The fourth quarter got off to a painful start but the major indices found support at their 50-dma.


CALL Play Updates

Alcon Inc. - ACL - close: 136.28 change: -1.00 stop: 133.90

ACL has pulled back toward support in the $134-136 zone. I wouldn't be surprised to see ACL retest the $134 area again. We can use a bounce in this zone as a new bullish entry point but keep a wary eye on the $140 level, which could act as resistance again. ACL has already hit our first target. Our second target is $148.00.

Suggested Options:
If ACL provides a new entry point I would use the November calls. We will plan to exit ahead of the late October earnings report.

Annotated Chart:

Picked on September 10 at $136.75
Change since picked:       - 0.47
                             /1st target hit @ 142.50 (+4.2%)
Earnings Date            10/27/09 (unconfirmed)
Average Daily Volume =        299 thousand 
Listed on September 10, 2009         


Allegheny Tech. - ATI - close: 33.67 change: +0.39 stop: 31.70 *new*

We've been talking about support at $32.00 for days. ATI finally hit that support level (actually 31.80) and bounced. Unfortunately, previous support near $34.00 is now acting as overhead resistance. Many of the short-term technicals have turned bearish. I am upping our stop loss to $31.70. More conservative traders may want to exit early instead. ATI is still up more than 10% from our entry point. I'm not suggesting new positions at this time. ATI has 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:      + 3.42 
                               /1st target hit @ 33.85 (+11.9%)
Earnings Date           10/21/09 (unconfirmed)
Average Daily Volume =       2.7 million  
Listed on August 27, 2009         


Caterpillar - CAT - close: 48.83 change: -0.62 stop: 47.49

Whoa! We were almost stopped out on Friday morning. CAT gapped open lower at $48.68 and immediately spiked down to $47.50 before bouncing. Not only is this a bounce from the 50-dma it's also a bounce from the 61.8% Fibonacci retracement of the September rally. If CAT doesn't bounce from here we want out. Let's give CAT a day or two to rebound and if it doesn't we'll exit early.

Our first target is $54.50. Our second target is $59.00. FYI: The P&F chart is bullish with an $85 target.

Suggested Options:
Wait for a bounce. If we get a new entry point I suggested the October or November $55 calls.

Annotated Chart:

Picked on   October 01 at $ 50.00
Change since picked:       - 1.17
Earnings Date            10/20/09 (unconfirmed)
Average Daily Volume =         10 million  
Listed on September 19, 2009         


Core Labs - CLB - close: 99.90 change: -3.19 stop: 93.90 *new*

We are still looking for a dip to the $96-95 zone and we're keeping the trigger to buy calls at $96.00. Yet we're raising our stop loss to $93.90 to reduce our risk. More conservative traders may want to raise their stops closer to $95.00 and its rising 50-dma, which should offer some technical support. If triggered our first target is $104. Our second target is $109.50.

Suggested Options:
If CLB hits our trigger I'm suggesting the November calls. My preference is the $100 strike.

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER @ 96.00
Change since picked:       + 0.00
Earnings Date            10/21/09 (unconfirmed)
Average Daily Volume =        175 thousand 
Listed on September 23, 2009         


Compass Minerals - CMP - close: 59.25 chg: -0.67 stop: 56.40

The correction continues in CMP. We're starting to see more technical indicators roll over into bearish postures. More conservative traders may want to exit early. I would expect a dip toward $57 and its 30-dma. Caution - if you look at a weekly chart of CMP last week looks like a bearish reversal or topping formation.

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.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on September 03 at $ 55.55
Change since picked:       + 3.70
                               /1st target hit @ 59.75 (+7.5%)
Earnings Date            10/27/09 (unconfirmed)
Average Daily Volume =        415 thousand 
Listed on September 02, 2009         


Consol Energy - CNX - close: 43.04 change: -0.24 stop: 39.45

CNX came close to testing short-term support near $42.00. It looks like the reason it did not get that low was technical support at the rising 30-dma. The short-term trend is down but CNX should find buying pressure in the $42-40 zone. We have a relatively wide stop loss and more conservative traders may want to reduce their risk with a stop closer to $42.00. I would still be inclined to buy calls on a bounce near the 42-40 zone.

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.

Suggested Options:
I suggested the January calls but we'll exit ahead of the October earnings report.

Annotated Chart:

Picked on September 25 at $ 43.77 /gap down entry
Change since picked:       - 0.73
Earnings Date            10/22/09 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on September 19, 2009         


Danaher Corp. - DHR - close: 64.74 change: -0.55 stop: 63.95

DHR has broken short-term support at $66.00 and the short-term technicals have turned bearish. I'm expecting a dip closer to $64.00. If the market decline really gets ugly DHR might drop toward its exponential 200-dma near $62.00. Of course that would stop us out. We can use a decent bounce near $64 as a new bullish entry point.

