million  
Listed on September 09, 2009         


Genesse & Wyoming - GWR - close: 32.27 change: +0.55 stop: 29.90 *new*

The railroad stocks have been under performing all week. GWR out performed its peers on Friday with a rally from its morning lows and a 1.7% gain. I am raising our stop loss to $29.90. We've already taken profits once and our second target is $34.75. I am not suggesting new bullish positions at this time.

We want to use small position sizes to limit our risk.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on   August 15 at $ 28.66 /gap down entry
                               /originally listed at $29.30
Change since picked:      + 3.62
                              /take profits 09/16/09 @ 32.45 (+13.2%)
Earnings Date           11/03/09 (unconfirmed)
Average Daily Volume =       230 thousand
Listed on August 15, 2009         


Grainger W.W. - GWW - close: 90.91 change: +0.94 stop: 87.40

GWW displayed a little strength with a new bounce back above $90.00. The trend is bullish but if the market corrects we can expect GWW to follow. I wouldn't be surprised to see GWW retest the $88.00 level if the S&P 500 dips. Readers can choose to buy this breakout over $90.00 or look for another dip. Our first target is $93.50. Our second target is $97.50.

Suggested Options:
I would use the October calls.

Annotated Chart:

Picked on September 1 at $ 86.00 *triggered  
Change since picked:      + 4.91
Earnings Date           10/14/09 (unconfirmed)
Average Daily Volume =       635 thousand 
Listed on August 22, 2009         


Intl. Bus. Mach. - IBM - close: 122.11 chg: +0.23 stop: 117.75

IBM spiked higher Friday morning after an analyst raised their price target toward $145. The stock spent the rest of the day hovering around $122.00. Broken resistance near $120 should be new support. I would look for dips near $120 as entry points. Our first target to take profits is at $126.00. Our second target is $129.75. We will plan to exit ahead of IBM's earnings report in mid October.

Suggested Options:
We want to use October calls. I prefer the $120s or $125s.

Annotated Chart:

Picked on September 16 at $121.82
Change since picked:       + 0.29
Earnings Date            10/15/09 (unconfirmed)
Average Daily Volume =        5.3 million  
Listed on September 16, 2009         


iShares Financials - IYF - close: 53.66 change: -0.04 stop: 49.49

After a two and a half week rally the financials look a little tired. Broken resistance near $52.00 should offer a little bit of support. I would wait for a dip and a bounce from $52.00 or the $50.00 level before considering new bullish positions. Our first target is $57.00. Our second target is $60.00.

Suggested Options:
I prefer the November calls.

Annotated Chart:

Picked on September 15 at $ 52.60 *triggered  
Change since picked:       + 1.06
Earnings Date            00/00/00
Average Daily Volume =        5.1 million  
Listed on September 01, 2009         


Mettler Toledo - MTD - close: 92.87 change: -0.05 stop: 86.95

MTD continues to show strength although shares look short-term overbought. I would look for a dip and a bounce near $88.00 or its rising 30-dma before considering new bullish positions. MTD has already hit our first target at $93.50. Our second target is $99.00. I am labeling this an aggressive play because volume is pretty light for this stock.

Suggested Options:
If MTD provides a new entry point I'd use the October calls.

Annotated Chart:

Picked on   August 27 at $ 88.50 *triggered  (1/4 normal size)
Change since picked:      + 4.37
                             /1st target hit @ 93.50 (+5.6%)
Earnings Date           11/05/09 (unconfirmed)
Average Daily Volume =       234 thousand 
Listed on August 22, 2009         


Occidental Petrol. - OXY - close: 77.15 change: -1.49 stop: 73.75

OXY was downgraded from a "strong buy" to an "out perform" on Friday morning, which exacerbated the profit taking. Shares fell toward $76 and the rising 10-dma. I would expect the dip to continue. Look for a bounce from $75.00 or $74.00 before considering new bullish positions. OXY has exceeded our first target and we're currently aiming for $79.85 but I'm tempted to raise the second target toward $82.50. The P&F chart is bullish with a $92 target.

Suggested Options:
If OXY provides a new entry point I'd use the October or November calls. My preference would be Novembers.

