Editor's Note:

I would be very cautious here about opening either bullish or bearish positions. The S&P 500 is struggling with resistance near 1100. If this index can produce a solid close over this level then my bias will turn a lot more bullish. Unfortunately we cannot immediately assume that bearish plays are the better bet here. The longer-term trend of higher lows is making it tough to launch new bearish trades. Although with stocks near resistance this would be considered a "lower risk" entry point for bearish plays because you can set your stop loss relatively tight.


CALL Play Updates

Arch Cap Group - ACGL - close: 69.95 change: +0.03 stop: 67.40 *new*

Momentum in ACGL has stalled near $70 as the S&P 500 stalls near the 1100 level. The trend is bullish but if shares reverse here it will look like a bearish double top. At this point I'd prefer to open positions on a bounce near the rising 50-dma near $67.85. I am raising our stop loss to $67.40. Our target is the $74.00 level and our time frame is several weeks.

Suggested Options:
If ACGL provides a new entry point I would use the December calls.

Annotated Chart:

Picked on  November 07 at $ 68.81
Change since picked:       + 1.14
Earnings Date            10/26/09 (confirmed)
Average Daily Volume =        444 thousand 
Listed on  November 07, 2009         


Canadian Nat. Res. - CNQ - close: 66.75 change: +1.05 stop: $63.95

I'm still bullish on CNQ but last week's failed rally near $69.00 is still casting a bearish shadow on the stock. The low on Friday was $65.33. More conservative traders might want to raise their stops toward $65.00 to reduce their risk. Our upside target is $74.00. If you are holding November calls we have to exit before Friday's closing bell.

Suggested Options:
November options expire in one week. I would use December calls for new positions.

Annotated Chart:

Picked on  November 09 at $ 67.74 *gap open higher entry
                          /original trigger was $66.05
Change since picked:       - 0.99
Earnings Date            03/04/10 (unconfirmed)
Average Daily Volume =        2.8 million  
Listed on  November 07, 2009         


Chevron Corp. - CVX - close: 77.94 change: +0.52 stop: 76.75

Crude oil looks like it could breakdown from here. If it does CVX will probably follow it lower. More conservative traders may want to consider an early exit right here. You could re-enter on a close over $80.00. I'm not suggesting new positions at this time. Our first target is $84.00.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  November 11 at $ 78.87 /gap higher entry point
Change since picked:       - 0.93
Earnings Date            01/28/10 (unconfirmed)
Average Daily Volume =       10.6 million  
Listed on  November 10, 2009         


Deere & Co - DE - close: 47.58 change: +0.17 stop: 46.85

The long-term trends in DE are unchanged. The stock has built a huge base under resistance at $50.00. We want to buy calls on a breakout over $50.00 so I'm suggesting a trigger to open positions at $50.25. If triggered our first target is $54.90. Our second target is $59.00. Keep in mind that we'll plan to exit ahead of DE's earnings report later in the month. More aggressive traders willing to hold over DE's earnings report will want to consider January 2010 calls.

Suggested Options:
If DE hits our trigger we want to buy the December $50 calls.

Annotated Chart:

Picked on  November xx at $ xx.xx <-- TRIGGER @ 50.25
Change since picked:       + 0.00
Earnings Date            11/25/09 (unconfirmed)
Average Daily Volume =        6.2 million  
Listed on  November 09, 2009         


Essex Property - ESS - close: 81.56 change: +0.14 stop: 78.90 *new*

ESS has been consolidating sideways the last couple of days but the overall pattern is still bullish. Broken resistance near $80.00 should offer some support. Therefore I'm raising our stop loss to $78.90. More conservative traders may want to edge their stops closer to $80.00. I would consider buying calls on another bounce from $80.00 but readers may want to wait for the S&P 500 to breakout over the 1100 level first. Our first target is $86.00. Our second target is $92.50.

Suggested Options:
If ESS provides a new entry point I would use the December calls.

