Editor's Note:

Most of our trading candidates look strong as investors shrug off the disappointing jobs number. Don't get overconfident. Manage your risk and take some money off the table.


CALL Play Updates

FUQI Intl. - FUQI - close: 21.66 change: +0.97 stop: 18.99 *new*

The breakout rally in FUQI continues and shares out performed most of the market with a 4.6% gain on Friday. I am raising our stop loss to $18.99. More conservative traders may want to place their stops closer to $20.00. Currently our target to exit is $24.75 but we'll want to keep a wary eye on the 100-dma (currently near $23.70) as possible overhead resistance. This is an aggressive, higher-risk trade. FYI: FUQI is due to present at an analyst conference on Monday.

Suggested Options:
I am not suggesting new positions at this time. We already had our entry point on the breakout over the 50-dma and another entry on the dip near $20.

Annotated Chart:

Entry  on   January 06 at $ 20.51   (small positions 1/4)  
Change since picked: + 1.15
Earnings Date 03/31/10 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on January 04, 2010


Intl. Business Mach. - IBM - close: 130.85 change: +1.30 stop: 128.90

Traders bought the dip in IBM twice near the $129 level this past week. The bounce back over $130.00 looks like a new bullish entry point. However, I would keep your positions small. There are some technical indicators suggesting the market is getting overbought and due for a correction.

Our first target is $134.95. Our second target is $139.00. However, our original play had the January $135 calls so we'll exit before expiration. If you own February calls or later then plan to exit ahead of earnings.

Suggested Options:
This does look like a new entry point but keep your positions very small. I'd use the February calls but exit ahead of earnings.

Annotated Chart:

Entry  on  December 28 at $131.55      
Change since picked: - 0.70
Earnings Date 01/19/10 (unconfirmed)
Average Daily Volume = 5.8 million
Listed on December 26, 2009


J.P.Morgan Chase - JPM - close: 44.68 change: -0.11 stop: 41.90 *new*

Banking stocks produced a four-day rally this week and finally hit some profit taking on Friday. Yet profit taking was very mild. Shares of JPM only lost 11 cents today. The stock is short-term overbought. I am suggesting we sell half our position now! That will leave us with a very small position and if you want we can add to it on a bounce near $42.50-42.00. We'll make $46.90 our second and final target. Please note our new stop loss at $41.90.

Suggested Options:
No new positions at this time.

Annotated Chart:

Entry  on   January 04 at $ 42.85 (small positions 1/2)      
Change since picked: + 1.83
take profits on 01/09/10 @ 44.68 (+4.2%) Earnings Date 01/15/10 (confirmed)
Average Daily Volume = 31.6 million
Listed on January 04, 2010


L-3 Communications - LLL - close: 87.75 change: +0.15 stop: 86.90 *new*

LLL has continued to trade sideways in spite of the market's strength. This is a bearish development. More conservative traders may want to exit early now. LLL's trend is still higher so I'm willing to hold on but we'll raise our stop loss to $86.90. 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.

Suggested Options:
No new positions at this time.

Annotated Chart:

Entry  on  December 28 at $ 86.80       
Change since picked: + 0.95
Earnings Date 01/28/10 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on December 26, 2009


Precision Castparts - PCP - close: 117.26 change: +1.56 stop: 112.25 *new*

PCP continues to show relative strength and broke out to new 52-week highs with a 1.3% gain. I would suggest more conservative traders take profits now! I'm raising our stop loss to $112.25. Our second and final target to exit is $118.75.

Suggested Options:
No new positions at this time.

Annotated Chart:

Picked on  December 01 at $107.35      
Change since picked: + 9.91
/1st target hit $112.45 (+4.7%)
Earnings Date 01/20/10 (unconfirmed)
Average Daily Volume = 817 thousand
Listed on November 28, 2009


TORO Co. - TTC - close: 43.16 change: +0.44 stop: 41.40 *new*

The bounce in TTC continues and the stock added 1% on below average volume. I would consider new positions on a dip near $42.50. Please note our new stop at $41.40. Our exit target is $45.90. We don't want to hold over the February earnings report. The plan calls for small positions to limit our risk.

Suggested Options:
If TTC provides a new entry point I would use the March $45 calls.

Annotated Chart:

Entry  on   January 07 at $ 42.60 (small positions)      
Change since picked: + 0.56
Earnings Date 02/18/10 (unconfirmed)
Average Daily Volume = 289 thousand
Listed on January 05, 2010


UnitedHealth Group - UNH - close: 32.70 change: -0.31 stop: 29.90 *new*

UNH suffered some minor profit taking after Thursday's big gain but traders were buying the dip intraday on Friday. The trend is up and technicals have turned positive. Traders may want to consider new positions on a dip near $32.00 but if you do I would suggest a relatively tight stop. Speaking of stops I'm moving our stop to $29.90.

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.

Suggested Options:
I would consider March calls but raise your stop!

Annotated Chart:

Entry  on  December 10 at $ 30.31       
Change since picked: + 2.39
Earnings Date 01/21/10 (unconfirmed)
Average Daily Volume = 819 thousand
Listed on December 10, 2009


Whirlpool - WHR - close: 84.56 change: +1.76 stop: 79.90

WHR duplicated Thursday's big gain with a 2.1% rally on Friday. Shares are now challenging resistance near $85.00 again. I happened to be watching CNBC this afternoon and Cramer had a lot of positive comments on WHR. I'm not suggesting new positions at this time. Look for a dip back toward $82.00 as a possible entry point. If you open positions going forward I would use the February calls. Our original play suggested January calls so we'll need to exit before expiration.

WHR has already hit our first target at $84.75. Our second target is $89.00.

Suggested Options:
If WHR provides a new entry point use the February calls.

Annotated Chart:

Entry  on  December 19 at $ 80.76 /gap higher entry      
Change since picked: + 3.80
/1st target hit $84.75 (+4.9%)
Earnings Date 02/08/10 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on December 19, 2009


PUT Play Updates

Fedex Corp. - FDX - close: 84.99 change: +2.06 stop: 85.51

Rival UPS raised their Q4 guidance this morning and that gave FDX a bump. Shares are still trading sideways but the consolidation is starting to look a little bit more bullish. Readers may want to consider buying calls if FDX can breakout past resistance at $86.00 or resistance near $88.00. I'm still cautious here and will keep the bearish trigger to buy puts active at $81.90. If triggered our first target is $78.10. Our second target is $75.10.

Suggested Options:
If FDX hits our trigger to buy puts I would use the February puts with a preference for the $80 strike.

Annotated Chart:

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


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: 60.17 change: +2.76 stop: n/a

UPS raised their Q4 earnings guidance this morning. The stock responded to the good news by gapping open higher at $59.77 and hitting $61.13 intraday. After watching the stock churn sideways for seven weeks I'm excited to see some movement. Readers have a choice now. Sell the calls for $0.75 and recoup some capital or hope the rally continues and just exit at breakeven (when the call hits $1.35). I am officially adjusting our exit price on the options to $1.35. If you have a significant position I would probably sell half now! We have five trading days left. 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 $1.35 or more.

Suggested Options:
No new positions.

Annotated Chart:

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: + 2.18
Earnings Date 02/02/10 (unconfirmed)
Average Daily Volume = 4.7 million
Listed on November 21, 2009