The reaction to the jobs report on Friday was somewhat surprising and our results were mixed. We're updating a handful of stop losses.

Editor's Note:

The November jobs report on Friday morning delivered everything we wanted and more. Yet the stock market failed to move significantly. On a short-term basis (last few days) the S&P 500 is forming a broadening top or megaphone pattern, which is normally interpreted as a bearish topping formation.

I am cautiously optimistic here in spite of the pattern on the S&P 500 but traders need to be careful. I suggest readers scale back their position sizes to reduce risk. We can start taking normal-sized positions when the S&P finally breaks out of its current range.

The market won't move sideways forever. Lately Mondays have been consistently bullish for the market. Let's see if this Monday can set a new closing high for the S&P 500. Investors can take some encouragement by the bullish breakout in the small cap Russell 2000 index, the relative strength in the SOX semiconductor index, and bullish breakout in the transportation index.


CALL Play Updates

Bucyrus Intl. - BUCY - close: 50.86 change: -1.01 stop: 51.90

BUCY has retreated to the bottom of its trading range near $50.00. Shares actually hit $49.85 Friday morning. We should consider the strong possibility that BUCY could breakdown after four weeks of failing to rally through resistance near $55.00. BUCY produces mining equipment so it's going to trade with the commodity stocks. If the dollar continues to bounce then commodities should trend lower. It's possible that Friday's rally in the dollar is a one-day move but if it's not then BUCY is probably going to sink.

We will keep BUCY as a bullish candidate for now with a trigger to buy calls at $55.65. More aggressive traders may want to buy calls on a move over $52.50. If triggered at 55.65 our first target is $59.90. Our second target is $64.00. However, I am also adding a trigger to buy puts! Use a trigger at $48.95 to buy puts. Our first target is $45.50 (just above the 50-dma). Our second target is $40.50.

Suggested Options:
I'm suggesting the January calls if triggered at $55.65. My preference is the January $60 strike. If BUCY breaks down I'd use the January puts and I'd buy the January 50s or 45s.

Annotated Chart:

Picked on  December 01 at $ xx.xx <-- TRIGGER @ 55.65  (or 48.95, small positions)
Change since picked:       + 0.00
Earnings Date            02/18/10 (unconfirmed)
Average Daily Volume =        2.8 million  
Listed on  December 01, 2009         


Caterpillar - CAT - close: 58.30 change: +0.10 stop: 58.49

Upward momentum is clearly waning for CAT but shares have not yet broken their bullish trend of higher lows. I'll probably drop CAT if shares close under $57.00 but we'll keep looking for a breakout for now. The plan is to buy calls with a trigger at $61.51. If triggered our first target is $64.95. Our second target is $69.00.

Suggested Options:
If triggered I'm suggesting the January calls. My preference is the $65 strike.

Annotated Chart:

Picked on  December 01 at $ xx.xx <-- TRIGGER @ 61.51
Change since picked:       + 0.00
Earnings Date            01/26/10 (unconfirmed)
Average Daily Volume =        7.8 million  
Listed on  December 01, 2009         


Capella Education - CPLA - close: 71.50 change: +1.02 stop: 69.65

Shares of CPLA were in breakout mode this morning but the rally faded. The stock did post a 1.4% gain but Friday's performance actually looks bearish. I am not suggesting new positions at this time. Thus far the 50-dma and the $70 region are holding as support. Our target is $79.50.

I do consider this an aggressive, higher-risk trade. Currently the Point & Figure chart is bullish with an $85 target.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  November 24 at $ 72.55
Change since picked:       - 1.05
Earnings Date            02/11/10 (unconfirmed)
Average Daily Volume =        126 thousand 
Listed on  November 24, 2009         


Fedex Corp. - FDX - close: 87.93 change: +1.99 stop: 81.95 *new*

The transports were some of the best performers on Friday and the transportation index broke through resistance to close at a new 2009 high. Shares of FDX also set a new closing high for 2009. I am raising our stop loss on FDX to $81.95. More conservative traders might be able to get away with a stop closer to $84.00. Our first target to take profits is at $89.95. Our second target is $94.00. The Point & Figure chart is bullish with a $112 target.

