Editor's Note: Good Evening. The market followed through today from Monday's bearish engulfing candlestick and continued its decline from the 50% retracement level in the SPX. As a result we closed IGT for a nice gain and exited ESRX at the open per last night's play updates. NTAP is a big winner and I am suggesting we close this position tomorrow at the open, especially for readers who can not trade intraday. DTG also performed well today and now we await our trigger on CSCO (long) and our new long play in HANS.

The SPX is now approaching its 20-day SMA (1,190) from above for the first time since it broke through on 6/11. And I believe this back test may produce a bounce in stocks. The big question now is how high will the bounce go if in fact we do get a bounce? From a bullish perspective this would create a higher low on the daily chart so retesting the highs from Monday, which would also correspond with the 50-day SMA (currently at 1,135 and declining), is not out of the question. The bottom line is that price action will probably remain choppy in the coming days so I anticipate keeping the portfolio somewhat narrow until a direction is resolved. My macro view is more bearish than bullish but I have no problem initiating long positions on strong stocks in strong sectors if the conditions are favorable. If we do in fact get a bounce off of the 20-day SMA it will also give us the chance to initiate more short positions at better prices, and with tighter stops. Please email me with any questions.

Current Portfolio:


CALL Play Updates

Cisco Systems - CSCO - close 22.97 change -0.37 stop 22.20

Target(s): 23.65, 24.20
Key Support/Resistance Areas: 23.65, 22.55
Time Frame: 1 to 2 weeks

Comments:
I anticipate getting filled on CSCO tomorrow at $22.85. This level is just above the recent closing lows and I think this is a good entry to play for a bounce. My comments from the play release remain mostly the same except that I have changed the suggested option position to August $22.00 CALLS. CSCO remains in the base it has built for the past 3 to 4 weeks and is trading in a $1 range (4.5%) between $22.55 and $23.55. $22.50 is key pivot level for the stock dating back to 2006. CSCO looks stable here with a lot of support and I suggest we take advantage of the reliable price pattern that is being built. I would like to use $22.85 as a trigger to enter long positions. If triggered readers should be able to purchase August $22.00 calls for about $1.67 (current ask is $1.74). If CSCO then proceeds to rally to the top of its base at $23.65 we should make about 55 cents on the position for a +35% gain. If CSCO breaks out it could rally to fill a gap which is up near our more aggressive 2nd target of $24.20 and below the stock's 200-day SMA. Another entry could be considered at $23.05. Our stop will be $22.20. NOTE: I view this trade as potentially being quick once it is opened.

Suggested Position: Buy August $22.00 CALL if CSCO trades down near $22.85, current ask $1.74, estimated ask at entry $1.67

Annotated Chart:

Entry on June xx
Earnings Date 8/5/10 (unconfirmed)
Average Daily Volume: 69 million
Listed on 6/16/10


PUT Play Updates

Dollar Thrifty Auto Group - DTG - close 43.57 change -0.89 stop 45.90 *NEW*

Target(s): 43.15, 42.70, 41.65, 40.05, 39.35
Key Support/Resistance Areas: 45.50, 43.50, 41.50, 39.00,
Current Gain/Loss: +30%
Time Frame: 1 week
New Positions: Yes

Comments:
DTG opened at $44.56 which is where we initiated short positions. The stock closed down -2% on the day and our July $45.00 PUTS have already gained +30%. The stock closed below its 50-day SMA, however, $43.50 is a support area so DTG could bounce from here. Most likely, the stock would bounce up to its 50-day or 20-day SMA and then fail. However, if DTG breaks lower prior to bouncing I suggest readers begin to tighten stops and protect profits. I've listed $43.15 and $42.70 as additional targets. $42.70 would fill a gap from 4/27 to 4/28. I have also lowered the stop a bit to $45.90. We still need to get through the base of the descending triangle to get things moving lower in earnest. I urge readers to simply protect profits on this position and do not hesitate to take profits when the opportunity presents itself. I'll leave my comments from the play release. If DTG breaks support there is a gap to be filled all the way down to $39.35. The stock also has support at its 50-day SMA and a trend line began on 2/5, but I believe these will be broken on any further market weakness. So the question is whether or not to wait for the base of the triangle to break near $43.15 or initiate short positions at current levels. The stock made a double top with today's highs and the highs from 6/14 so it is a compelling area to initiate short positions at current levels. This also gives us a good reference point to place a relatively tight stop $46.40 which is above the double top and all of the highs since 6/4. More conservative traders may want to wait to initiate short positions if DTG trades below $43.15 as this should get things moving to the downside in earnest. Officially we will be entering short positions at current levels and playing the more aggressive route with a tight stop.