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:
If DHR bounces from support I would use the October or November 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:       - 1.63
Earnings Date            10/22/09 (confirmed)
Average Daily Volume =        2.4 million  
Listed on September 05, 2009         


Diamond Offshore - DO - close: 92.45 change: -1.33 stop: 89.75 *new*

Once again DO is testing its trendline of support in the 90-92 zone. I suspect DO will trade near $90 again. We can buy calls on another bounce near $90.00. I am raising our stop loss to $89.75. The plan was to use small position sizes.

More cautious traders may want to consider an early exit for DO. I'm growing more and more concerned about the action in crude oil. Oil delivered a little oversold bounce but failed in such a way to suggest the next move will be lower.

As long as DO holds the up trend 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:
Look for another bounce near $90.00 and use the November calls.

Annotated Chart:

Picked on September 15 at $ 94.69 *adjusted entry point
Change since picked:       - 2.24
Earnings Date            10/22/09 (unconfirmed)
Average Daily Volume =        1.8 million  
Listed on September 12, 2009         


Dril-Quip, Inc. - DRQ - close: 48.31 change: -0.11 stop: 45.90

The trend in DRQ is still up and the pull back last week looks like a normal and relatively mild correction. Unfortunately if the market begins to accelerate lower we can expect DRQ to follow suit. I'm tempted to buy calls on Friday's intraday bounce but I'm suggesting readers wait. More conservative traders may want to raise their stops toward $47.00. Why tighten your stop? Because the action last week has produced what appears to be a potential reversal on the weekly chart.

Our first target is $53.00. Our second target is $57.50. The Point & Figure chart is bullish with a $65.00 target.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on September 28 at $ 48.50
Change since picked:       - 0.19
Earnings Date            11/10/09 (unconfirmed)
Average Daily Volume =        282 thousand 
Listed on September 26, 2009         


Flowserve - FLS - close: 95.20 change: -0.76 stop: 89.40 *new*

FLS delivered a volatile session with a gap down on Friday at $94.04 and a dip to $92.76. I still think it moves lower. Broken support near $96.00 should be new resistance and I expect FLS to slide toward the $91-90 zone.

We want to buy calls at $91.00 but readers could wait for a bounce from $90.00 instead. The 50-dma is at $89.70 so I'm raising our stop loss to $89.40. Our first target is $99.50.

We will plan to exit ahead of the late October earnings report.

Suggested Options:
If triggered we want to use the November calls. My preference is the $95 strike.

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER @ 91.00
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: 63.08 change: -0.07 stop: 56.95 *new*

While GD has been holding up pretty well I suspect the correction may be a little deeper than anticipated. I am lowering our trigger to buy calls from $61.00 to $58.50 and I'm moving our stop loss to $56.95.

Our first target is $64.50.

Suggested Options:
We want to use the November calls but we'll exit ahead of the late October earnings report.

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER @ 58.50
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: 42.02 change: +0.71 stop: 37.45

You could argue that Friday's gain in ILMN is relative strength. Indeed there was no follow through on Thursday's bearish reversal pattern. Yet Friday's session produced an "inside day". I'm still expecting a pull back into the $39-38 zone. 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. We plan to exit before the October earnings report.

Suggested Options:
If triggered I'm suggesting the November calls. My preference was the $40 strike.

Annotated Chart:

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: 50.57 change: -0.07 stop: 49.49

More conservative traders may want to exit immediately! The financials led the market lower on Friday. The IYF gapped open lower and dipped to $49.63 before bouncing back above $50 and its 50-dma. The rebound appears to be technical with the short-term trendline of higher lows. I'd want to see a convincing bounce before jumping into new bullish positions. Our first target is $57.00. Our second target is $60.00.

Suggested Options:
I hesitate to launch new positions.

Annotated Chart:

Picked on September 15 at $ 52.60 *triggered  
Change since picked:       - 2.03
Earnings Date            00/00/00
Average Daily Volume =        5.1 million  
Listed on September 01, 2009         


PPG Inds. Inc. - PPG - close: 56.26 change: -0.30 stop: 54.95

This is a crucial test of support for PPG. Shares violated the $56.00 level and traded under its 50-dma before bouncing back on Friday. If PPG doesn't rally from here it could portend a much deeper correction. P> I'm not suggesting new positions at this time. PPG has already exceeded our first target and we're currently aiming for $63.00.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on   August 28 at $ 55.65
Change since picked:      + 0.61
                             /1st target exceeded @ 60.05 (7.9%)
Earnings Date           10/15/09 (confirmed)
Average Daily Volume =       1.6 million  
Listed on August 27, 2009         


SOHU.com Inc. - SOHU - close: 64.63 change: -1.09 stop: 63.75

The market correction has brought SOHU to technical support at its 50-dma. The stock is also testing its short-term trend of lower lows. A bounce from here would be a new bullish entry point but given the market's recent tone traders may want to postpone new positions.

