Stocks initially spiked on the Fed news but eventually the rally faded. Traders started taking profits deeper into the afternoon.

Editor's Note:

Stocks have been very overbought so a pull back would be both normal and healthy. However, I expect any profit taking to be shallow. There are too many traders waiting on the sidelines to buy the dip.


CALL Play Updates

Alcon Inc. - ACL - close: 143.53 change: +3.30 stop: 129.49

Target achieved. ACL exploded higher this morning and reached $144.93 by late this afternoon. I don't see any specific news to account for the sudden relative strength. Our first target to take profits was at $142.50. If the stock corrects I would look for support near $133.50. Thus I'm raising our stop loss to $132.99. I'm not suggesting new positions at this time. Our second target is $148.00.

Chart:

Picked on September 10 at $136.75
Change since picked:       + 6.78
                             /1st target hit @ 142.50 (+4.2%)
Earnings Date            10/21/09 (unconfirmed)
Average Daily Volume =        299 thousand 
Listed on September 10, 2009         


Allegheny Tech. - ATI - close: 35.46 change: -0.31 stop: 30.99

ATI hit $36.95 before reversing, which is really frustrating since our second target was $37.00. More conservative traders will want to seriously consider an early exit right here! I'm not suggesting new positions. Look for support near $32.00.

Picked on   August 31 at $ 30.25 *triggered         
Change since picked:      + 5.21
                               /1st target hit @ 33.85 (+11.9%)
Earnings Date           10/21/09 (unconfirmed)
Average Daily Volume =       2.7 million  
Listed on August 27, 2009         


Best Buy Inc. - BBY - close: 38.30 change: -0.02 stop: 36.45

BBY is still churning sideways in the $38-39 zone. The stock remains under short-term resistance at its 10-dma. The longer-term trend of higher lows is still in place but I'm not suggesting new positions at this time. I suspect BBY will retest the 50-dma near $37.50. Wait for another bounce from the $37.50 region. Our first target to take profits is at $41.40. Our second target 46.50. The Point & Figure chart is bullish with a $54 target.

Picked on September 21 at $ 38.45
Change since picked:       - 0.15
Earnings Date            12/16/09 (unconfirmed)
Average Daily Volume =        8.7 million  
Listed on September 21, 2009         


Caterpillar - CAT - close: 53.14 change: -1.20 stop: 47.49

We've been hoping for some profit taking in CAT so we can jump on board. I am raising our trigger to buy calls from $50.00 to $50.50.

If we are triggered at $50.00 our first target is $54.50. Our second target is $59.00. FYI: The P&F chart is bullish with an $85 target.

Picked on September xx at $ xx.xx <-- TRIGGER @ 50.50
Change since picked:       + 0.00
Earnings Date            10/20/09 (unconfirmed)
Average Daily Volume =         10 million  
Listed on September 19, 2009         


CF Industries - CF - close: 87.59 change: -1.30 stop: 84.75

I am expecting a dip back toward $86.00 and possibly the $85-84 zone, which means our stop loss might be a little too tight. More conservative traders may want to exit now and return once we see shares bounce. I'm not suggesting new positions at this time. Wait for a bounce.

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.

Picked on September 05 at $ 85.93
Change since picked:       + 1.66
Earnings Date            10/27/09 (unconfirmed)
Average Daily Volume =        653 thousand 
Listed on September 05, 2009         


Compass Minerals - CMP - close: 59.64 chg: -0.26 stop: 54.75

CMP held up reasonably well and bounced again from its rising 10-dma. If the market does see a little correction I would expect CMP to dip towards the $56.00 level. I'm not suggesting new positions at this time. 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.

Picked on September 03 at $ 55.55
Change since picked:       + 4.09
                               /1st target hit @ 59.75 (+7.5%)
Earnings Date            10/28/09 (unconfirmed)
Average Daily Volume =        415 thousand 
Listed on September 02, 2009         


Consol Energy - CNX - close: 46.89 change: -2.39 stop: 39.45

CNX hit some profit taking with a 4.8% decline. Hopefully it continues. Our plan is to buy a dip into the $44.00-42.50 zone.

If triggered our first target is $48.50. Our second target is $52.40. We'll plan to exit ahead of the late October earnings report. FYI: The Point & Figure chart is forecasting a $73 target.

Picked on September xx at $ xx.xx <-- TRIGGER 44.00
Change since picked:       + 0.00
Earnings Date            10/22/09 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on September 19, 2009         


Danaher Corp. - DHR - close: 67.76 change: -0.54 stop: 63.95

We've been expecting a correction in DHR for several days now. Keep an eye on the $65.00 region. 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.