Annotated Chart:

Picked on   August 27 at $ 72.00 *triggered         
Change since picked:      + 5.15
                    /1st target exceeded, gap higher @ 77.23 (+7.2%)
Earnings Date           10/28/09 (unconfirmed)
Average Daily Volume =       5.0 million  
Listed on August 26, 2009         


PPG Inds. Inc. - PPG - close: 59.65 change: +0.37 stop: 54.95

PPG is still testing resistance at $60.00. I would expect another dip back toward the $56-55 zone. Wait for a bounce before considering new positions. PPG has already exceeded our first target and we're currently aiming for $63.00. The P&F chart is very bullish with a $90 target.

Suggested Options:
If PPG provides a new entry point I'd use the October or November calls. My preference would be Novembers.

Annotated Chart:

Picked on   August 28 at $ 55.65
Change since picked:      + 4.00
                             /1st target exceeded @ 60.05 (7.9%)
Earnings Date           10/27/09 (unconfirmed)
Average Daily Volume =       1.6 million  
Listed on August 27, 2009         


SPX Corp. - SPW - close: 63.82 change: +0.31 stop: 57.25

SPW has turned sideways the last few days. If the S&P 500 pulls back we have a good chance of catching SPW near $60.00. More conservative traders could try and wait for a dip near $58.50 instead. Our plan is to buy calls at $60.50. If triggered our first target is $64.00. Our second target is $68.50.

Suggested Options:
If triggered we want to use the October or December calls (I don't see any Novembers available). My preference would be the December $60s (SPW-LL) or the $65s (SPW-LM).

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER @ 60.50
Change since picked:       + 0.00
Earnings Date            10/28/09 (unconfirmed)
Average Daily Volume =        570 thousand 
Listed on September 12, 2009         


SOHU.com Inc. - SOHU - close: 69.27 change: -1.63 stop: 63.25

SOHU is starting to correct. If the market dips this week we have a good chance to getting triggered. Our plan is to buy calls at $67.50. More conservative traders may want to wait for a dip closer to the $66.00-65.00 zone.

Our first target is $72.50. Our second target is $77.00.

Suggested Options:
We want to trade the October or December calls (I don't see any Novembers available). My preference would be the December $70s (TKZ-LN).

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER @ 67.50
Change since picked:       + 0.00
Earnings Date            10/26/09 (unconfirmed)
Average Daily Volume =        577 thousand 
Listed on September 15, 2009         


State Street (Bank) STT - close: 54.39 change: +0.60 stop: 49.45

The financials look a little overbought given their rally off the September lows. STT is not so overbought but could still see a dip back toward $52.00 or its 50-dma. Wait for a bounce before considering new bullish positions. STT has already hit our first target. Our second target is $59.80. Currently the Point & Figure chart is bullish with a $62 target.

Suggested Options:
If STT provides a new entry point I would use the October or November calls.

Annotated Chart:

Picked on   August 31 at $ 52.00 
Change since picked:      + 2.39
                             /1st target hit @ 55.00 (+5.7%)
Earnings Date           10/13/09 (unconfirmed)
Average Daily Volume =       5.3 million  
Listed on August 19, 2009         


United Health - UNH - close: 28.58 change: -0.76 stop: 27.49

The healthcare debate rages on. If it looks like any reform will be toned down to increase the chance of getting passed then healthcare stocks could rally.

Right now the plan is to buy calls on a breakout with a trigger at $30.55. If triggered our first target to take profits is $34.50. Our second target is $37.50.

FYI: Readers may want to consider a strangle or a straddle on this stock instead. That way you don't care what direction it moves. Just make sure you give yourself enough time.

Suggested Options:
If UNH hits our trigger we want to trade the October or December calls (I don't see any Novembers). Just remember that we'll exit ahead of the mid October earnings report.

