We're cutting a couple of stocks from the play list today. The market's lack of follow through on Monday's rebound is a little worrisome.

Editor's Note:

Stocks are likely to trade sideways into the quarter end tomorrow (September 30th). Come Thursday there is going to be a real tug-of-war between traders who want to take profits and money managers who need to put more money to work before their fiscal year ends on October 31st.


CALL Play Updates

Alcon Inc. - ACL - close: 140.13 change: -0.73 stop: 132.99

ACL continues to hover around the $140 level and may continue to do so through tomorrow as the quarter ends. There is no change from my prior comments.

Wait and watch for a bounce near the $136-134 zone before considering new bullish positions. ACL has already hit our first target. Our second target is $148.00.

Picked on September 10 at $136.75
Change since picked:       + 3.38
                             /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: 35.34 change: -0.21 stop: 31.45

ATI also spent the day trading sideways. There is no change from my previous comments.

More conservative traders will want to consider an early exit now. I'm not suggesting new positions until we see ATI test support. ATI has exceeded our first target. We're currently aiming for $37.00.

Picked on   August 31 at $ 30.25 *triggered         
Change since picked:      + 5.09
                               /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: 37.86 change: +0.13 stop: 36.45

The consumer confidence numbers this morning were bearish for retailers so I'm surprised that BBY actually closed in positive territory. Short-term the trend is still down and I will repeat my prior comments. Wait for a move over $38.25 or even $39.00 before launching new positions. 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:       - 0.59
Earnings Date            12/16/09 (unconfirmed)
Average Daily Volume =        8.7 million  
Listed on September 21, 2009         


Caterpillar - CAT - close: 51.60 change: -0.58 stop: 47.49

The bounce in CAT appears to be fading with today's failed rally. Odds just jumped that CAT will test $50 soon. I am lowering our trigger to buy calls from $50.50 to $50.00. More cautious traders may want to wait for a dip near $49.00 instead.

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 @ 50.00
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: 85.84 change: -0.22 stop: 83.65

There was no confirmation of CF's bullish engulfing candlestick from yesterday. That raises the risk that CF's short-term trend lower continues. I'm not suggesting new positions at this time. Another bounce above $84 might change my mind.

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. CF started their bid in January at $2.1 billion, bumped it to $2.2 billion in March, and then raised it to $4 billion in August. TRA has consistently rejected CF's offers.

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.

September 24th TRA announced a one-time, special cash dividend to shareholders of $7.50 per share, worth about $750 million. Details and dates of the dividend are not know yet but it's expected to be paid in the fourth quarter of 2009. It's been suggested that TRA is doing this to make themselves look less attractive to CF.

M&A UPDATE 09/28/09 :
CF is getting more aggressive with its bid to acquire TRA. The company announced this morning that it had already purchased 7 percent of TRA's stock on the open market.

Picked on September 05 at $ 85.93
Change since picked:       - 0.09
Earnings Date            10/27/09 (unconfirmed)
Average Daily Volume =        653 thousand 
Listed on September 05, 2009         


Core Labs - CLB - close: 102.69 change: +0.97 stop: 92.25

Oil service stocks continue to show relative strength. Our plan with CLB is unchanged. We're waiting for a dip to $96.00 to buy calls. If triggered our first target is $104. Our second target is $109.50.

Picked on September xx at $ xx.xx <-- TRIGGER @ 96.00
Change since picked:       + 0.00
Earnings Date            10/22/09 (unconfirmed)
Average Daily Volume =        175 thousand 
Listed on September 23, 2009         


Compass Minerals - CMP - close: 61.52 chg: +0.70 stop: 55.95 *new*

CMP refuses to roll over. The stock hit another new relative high at $61.76 today. I am raising our stop loss to $55.95.

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:       + 5.97
                               /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: 45.32 change: -0.39 stop: 39.45

Some of the short-term technicals on CNX are suggesting the correction is not over yet. If you hadn't bought calls yet consider waiting for a dip near $42.00.

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 25 at $ 43.77 /gap down entry
Change since picked:       + 1.55
Earnings Date            10/22/09 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on September 19, 2009         


Danaher Corp. - DHR - close: 67.38 change: +0.27 stop: 63.95

DHR continues to bounce but I'm not convinced the pull back is over yet. I'm not suggesting new positions at this time.

