Current Portfolio:


CALL Play Updates

Merck & Co - MRK - close 36.09 change -0.21 stop 34.79 *corrected*

Target(s): 37.20, 37.75, 38.60, 39.35
Key Support/Resistance Areas: 39.50, 38.75, 38.00, 36.35, 35.80
Current Gain/Loss: +4%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/12: MRK traded down to $35.84 in early trading which triggered our long entry. The stock then drifted higher throughout the day. MRK appears to be forming a bull flag on its daily chart. A break above Thursday's high of $36.40 should get things moving higher relatively quick. Since we were able to get the lower entry trigger today I am going to offer a lowered 1st target of $37.20 which is a good place to consider at least consider tightening stops. I've also adjusted our primary target of $37.95 down 20 cents to $37.75.

7/10: MRK is building an ascending triangle on its daily chart with resistance near a key pivot level for the stock at $36.35. The stock formed a bullish inverse head and shoulders pattern that began with the left head in April (see large ovals on chart). If MRK trades above Friday's highs there is little resistance until about $38.00. Earnings are at the end of July and I expect this stock to make a run. I suggest we use any weakness to initiate long positions or a break above Friday's highs, whichever occurs first. The stock has closed above its 100-day, 200-day, and 20-day SMA's which are all converging so I don't expect too much pullback from here. Let's use a trigger of $36.50 and $35.85 to initiate long positions. Our stop will be $34.79 which is below all of the aforementioned SMA's and the lows from 6/21 and 6/23.

Current Position: August $36.00 CALLS, entry was at $1.21

Entry on July 12, 2010
Earnings Date 7/30/10 (unconfirmed)
Average Daily Volume: 18 million
Listed on 7/10/10


PUT Play Updates

Deere & Co. - DE - close 57.48 change -0.53 stop 60.05

Target(s): 56.30, 55.20, 53.25, 51.75
Key Support/Resistance Areas: 60.00, 57.50, 56.50, 56.00, 54.00, 52.70, 51.50
Current Gain/Loss: -37%
Time Frame: 1 to 2 weeks
New Positions: Yes, with a tight stop

Comments:
7/12: DE backed off and closed below its 20-day and 50-day SMA's today. The stock is also below the broken upward trend line that began in July 2009. We have two immediate targets below that could be hit intraday if there is any continued weakness in the stock. These targets are near intraday support levels and are good places to consider closing positions or to tighten stops to see if we can get a better exit. $59.30 is still a good level to place a tighter stop.

7/10: DE is not acting as I suspected and the position is moving against us. The stock has rallied to close its gap down on 6/29 which is also just underneath its broken upward trend line that began in July 2009. DE also closed right at its 20-day and 50-day SMA's from below. This the area where I thought any bounce in DE would stop and I think new bearish positions could be opened here with tight stops. The volume on this bounce has been significantly lighter than the pullback which is a bearish signal because it indicates that the stock is being more heavily distributed rather than accumulated. However, if the bounce doesn't stop here readers should consider getting out of the way and closing positions. A tighter stop could placed at $59.30 which is above the 100-day SMA and Friday's high. Officially, I am sticking with the original stop but have tightened the targets. These are near support/resistance and are places where I would suggest tightening stops.

7/7: DE had a huge day and closed +3.61% higher. The stock closed right at a key support/resistance level at $56.50 and is entering a congestion zone, downtrend line, the backside of a broken upward trend line, and all of its SMA's from below. The stock could bounce a little further but I would be very surprised to see DE above $58.00. I suggest we use some patience and see how the this relief rally plays out in the coming days.

Current Position: August $55.00 PUTS, entry was at $3.00

Entry on July 6, 2010
Earnings 8/18/2010 (unconfirmed)
Average Daily Volume: 5.4 million
Listed on July 3, 2010


Ingersoll-Rand - IR - close 33.90 change -0.14 stop 36.60

Target(s): 33.25, 32.05, 31.25
Key Support/Resistance Areas: 37.00, 36.50, 35.70, 34.50, 33.11, 31.50, 30.12
Current Gain/Loss: +2%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/12: IR spiked higher this morning but was met with selling which sent the stock lower, and it never really recovered. If there is any weakness in the broader market I expect IR to break lower and easily trade down to our first target of $33.25. Our primary target is $32.05.

