Current Portfolio:


CALL Play Updates

Human Genome Sciences - HGSI - close 25.70 change -0.66 stop 23.95

Target(s): 26.50, 27.00, 27.55
Key Support/Resistance Areas: 28.00, 27.10, 26.60, 24.70, 24.25
Current Gain/Loss: +1.6%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/27: HGSI traded to our $25.50 trigger to enter long positions and then bounced into the close. HGSI has solid support down to $24.70 which is near the 50-day SMA and recent upward trend line. We may have to exhibit a little patience to allow HGSI to gather its footing but I expect the stock to maintain its upward trend line. I made some minor adjustments to the above targets.

7/26: HGSI came within 7 cents of hitting our trigger to enter long positions. We are having trouble getting into positions as the stock's are nearly missing our triggers. HGSI has an upward tend line from its 7/1 lows and I think the stock will turn back to touch it in the comings days. I'm keeping the set-up and trigger the same.

7/24: HGSI broke and closed above its primary down trend line that began on 4/13. The stock has made a higher low and has convincingly broken above its 20-day and 50-day SMA's. I suggest we initiate long positions on weakness in the stock. I expect a pullback somewhere between $25.50 and $25.10. Officially, we'll use $25.50 as a trigger with a stop at $23.95 which is below the upward trend line and the 50-day SMA. I believe HGSI should trade up to its 200-day SMA near our second target of $27.05. Our first target is $26.60 which can be used an area to begin tightening stops.

Current Position: September $26.00 CALL, entry was at $1.82

Entry on July xx
Earnings Date 10/25/10 (unconfirmed)
Average Daily Volume: 4.2 million
Listed on 7/24/10


ProShares UltraShort 20 YR Treasury - TBT - close 37.22 change +0.70 stop 34.25

Target(s): 37.50, 38.00, 39.25, 40.50, 41.95
Key Support/Resistance Areas: 42.00, 41,00, 39.70, 38.25, 37.55, 34.65
Current Gain/Loss: +30.9%
Time Frame: Several Weeks
New Positions: Yes

Comments:
7/27: TBT broke above its most recent downtrend line and closed +1.92% higher on the day. The next level of resistance is $37.50 to $38.00 which is just below its 50-day SMA. TBT will most likely find resistance in this area. Our first target is $37.50 which is not a bad place to consider taking profits or tightening stops. For options traders our current gain is +30.9% and at $37.50 it should be about +42%. Ultimately I expect TBT to trade up to the $39.00 to $41.00 level which is near our more aggressive targets. However, it will not do this in a straight line. So taking some profits off of the table or tightening stops is a good strategy. I plan to officially tighten the stop when there is a better reference point but be aware that there should be a pullback in the $37.50 to $38.00 level.

7/26: TBT was initiated at the open. The ETF is finding some resistance at its secondary downtrend line but it appears it is only a matter of time before this is broken and TBT breaks to the upside. My comments from the play release remain the same.

7/24: I think bonds are way overvalued and are due for a correction. TBT is an leveraged inversely correlated instrument. Typically bond prices move opposite of stock prices, i.e. as the stock prices decline prices of bonds generally move higher and bond yields move lower, and vice-versa. So a long play in TBT is a bet that bond prices will decline and bond yields will rise which means that money will be flowing out of the bond market and probably into the stock market. In general, bonds are slow movers so TBT gives you more bang for your buck and is highly liquid with average daily volume of about 8 million shares. TBT mad a double bottom on 7/1 and 7/21 and I believe it is poised to move higher. The ETF closed above its 20-day SMA and a prior resistance level at $36.30. TBT has a downtrend line to deal with but I am not expecting it to experience too much trouble here. Our immediate target is $37.50 which near a prior resistance level and just under the ETF's 50-day SMA. TBT will probably find resistance there and when it finds its footing and moves higher we will have a reference point to trail the stop higher. My intention is that this trade could last several weeks and I think TBT could make a run up to its October 2009 lows which is near $42.00. Interest rates are at all time lows and I just don't see them going any lower which will bode well for a long position in TBT. Our stop is $34.25 which is below the YTD lows. NOTE: If there is weakness in equities early this week TBT will probably pullback so patience is most likely needed. A lower entry could be considered in the $36.00 area but I'm not certain we will get it.