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:       + 1.01
Earnings Date            10/22/09 (confirmed)
Average Daily Volume =        2.4 million  
Listed on September 05, 2009         


Diamond Offshore - DO - close: 96.32 change: +2.95 stop: 88.49

The rebound in DO continues and the stock out performed its peers and the market with a 3.1% gain. Shares are near their 2009 highs above $96. I'm not suggesting new positions at these levels. We had plenty of entry opportunities on the dip near $90. 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:       + 1.63
Earnings Date            10/22/09 (unconfirmed)
Average Daily Volume =        1.8 million  
Listed on September 12, 2009         


Dril-Quip, Inc. - DRQ - close: 49.77 change: +0.59 stop: 45.90

DRQ continues to show relative strength with a 1.1% gain and another new high. The stock is now testing round-number resistance near $50.00. This is where we should expect a little pull back and possibly a dip back toward $48.00, which can be used as a new entry point. Our first target is $53.00. Our second target is $57.50. The Point & Figure chart is bullish with a $65.00 target.

Picked on September 28 at $ 48.50
Change since picked:       + 1.27
Earnings Date            11/10/09 (unconfirmed)
Average Daily Volume =        282 thousand 
Listed on September 26, 2009         


Flowserve - FLS - close: 97.85 change: -0.93 stop: 87.45 *new*

Take a moment to look at a 30-minute chart of FLS. Now look at the last three weeks. You can see a bearish head-and-shoulders pattern forming. If FLS closes under $96.00 it will break the neckline and the pattern is forecasting a drop from $96 to $90. I'm moving our trigger to buy calls from $95 and moving it lower to $91.00. I'm also adjusting our stop loss down to $87.45. If we're triggered at $91.00 I'll adjust our targets.

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 @ 91.00 *new*
Change since picked:       + 0.00
Earnings Date            10/28/09 (unconfirmed)
Average Daily Volume =        1.2 million  
Listed on September 19, 2009         


Fomento Economico Mex. - FMX - close: 36.78 chg: +0.08 stop: 34.99

Nothing has changed for FMX. The stock continues to hover under resistance near $37.00. Our trigger to buy calls is at $37.55. If triggered our first target is $40.00. Our second target is $42.50. The Point & Figure chart is much more bullish with a $66 target.

Picked on September xx at $ xx.xx <-- TRIGGER @ 37.55
Change since picked:       + 0.00
Earnings Date            10/26/09 (unconfirmed)
Average Daily Volume =        1.0 million  
Listed on September 24, 2009         


General Dynamic - GD - close: 64.47 change: -0.07 stop: 57.85

There wasn't much follow through on GD's rally from Monday.

We'll keep our entry point at $61.00 for now but we might want to raise it toward $62.00.

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         


Illumina Inc. - ILMN - close: 42.10 change: +0.82 stop: 37.45

ILMN has rallied to new 2009 highs. I'm still not willing to chase it. Currently our plan is to buy calls on a dip at $39.10.

If we are triggered at $39.10 our first target is $42.40. Our second target is $46.75 but that's probably being optimistic given our time frame. ILMN reports earnings in less than four weeks. We'll plan to exit before earnings are announced.

Picked on September xx at $ xx.xx <-- TRIGGER @ 39.10
Change since picked:       + 0.00
Earnings Date            10/20/09 (unconfirmed)
Average Daily Volume =        1.6 million  
Listed on September 26, 2009         


iShares Financials - IYF - close: 53.01 change: -0.24 stop: 49.49

Financial stocks stalled on Tuesday. Wait for another bounce before considering new bullish positions. Our first target is $57.00. Our second target is $60.00.

Picked on September 15 at $ 52.60 *triggered  
Change since picked:       + 0.41
Earnings Date            00/00/00
Average Daily Volume =        5.1 million  
Listed on September 01, 2009         


NYSE Euronext - NYX - close: 28.74 change: -0.04 stop: 27.75

NYX pared its gains and closed in negative territory. This has some very short-term indicators suggesting the stock will retest $28.00 and possibly its 100-dma soon. I would consider new positions on another bounce from the $28 level. Our first target is $31.95. Our second target is $34.50.

