Stocks were short-term oversold and investors used the positive ISM report as an excuse to cover. This is a normal oversold bounce, which should begin to fade in a day or two. We can use it as a new entry point to launch put positions.


CALL Play Updates

Volatility Index - VIX - close: 22.83 change: -1.79 stop: 19.90

U.S. markets were seeing an oversold bounce on Monday thanks in part to a stronger ISM report. The VIX retreated with a 7.2% decline. Our play went from nearly +0.90 to -0.90. I would use a dpi back toward the 21.00-20.00 zone as a new bullish entry point to buy calls on the VIX. Our first target to take profits is at $29.50. Our second target is $34.00.

Entry  on   January 28 at $ 23.73 
Change since picked:       - 0.90
Earnings Date            --/--/--
Average Daily Volume =          x million  
Listed on   January 28, 2010         


PUT Play Updates

Apple Inc. - AAPL - close: 194.73 change: +2.66 stop: 216.00

After a $7 decline on Friday shares of AAPL are bouncing. The 1.3% rebound leaves it near the $195 level but still under prior support and what should be new resistance at its 100-dma. I would welcome a bounce back toward $200, which should also be new resistance, and we can use a rebound toward $200 as a new entry point to buy puts.

We're going to give this trade lots of room with a wide stop since shares have been so volatile lately. Our first target to take profits is at $182.50. Our second target is $165.00 although we might exit at the 200-dma. This is an aggressive trade and I'm suggesting small positions.

FYI: Amazon.com (AMZN) made headlines today when the company gave into publishers to raise their prices on e-books. AMZN wants to sell them for $9.99 but the publishers want to charge more. The new pricing for AMZN's books should be inline with what AAPL plans to charge on its new iPad device.

Entry  on   January 28 at $201.08 (small positions)/gap open entry
Change since picked:       - 6.35
Earnings Date            01/25/10 (confirmed)
Average Daily Volume =         26 million  
Listed on   January 28, 2010         


Franklen Resources Inc. - BEN - close: 101.45 change: +2.42 stop: 106.80

Financials produced a decent bounce on Monday. The $105-106 zone should be decent resistance with the 50-dma and 100-dma directly overhead. This is the area where shares failed last week. If the market is going to bounce then wait for BEN to move into the $104-106 zone as a new entry point to buy puts.

Our target is $91.50. This is a slightly more aggressive trade and I'm suggesting smaller positions. FYI: BEN gapped open higher this morning affecting our entry point (and significantly changed our entry price on the March $95 puts).

Entry  on   January 30 at $ 99.59 /gap higher entry point (small positions)
Change since picked:       + 1.86
Earnings Date            01/28/10 (confirmed)
Average Daily Volume =        1.2 million  
Listed on   January 30, 2010         


FEDEX Corp. - FDX - close: 80.67 change: +2.32 stop: 82.55

The transports delivered a nice bounce with a 1.7% gain. FDX outperformed its peers with a 2.9% rebound placing the stock back near prior support and new resistance near $80.00 and its 100-dma. Even if FDX continues to bounce the stock should have additional resistance at the 50-dma near $84.50. More aggressive traders may want to raise their stops toward $84.50 or just above $85.00 to give FDX room to maneuver. Such a move toward the 50-dma would hit our stop loss.

Wait for the bounce to roll over before launching new positions. Our first target to take profits is at $75.25. Our second target is $72.00. More aggressive traders could aim for the 200-dma.

Entry  on   January 25 at $ 79.45 
Change since picked:       + 1.22
Earnings Date            03/18/10 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on   January 23, 2010         


Gymboree - GYMB - close: 39.67 change: +0.66 stop: 42.75

We are starting to see an oversold bounce in shares of GYMB. The stock gained 1.69% but remains under resistance at $40.00 and its 200-dma. I would expect the rebound to carry GYMB toward $41.00-42.00 before rolling over again. Wait for the bounce to roll over before launching new positions. Our first target is $35.50. Our second, longer-term target is $32.00. Consider using small positions to limit your risk.