7/10: I am comfortable with the fill we got in IR on Thursday. The stock is forming a bear flag and I expect it break down when the oversold bounce in the market loses momentum. I've adjusted our targets and added one just below for readers looking for a quicker exit. If the first target is hit the gain should be 10% to 15%. This is good place to at least tighten stops to see if we get more out of the position.

Current Position: August $35.00 PUTS, entry was at $2.25

Entry on July 8, 2010
Earnings 7/19/2010 (unconfirmed)
Average Daily Volume: 5.4 million
Listed on July 7, 2010


Lululemon Athletica Inc. - LULU - close 38.87 change -0.02 stop 41.30 *NEW*

Target(s): 37.20, 35.80, 34.55, 33.50
Key Support/Resistance Areas: 42.25, 39.75, 37.00, 35.16, 32.75
Current Gain/Loss: +0.00%
Time Frame: 1 week
New Positions: Yes

Comments:
7/12: Finally, LULU hit our trigger of $39.15 to enter short positions. The stock immediately lost $1.25 and then recovered. One thing is clear on the intraday charts and that is the volume when the stock was declining this morning was much greater compared to its recovery. I like the volume pattern and think LULU retests its lows before breaking higher. Should it break higher the 50-day SMA sits at $39.87 which should keep things under control. I've also listed a target of $37.20 which is just above a key support/resistance area of $37.00. Some might view this level as forming an inverse head and shoulders pattern on the hourly chart so it would be prudent to consider tightening stops at this level. This level will also produce a decent gain in the position.

7/10: LULU is getting ever so close to our entry. The stock traded to within 8 cents on Friday and backed off. The bounce over the past few days has been on extremely light volume showing a lack of participation. This is one of the most bloated retail stocks out there trading at a P/E of 38. It is a novelty retailer and sometimes the P/E doesn't matter so I will keep a tight leash on this and use a stop of $41.30 which is just above the 20-day and 50-day SMA's. LULU has not tested them from below since breaking through them in June. I like the short set-up and want to lower the entry trigger to $39.15. I have also adjusted the targets. I'm looking for LULU to make quick trip back down to test its lows and possibly break them.

Current Position: Buy August $35.00, entry was at $1.30

Entry on July 12, 2010
Earnings 8/19/2010 (unconfirmed)
Average Daily Volume: 700,000
Listed on July 1, 2010


Polo Ralph Lauren - RL - close 76.12 change -1.04 stop 82.50

Target(s): 75.25, 73.50, 72.10
Key Support/Resistance Areas: 82.00, 80.00, 78.00, 75.00
Current Gain/Loss: +13%
Time Frame: 1 week
New Positions: No

Comments:
7/12: RL sold off at the open and never really recovered. I'm expecting RL to hit our first target relatively quick, possibly tomorrow. This would fill its gap higher on 7/8. My comments below haven't changed.

7/10: We initiated AUG $75 PUTS at the open for $3.00. The opening print was all RL could muster for the day as the stock drifted lower throughout the day. There is a lot of resistance to keep RL in check. I am looking to book a quick gain on this position and expect the stock to hit our first target of $75.25 relatively quick. This should give us a +20% gain on the position and is good place to tighten stops to protect profits. My primary target is $73.50 but that may take a bit longer depending on earnings, news, and how the market is reacting to it.

