Editor's Note:

Good evening traders. We were triggered on our CLF call play today and the stock performed well. RRC gapped higher and above our entry in the $45 to $46 zone so we did not open positions. When reviewing RRC's chart the stock is entering a bunch of congestion near $49.00 that I don't think it can overcome. All of its daily SMA's are overhead along with several downtrend lines and broken uptrend lines. I suggest readers initiate PUT positions in RRC tomorrow. We'll place a stop at $50.75 which gives us a nice risk reward set-up. Please see the new plays from Saturday for more details.

The volatility over the past couple of weeks continues to make trades very difficult to manage. In this environment I believe it is necessary to have hedged positions on the long and short side of the market. This enables traders to enter (or take profits) on positions when there are wild swings in price. But this also requires intraday management so if you can't manage trades intraday I suggest keeping position size extremely small, or simply staying away. Good luck!

NOTE: I am trying a slightly different format for our daily play updates that I think you will like. I am simply listing important information such as our targets, key support/resistance levels, and time frames at the top of the play update. My hope is that this information will help you better manage the trade by quickly being able to identify important facts about the trade as opposed to sifting through the text of the play update. If you have any suggestions or comments please email me.

Current Portfolio:


CALL Play Updates

Cliffs Natural Resources - CLF - close 61.18 change +5.06 stop 54.75

Target(s): 65.90, 69.50
Key Support Areas: 59.00, 54.75, 52.75
Key Resistance Areas: 61.60, 66.00, 70.00
Current Gain/Loss: +10%
Time Frame: 1 to 2 weeks
New Positions: Yes

CLF rebounded today closing +9% higher. This triggered our entry to buy June $65 calls at $3.10. The stock drifted higher throughout the day making higher lows. It appears CLF is turning back higher to retest its 50-day SMA near $66.00. If the stock does this I recommend readers take profits at this level which is also close to our new first target at $65.90 listed above. This will generate a nice profit and should also act as a resistance level.

*Note: Please use small position size due the high volatility of this stock and political risks involved from the Australian government's proposed miner tax.*

Current Position: Long JUNE $65.00 CALL, entry at $3.10

Entry on 5/10/2010
Earnings Date 7/29/2010 (unconfirmed)
Average Daily Volume: 8.7 million
Listed on 5/8/2010


IMAX Corporation - IMAX - close 18.21 change +0.85 stop 16.75

Target(s): 19.25, 20.95
Key Support Areas: 17.75, 16.95, 50-day SMA
Key Resistance Areas: 18.74 (intraday), 19.20, 19.90, 21.30
Current Gain/Loss: -22%
Time Frame: 1 to 2 weeks
New Positions: Aggressive traders only

Comments:
IMAX bounced back today after Friday's sell-off in the stock, closing +4.90% higher. The stock traded as high as $19.39 early this morning and then the sellers showed up sending the stock down over $1 lower to close at $18.21. IMAX made a double top with the intraday highs of today and last Thursday which probably sparked the selling. Double tops and bottoms can produce powerful moves in stocks and in IMAX's case the stock closed -6% lower than the double top high and +2.2% off of its lows. The stock traded in an 8% range today. I urge readers to be careful here with the volatility and protect capital. I listed a lower first target above which can be used to manage exiting the position, along with several support areas above our stop. $17.75 could be used as a tighter stop to protect capital.

Current Position: Long JUNE $20.00 CALL, entry at $1.10

Annotated Chart:

Entry on May 5th at $1.10
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 1.9 million
Listed on May 4, 2010


Target Corporation - TGT - close 56.67 change +2.37 stop 51.75

Target(s): 58.00
Key Support Areas: 56.50 (20-dma), 54.75, 52.30,
Key Resistance Areas: 56.75, 58.00
Current Gain/Loss: +48%
Time Frame: 1 to 2 weeks
New Positions: No

Comments:
The bulls continued piling into TGT today after Friday's dip to $52.69. The stock has now rebounded +7.5% since the low on Friday morning. Our position has nice healthy gains of +47.50% and I urge readers to protect profits. TGT closed just above its 20-day SMA and we are approaching our target of $58.00

Current Position: Long JUNE $57.50 CALL, entry at $1.20

Entry on May 6, 2010 at $2.00
Earnings Date May 20, 2010 (unconfirmed)
Average Daily Volume: 5.2 million
Listed on May 5, 2010


PUT Play Updates

Sina Corporation - SINA - close 34.49 change +1.75 stop $36.80 *NEW*

Target(s): 32.50, 30.50
Key Support Areas: 32.50, 30.50
Key Resistance Areas: 35.30, 36.00, 37.60
Current Gain/Loss: +16%
Time Frame: 1 to 2 weeks
New Positions: No

Comments:
SINA continues to look vulnerable and is below broken support near $35.00. The stock is below all of its major daily and weekly SMA's. The 50-day SMA crossed below the 200-day SMA which is a bearish signal that confirms our outlook for this stock. I expect the overhead resistance and SMA's to hold. I would like to move our stop down to $36.80 to protect capital if SINA somehow manages to continue higher from here.

Current Position: JUNE $35.00 PUT, entry at $2.20

Entry on May 4th at $2.20
Earnings Date May 17, 2010 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on May 1, 2010