Entry  on   January 23 at $ 39.74 
Change since picked:       - 0.07
Earnings Date            03/04/10 (unconfirmed)
Average Daily Volume =        513 thousand 
Listed on   January 23, 2010         


Infosys Tech. - INFY - close: 52.86 change: +0.95 stop: 56.25

INFY gained 1.8% but failed to move out of Friday's range. I would expect INFY to bounce toward its 50-dma (near $54.00) or toward $55.00 and then roll over. We can use a move toward $55 as an entry point to buy puts. Our first target is $50.15. Our second and final target is $46.50.

Entry  on   January 28 at $ 53.40
Change since picked:       - 0.54
Earnings Date            04/15/10 (unconfirmed)
Average Daily Volume =        1.5 million  
Listed on   January 25, 2010         


JPMorgan Chase - JPM - close: 39.63 change: +0.69 stop: 41.55

JPM is still trying to bounce back above resistance at $40.00 and its 200-dma. If JPM is success shares should find additional resistance in the $41-42 zone. More aggressive traders may want to raise their stops a bit. Our first target to take profits is at $35.25. Our second target is $32.00.

Entry  on   January 26 at $ 38.44 
Change since picked:       + 1.19
Earnings Date            04/15/10 (unconfirmed)
Average Daily Volume =         46 million  
Listed on   January 26, 2010         


Mckesson Corp. - MCK - close: 59.53 change: +0.71 stop: 62.51

The bounce in MCK produced a 1.2% move. I am still suggesting bearish positions now but a better entry point would be a bounce or failed rally in the $61-62 zone. The next level of support looks like the 200-dma down near $53.00. I am suggesting bearish positions now. Our first target to take profits will be $54.00.

Entry  on   January 30 at $ 58.82 
Change since picked:       + 0.71
Earnings Date            01/26/10 (confirmed)
Average Daily Volume =        2.8 million  
Listed on   January 30, 2010         


Mettler Toledo Intl. - MTD - close: 97.68 change: +0.21 stop: 102.25

We have three days left. MTD is due to report earnings on February 4th. We do not want to hold over the announcement. On a short-term basis MTD is still holding on to support at the 100-dma. This bounce in the market could last a day or two, which doesn't help us given our very brief time frame. More conservative traders may want to exit right now! If it looks like MTD is going to close over $100 I would exit early. Our target to exit is $95.25.

Entry  on   January 22 at $ 99.40
Change since picked:       - 1.72
Earnings Date            02/04/10 (unconfirmed) 
Average Daily Volume =        134 thousand 
Listed on   January 21, 2010         


Retail Holders - RTH - close: 92.06 change: -0.01 stop: 95.05

The RTH underperformed the RLX retail sector index and the rest of the market. Shares appear to be forming a bear-flag pattern, which is easier to see on an intraday chart. I am still suggesting new positions but a better entry point would be a bounce in the $94 region. Our first target is the $87.00 level. The 200-dma will probably be support. The RTH moves kind of slow so make sure you use an option that gives you enough time.

Entry  on   January 23 at $ 91.42 
Change since picked:       + 0.64
Earnings Date            --/--/--
Average Daily Volume =        1.7 million  
Listed on   January 23, 2010         


SIEMENS - SI - close: 90.61 change: +1.50 stop: 95.75

SI's oversold bounce produced a 1.6% gain. Look for a rebound toward $94 as a new entry point to buy puts.

The Jan. 22nd low was $87.38. Our first target to take profits is at $87.55. Our second target is $81.00. Our time frame is three to four weeks.

Entry  on   January 26 at $ 94.34 /gap higher entry
Change since picked:       - 3.73
Earnings Date            01/26/10 (confirmed)
Average Daily Volume =        368 thousand 
Listed on   January 26, 2010