Editor's Note:
Damage control has set in as this rally has obviously exceeded my expectations. I have made adjustments to targets on most positions. We've had a tough week after a very profitable last half of June. I'm confident we will get good exits on our current positions and get things back on track once we have more clarity of the next move in the market. I'll have June results posted this weekend. Please email me with any questions.

Current Portfolio:


CALL Play Updates

Merck & Co - MRK - close 36.45 change +0.36 stop 34.79

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: +18%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/13: MRK closed above resistance of $36.35 and looks like it is headed towards our targets. If the broader market continues bouncing we should have no issues hitting our target(s) and MRK could also act as a defensive play if there is a pullback.

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.

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 59.37 change +1.89 stop 61.63 *NEW*

Target(s): 57.55, 57.05, 56.30, 55.20
Key Support/Resistance Areas: 60.00, 57.50, 56.50, 56.00, 54.00, 52.70, 51.50
Current Gain/Loss: -57%
Time Frame: 1 to 2 weeks
New Positions: Yes, with a tight stop

Comments:
7/13: Simply put this trade has turned out to be a disaster and I am looking for an exit. All of the resistance levels mentioned in yesterday's update (see below) have not held. The broader market is at a critical reference point (SPX 1,105 likely tomorrow) and considering it has catapulted to this level with absolutely zero pullback we should get a down day or two soon. I'm not concerned about time decay with August options yet so I am suggesting we be patient here and wait for the exit prices I have listed above. I added $57.55 as the near term target followed by $57.05 and $56.30. $57.55 will close the gap higher from this morning. I believe the stock will print these levels either this week or next week. As DE begins to retrace these recent gains I will be looking to trail the stop down so that the loss on this trade is minimized. So now we have to deal with the stop loss. I am going to go out on a limb and raise the stop to $61.63 which is above the June 21 high and the primary downtrend line from April to June highs. This should provide us enough room to withstand any spikes in the market which appears may happen at the open tomorrow.

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.

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 35.08 change +1.18 stop 36.60

Target(s): 34.15, 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: -25%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/13: IR printed a big green bodied candle and appear to be headed for its 200-day SMA from below. This is only about 25 cents higher and will be the first re-test of it IR broke through it on 6/30. When we get a pullback in the broader market I expect IR to retrace today's gains and possibly retest its lows near $33.25. I've listed $34.15 as a target to consider exiting positions to preserve capital. We should see this level quickly on any on any meaningful pullback in the market.

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 39.13 change +0.26 stop 41.30 *NEW*

Target(s): 37.95, 37.20, 35.80
Key Support/Resistance Areas: 42.25, 39.75, 37.00, 35.16, 32.75
Current Gain/Loss: -7.6%
Time Frame: 1 week
New Positions: Yes

Comments:
7/13: LULU managed to eek out a 26 cent gain today as the market catapulted higher. This is under performance and confirms my bearish outlook for the stock. We could get a little more bounce in this position but when the market pulls back LULU should go lower relatively quick. However, in the spirit of following the market we need to be careful and not get too greedy by expecting LULU to simply rollover and give us a big gain. As such, I've added $37.95 as the first target which just above yesterday's low. This level is -3% lower from our entry price and if you bought options they should return about +15% at $37.95. Tightening stops at this level is suggested to see if we cn get more out off the position.

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 77.68 change +1.56 stop 82.50

Target(s): 75.50, 73.50, 72.10
Key Support/Resistance Areas: 82.00, 80.00, 78.00, 75.00
Current Gain/Loss: -10%
Time Frame: 1 week
New Positions: No

Comments:
7/13: I've adjusted the first target on RL up 25 cents so that it si just below yesterday's low. I expect RL to hit this target within the next week. The stock bounced today but the volume was light when compared to the selling recently. I expect that to continue as the market pulls back.

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.

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 45.33 change +0.58 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: -28%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/13: It appears the Q's are going to spike higher in the morning as a result of earnings from Intel. The NASDAQ 100 futures are currently up over 1% as of this writing. This equates to a price in the Q's of approximately $45.85. The recent patterns after Intel reports show significant market sell offs in the ensuing days after the initial spike. If you believe this time is different and we continue to go higher I suggest exiting early tomorrow or place a new stop above the highs of tomorrow. $46.15 gives you some room and is above the 200-day SMA (near QQQQ's close today) and the 50-day SMA's. But this level could also get picked off as a stop on a spike higher, only to see QQQQ reverse lower. I believe we will see our first target of $43.75 before our official stop of $46.90 so I am sticking with the original plan.

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.

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 25.94 change +0.67 stop 26.75

Target(s): 25.25, 24.85, 24.25, 23.70
Key Support/Resistance Areas: 26.50, 26.00, 25.25, 24.80, 24.00, 23.60, 22.50
Current Gain/Loss: -40%
Time Frame: 1 to 2 weeks
New Positions: Yes, with a tight stop

Comments:
7/13: SBUX is just not giving us the pullback I anticipated. The stock has rallied +10% from its lows last week in five trading days. It bounced straight up from its 200-day SMA right into its 50-day and 20-day SMA's. I keep anticipating a reverse lower and if it doesn't happen soon I suppose the concerns of strapped consumers buying $5 latte's are a thing of the past. There is a gap to be filled up to $26.39 and that might be where this is headed before a turn back down. I've tightened the above targets and suggest we begin to exit positions on weakness. These levels are good places to at least tighten stops.

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