The stock market has been unable to breakout from its trading range and now with the last two weeks of the year upon us volume will really start to fade.


CALL Play Updates

EQUINIX Inc. - EQIX - close: 106.49 change: +1.87 stop: 99.75

The bounce in EQIX looks strong with a rebound off the rising 10-dma. Our first target is $109.50. I am adding a second target at $113.50. If you were looking for a new bullish entry point to buy calls then this is it. Consider raising your stop loss toward $103. The plan was to use small position sizes to limit risk.

Suggested Options:
Previously I suggested the January calls with a preference for the $105 strikes. I would now consider the $110s or the March strikes.

Annotated Chart:

Entry  on  December 09 at $103.02
Change since picked:       + 3.47 
Earnings Date            02/10/10 (unconfirmed)
Average Daily Volume =        501 thousand 
Listed on  December 09, 2009         


Infosys Tech. - INFY - close: 54.64 change: +0.39 stop: 49.90

INFY bounced strong off its intraday lows. The most almost looks like a mini bull-flag pattern. I would be tempted to open new positions if you raised your stop loss. Our first target to take profits is at $55.75. Our second and final target is $59.50. We will plan to exit ahead of the January 12th earnings report.

Suggested Options:
If you choose to buy the bounce I would use January calls since we plan to exit ahead of the January earnings report.

Annotated Chart:

Entry  on  December 05 at $ 51.88 /gap down entry point
                           /originally listed at $52.46
Change since picked:       + 2.76
Earnings Date            01/12/10 (confirmed)
Average Daily Volume =        1.4 million  
Listed on  December 05, 2009         


General Dynamics - GD - close: 68.24 change: -0.27 stop: 67.45

The correction in shares of GD has lasted four days and the stock has dipped to technical support at its long-term trend of higher lows. I would buy calls on this intraday bounce from $67.75 (Friday's low). More conservative traders could wait for more confirmation on the bounce.

Our first target to take profits in GD is $74.95. FYI: The Point & Figure chart is bullish with a $105 target.

Suggested Options:
I am suggesting the February calls. My preference is the $70 or 75 strikes.

Feb. $75 call is GD-BO. The Feb. $70 call is GD-BN.

Annotated Chart:

Entry  on  December 14 at $ 70.66 (half position)
Change since picked:       - 2.42
Earnings Date            01/27/10 (unconfirmed)
Average Daily Volume =        1.6 million  
Listed on  December 14, 2009         


Norfolk Southern - NSC - close: 52.04 change: -0.02 stop: 49.75

The railroad stocks are still stuck in their trading range much like the major averages. At this time I'd either wait for another bounce from the $50.00 level or look for a move over $53.25 before considering new bullish entries. Our first target is now $56.50. Our second and final target is $59.50. 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. Today I'd still consider that option or the March calls if NSC produces a new entry point.

Annotated Chart:

Picked on  November 21 at $ 51.84 (small positions)/gap higher entry
Change since picked:       + 0.20
Earnings Date            01/27/10 (unconfirmed)
Average Daily Volume =        5.4 million  
Listed on  November 21, 2009         


Precision Castparts - PCP - close: 112.38 change: +1.66 stop: 107.25

Traders are buying the dip and PCP looks ready to hit new highs again. This looks like a new entry point but you might want a tighter stop loss (maybe near $108 or $109). PCP has already hit our first target at $112.45. Our second target is $118.75. The Point & Figure chart is bullish with a $131 target.

Suggested Options:
I would consider the January or March calls with a preference for the $110 or $115 strike.

Annotated Chart:

Picked on  December 01 at $107.35
Change since picked:       + 5.03
                            /1st target hit $112.45 (+4.7%)
Earnings Date            01/20/10 (unconfirmed)
Average Daily Volume =        817 thousand 
Listed on  November 28, 2009         


Stifel Financial - SF - close: 56.97 change: -0.40 stop: 54.95

SF spiked higher on Friday morning but failed to hit the $58.00 level. Traders bought the dip midday near $56.00. I don't see any changes from my prior comments. I'm suggesting a trigger to buy calls at $58.05. If triggered our first target is $64.50. Our time frame is January expiration. The P&F chart is bullish and points to a $70 target.

