Stocks drift lower on lackluster GDP data although profit taking was mild.


CALL Play Updates

Arch Cap Group - ACGL - close: 69.96 change: +0.46 stop: 67.95

ACGL displayed a little relative strength with a 0.66% gain versus a drop in the S&P 500. Yet ACGL failed to breakout over the $70.00 mark again. I remain cautious here. 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:       + 1.15
Earnings Date            10/26/09 (confirmed)
Average Daily Volume =        444 thousand 
Listed on  November 07, 2009         


Gold ETF - GLD - close: 114.73 change: +0.44 stop: 107.95

Usually gold and the dollar move in opposite directions but today gold managed to ignore a small bounce in the dollar. The GLD gained another 0.38%. I'm not suggesting new bullish positions at this time. 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:       +12.45
                               /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: 46.66 change: -0.14 stop: 44.49

Tuesday was a quiet session for MSM, which traded sideways under the $47.00 level. I'm still bullish here but the stock might try to fill the gap with a dip toward $46.00 first. Our first target is $49.75. Our second target is $52.50.

Picked on  November 17 at $ 46.62
Change since picked:       + 0.04
Earnings Date            01/07/10 (unconfirmed)
Average Daily Volume =        513 thousand 
Listed on  November 17, 2009         


Norfolk Southern - NSC - close: 51.49 change: -0.53 stop: 49.75

Yesterday I warned readers to expect NSC to fill the gap and that's what shares delivered today. I would go ahead and buy calls on this dip but more cautious traders might want to wait for a new relative high first (over 52.85).

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:       - 0.35
Earnings Date            01/27/10 (unconfirmed)
Average Daily Volume =        5.4 million  
Listed on  November 21, 2009         


Vertex Pharma - VRTX - close: 39.06 change: -0.30 stop: 38.49

VRTX hit a new two-week low this morning but traders bought the dip again. I don't see any changes from the Monday night play description. I'm suggesting a trigger to buy calls at $40.25. We'll use a stop under last week's low. Our target to exit is at $44.25. My time frame is several weeks.

Picked on  November xx at $ xx.xx <-- TRIGGER @ 40.25
Change since picked:       + 0.00
Earnings Date            02/09/10 (unconfirmed)
Average Daily Volume =        3.2 million  
Listed on  November 23, 2009         


Waters Corp - WAT - close: 59.42 change: +0.39 stop: 58.75

I was prepared to drop WAT as a candidate but shares displayed some relative strength with a 0.66% gain versus a 0.05% loss in the S&P 500. More aggressive traders might want to consider bullish positions on a move over $60.00. I'm suggesting readers wait for a move over $61.50. If triggered at $61.50 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: 63.96 chg: -1.48 stop: 71.05

The bidding war for DDRX continues. GMCR raised their offer to $32.00 a share this morning. This offer matches PEET's $32/share offer. However, PEET's is a combination of cash and stock while GMCR's is all cash. Shares of GMCR lost 2.2% on the session.

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:       - 0.79
Earnings Date            01/28/10 (unconfirmed)
Average Daily Volume =        1.5 million  
Listed on  November 18, 2009         


Goldman Sachs - GS - close: 171.13 change: -0.87 stop: 176.05

Financials were under performers on Tuesday. The selling pressure for banks stocks actually began in China this morning and swept around the globe. Shares of GS dipped toward short-term support near $170. We're still waiting for a breakdown 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.

Editor's note on GS' earnings:
A reader brought up a good question last night. GS traditionally reports their Q4 earnings in the middle of December. Yet the company changed their reporting period last quarter and instead of announcing Q3 numbers in September they announced them in October. That might mean that GS' next earnings release may not happen until January.

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: 78.50 change: +0.33 stop: 80.05

Biotech stocks outperformed the market today. The BTK index gained 2.7%. The IBB has different components than the BTK and shares of the IBB only gained 0.4% but the short-term trend is starting to turn positive. More conservative traders may want to exit early if this ETF closes over its 50-dma near $79.00. I am not suggesting new bearish positions at this time. We may want to consider switching directions and buying calls if the IBB can close over resistance at $80.00.

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:       + 1.32
Earnings Date            --/--/--
Average Daily Volume =        4.9 million  
Listed on  November 19, 2009         


Northern Trust - NTRS - close: 48.07 change: -0.09 stop: 50.26

NTRS spent the session churning sideways in a narrow range. 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:       - 1.11 
Earnings Date            01/21/10 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on  November 12, 2009         


Research In Motion - RIMM - close: 59.53 change: -0.47 stop: 65.26

RIMM's close under $60.00 is bearish but I remain cautious here. The stock spent most of the session drifting sideways in a very narrow range.

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:       - 2.27
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: 171.13 change: -0.87 stop: n/a

The dip toward $170 today offered us another great chance to open strangle positions on GS. I don't see any changes from my previous comments.

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:       - 0.54
Earnings Date            12/15/09 (unconfirmed)
Average Daily Volume =        9.5 million  
Listed on  November 21, 2009         


Ultra(Long)-S&P500 - SSO - close: 37.61 change: +0.04 stop: n/a

It looks like the sideways consolidation in the SSO is narrowing and shares are coiling for a bullish breakout over resistance near $38.00. 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:       + 0.53
Earnings Date            --/--/--
Average Daily Volume =         32 million  
Listed on  November 11, 2009         


United Parcel Service - UPS - close: 57.92 change: -0.24 stop: n/a

Today's dip toward $57.50 offered us another chance to launch strangle positions on UPS. I don't see any changes from my prior comments. 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:       - 0.07
Earnings Date            02/02/10 (unconfirmed)
Average Daily Volume =        4.7 million  
Listed on  November 21, 2009         


CLOSED BULLISH PLAYS

Deere & Co - DE - close: 52.29 change: +0.44 stop: 49.90

Unfortunately, we needed to close the DE play today. The trend is up and the breakout over major resistance at $50.00 is very bullish. Yet holding over earnings can be dangerous. The company is supposed to report tomorrow morning. Wall Street expects to see a profit of 3 cents per share. I would certainly keep DE on your watch list if the earnings news is good.

Chart:

Picked on  November 18 at $ 50.52 *gap open higher   
Change since picked:       + 1.77 <-- early exit (+3.5%)
Earnings Date            11/25/09 (confirmed)
Average Daily Volume =        6.2 million  
Listed on  November 09, 2009