The markets turned higher on Monday but not all stocks were able to keep their gains.


CALL Play Updates

Arch Cap Group - ACGL - close: 69.50 change: +0.19 stop: 67.95

Uh-oh! ACGL did not rebound higher as much as the rest of the market. That's a warning sign. If this under performance continues tomorrow we might close this play early. I'm not suggesting new bullish positions at this time. Our target is the $74.00 level.

Picked on  November 07 at $ 68.81
Change since picked:       + 0.69
Earnings Date            10/26/09 (confirmed)
Average Daily Volume =        444 thousand 
Listed on  November 07, 2009         


Deere & Co - DE - close: 51.85 change: +1.02 stop: 49.90 *new*

Shares of DE gapped open higher and hit $53.59 thanks to an analyst upgrade this morning. The stock gave back a good chunk of its gains. I'm adjusting our exit target to $54.50 and our stop loss to $49.90. See below for the reason.

Strategy update: Traders have a decision to make. DE is due to report earnings on November 25th before the opening bell. Normally we avoid holding over earnings and that means we'd need to exit tomorrow at the closing bell. I have a suspicion that DE's earnings could send the stock higher but the newsletter will officially play it safe and exit tomorrow (Tuesday) at the close. More aggressive traders may want to hold over the earnings report or maybe hold just a small chunk of your original position over the announcement. Market volume on Wednesday should be extremely low and that means DE's move (up or down) could be exacerbated by extremely low volume.

Picked on  November 18 at $ 50.52 *gap open higher   
Change since picked:       + 1.33
Earnings Date            11/25/09 (confirmed)
Average Daily Volume =        6.2 million  
Listed on  November 09, 2009         


Gold ETF - GLD - close: 114.29 change: +1.35 stop: 107.95 *new*

The U.S. dollar sank toward its lows and the price of gold shot to a new all-time high at $1,174 an ounce (on an intraday basis). The GLD hit $115.11. I'm upping our stop loss to $107.95. Our second target to exit (completely) is at $119.00. Our time frame is still several weeks.

Picked on   October 06 at $102.28
Change since picked:       +12.01
                               /1st target hit @ 109.50 (+7.0%)
Earnings Date            00/00/00
Average Daily Volume =       14.2 million  
Listed on   October 06, 2009         


MSC Industrial Direct - MSM - close: 46.80 change: +0.90 stop: 44.49

MSM rallied to new three-week highs and broke through resistance near $46.50. Shares may fill the gap near $46.00 first but the trend is up. Our first target is $49.75. Our second target is $52.50.

Picked on  November 17 at $ 46.62
Change since picked:       + 0.18
Earnings Date            01/07/10 (unconfirmed)
Average Daily Volume =        513 thousand 
Listed on  November 17, 2009         


Norfolk Southern - NSC - close: 52.02 change: +0.62 stop: 49.75

Most of NSC gains occurred on the opening gap higher at $51.84. The gap open has changed our entry point. I would still consider new positions here but the stock might dip toward $51.40 and fill the gap before moving higher.

Our first target to take profits is at $54.90. Our second target is $58.50. Our time frame is several weeks. FYI: The Point & Figure chart is bullish with a $65 target.

Picked on  November 21 at $ 51.84 (small positions)/gap higher entry
Change since picked:       + 0.18
Earnings Date            01/27/10 (unconfirmed)
Average Daily Volume =        5.4 million  
Listed on  November 21, 2009         


Waters Corp - WAT - close: 59.03 change: -0.01 stop: 58.75

WAT failed to truly participate in the market's rally today. If we don't see some strength tomorrow I'll drop it as a bullish candidate. For now we're still waiting for a new relative high with a trigger to buy calls at $61.50. If triggered our first target is $64.90. We'll cautiously set a secondary target at $67.45.

Picked on  November xx at $ xx.xx <-- TRIGGER @ 61.50
Change since picked:       + 0.00
Earnings Date            01/27/10 (unconfirmed)
Average Daily Volume =        1.2 million  
Listed on  November 12, 2009         


PUT Play Updates

Green Mountain Coffee Roasters - GMCR - cls: 65.44 chg: +0.43 stop: 71.05

At first glance I was surprised that GMCR didn't rally further today given the widespread strength. The stock stalled near $66.00 and technical resistance at its 100-dma. It seems that GMCR could be involved in a bidding war to acquire Diedrich Coffee (DDRX) and investors could be nervous GMCR might end up paying too much. Peet's Coffee (PEET) has offered $26 a share to buy DDRX but GMCR has a competing offer at $30 a share. As of this morning PEET upped their bid to $32 a share. Many analysts think the final price will be higher.

I remain bearish on GMCR but it would be risky to open new bearish positions with the stock market hitting new highs and GMCR is already a dangerous stock to be bearish one. GMCR still has extremely high short interest. Our first target is $60.25. Our second target is $55.50.