Picked on September 22 at $ 29.82
Change since picked:       - 1.08
Earnings Date            10/30/09 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on September 22, 2009         


Oil Service Holders - OIH - close: 117.89 chg: +0.49 stop: 112.99

A few individual oil service stocks did well but the sector saw its rally slow down on Tuesday. I'm still bullish here but readers may want to consider waiting for another bounce from the $115 level. Our first target is $124.00.

Please note that this is a slightly aggressive play. The OIH will be strongly influenced by the price of crude oil. Last week oil broke down under a key trendline of support. Yet rising tensions with Iran could keep oil from seeing any significant declines.

Picked on September 28 at $117.40
Change since picked:       + 0.49
Earnings Date            00/00/00
Average Daily Volume =        6.6 million  
Listed on September 28, 2009         


PPG Inds. Inc. - PPG - close: 58.74 change: -0.02 stop: 54.95

The action today looks a bit like a failed rally and suggests the correction in PPG isn't over yet.

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:      + 3.09
                             /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: 61.94 change: +0.46 stop: 57.45

SPW managed to post a gain but it wasn't very convincing. Our plan is to buy calls at $60.00. More cautious traders may want to wait for a dip near $58.00 instead. I'm inching our stop loss down to $57.45. If triggered our first target is $64.95. Our second target is $68.75.

Picked on September xx at $ xx.xx <-- TRIGGER @ 60.00
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: 67.21 change: +0.31 stop: 63.75

I am very tempted to buy calls on SOHU following today's bounce but I'm going to stick to the plan, which is to wait for a dip to $66.00. Actually readers can use a dip in the $66.00-64.00 zone.

If triggered our first target is $72.50. Our second target is $77.00.

Picked on September xx at $ xx.xx <-- TRIGGER @ 66.00
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: 55.40 change: -0.03 stop: 49.30

Lack of follow through on yesterday's bounce is worrisome. Two days in a row the stock has failed near $56.15. Readers may do better to wait for a move over this level. Our plan is to use small position sizes (1/2 to 1/4 our normal size).

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 28 at $ 55.43 *new entry
Change since picked:       - 0.03
Earnings Date            10/20/09 (unconfirmed)
Average Daily Volume =        809 thousand 
Listed on September 12, 2009         


Wells Fargo - WFC - close: 28.35 change: -0.55 stop: 27.25

Lack of follow through on yesterday's bounce is a concern. Wait for another rebound near $28.00 before considering new 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:       - 1.04
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: 28.60 change: -0.44 stop: n/a

The afternoon rally in CI failed and the stock looks poised to move lower. I'm not suggesting new positions at this time.

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:       - 0.80
Earnings Date            11/05/09 (unconfirmed)
Average Daily Volume =        3.8 million  
Listed on September 08, 2009         


CLOSED BULLISH PLAYS

Genesse & Wyoming - GWR - close: 30.73 change: -0.78 stop: 29.75

I am concerned with the relative weakness in the railroad stocks. It continues to hamper GWR's attempts to rebound. Shares of GWR still have some support near $30.00 and its 50-dma but I am going to go ahead and suggest an early exit now. We can always jump back in later if GWR manages to breakout higher. We've already taken profits once and our second target was $34.75. We wanted to use small position sizes to limit our risk.

Chart:

Picked on   August 15 at $ 28.66 /gap down entry
                               /originally listed at $29.30
Change since picked:      + 2.07 <-- exit early @ 30.73 (+7.2%)
                              /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         


Intl. Bus. Mach. - IBM - close: 118.81 chg: -0.52 stop: 117.75

I'm giving up on IBM as well. The stock failed to bounce after testing its 50-dma today. The drop under $120 yesterday was bearish enough. I'm suggesting traders cut their losses now. You can re-enter on a breakout over $122.

Chart:

Picked on September 16 at $121.82
Change since picked:       - 3.01 <- exit early (-2.4%)
Earnings Date            10/15/09 (unconfirmed)
Average Daily Volume =        5.3 million  
Listed on September 16, 2009