Editor's Note:

Friday's market turned out to be a volatile one as investors reacted to the Dubai World default news. Foreign markets took the brunt of the selling but the intraday bounce in the S&P 500 rolled over in the last few minutes of Friday's holiday-shortened session. It's hard to draw any firm conclusions with so many investors, big and small, at home for the Thanksgiving holiday. The real impact won't be seen until Monday and analysts will have had the weekend to consider the impact the Dubai news will really have on the market.

I suggest traders stay cautious and reserve some capital. It could take a few days before we really see which direction the market wants to go. Although at the moment I would focus on support near 1080 and resistance near 1110 on the S&P 500. A breakout either way will probably set the new direction for stocks.


CALL Play Updates

Capella Education - CPLA - close: 71.05 change: -0.98 stop: 69.49

CPLA held up reasonably well on Friday. The stock gapped open lower at $70.57. The intraday bounce had trouble with the $72.00 level so I hesitate to open new positions at this time. Nimble traders could try buying calls on another bounce near the $70.00 level, which should be bolstered by the rising 50-dma. More conservative traders may want to wait for more signs of strength first (like a move over $73.50 or even the $75.00 level, which is overhead resistance.

We suggested small positions. If CPLA does breakout over $75.00 we can choose to add to our positions. I do consider this an aggressive, higher-risk trade. Currently the Point & Figure chart is bullish with an $85 target. I'm setting our first target at $79.50.

Suggested Options:
I'm not suggesting new positions at this time. If CPLA does offer a new entry point I'd use the December or January calls.

Annotated Chart:

Picked on  November 24 at $ 72.55
Change since picked:       - 1.50
Earnings Date            02/11/10 (unconfirmed)
Average Daily Volume =        126 thousand 
Listed on  November 24, 2009         


Gold ETF - GLD - close: 115.06 change: -1.56 stop: 109.49

Friday's session could have been a lot worse for gold investors. When the Dubai news hit the wires investors were in a "sell first, ask questions later" kind of mood. Gold futures plunged $50 overnight but by the end of trading on Friday gold had trimmed its losses to less than $10. Shares of the GLD gold ETF gapped open lower but traders bought the dip at its rising 10-dma. This looks like a sign of strength but the GLD remains very overbought and due for a correction. I am repeating my comments from earlier that more conservative traders will want to seriously consider an early exit right now to lock in a gain.

Last week I lowered our final exit target to $118.50. I am not suggesting new positions at this time.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on   October 06 at $102.28
Change since picked:       +12.78
                               /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: 46.21 change: -1.01 stop: 44.49

MSM is another stock that held up reasonably well. Shares gapped open lower but found some short-term support near $45.75-46.00. If the market continues to slip look for MSM to dip toward $45.00 and its 50-dma. We can use a bounce near $45.00 as a new bullish entry point but I would hesitate to open positions if the S&P 500 breaks down under 1080. Our first target is $49.75. Our second target is $52.50.

Suggested Options:
If MSM provides a new entry point I'd use the December calls ($45 or $50 strikes).

Annotated Chart:

Picked on  November 17 at $ 46.62
Change since picked:       - 0.41
Earnings Date            01/07/10 (unconfirmed)
Average Daily Volume =        513 thousand 
Listed on  November 17, 2009         


Norfolk Southern - NSC - close: 51.19 change: -0.65 stop: 49.75

Profit taking in NSC was pretty mild on Friday. Traders bought the dip near round-number, psychological support at the $50.00 level. More aggressive traders could buy calls on this intraday bounce but I'd prefer to see a new relative high considering the market's weakness.

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.

Suggested Options:
Wait for a new entry point. I'm suggesting the January calls.

Annotated Chart:

Picked on  November 21 at $ 51.84 (small positions)/gap higher entry
Change since picked:       - 0.65
Earnings Date            01/27/10 (unconfirmed)
Average Daily Volume =        5.4 million  
Listed on  November 21, 2009         


Vertex Pharma - VRTX - close: 39.00 change: -0.38 stop: 38.49

Traders bought the dip in VRTX near recent support. Selling pressure was kind of mild but I'm sticking to the plan. We want to see a move over resistance near $40.00. 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.

Suggested Options:
If VRTX hits our entry point I'm suggesting the January calls. My preference is the $40 strike.

Annotated Chart:

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         


PUT Play Updates

Green Mountain Coffee Roasters - GMCR - cls: 62.95 chg: -0.41 stop: 71.05

We should remain very cautious on GMCR. Friday was an opportunity to really sell GMCR and shares didn't move that much. The stock slipped to $61.85 on Friday morning but trimmed its losses by the closing bell. I'd feel more confident with bearish positions if the S&P 500 broke down under the 1080 level.

GMCR is a dangerous stock to be bearish on. GMCR has extremely high short interest. Our first target is $60.25. Our second target is $55.50.

