Editor's Note:

Traders immediately bought Thursday's dip this morning after positive manufacturing data in both China and the U.S. Overall Monday produced a very widespread rally with retail and utility stocks the only real laggards. It's common to see new money put to work at the beginning of the month/quarter/year so today's strength isn't too surprising. The question is how long will it last?


CALL Play Updates

Intl. Business Mach. - IBM - close: 132.45 change: +1.55 stop: 128.90

IBM spiked to a new 52-week high at $132.97 this morning. If shares can breakout and close above this new $130-132.50 trading range it will reinforce the current up trend.

Our first target is $134.95. Our second target is $139.00. Our time frame is about four weeks. We do not want to hold over IBM's earnings report.

Entry  on  December 28 at $131.55
Change since picked:       + 0.90
Earnings Date            01/19/10 (unconfirmed)
Average Daily Volume =        5.8 million  
Listed on  December 26, 2009         


Infosys Tech. - INFY - close: 56.76 change: +1.49 stop: 53.85

INFY was a strong performer with a 2.69% gain and new 52-week highs. The plan is to exit ahead of the January 12th earnings report if INFY doesn't hit our target first. INFY has already hit our first target at $55.75. Our second and final target is $59.50.

Entry  on  December 05 at $ 51.88 /gap down entry point
                           /originally listed at $52.46
Change since picked:       + 4.88
                            /1st target hit @ 55.75 (+7.4%)
Earnings Date            01/12/10 (confirmed)
Average Daily Volume =        1.4 million  
Listed on  December 05, 2009         


L-3 Communications - LLL - close: 87.97 change: +1.02 stop: 84.90

The action in LLL was a bit rocky. The early morning gap higher faded until traders bought the dip midday around $87. I am not suggesting new positions at this time.

I did label this an aggressive, higher-risk trade. Our first target to take profits is at $89.95. Our second and final target is $94.00. We want to exit ahead of the late January earnings report. FYI: The Point & Figure chart is bullish with a $104 target.

Entry  on  December 28 at $ 86.80 
Change since picked:       + 1.17
Earnings Date            01/28/10 (unconfirmed)
Average Daily Volume =        1.0 million  
Listed on  December 26, 2009         


NUCOR Corp. - NUE - close: 47.79 change: +1.14 stop: 43.90

Commodity-related stocks had a good day. NUE spiked to a new relative high over $48.00 before paring its gains. Shares still closed with a 2.4% rally. More conservative traders might want to raise their stops toward $45.00. Our target is $49.50. We will plan to exit ahead of the late January earnings report.

Entry  on  December 22 at $ 45.85 (1/2 position or less) /gap higher entry
Change since picked:       + 1.94
Earnings Date            01/28/10 (unconfirmed)
Average Daily Volume =        4.5 million  
Listed on  December 22, 2009         


Precision Castparts - PCP - close: 112.54 change: +2.19 stop: 109.45

The initial pop higher faded but traders bought the dip near $110.65. This could be a new bullish entry point if you keep your stops relatively tight. PCP has already hit our first target at $112.45. Our second target is $118.75. The Point & Figure chart is bullish with a $157 target (it was $131).

Picked on  December 01 at $107.35
Change since picked:       + 5.19
                            /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: 59.12 change: -0.12 stop: 56.45

SF under performed its peers and the market on Monday. The relative weakness might suggest SF needs a pull back. If the stock corrects then broken resistance near $57.00 should offer some support. I am not suggesting new bullish positions at this time. Our first target is $64.50, which may be a little optimistic since our time frame is January expiration. The P&F chart is bullish and points to a $70 target.

Entry  on  December 22 at $ 58.05
Change since picked:       + 1.07
Earnings Date            02/11/10 (unconfirmed)
Average Daily Volume =        207 thousand 
Listed on  December 16, 2009         


UnitedHealth Group - UNH - close: 31.53 change: +1.05 stop: 28.90

UNH gapped open higher and closed the day with a 3.4% gain. Shares have broken the short-term trend of lower highs. There is no change from my prior comments.

This was a "lottery ticket" style of play. We knew it was risky given all the political ups and downs for the healthcare bill. Our time frame was several weeks and we listed January and March calls. At this time if you choose to open new positions I'd use March calls but that would require holding over the late January earnings report (to get the most out of your March calls). Our first target is $34.00. Our longer-term target is $36.00.