Picked on September 05 at $ 66.37 (buy 1/2 position)
               /originally listed at $65.76, gap higher entry @ 66.37
Change since picked:       + 1.42
Earnings Date            10/15/09 (unconfirmed)
Average Daily Volume =        2.4 million  
Listed on September 05, 2009         


Diamond Offshore - DO - close: 93.23 change: -2.17 stop: 88.49

Hmm... it looks like DO is setting up for another test of support near $90.00 and its rising 50-dma. The weekly oil inventory report came in worse than expected and crude oil futures plunged. This undercut the oil stocks and DO lost 2.2%. Wait for a bounce from $90.00 before launching new call positions. 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.

Picked on September 15 at $ 94.69 *adjusted entry point
Change since picked:       - 1.26
Earnings Date            10/22/09 (unconfirmed)
Average Daily Volume =        1.8 million  
Listed on September 12, 2009         


Flowserve - FLS - close: 100.27 change: -0.59 stop: 88.95

FLR held up very well considering how overbought the stock is. Nothing has changed for us. Our trigger to buy calls is at $95.00. A normal 38.2% Fib retracement of the September rally would be a dip near $94.50. g

If we are triggered our first target is $99.25. Our second target is $107.50. However, we will plan to exit ahead of the late October earnings report. FYI: The P&F chart is bullish with a $128 target.

Picked on September xx at $ xx.xx <-- TRIGGER @ 95.00
Change since picked:       + 0.00
Earnings Date            10/28/09 (unconfirmed)
Average Daily Volume =        1.2 million  
Listed on September 19, 2009         


General Dynamic - GD - close: 63.23 change: -0.63 stop: 57.85

GD is starting to slide. If the market sees any follow through on today's reversal then we have a good shot at being triggered. Our plan is to buy calls on a dip at $61.00. More conservative traders may want to wait for a dip near $60.00.

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

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: 31.72 change: -0.22 stop: 29.90

The railroad sector index lost 1.7%. GWR only gave up 0.6%. The short-term trend looks bearish and I would expect another dip toward the $31.00-30.00 zone.

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.

Picked on   August 15 at $ 28.66 /gap down entry
                               /originally listed at $29.30
Change since picked:      + 3.06
                              /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: 89.40 change: -1.47 stop: 87.40

Short-term technicals are turning bearish on GWW. The stock should find some support in the $88.50-88.00 zone but I wouldn't put a lot of faith in it. I'm not suggesting new positions at this time. Our first target is $93.50. Our second target is $97.50.

Picked on September 1 at $ 86.00 *triggered  
Change since picked:      + 3.40
Earnings Date           10/14/09 (unconfirmed)
Average Daily Volume =       635 thousand 
Listed on August 22, 2009         


Intl. Bus. Mach. - IBM - close: 120.82 chg: -0.79 stop: 117.75

Short-term this late day reversal and failed rally near its September highs is bearish. The question is will support at $120.00 hold. More conservative traders may want to tighten their stops closer to $120. Wait for a bounce near $120 before considering new bullish positions. 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.

Picked on September 16 at $121.82
Change since picked:       - 1.00
Earnings Date            10/15/09 (unconfirmed)
Average Daily Volume =        5.3 million  
Listed on September 16, 2009         


iShares Financials - IYF - close: 53.08 change: -0.99 stop: 49.49

Financial stocks plunged in the last 30 minutes of trading. I would expect the IYF to fall toward $52.00 if not lower. Wait for a bounce before considering new positions. Our first target is $57.00. Our second target is $60.00.

Picked on September 15 at $ 52.60 *triggered  
Change since picked:       + 0.48
Earnings Date            00/00/00
Average Daily Volume =        5.1 million  
Listed on September 01, 2009         


Mettler Toledo - MTD - close: 90.69 change: -0.29 stop: 87.49

The bounce from $90.00 has reversed. I would expect a dip toward the $89-88 zone. Wait for a bounce before considering new 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.

Picked on   August 27 at $ 88.50 *triggered  (1/4 normal size)
Change since picked:      + 2.19
                             /1st target hit @ 93.50 (+5.6%)
Earnings Date           11/05/09 (unconfirmed)
Average Daily Volume =       234 thousand 
Listed on August 22, 2009         


NYSE Euronext - NYX - close: 29.15 change: -0.67 stop: 27.75

Good news. We might see that dip near $28.00 after all. At this time I'd wait for a bounce before launching new positions. Our first target is $31.95. Our second target is $34.50.