Annotated Chart:

Picked on  November 10 at $ 80.65
Change since picked:       + 0.91
Earnings Date            02/03/10 (unconfirmed)
Average Daily Volume =        500 thousand 
Listed on  November 09, 2009         


Gold ETF - GLD - close: 109.74 change: +1.53 stop: 103.90 *new*

The U.S. dollar continues to sink and gold hit new highs on Friday. The GLD rallied to $109.80. I am raising our stop loss on this play to $103.90. I'm not suggesting new bullish positions at this time. Any November positions need to be closed before expiration this week. The newsletter's remaining position are the January $110 calls. Our second target to exit is $119.00. Our time frame is still several weeks.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on   October 06 at $102.28
Change since picked:       + 7.46
                               /1st target hit @ 109.50 (+7.0%)
Earnings Date            00/00/00
Average Daily Volume =       14.2 million  
Listed on   October 06, 2009         


Parker Hannifin - PH - close: 55.00 change: -0.29 stop: 52.90

The larger trend in PH is up but short-term the stock has been showing relative weakness. If they close under $55.00 it's almost a sure bet that PH will hit its 50-dma near $53.50. A bounce from $55.00 or its 50-dma could be used as a new bullish entry point but I'd use small positions (with December options).

Our first target is $58.50. We will cautiously set a second target at $62.00 but the $60.00 level could prove to be strong resistance. I would use small positions.

Suggested Options:
If PH provides a new entry point I would use the December calls.

Annotated Chart:

Picked on  November 03 at $ 55.25
Change since picked:       + 0.04
Earnings Date            01/20/09 (unconfirmed)
Average Daily Volume =        1.6 million  
Listed on  November 03, 2009         


UltraShort Treasury ETF - TBT - close: 47.02 change: -0.63 stop: 45.40 *new*

TBT is moving slowly, which is what we expected and why I suggested the January calls. I would still consider bullish positions in the $48-46 zone but I'm starting to think a better plan would be to wait for a close over its 200-dma near $48.60. I am raising our stop loss to $45.40.

Our first target is $54.50. Our second target is $58.50. Our time frame is several weeks (possibly year end).

Suggested Options:
I'm suggesting the 2010 January calls.

Annotated Chart:

Picked on   October 26 at $ 47.89 (1/2 position)
Change since picked:       - 0.87

2nd entry on   October 30 at $ 45.50 (1/2 position)
Change since picked:          + 1.62

Earnings Date            --/--/--
Average Daily Volume =        6.0 million  
Listed on   October 26, 2009         


Volatility Index - $VIX - close: 23.36 change: -0.88 stop: 21.90

Our VIX play is not off to a great start. There wasn't any follow through on Friday. The Wednesday-Thursday move still looks like a bullish reversal but if the S&P 500 can breakout over the 1100 level I wouldn't be surprised to see us get stopped out. I would still consider small bullish positions here but readers may want to wait and see if the VIX bounces from 22.00 again before initiating new positions. Our exit target is $30.00. This should be a relatively quick trade. I'm suggesting small positions.

Suggested Options:
I'm suggesting the December calls.

Annotated Chart:

Picked on  November 12 at $ 24.24 
Change since picked:       - 0.88
Earnings Date            --/--/--
Average Daily Volume =         xx million  
Listed on  November 12, 2009         


PUT Play Updates

Baidu Inc. - BIDU - close: 432.50 change: +5.35 stop: 441.00

BIDU is an aggressive, higher-risk trade. Shares managed a bounce on Friday but the stock remains under resistance near $440.00. Readers may want to wait for another failed rally pattern under $440 before initiating new positions. I'm suggesting very small positions. We'll use a stop above the 2009 highs. Our target to exit is $360.00.

Suggested Options:
I'm suggesting the December puts. Options are very expensive. This is already an aggressive trade and I'm making it more speculative with a deep, out of the money put. I'm suggesting the $370 put.

BUY PUT DEC 370 BPJ-XN open interest=1129 current ask $4.40

Annotated Chart:

Picked on  November 12 at $427.15
Change since picked:       + 5.35
Earnings Date            02/18/09 (unconfirmed)
Average Daily Volume =        2.7 million  
Listed on  November 12, 2009         


Bank of Montreal - BMO - close: 48.93 change: +0.34 stop: 50.15

Financials have been lagging the broader market but if the S&P 500 can breakout over the 1100 level I would expect them to try and catch up. That makes new bearish positions a little hazardous here even though BMO still has resistance at the $50.00 level.