FYI: Readers should note that I'm listing December options, which expire in three weeks. I would prefer to buy January calls but FDX is going to report earnings before December option expiration and we'll exit ahead of the earnings report so there is no need to pay for January's premium.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  December 01 at $ 85.75 
Change since picked:       + 2.18
Earnings Date            12/17/09 (confirmed)
Average Daily Volume =        2.6 million  
Listed on  November 30, 2009         


Ishares Financial - IYF - close: 52.06 change: +0.83 stop: 49.99

The good news here is that the financials did not see any follow through on yesterday's bearish reversal. The bad news is that the IYF and most of the financials are still stuck in a sideways consolidation without any clues as to what direction the next breakout will go. I'm not suggesting new positions at this time. We need to see a clearly defined bounce from the 100-dma or a new move over $52.50 (more cautious traders can wait for a move over $53.00) before I'd consider new positions. Our multi-week target is $59.00. I would use small positions.

Suggested Options:
No new positions at this time.

Annotated Chart:

Entry  on  December 03 at $ 52.60
Change since picked:       - 0.54
Earnings Date            --/--/--
Average Daily Volume =        3.1 million  
Listed on  December 02, 2009         


MSC Industrial Direct - MSM - close: 46.89 change: +0.78 stop: 44.90

MSM provided another bounce but it failed to breakout over the late November highs. The larger trend is still positive but there has been no volume in MSM's move and without any clarity in the major indices I'm not suggesting new positions. Our first target is $49.75. Our second target is $52.50.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  November 17 at $ 46.62
Change since picked:       + 0.27
Earnings Date            01/07/10 (unconfirmed)
Average Daily Volume =        513 thousand 
Listed on  November 17, 2009         


Norfolk Southern - NSC - close: 52.84 change: +1.36 stop: 49.75

The Dow Jones Transportation Index broke out past resistance to new 2009 highs. This is a very bullish sign for the market. The airlines have been out performing the rest of the sector but the railroads have been improving. Shares of NSC have rallied up to resistance near $53.00 and the top of its trading range. The stock actually set a new closing high for the year. I would be tempted to buy calls right here but you could wait for a move over $53.00 first.

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:
Previously I suggested the January calls with a preference for the $55 strike.

Annotated Chart:

Picked on  November 21 at $ 51.84 (small positions)/gap higher entry
Change since picked:       + 1.00 
Earnings Date            01/27/10 (unconfirmed)
Average Daily Volume =        5.4 million  
Listed on  November 21, 2009         


Precision Castparts - PCP - close: 110.90 change: +3.01 stop: 104.95 *new*

PCP continues to show strength. The stock out performed the market on Friday with a 2.7% gain and a new 2009 high over round-number resistance at the $110 level. If you're looking for a new entry point I'd probably watch for a bounce in the $108 region. We are raising our stop loss to $104.95.

Our first target to take profits is at $112.45. Our second target is $118.75. The Point & Figure chart is bullish with a $131 target.

Suggested Options:
If PCP provides a new entry point I would use the January calls.

Annotated Chart:

Picked on  December 01 at $107.35
Change since picked:       + 3.55
Earnings Date            01/20/10 (unconfirmed)
Average Daily Volume =        817 thousand 
Listed on  November 28, 2009         


Vertex Pharma - VRTX - close: 39.63 change: -0.59 stop: 38.49

There was no follow through for VRTX on Thursday's bullish breakout. The close under $40.00 is short-term bearish. I would look for a new rise over Friday's high (40.44) before launching new positions. Our target to exit is at $44.25. My time frame is several weeks.

Suggested Options:
If VRTX provides a new entry point I would use the January calls. My preference is for the $40 strike.

Annotated Chart:

Entry  on  December 03 at $ 40.25
Change since picked:       - 0.62
Earnings Date            02/09/10 (unconfirmed)
Average Daily Volume =        3.2 million  
Listed on  November 23, 2009         


PUT Play Updates

FISERV Inc. - FISV - close: 47.08 change: +0.71 stop: 48.55

The early morning rally failed at short-term resistance but FISV still managed a 1.5% gain. The six-week trend of lower highs is suggesting the trend is down but I'm still suggesting caution here. Currently our bearish target o FISV is $42.25.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  November 28 at $ 46.29
Change since picked:       + 0.79
Earnings Date            02/02/10 (unconfirmed)
Average Daily Volume =        1.4 million  
Listed on  November 28, 2009         