Suggested Options:
I would prefer to use February calls but they're not available yet. That leaves us January or Aprils. Given that choice I'd pick January calls. My preference is the $60 strike.

Annotated Chart:

Entry  on  December xx at $ xx.xx <-- TRIGGER @ 58.05
Change since picked:       + 0.00
Earnings Date            02/11/10 (unconfirmed)
Average Daily Volume =        207 thousand 
Listed on  December 16, 2009         


UnitedHealth Group - UNH - close: 31.54 change: -0.28 stop: 27.99

UNH reached overbought levels midweek so it's not surprising to see some profit taking. I'd consider buying new call positions on a dip or bounce near $30.50-30.00.

Our first target is $34.00. Our longer-term target is $36.00. Our time frame is several weeks. If you buy March calls you might want to think about holding over the late January earnings report.

Suggested Options:
If UNH provides an entry point I would use the January or March calls.

Annotated Chart:

Entry  on  December 10 at $ 30.31 
Change since picked:       + 1.23
Earnings Date            01/21/10 (unconfirmed)
Average Daily Volume =        819 thousand 
Listed on  December 10, 2009         


United Tech. - UTX - close: 69.46 change: -0.12 stop: 67.45

UTX had resistance at $69.00 and at $70.00. Shares broke through both in the last several days and hit our trigger to buy calls at $70.25. Now the stock is retesting the $69.00 level, which should be support. Readers can choose to buy the late afternoon bounce from $69 on Friday or wait for UTX to trade back above $70.25 again. More conservative traders may want to use a tighter stop loss. Our first target is $74.75. The Point & Figure chart is bullish with a $95.00 target.

Suggested Options:
I am suggesting the January calls with a preference for the $70 strike.

Annotated Chart:

Entry  on  December 15 at $ 70.25
Change since picked:       - 0.79
Earnings Date            01/21/10 (unconfirmed)
Average Daily Volume =        4.0 million  
Listed on  December 12, 2009         


Valmont Industries - VMI - close: 80.28 change: +0.15 stop: 78.45

It's not surprising to see VMI close near the $80 strike price at expiration. Readers can use this dip to $80 as a new entry point or wait for a rebound back above $81.00 to launch new positions. Our first target to take profits is at $84.90. Our second target is $88.75. FYI: The most recent data list short interest at 9% of the very small 20.1 million-share float.

Suggested Options:
I'm suggesting the January calls with a preference for the $85 strike.

Annotated Chart:

Entry  on  December 10 at $ 81.00
Change since picked:       - 0.72
Earnings Date            02/10/10 (unconfirmed)
Average Daily Volume =        238 thousand 
Listed on  December 05, 2009         


Vertex Pharma - VRTX - close: 42.34 change: +1.21 stop: 39.75 *new*

Expiration Friday turned out to be a strong session for VRTX. The stock rallied from the $41.00 level and closed near its highs with a 2.9% gain. I am raising our stop loss to $39.75. Our target to exit is at $44.25. My time frame is several weeks.

Suggested Options:
I could see opening new positions here but you may want to adjust your stop loss and your exit target higher.

Annotated Chart:

Entry  on  December 03 at $ 40.25
Change since picked:       + 2.09
Earnings Date            02/09/10 (unconfirmed)
Average Daily Volume =        3.2 million  
Listed on  November 23, 2009         


PUT Play Updates

Freeport McMoran - FCX - close: 76.54 change: +0.58 stop: 80.55

FCX managed to bounce twice intraday from the $75.50 region. Bulls may have grown bolder on the intraday decline in the U.S. dollar. The short-term trend for FCX is still down and I would watch for another failed rally under $80 as our next entry point.

Remember, we should consider this an aggressive, higher-risk trade because the dollar, commodities, and shares of FCX can be somewhat volatile. The plan was to use very small positions to limit risk. Our first target is $72.50. I'm adding a second target at $68.50.