I would look for two things. A clearly defined failed rally/bearish reversal in the S&P 500 and the same in shares of BMO before launching new positions. Our first target is $42.75. Our second target is $40.50.

Suggested Options:
If BMO provides a new entry point I would use the December puts.

Annotated Chart:

Picked on   October 27 at $ 47.37
Change since picked:       + 1.56
Earnings Date            11/24/09 (unconfirmed)
Average Daily Volume =        539 thousand 
Listed on   October 27, 2009         


Russell 2000 iShares - IWM - close: 58.73 change: +0.56 stop: 60.55

The small caps have continued to under perform its large cap rivals. Last week saw the Russell 2000 and the IWM roll over under resistance. I remain bearish but it looks like the IWM is going to bounce back and retest resistance near $60 and its 50-dma again. Look for another failed rally as a new entry point.

Our first target is $55.50. Our second target is $52.00 or the 200-dma, whichever the IWM hits first.

Suggested Options:
If the IWM provides a new entry point I would use the December puts.

Annotated Chart:

Picked on  November 09 at $ 59.00
Change since picked:       - 0.27
Earnings Date            --/--/--
Average Daily Volume =       54.5 million  
Listed on  November 02, 2009         


Northern Trust - NTRS - close: 48.04 change: -1.14 stop: 52.25

NTRS continues to under perform the banking sector and the S&P 500. Shares posted another loss on Friday with a 2.3% decline and a new multi-month low. I would still be tempted to buy puts here but readers may want to wait for a bounce toward the $49-50 zone and launch positions there. Our first target to take profits is at $45.25. Our second target is $41.00. The Point & Figure chart is bearish with a $39.00 target.

Suggested Options:
We were suggesting the December puts.

Annotated Chart:

Picked on  November 12 at $ 49.18
Change since picked:       - 1.14 
Earnings Date            01/21/10 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on  November 12, 2009         


Research In Motion - RIMM - close: 62.69 change: -0.29 stop: 65.26

Our new play in RIMM has been opened. We set a trigger to buy puts at $61.80 and shares hit $61.79 on Friday morning. The oversold bounce appears to be rolling over. My only concern, aside from recent strength in big cap stocks, is the low volume on RIMM's recent pull back. I remain bearish here but readers may want to see more confirmation. Consider using a trigger at $61.49 to launch positions instead. Our first target is $55.25. Our second target is $50.50. RIMM can be a volatile stock so I'm suggesting smaller position sizes.

Suggested Options:
I'm suggesting the December puts. My favorite was the $60 strike.

Annotated Chart:

Picked on  November xx at $ xx.xx <-- TRIGGER 61.80
Change since picked:       + 0.00
Earnings Date            12/17/09 (unconfirmed)
Average Daily Volume =       18.9 million  
Listed on  November 12, 2009         


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.)

Ultra(Long)-S&P500 - SSO - close: 36.73 change: +0.40 stop: n/a

A bounce in the S&P 500 and the SSO is giving us another entry point to launch strangles. I was suggesting traders buy a strangle in the $36.50-37.50 zone.

Suggested Options:
The options suggested for this strangle were the December $40 calls (SUC-LN) and the December $34 puts (SOJ-XH). Our estimated cost was $1.70. We want to sell if either option hits $3.00 or higher.

Annotated Chart:

Picked on  November 11 at $ 37.08
Change since picked:       - 0.35
Earnings Date            --/--/--
Average Daily Volume =         32 million  
Listed on  November 11, 2009         


CLOSED BEARISH PLAYS

BIOGEN IDEC - BIIB - close: 46.72 change: +0.22 stop: 47.05

On Wednesday we lowered our stop loss down to $47.05. The oversold bounce in BIIB continued on Friday and shares hit $47.06 closing our play.

Chart:

Picked on   October 03 at $ 48.89
Change since picked:       - 1.84 <-- stopped @ 47.05 (-3.7%)
                               /1st target hit @ 44.50 (-8.9%)
Earnings Date            10/20/09 (confirmed)
Average Daily Volume =        2.6 million  
Listed on   October 03, 2009