Annotated Chart:

Picked on   August xx at $ xx.xx <-- TRIGGER @ 30.55
Change since picked:      + 0.00
Earnings Date           10/20/09 (unconfirmed)
Average Daily Volume =       9.2 million  
Listed on August 29, 2009         


U.S. Oil Fund - USO - close: 37.12 change: -0.37 stop: 34.95 *new*

The long-term trend of higher lows is still intact but it's competing with a trend of lower highs. If the dollar begins to bounce it will put pressure on crude oil. I'm inching our stop loss up to $34.95. I would still buy a dip or a bounce from $36.00. Our first target is $39.95. I'm adding a second target at $42.50.

Suggested Options:
I would buy the January calls if the USO provides a new entry point.

Annotated Chart:

Picked on   August 31 at $ 36.50 
Change since picked:      + 0.62
Earnings Date           00/00/00
Average Daily Volume =      11.5 million  
Listed on August 15, 2009         


Waters Corp. - WAT - close: 55.32 change: -0.27 stop: 49.30

WAT has broken out from a multi-week consolidation. We want to buy calls on a dip at $53.50. If triggered our first target is $59.50. The P&F chart is bullish with a $69 target. We do not want to hold over the mid October earnings report.

Suggested Options:
If WAT hits our trigger I would use the October or November calls. My preference would be the November $55s (WAT-KK).

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER 53.50
Change since picked:       + 0.00
Earnings Date            10/20/09 (unconfirmed)
Average Daily Volume =        809 thousand 
Listed on September 12, 2009         


PUT Play Updates

*Currently we do not have any put play updates*


Strangle & Spread Play Updates

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

Cigna Corp. - CI - close: 31.84 change: -0.76 stop: n/a

CI failed twice near $33.00 last week and could retrace towards the $30.00 mark. I would still consider new strangles on a dip in the $30.25-29.75 zone.

The options I suggested were the October $35 calls (CI-JG) and the October $25 puts (CI-VE). Our estimated cost was $1.20. We want to sell if either option hits $2.50 or higher. The closer we can open this trade to $30.00 the better.

Suggested Options:
See above.

Annotated Chart:

Picked on September 08 at $ 29.40
Change since picked:       + 2.44
Earnings Date            11/05/09 (unconfirmed)
Average Daily Volume =        3.8 million  
Listed on September 08, 2009         


CLOSED BULLISH PLAYS

Factset Research - FDS - close: 62.17 chg: -0.18 stop: 57.45

We're almost out of time and I'm suggesting an early exit now. FDS is due to report earnings on Tuesday morning, September 22nd. We could try and hold on one more day and exit on Monday at the close. However, the market looks a little overbought and FDS looks very short-term extended. I'm suggesting an early exit now! FDS has already hit our first target at $62.00.

Chart:

Picked on September 08 at $ 57.55
Change since picked:       + 4.62 <-- early exit (+8.0%)
                               /1st target hit @ 62.00 (+7.7%)
Earnings Date            09/22/09 (confirmed)
Average Daily Volume =        331 thousand 
Listed on September 05, 2009         


Goldman Sachs - GS - close: 183.18 change: +1.72 stop: 166.45

Close enough! GS rallied to $183.95 on Friday afternoon. Our second and final target was $184.00. The stock looks too short-term overbought for us to want to stick around. I'm suggesting readers exit now we can look for a new entry point on a dip and bounce in the $175-170 zone.

Chart:

Picked on September 8 at $166.75
Change since picked:      +16.43<-- early exit (+9.8%)
                             /1st target hit @ 179.00 (+7.3%)
Earnings Date           10/13/09 (unconfirmed)
Average Daily Volume =       8.8 million  
Listed on August 29, 2009         


CLOSED STRANGLE & SPREAD PLAYS

Research In Motion - RIMM - close: 83.61 chg: +0.91 stop: n/a

RIMM gave us a little bounce on Friday and the September $80 calls settled at $3.60. The plan was to exit at the closing bell or at $5.00. Our estimated cost for the strangle was $2.64.

The options suggested were the September $80 calls (RFY-IP) and the September $70 puts (RFY-UN).

Chart:

Picked on   August 25 at $ 75.56
Change since picked:      + 8.05
Earnings Date           09/24/09 (confirmed)
Average Daily Volume =      11.7 million  
Listed on August 25, 2009