The oversold bounce continues. Just remember that two days does not make a trend. We're adjusting a couple of stop losses.


CALL Play Updates

Volatility Index - VIX - close: 21.48 change: -1.11 stop: 19.90

The market's oversold bounce continues. As stocks move higher the VIX is slipping. I still think this is temporary. My market bias is bearish until the S&P can close over 1120 again. That doesn't mean we can't get stopped out first if the VIX spikes under 20.00. I suspect that the VIX will hold near 20.00 and as soon as we see the market start to roll over again I would initiate new bullish positions in the VIX. Our original plan called for March 30 calls. 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: 195.86 change: +1.13 stop: 216.00

AAPL is underperforming the NASDAQ and most of the big caps. Shares managed a 0.5% gain but still closed under its 100-dma and the $200 level. I am suggesting we use any bounce near $200, even $205, as a new entry point to buy puts. More conservative traders will want to wait for any such bounce to roll over first before initiating positions.

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.

Entry  on   January 28 at $201.08 (small positions)/gap open entry
Change since picked:       - 5.22
Earnings Date            01/25/10 (confirmed)
Average Daily Volume =         26 million  
Listed on   January 28, 2010         


Franklen Resources Inc. - BEN - close: 101.79 change: +0.34 stop: 106.80

BEN also underperformed today with a 0.3% gain versus 1.2% in the S&P 500. Of course most of the financials were struggling with their gains on Tuesday. I'm repeating my comments from Monday. 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:       + 2.20
Earnings Date            01/28/10 (confirmed)
Average Daily Volume =        1.2 million  
Listed on   January 30, 2010         


Gymboree - GYMB - close: 40.80 change: +1.13 stop: 42.75

Retail stocks delivered a bounce on Tuesday. GYMB outperformed its peers with a 2.8% gain. I couldn't find any company-specific news to account for the relative strength. The close over $40.00 is short-term bullish but shares failed to breakout past resistance at the 200-dma. Even if GYMB does make it past the 200-dma there should be additional resistance near $42 and its 50-dma. Wait for a failed rally before launching new bearish 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:       + 1.06
Earnings Date            03/04/10 (unconfirmed)
Average Daily Volume =        513 thousand 
Listed on   January 23, 2010         


Infosys Tech. - INFY - close: 53.07 change: +0.21 stop: 56.25

INFY's bounce underperformed on Tuesday. It still looks like shares are headed for the $54-55 zone so I would wait for the bounce or wait for the bounce to rollover before initiating new put positions. Our first target is $50.15. Our second and final target is $46.50.

Entry  on   January 28 at $ 53.40
Change since picked:       - 0.33
Earnings Date            04/15/10 (unconfirmed)
Average Daily Volume =        1.5 million  
Listed on   January 25, 2010         


JPMorgan Chase - JPM - close: 40.55 change: +0.92 stop: 42.26 *new*

On a short-term basis JPM's breakout past $40.00 and its 200-dma is very bullish. It is interesting to note that the rebound today stalled at the 38.2% Fib retracement of its January decline. The stock is probably headed for the $41.50-42.00 zone but I think this bounce is temporary. Readers have a choice to make. Do you lower your stop loss and close the play somewhere near $40.75-41.00 and just re-enter when JPM rolls over near $42.00? Or do you raise your stop loss toward the $42.00-42.50 region and try and ride out this rebound? If JPM doesn't roll over then the second strategy doesn't sound very appealing.

Today I'm opting for the second and raising our stop loss to $42.26. If shares begin to falter and roll over as we expect they will then we'll double down on our puts (with March puts). 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:       + 2.11
Earnings Date            04/15/10 (unconfirmed)
Average Daily Volume =         46 million  
Listed on   January 26, 2010         


Mckesson Corp. - MCK - close: 60.46 change: +0.93 stop: 62.51

MCK's close over $60.00 is short-term bullish but the stock has plenty of resistance in the $61-62 zone. Wait for the bounce to roll over under $62.00 and then launch new positions. 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:       + 1.64
Earnings Date            01/26/10 (confirmed)
Average Daily Volume =        2.8 million  
Listed on   January 30, 2010         


Mettler Toledo Intl. - MTD - close: 98.10 change: +0.42 stop: 100.15 *new*

We have two days left. The plan is to exit on February 4th at the closing bell to avoid holding over earnings that same day. I am moving our stop loss down to $100.15. More conservative traders may want to exit right now! Our target to exit is $95.25.

Entry  on   January 22 at $ 99.40
Change since picked:       - 1.30
Earnings Date            02/04/10 (unconfirmed) 
Average Daily Volume =        134 thousand 
Listed on   January 21, 2010         


Retail Holders - RTH - close: 93.01 change: +0.95 stop: 95.05

The 1% bounce in the RTH really doesn't change anything. Shares are still building a bear-flag shaped consolidation. I've been suggesting readers open new positions near $94.00. I'd move that down to the $93.50 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:       + 1.59
Earnings Date            --/--/--
Average Daily Volume =        1.7 million  
Listed on   January 23, 2010         


SIEMENS - SI - close: 92.54 change: +1.93 stop: 95.75

European markets were up across the board on Tuesday. This gave SI a positive environment and shares gapped higher this morning. Nothing has changed for us. Readers can use a bounce near $94 or wait for the bounce to roll over as a new entry point for 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:       - 1.80
Earnings Date            01/26/10 (confirmed)
Average Daily Volume =        368 thousand 
Listed on   January 26, 2010         



CLOSED BEARISH PLAYS

FEDEX Corp. - FDX - close: 82.33 change: +2.32 stop: 82.55

We have been stopped out of FDX. Shares hit $82.55 very late in the day. I mentioned this was a risk yesterday. I'm still bearish on FDX and would watch for a failed rally near the 50-dma (84.50) or the $85.00 level and use that as a new entry point.

Chart:

Entry  on   January 25 at $ 79.45 
Change since picked:       + 3.10 <-- stopped out @ 82.55 (+3.9%)
Earnings Date            03/18/10 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on   January 23, 2010