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

Suggested Options:
I hesitate to open new positions at this time.

Annotated Chart:

Picked on   October 01 at $ 68.24 /gap open entry
                                 (small positions 1/2 to 1/4)
Change since picked:       - 3.61
Earnings Date            10/26/09 (unconfirmed)
Average Daily Volume =        577 thousand 
Listed on September 15, 2009         


Waters Corp. - WAT - close: 53.90 change: -0.24 stop: 51.90

WAT was not immune to the market's recent weakness and many technical indicators have rolled over into bearish formations. The stock is quickly approaching potential support near $53.00. More conservative traders might want to adjust their stops closer to the $53 level. I would wait for a bounce near $53 before considering new bullish positions. Our plan is to use small position sizes (1/2 to 1/4 our normal size).

Our first target is $59.50. We do not want to hold over the mid October earnings report.

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

Annotated Chart:

Picked on September 28 at $ 55.43 *new entry
Change since picked:       - 1.53
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: 27.82 change: +0.01 stop: n/a

CI dipped to yet another new low before bouncing back to unchanged. The stock is short-term oversold and due for a bounce. We only have two weeks left and it looks like the move in CI has not been as big as we expected. We can't expect CI to continue sliding lower at its current pace without a correction and that puts our strangle in serious jeopardy. 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.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on September 08 at $ 29.40
Change since picked:       - 1.58
Earnings Date            11/05/09 (unconfirmed)
Average Daily Volume =        3.8 million  
Listed on September 08, 2009         


CLOSED BULLISH PLAYS

CF Industries - CF - close: 82.95 change: -1.25 stop: 83.65

CF broke support near $84.00 and its 50-dma on Friday. Shares actually gapped open lower at $82.89, which was under our stop loss at $83.65 so our exit was worse than expected. The next level of support looks like the $80 level and its 100-dma.

Chart:

Picked on September 05 at $ 85.93
Change since picked:       - 3.04<-- exit at $82.89 (-3.5%)
                               /gap down exit 
Earnings Date            10/27/09 (unconfirmed)
Average Daily Volume =        653 thousand 
Listed on September 05, 2009         


Helmerich & Payne - HP - close: 37.43 chg: -0.51 stop: 36.65

Our new play on HP did not pan out. With stocks selling off Friday morning HP gapped open lower at $37.27 and quickly slid lower to hit our stop at $36.65. Shares managed to bounce from their 30-dma but the damage was done.

Chart:

Picked on September 30 at $ 38.50
Change since picked:       - 1.85 <-- stopped @ 36.65 (-4.8%)
Earnings Date            11/19/09 (unconfirmed)
Average Daily Volume =        1.2 million  
Listed on September 29, 2009         


NYSE Euronext - NYX - close: 27.31 change: -0.45 stop: 27.75

The NYX confirmed its breakdown of support with Friday's trading. The stock gapped open lower, tried to bounce but failed, and closed near its lows for the session. Readers may want to consider bearish positions. Our stop loss was at $27.75 but the stock opened at $27.19.

Chart:

Picked on September 22 at $ 29.82
Change since picked:       - 2.63 <-- stopped @ 27.19 (-8.8%)
                               /gap down entry 
Earnings Date            10/30/09 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on September 22, 2009         


Oil Service Holders - OIH - close: 111.64 chg: -1.91 stop: 112.99

The volatile oil service sector holders gapped open lower on Friday. The OIH opened at $111.07, well below our stop at $112.99. The play was immediately closed. I'd keep an eye on the 100-dma near $105 as a possible support.

Chart:

Picked on September 28 at $117.40
Change since picked:       - 6.33 <-- stopped @ 111.07 (-5.3%)
                              /gap down exit
Earnings Date            00/00/00
Average Daily Volume =        6.6 million  
Listed on September 28, 2009         


SPX Corp. - SPW - close: 56.77 change: -1.28 stop: 57.45

We patiently waited for the correction in SPW and then when it finally showed up it the stock just kept right on falling. SPW sliced through round-number support at $60.00 and price support at $58.00 and technical support at the 50-dma. The stock gapped open lower on Friday at $57.19, which was under our stop loss. The play was closed immediately.

Chart:

Picked on   October 01 at $ 60.00
Change since picked:       - 2.81 <-- stopped @ 57.19 (-4.6%)
                               /gap down exit 
Earnings Date            10/28/09 (unconfirmed)
Average Daily Volume =        570 thousand 
Listed on September 12, 2009