Picked on September 22 at $ 29.82
Change since picked:       - 0.67
Earnings Date            10/30/09 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on September 22, 2009         


Occidental Petrol. - OXY - close: 76.35 change: -1.97 stop: 74.75

The oil inventory numbers came in worse than expected and oil fell sharply. This prompted selling in the oil stocks and OXY gave up 2.5%. I'm not suggesting new positions at this time. OXY has already hit our first target. We're currently aiming for $82.50.

Picked on   August 27 at $ 72.00 *triggered         
Change since picked:      + 4.35
                    /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: 59.05 change: -1.07 stop: 54.95

PPG is retreating from new 2009 highs. Look for support near $56.00. I'm not suggesting new positions at this time. 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.

Picked on   August 28 at $ 55.65
Change since picked:      + 3.40
                             /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: 64.00 change: -0.12 stop: 57.75

We've been waiting for a pull back in SPW. Maybe we'll get one now that the market is sliding. Our trigger to buy calls is at $61.00. If triggered our first target is $64.95. Our second target is $68.75.

Picked on September xx at $ xx.xx <-- TRIGGER @ 61.00
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: 70.53 change: +2.24 stop: 63.25

SOHU displayed relative strength with a 3.2% gain. Sadly we haven't been triggered yet. We're still waiting for a dip to $67.50. More aggressive traders may want to buy calls on this bounce today instead.

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

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         


Waters Corp. - WAT - close: 55.48 change: -0.28 stop: 49.30

Nothing has changed from my prior comment. We're still sitting on the sidelines waiting for a dip.

Currently the plan is to buy calls on a pull back 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.

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         


Wells Fargo - WFC - close: 28.76 change: -0.63 stop: 27.25

The bullish bounce in WFC has stalled a bit. Look for another bounce from the $28.00 level before considering new bullish positions. Our first target is $32.50. Our second target is $34.75 but we may not have time. The plan is to exit ahead of the mid October earnings report.

Picked on September 22 at $ 29.39
Change since picked:       - 0.63
Earnings Date            10/14/09 (unconfirmed)
Average Daily Volume =         42 million  
Listed on September 22, 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: 30.34 change: -0.97 stop: n/a

CI has pulled back toward the $30.00 level again. If you were looking for a new entry point this is it. Readers may want to use November or January options instead of Octobers.

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.

Picked on September 08 at $ 29.40
Change since picked:       + 0.94
Earnings Date            11/05/09 (unconfirmed)
Average Daily Volume =        3.8 million  
Listed on September 08, 2009         



CLOSED BULLISH PLAYS

State Street (Bank) STT - close: 50.65 change: -2.62 stop: 49.45

I am suggesting an early exit out of STT. The stock has been under performing its peers this week. Must be too many weak hands holding the stock. Shares really under performed today with a 4.9% decline. There is a chance the stock finds support at $50.00 but I'd rather exit now with the close under its 50-dma.

Chart:

Picked on   August 31 at $ 52.00 
Change since picked:      - 1.35 <-- early exit @ 50.65 (-2.5%)
                             /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: 27.58 change: -1.01 stop: 27.49

I am dropping UNH as a bullish candidate. We were expecting healthcare stocks to rally once Congress returned to their fall session. The opposite has occurred. UNH is now breaking down. Our play was never opened with a trigger to buy calls at $30.55.

Chart:

Picked on   August xx at $ xx.xx <-- TRIGGER @ 30.55
Change since picked:      + 0.00                    *never opened*
Earnings Date           10/20/09 (unconfirmed)
Average Daily Volume =       9.2 million  
Listed on August 29, 2009         


U.S. Oil Fund - USO - close: 35.13 change: -1.85 stop: 34.95

Uh-oh! Our call play on the USO looks like it's in serious trouble. Analysts were expecting the weekly crude oil stockpiles to fall more than two million barrels. Instead the EIA said inventories rose more than two million barrels. This prompted a lot of selling in the oil futures and the USO plunged through technical support. The close looks like a clear bearish breakdown. I'm suggesting an early exit now!

Chart:

Picked on   August 31 at $ 36.50 
Change since picked:      - 1.37 <-- early exit @ 35.13 (-3.7%)
Earnings Date           00/00/00
Average Daily Volume =      11.5 million  
Listed on August 15, 2009