Suggested Options:
If FCX provides a new entry point we want to use the January puts. My preference is the $75 strike.

Annotated Chart:

Entry  on  December 12 at $ 76.81 
Change since picked:       - 0.27
Earnings Date            01/26/10 (unconfirmed)
Average Daily Volume =       12.6 million  
Listed on  December 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: 195.43 change: +3.57 stop: n/a

AAPL erased Thursday's losses with a 1.8% gain. The positive earnings news from RIMM was also seen as a bullish sign for AAPL's business. Currently the short-term trend for AAPL is still lower. I am not suggesting new strangle positions at this time.

Our aggressive December strangle has expired. 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.

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:       - 4.48
Earnings Date            01/21/10 (unconfirmed)
Average Daily Volume =       15.1 million  
Listed on  November 30, 2009         


United Parcel Service - UPS - close: 57.98 change: -0.25 stop: n/a

UPS closed back inside its multi-week trading range. It was a quiet death for our December strangle. I hesitate to suggest new strangle positions but I can't imagine UPS will stay in this trading range once we hit January. You could opt for April options instead if you want to launch new positions.

(Closed) December Strangle
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.

January Strangle
The options suggested for the January strangle were the January $60.00 calls (UPS-AL) and the January $55.00 puts (UPS-MK). Our estimated cost was $1.35. I would plan to sell if either option hit $3.50 or more.

Suggested Options:
No new positions

Annotated Chart:

Picked on  November 21 at $ 57.99 /gap open entry
Change since picked:       - 0.01 
Earnings Date            02/02/10 (unconfirmed)
Average Daily Volume =        4.7 million  
Listed on  November 21, 2009         


CLOSED BULLISH PLAYS

Mosaic - MOS - close: 55.22 change: -0.81 stop: 57.95

A few days ago it looked like MOS was poised to breakout higher from its consolidation. Instead the stock broke down. Shares never hit our trigger to buy calls at $62.55. I am now removing MOS as a bullish candidate.

Chart:

Entry  on  December xx at $ xx.xx <-- TRIGGER @ 62.55
Change since picked:       + 0.00
Earnings Date            01/05/10 (unconfirmed)
Average Daily Volume =        5.8 million  
Listed on  December 16, 2009         


MSC Industrial Direct - MSM - close: 46.46 change: -0.24 stop: 44.90

We have run out of time and our December option expired. The long-term trend for MSM is still up but with the S&P 500 churning sideways for six weeks shares of MSM didn't make much progress. Readers may want to re-evaluate a bullish entry point here or look for a move over $47.75 as a new entry.

Chart:

Picked on  November 17 at $ 46.62
Change since picked:       - 0.16 <-- closed @ 46.46 (-0.03%)
Earnings Date            01/07/10 (unconfirmed)
Average Daily Volume =        513 thousand 
Listed on  November 17, 2009         


Weyerhaeuser - WY - close: 42.80 change: -0.19 stop: 40.75

I am temporarily giving up on WY but I would keep it on your watch list. A rebound past $44.00 or a new bounce from $40.00 may end up being a new bullish entry point.

Chart:

Entry  on  December 14 at $ xx.xx 
Change since picked:       + 0.00
Earnings Date            02/05/10 (unconfirmed)
Average Daily Volume =        1.6 million  
Listed on  December 14, 2009         


CLOSED STRANGLE & SPREAD PLAYS

Goldman Sachs - GS - close: 163.19 change: +2.26 stop: n/a

In spite of the down trend GS never broke the $160 level. Our aggressive December strangle has expired. The options suggested were the December $180 calls (GPY-LP) and the December $160 puts (GPY-XL). Our estimated cost is about $4.61.

Annotated Chart:

Picked on  November 21 at $171.67 /gap open entry
Change since picked:       - 8.48
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: 37.43 change: +0.40 stop: n/a

The S&P 500 has been unable to breakout of its trading range for six weeks now. It was the worst possible scenario for our strangle play. December options have expired. 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.

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