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

Annotated Chart:

Picked on  November 19 at $ 64.75
Change since picked:       - 1.80
Earnings Date            01/28/10 (unconfirmed)
Average Daily Volume =        1.5 million  
Listed on  November 18, 2009         


Goldman Sachs - GS - close: 164.16 change: -4.76 stop: 176.05

Financial stocks were some of the worst performers on Friday as investors worried about who had exposure to Dubai World's debt. Shares of GS gapped open lower at $164.27 and eventually closed with a 2.8% decline. There are a few things I would expect from shares of GS. The stock will probably try and fill the gap with a bounce toward $169-170. The $160 level could be round-number support. Plus the exponential 200-dma near $155 could be technical support. Look for that bounce near $170 to roll over and use it as a new entry point to buy puts. Our first target is $155.50. More aggressive traders could aim for the $150 area or the simple 200-dma.

Suggested Options:
If GS provides a new entry point I'd use the December puts.

Annotated Chart:

Picked on  November 25 at $168.75
Change since picked:       - 4.59
Earnings Date            12/15/09 (unconfirmed, could be in January)
Average Daily Volume =        9.5 million  
Listed on  November 21, 2009         


iShares Biotech - IBB - close: 78.35 change: -0.76 stop: 80.05

I am still very tempted to exit early from our IBB play but so far the stock is honoring the trendline of lower highs. The intraday bounce on Friday was pretty sharp and the ETF performed better than the major averages. 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.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  November 19 at $ 77.18 /gap down entry point
                             /originally listed at $77.86
Change since picked:       + 1.17
Earnings Date            --/--/--
Average Daily Volume =        4.9 million  
Listed on  November 19, 2009         


Northern Trust - NTRS - close: 47.69 change: -0.52 stop: 50.26

NTRS hit new multi-month lows on the gap down this morning but like everything else shares bounced intraday. 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.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  November 12 at $ 49.18
Change since picked:       - 1.49 
Earnings Date            01/21/10 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on  November 12, 2009         


Research In Motion - RIMM - close: 58.14 change: -1.62 stop: 62.75 *new*

RIMM sank to new three-week lows on Friday. The path of least resistance appears to be down but shares are nearing possible support (see chart). I remain cautious on RIMM. I'm not suggesting new positions at this time. Please note our new stop loss at $62.75. 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:
No new positions at this time.

Annotated Chart:

Picked on  November 16 at $ 61.80
Change since picked:       - 3.66
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: 164.16 change: -4.76 stop: n/a

It looks like the new direction for GS has been decided and it's down. I am no longer suggesting new strangle positions on the stock.

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.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  November 21 at $171.67 /gap open entry
Change since picked:       - 7.51
Earnings Date            12/15/09 (unconfirmed, could be January)
Average Daily Volume =        9.5 million  
Listed on  November 21, 2009         


Ultra(Long)-S&P500 - SSO - close: 36.66 change: -1.21 stop: n/a

The S&P 500 and the SSO hit short-term support Friday morning and bounced. The real test will be Monday when fund managers come back to work. Do they buy the dip or sell it? I'm not suggesting new strangle positions at this time.

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.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  November 11 at $ 37.08
Change since picked:       - 0.42
Earnings Date            --/--/--
Average Daily Volume =         32 million  
Listed on  November 11, 2009         


United Parcel Service - UPS - close: 57.43 change: -0.77 stop: n/a

UPS is still stuck in its trading range. I see the close near $57.50 as an entry point to open new strangle positions. Shares are bound to breakout sooner rather than later. I'd limit new positions to the $58.00-56.00 zone.

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.

Suggested Options:
See above.

Annotated Chart:

Picked on  November 21 at $ 57.99 /gap open entry
Change since picked:       - 0.56
Earnings Date            02/02/10 (unconfirmed)
Average Daily Volume =        4.7 million  
Listed on  November 21, 2009         


CLOSED BULLISH PLAYS

Arch Cap Group - ACGL - close: 68.81 change: -1.14 stop: 67.95

Our call play on ACGL went from being profitable to a loser overnight with shares of ACGL gapping open lower at $67.06. This was under technical support at its 50-dma and under our stop loss at $67.95 so our play was closed immediately on the gap down. If shares of ACGL close under $67.00 it's going to make the peaks in October and November really look like a bearish double top.

Chart:

Picked on  November 07 at $ 68.81
Change since picked:       - 1.75 <-- stopped out/gap down $ 67.06 (-2.5%)
Earnings Date            10/26/09 (confirmed)
Average Daily Volume =        444 thousand 
Listed on  November 07, 2009         


Waters Corp - WAT - close: 59.02 change: -0.76 stop: 58.75

Selling pressure in WAT wasn't that bad on Friday but I'm tired of waiting for shares to breakout. Readers may want to keep WAT on their watch list for a move over $60.00 or better yet a move over $61.50 as a bullish entry point. If shares close under the 50-dma it might be time to consider bearish trades. Our trigger at $61.50 was never hit.

chart:

Picked on  November xx at $ xx.xx <-- TRIGGER @ 61.50
Change since picked:       + 0.00                 *never opened*
Earnings Date            01/27/10 (unconfirmed)
Average Daily Volume =        1.2 million  
Listed on  November 12, 2009