Current Position: July $45.00 PUTS, entry was at $1.65

Annotated weekly chart:

Entry on June 22, 2010
Earnings 8/19/2010 (unconfirmed)
Average Daily Volume: 9.1 million
Listed on June 19, 2010


NetApp, Inc. - NTAP - close 39.77 change -0.76 stop 41.05 *NEW*

Target(s): 39.70, 39.05, 37.00, 35.25
Key Support/Resistance Areas: 41.84, 40.00, 39.00, 36.50, 35.00
Current Gain/Loss: +70%
Time Frame: 1 week
New Positions: No

Comments:
We have made +70% on our NTAP position. As I mentioned yesterday I don't want to get too cute with this trade so fiercely protecting profits is highly suggested. The stock came within 18 cents of hitting our first target today. Today's low equals the low from 6/14 so if this gets interpreted as a double bottom by traders and the market bounces tomorrow NTAP could catch a serious bid. In addition, the 20-day SMA on the SPX is at 1,090 so even if we get a little more weakness tomorrow I expect stocks to bounce when the SPX reaches this level. For readers who do can not trade intraday I suggest you exit at the open tomorrow or place a GTC sell limit order based on the option price and simply take profits. For readers who can trade intraday I would be quick to exit positions if there is strength in the market tomorrow, and if there is weakness trail stops down. I've adjusted our stop down to $41.05 which should be enough room to absorb a bounce but I would not let the stock bounce this high prior to exiting. If the stock trades higher than this I it is time to step aside. I'm also going to adjust the first target to $39.70 which is just above today's lows. NTAP has corrected -5% from its highs which is in the range of our expected 5% to 10% decline when we initiated the play. So we need to stick with our set-ups and protect profits. NOTE: I view this trade as potentially being quick.

Current Position: July $41.00 PUTS, entry was at $1.30

Annotated Chart:

Entry on June 21, 2010
Earnings 8/19/2010 (unconfirmed)
Average Daily Volume: 9.1 million
Listed on June 19, 2010


CLOSED BULLISH PLAYS

Express Scripts, Inc - ESRX - close 50.20 change -1.51 stop 50.90

Target(s): 52.70 (hit), 53.25, 54.75
Key Support/Resistance Areas: 54.00, 51.25, 50.00
Current Gain/Loss: -7.84%
Time Frame: Several weeks
New Positions: Closed

Comments:
We made the right call with ESRX by selling positions at the open today at $2.35 for a small loss. The overall market weakness and news last Friday proved to be too much for ESRX. So we stayed nimble and exited positions to preserve capital. ESRX has now closed below its upward trend line from February and broke its 20-day and 50-day SMA's. The stock has support down to the $49.00 to $49.50 area which is also near its 100-day SMA. I would be careful underneath these levels with long positions as ESRX could pull back a couple of more dollars and maybe even make a trip to its 200-day SMA all the way down at $45.61.

Closed Position: August $52.50 CALL at $2.35, entry was at $2.55

Annotated Chart:

Entry on June 18, 2010
Earnings Date 7/29/10 (unconfirmed)
Average Daily Volume: 5.5 million
Listed on 6/17/10


CLOSED BEARISH PLAYS

International Game Technology - IGT - close 17.68 change -0.43 stop 19.10 *NEW*

Target(s): 17.80, 17.30, 16.80
Key Support/Resistance Areas: 19.00, 18.75, 18.09, 17.60, 17.25, 16.60
Current Gain/Loss: +57.9%
Time Frame: 1 week
New Positions: Closed

Comments:
IGT collapsed with the selling pressure today and hit our target of $17.80. Considering the sell-off in the markets since yesterday morning and that the SPX is approaching its 20-day SMA from above I think it is prudent to book this gain and not endure any bounces. We have made +57% on the trade and I believe taking the gain is the right thing to do. There is also support in the $17.60 area and $17.25 area so readers who still have positions, and who can manage them intraday, I suggest tightening stops as these levels approach. And please protect the profits we have earned.

Closed Position: July $19.00 PUTS @ $1.50, entry was at $0.95

Annotated Chart:

Entry on June 21, 2010
Earnings 7/22/2010 (unconfirmed)
Average Daily Volume: 4.8 million
Listed on June 19, 2010