7/8: RL has rallied +8% off of its lows on Friday and is now approaching its 20-day SMA, two downtrend lines, and a price congestion area dating back to October 2009, all from below. The facts are that the consumer is not in good shape, jobs are hard to come to come by, and the housing market remains in the tank. This doesn't bode well for retailers and I believe we will see RL retest its lows before it breaks the downtrend lines. I've chosen $77.40 as the entry trigger which is just above today's closing price. I would like to buy August $75.00 PUTS for no more than $3.00 which is what they should be worth at $77.40. Our stop will be $82.50 which is below the 20-day and 200-day SMA's and will be below the 50-day SMA in a matter of couple of days.

Current Position: August $75.00 PUTS, entry was at $3.00

Entry on July 9, 2010
Earnings 8/5/2010 (unconfirmed)
Average Daily Volume: 1.8 million
Listed on July 8, 2010


PowerShares QQQQ Trust - QQQQ - close 44.75 change +0.13 stop 46.90

Target(s): 43.75, 42.55, 41.80, 41.05
Key Support/Resistance Areas: 46.77, 45.25, 44.46, 43.50, 42.50, 41.00
Current gain/loss: -18%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/12: QQQQ backed off right at its 20-day SMA this morning which also corresponds to the ETF's February highs. This level is a logical reversal point for QQQQ, however, Intel reports earnings tomorrow after the bell so that is the wild card for the short term price direction. I've adjusted our near term target to $43.75 which is just above the lows on 7/8.

7/10: QQQQ is bouncing but I expect the selling to resume soon. In light of the choppy trading that I foresee I am going offer a near term target of $43.60 which is $1 lower than current levels. For readers in PUT positions they should be worth about $2.15 (entry was at $1.85) which would be a +16% gain. This target is near the June 8 low and may form an inverse head and shoulders pattern. I suggest being quick to tighten stops at this level to protect profits. QQQQ may bounce up to its 20-day or 50-day SMA just overhead before reversing so I suggest being patient. There was a lot of volume in the August PUT strikes on Friday and large blocks bought on the offer. This is a good sign for a move lower but earnings is the wild card.

7/7: QQQQ had a monster truck rally today but I believe this will be short lived. The ETF is nearing an important resistance level at $44.46 and has all of its SMA's and plenty of congestion overhead to act as resistance. The rectangle on the chart represents a gap that I suppose could get filled so conservative traders may consider waiting to enter at $45.00. I'm just not confidant the gap will get filled. Today was a relief rally and we may get a little more but I think the selling will resume again and QQQQ should easily retest its lows and possibly break them. Let's use a trigger of $44.30 to initiate short positions. Our stop is $46.90 and I do not see QQQQ trading up to this level prior to breaking down again.

Current Position: August $45.00 PUTS, entry was at $1.85

Entry on July 8, 2010
Earnings N/A (unconfirmed)
Average Daily Volume: 100 million
Listed on July 7, 2010


Starbucks Corp. - SBUX - close 25.27 change -0.03 stop 26.75

Target(s): 24.25, 23.70, 22.55, 21.30
Key Support/Resistance Areas: 26.50, 26.00, 25.25, 24.80, 24.00, 23.60, 22.50
Current Gain/Loss: -22%
Time Frame: 1 to 2 weeks
New Positions: Yes, with a tight stop

Comments:
7/12: SBUX sold off this morning but drifted higher the remainder of the day. SBUX has resistance at current levels and I am looking for the stock to make a lower high and reverse to retest its lows.

7/10: SBUX has retraced some of its recent decline as the market has bounced. The stock is testing its 100-day SMA from below and the backside of its broken upward trend line for the first time since breaking in late June. The 100-day SMA has been an important reference point for the stock in 2010. We are also near an important support/resistance level of $25.25 so this is a logical place for SBUX to reverse back down. However, the broader market direction will most determine our fate on this position. A tighter stop could be placed at $25.80 but the bounce may go a little further so patience is suggested. I am looking for SBUX to make a lower high and reverse back down to at least retest its lows. I like new positions at these levels.

Current Position: August $25.00 PUTS, entry was at $1.40

Entry on July 8, 2010
Earnings 7/21/2010 (unconfirmed)
Average Daily Volume: 10 million
Listed on July 3, 2010