Green Mountain Coffee Roasters - GMCR - cls: 61.19 chg: +1.24 stop: 66.15

Some positive analyst comments on GMCR helped the stock rally toward $62.00 on Friday morning but the rebound faded and shares pared their gains to just +2.0%. The stock hit our first target on last week and shares are currently looking oversold and due for a larger bounce. More conservative traders may want to scale back their position sizes or tighten their stops. I am not suggesting new positions at this time. We are adjusting our second and final target to $56.00. This is a higher-risk trade considering the risk of a short squeeze.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  November 19 at $ 64.75
Change since picked:       - 3.56
                                /1st target hit @ 60.25 (-6.9%)
Earnings Date            01/28/10 (unconfirmed)
Average Daily Volume =        1.5 million  
Listed on  November 18, 2009         


Goldman Sachs - GS - close: 167.24 change: +2.94 stop: 175.25 *new*

Shares of GS erased Thursday's losses but the intraday bounce on Friday failed to breakout over its 10-dma and its short-term trend of lower highs. Broken support near $170 and its old trendline of higher lows should be new resistance. I'm not suggesting new bearish positions at this time but we'll be watching for another failed rally as our next entry point. We're inching the stop loss down to $175.25. Our first target is $155.50. More aggressive traders could aim for the $150 area or the simple 200-dma.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  November 25 at $168.75
Change since picked:       - 1.51
Earnings Date            12/15/09 (unconfirmed, could be in January)
Average Daily Volume =        9.5 million  
Listed on  November 21, 2009         


Research In Motion - RIMM - close: 58.75 change: +0.33 stop: 62.75

The consolidation in RIMM continues to narrow. A breakout one way or the other is imminent. Friday's bounce failed near its 21 and 30-dma. I'm not suggesting new positions. More conservative traders may want to lower their stops.

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:       - 3.05
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.)

Apple Inc. - AAPL - close: 193.32 change: -3.16 stop: n/a

It was a very volatile session for AAPL. The stock gapped open higher but the bounce failed under the $200.00 level. Shares plunged intraday to $190.28 before paring its losses by the close. There were rumors all day on Friday that AAPL was in talks to buy music site Lala.com and after the closing bell AAPL confirmed that the did indeed buy Lala.com for an undisclosed amount. Yet I did not see anything that linked the Lala acquisition to the sharp intraday weakness but AAPL has been growing weaker for several days now. Friday's session is technically a bearish breakdown under its 50-dma and out of its bullish channel.

I am not suggesting new strangle positions at this time.

We have an aggressive December strangle and a less aggressive January strangle. The options in the December strangle were the December $210 calls (AJL-LV) and the December $190 puts (APV-XR). Our estimated cost is $3.83. We want to sell if either option hits $8.00 or more.

The options in the January strangle were January $220 calls (AJL-LV) and the January $180 puts (APV-XR). Our estimated cost is $5.60. We want to sell if either option hits $10.00 or more.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  November 30 at $199.91
Change since picked:       - 6.59
Earnings Date            01/21/10 (unconfirmed)
Average Daily Volume =       15.1 million  
Listed on  November 30, 2009         


Goldman Sachs - GS - close: 167.24 change: +2.94 stop: n/a

GS managed a bounce off its intraday low but shares failed to breakout over the bearish trend of lower highs. We've only got two weeks left before December options expire. 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:       - 4.43
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: 37.60 change: +0.40 stop: n/a

The S&P 500's failure to really break one way or the other on the jobs report is very worrisome for our strangle play. If we don't see some movement on Monday more conservative traders may want to consider an early exit. We only have two weeks left before December options expire. 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:       + 0.52
Earnings Date            --/--/--
Average Daily Volume =         32 million  
Listed on  November 11, 2009         


United Parcel Service - UPS - close: 57.87 change: +0.30 stop: n/a

I'm surprised by the lack of moment in UPS. The transportation index broke out past resistance to hit new 2009 highs on Friday. UPS is still stuck in its trading range. It won't stay like this forever but we've only got two weeks left before December options expire. I'm not suggesting new strangle positions at this time.

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:
No new positions at this time.

Annotated Chart:

Picked on  November 21 at $ 57.99 /gap open entry
Change since picked:       - 0.12 
Earnings Date            02/02/10 (unconfirmed)
Average Daily Volume =        4.7 million  
Listed on  November 21, 2009