Entry  on  December 10 at $ 30.31 
Change since picked:       + 1.22
Earnings Date            01/21/10 (unconfirmed)
Average Daily Volume =        819 thousand 
Listed on  December 10, 2009         


Volatility Index - VIX - close: 20.04 change: -1.64 stop: 18.95

With the market in rally mode it's only natural to see the VIX retreating. Given the strength of the market's rally I'm not suggesting new positions in the VIX right now. We'll wait and see how the week shapes up. Our next entry point might be Friday if investors end up selling the jobs report.

Our first target to take profits is at 27.50. Our second target is 32.50. We gave ourselves a relatively wide stop loss at $18.95.

Entry  on   January 02 at $ 21.68 
Change since picked:       - 1.64
Earnings Date            --/--/--
Average Daily Volume =        --- million  
Listed on   January 02, 2010         


Whirlpool - WHR - close: 81.95 change: +1.29 stop: 79.45

The bounce in WHR today looks like a new bullish entry point. WHR has already hit our first target at $84.75. Our second target is $89.00.

Entry  on  December 19 at $ 80.76 /gap higher entry
Change since picked:       + 1.19
                             /1st target hit $84.75 (+4.9%)
Earnings Date            02/08/10 (unconfirmed)
Average Daily Volume =        1.6 million  
Listed on  December 19, 2009         


Zebra Technologies - ZBRA - close: 28.67 change: +0.32 stop: 27.70

Traders bought the dip in ZBRA at its rising 10-dma. Readers may want to consider small positions on a new relative high over $28.90 and just focus on our second target. Our first target is $30.00. Our second target is $32.00 but that looks pretty aggressive and we may end up exiting early if the market does correct.

Entry  on  December 30 at $ 28.39 
Change since picked:       + 0.28
Earnings Date            02/09/10 (unconfirmed)
Average Daily Volume =        166 thousand 
Listed on  December 30, 2009         


PUT Play Updates

Fedex Corp. - FDX - close: 83.45 change: -0.00 stop: 85.51

Wow! The market surges to new highs and FDX fails to participate. This could be a telling clue about the strength in transports. I hesitate to open bearish positions with the market marching higher but we'll stick to our game plan.

I'm suggesting a trigger to buy puts at $81.90. If triggered our first target is $78.10 near the rising 100-dma. Our second target is $75.10. More aggressive traders could aim for the November 2009 lows near $72.00.

Entry  on   January xx at $ xx.xx <-- TRIGGER @ 81.90
Change since picked:       + 0.00
Earnings Date            03/18/10 (unconfirmed)
Average Daily Volume =        3.3 million  
Listed on   January 02, 2010         


Flowserve - FLS - close: 97.01 change: +2.48 stop: 98.25

FLS is on the verge of breaking resistance at its multi-week trend of lower highs. Aggressive traders could buy calls on a move over $98. I'd be tempted to buy calls if FLS can rally past $100 and its 50-dma. Until then the trend looks bearish. We'll stick to the plan.

I'm suggesting a trigger to buy puts at $93.85. If triggered our first target is the long-term trendline of higher lows, which places our exit around $88.50. I'm suggesting we exit 2/3rds to 3/4ths of our position at $88.50. We'll keep a small position and aim for $85.15.

Entry  on   January xx at $ xx.xx <-- TRIGGER @ 93.85
Change since picked:       + 0.00
Earnings Date            02/24/10 (unconfirmed)
Average Daily Volume =        612 thousand 
Listed on   January 02, 2010         


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.)

United Parcel Service - UPS - close: 58.18 change: +0.81 stop: n/a

Rival FDX closed unchanged on the session. UPS gapped open higher but then proceeded to pare its gains by the close. UPS did manage to erase Thursday's loss so not much progress. With only two weeks left before options expire readers may want to adjust their exit price lower. I'm not suggesting new strangle positions.

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.

Picked on  November 21 at $ 57.99 /gap open entry
Change since picked:       + 0.19 
Earnings Date            02/02/10 (unconfirmed)
Average Daily Volume =        4.7 million  
Listed on  November 21, 2009