Picked on  November 19 at $ 64.75
Change since picked:       + 0.69
Earnings Date            01/28/10 (unconfirmed)
Average Daily Volume =        1.5 million  
Listed on  November 18, 2009         


Goldman Sachs - GS - close: 172.00 change: +1.99 stop: 176.05

GS bounced from support and hit $173.63 intraday but eventually pared its gains. We're still waiting for a breakdown under support with a trigger to buy puts at $168.75. If triggered first target is $155.50. More aggressive traders could aim for the $150 area or the 200-dma.

I want to remind readers that the big brokerage stocks used to rally sharply ahead of their earnings reports and then sell-off on the announcement. GS' earnings report is about three weeks away.

If you don't want to make a directional bet on GS then check out the strangle play listed in the strangle section.

Picked on  November xx at $ xx.xx <-- TRIGGER @ 168.75
Change since picked:       + 0.00
Earnings Date            12/15/09 (unconfirmed)
Average Daily Volume =        9.5 million  
Listed on  November 21, 2009         


iShares Biotech - IBB - close: 78.17 change: +0.56 stop: 80.05

I'm still seeing mixed messages in the IBB. Looking at the daily chart shares produced another failed rally at the 50-dma. Yet the intraday chart has taken on a more bullish tone. Readers might want to wait for a new decline under $77.00 to open positions. The biotech stocks can be a volatile group so I'm suggesting small positions. Our target is near the November lows at $73.50.

Picked on  November 19 at $ 77.18 /gap down entry point
                             /originally listed at $77.86
Change since picked:       + 0.99
Earnings Date            --/--/--
Average Daily Volume =        4.9 million  
Listed on  November 19, 2009         


Northern Trust - NTRS - close: 48.16 change: +0.92 stop: 50.26

Traders were hungry for all sorts of risk on Monday and the financial stocks performed well. NTRS, which was already oversold, gained 1.9%. The $50.00 level should be overhead resistance. I'm not suggesting new positions at this time. Our first target is $45.85. Our second target is $41.00. The Point & Figure chart is bearish and its target has fallen from $39 down to $35 in just the last few days.

Picked on  November 12 at $ 49.18
Change since picked:       - 1.02 
Earnings Date            01/21/10 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on  November 12, 2009         


Research In Motion - RIMM - close: 60.00 change: +0.28 stop: 65.26

The market's early morning rally lifted RIMM to $61.49 but shares pared their gains with a slide back to $60.00. Technically, today's gain on top of Friday's bullish engulfing candlestick pattern, would be a new bullish reversal. More conservative traders may want to lower their stops or consider an early exit. I'm not suggesting new positions at this time.

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.

Picked on  November 16 at $ 61.80
Change since picked:       - 1.80
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.)

Goldman Sachs - GS - close: 172.00 change: +1.99 stop: n/a

I'm not too surprised to see a little oversold bounce from support in GS, especially with the market up sharply on Monday. Yet the future direction of GS is still very much in doubt. I would still open new strangles positions in the $172-168 zone but the closer to $170 the better.

The options suggested were the December $180 calls (GPY-LP) and the December $160 puts (GPY-XL). Our estimated cost is about $4.61. We want to sell if either option hits $9.00 or higher.

Picked on  November 21 at $171.67 /gap open entry
Change since picked:       + 0.33
Earnings Date            12/15/09 (unconfirmed)
Average Daily Volume =        9.5 million  
Listed on  November 21, 2009         


Ultra(Long)-S&P500 - SSO - close: 37.57 change: +0.95 stop: n/a

The SSO spiked toward its 2009 highs but failed to close above resistance. I don't see any changes from my weekend comments. This week could be volatile as volume will probably be light thanks to the Thanksgiving holiday. I'm not suggesting new positions.

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.

Picked on  November 11 at $ 37.08
Change since picked:       + 0.49
Earnings Date            --/--/--
Average Daily Volume =         32 million  
Listed on  November 11, 2009         


United Parcel Service - UPS - close: 58.16 change: +0.65 stop: n/a

UPS gapped open higher at the open to $57.99 and hit $58.80 intraday. I would still consider new strangle positions in the $58.50-56.50 zone but the closer to $57.50 the better. The options suggested for this trade were the December $60 calls (UPS-LL) and the December $55 puts (UPS-XK). Our estimated cost is $1.05. We want to sell if either option hits $3.00 or more.

Picked on  November 21 at $ 57.99 /gap open entry
Change since picked:       + 0.17
Earnings Date            02/02/10 (unconfirmed)
Average Daily Volume =        4.7 million  
Listed on  November 21, 2009         


CLOSED BULLISH PLAYS

Deckers Outdoor - DECK - close: 94.70 change: -1.02 stop: 96.95

DECK under performed the market on Monday. Shares gapped open higher and spiked to $99.08 but immediately reversed lower and eventually closed in negative territory. The relative weakness here is a big warning sign. More nimble traders may want to consider bearish positions if DECK breaks down under the $93.70 level.

Chart:

Picked on  November xx at $ xx.xx <-- TRIGGER @ 100.75
Change since picked:       + 0.00            *never opened*
Earnings Date            02/25/10 (unconfirmed)
Average Daily Volume =        659 thousand
Listed on  November 16, 2009