Current Position: September $37.00 CALL, entry was at $1.23

Entry on July 27, 2010
Earnings N/A (unconfirmed)
Average Daily Volume: 3.8 million
Listed on July 24, 2010


ProShares Ultra Basic Materials - UYM - close 30.44 change -0.71 stop 27.20

Target(s): 30.35, 31.20,
Key Support/Resistance Areas: 31.30, 30.50, 29.00, 28.00, 27.25
Time Frame: 1 week

Comments:
7/27: UYM printed a bearish engulfing candlestick today which should get the ETF moving towards our $29.10 long entry trigger in earnest. This is a key prior support/resistance level dating back to the fall of 2009 and is a good place to consider a long position. I believe the pullback should happen this week. I'm expecting UYM and the broader market to pullback but it should be a healthy pullback to some energy before pushing higher. NOTE: This is a leveraged ETF so please use proper position size to limit risk.

7/26: My comments from 7/24 have not changed. We are looking for UYM to retrace some of its recent gains prior to entering long positions with a trigger of $29.10.

7/24: UYM came within 30 cents of our trigger to enter long positions. This market has a knack for not letting traders into positions and UYM continued motoring higher on Friday. The ETF is near a support/resistance area at $30.50 and I believe it will turn back towards the $29.00 level to gain steam before eventually breaking above Friday's highs. The fact of the matter is that there are probably a lot of people still "holding the bag" from the mid June swing highs (or before) and that overhead supply needs to be worked off before UYM continues higher. This is why it is higher risk to chase it at these levels unless you are trading intraday and using a very tight stop. So the question is how far will it pullback and what is the ideal entry point? UYM has intraday support at $29.30 down to $28.80. If these levels break the next level of support is down at $28.00 which is also near the 50-day SMA. These are three entry levels I suggest readers use as a guide to enter positions. Officially, we are going stick with $29.10 as our trigger. This will be a throwback to the middle of the developing upward channel and is also just above a key pivot level for UYM dating back November 2009. UYM may even push up to its 200-day SMA before turning down but in the end I think patience will pay off. I've adjusted the strike price to September $30.00 calls.

Suggested Position: September $30.00 CALL, current ask $2.95, estimated ask at entry $2.15 (I suggest entering this position with a limit order between the bid/ask spread. Try to enter at no more than 5 to 10 cents above the middle of the bid/ask spread)

Entry on July xx
Earnings Date N/A (unconfirmed)
Average Daily Volume: 1.9 million
Listed on 7/22/10


PUT Play Updates

SPDR S&P 500 ETF - SPY - close 111.55 change -0.01 stop 113.55

Target(s): 110.30, 109.50, 108.60, 107.75
Key Support/Resistance Areas: 113.20, 111.65, 110.00, 109.50, 108.55
Current Gain/Loss: +8.6%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/27: The gap higher in the S&P 500 today allowed us to enter short positions in SPY at a better price. SPY drifted lower most of the day and I am expecting more downside, at least in the near term. I am going to offer a higher first target at $110.30 which is just above the mid-July highs. SPY will probably bounce at this level and it is a good place to protect against reversal. A tighter stop could be placed at $112.55 which is just above today's highs.

7/26: SPY has rallied right into resistance and its 200-day SMA from below. This is a logical place for SPY to turn back lower towards its 50-day SMA. We are playing for a retracement which I think SPY will do prior to moving much higher. The bottom line is that SPY is need of healthy pullback before it can move much higher. I've chosen a stop of $113.55 which is above the June highs and the 100-day SMA.

Current Position: September $110.00 PUTS, entry was at $2.90

Entry on July 27, 2010
Earnings: N/A (unconfirmed)
Average Daily Volume: 236 million
Listed on July 26, 2010


CLOSED BEARISH PLAYS

Costco Wholesale - COST - close 57.21 change +1.50 stop 57.25

Target(s): 55.40, 54.80, 54.30
Key Support/Resistance Areas: 56.80, 55.60, 54.25, 53.40, 51.50
Current Gain/Loss: -39.8%
Time Frame: 1 week
New Positions: No

Comments:
7/27: In the pre-market Stifel raised COST to a buy from a hold which started the buying and short covering and determined our fate in this trade. COST gapped +1.4% higher at the open and our stop was hit this afternoon. The stock rallied right through its 50-day SMA with little resistance. The stop was placed at $57.25 because it was above the 50-day SMA and the most recent lower high. In hindsight it probably should have been a little higher. For readers who may still have positions I would place a stop above today's highs and the primary downtrend line. COST should retrace some of today's gains especially if the broader market is weak. I do not know how much further COST can go but it has entered a congestion area dating back to September of 2009 which should keep things in check. At a minimum the stock should close the gap higher today before moving much higher.

7/26: My comments from 7/24 have not changed. COST drifted lower the entire day and traded to within 5 cents of our first target above before bouncing. We are looking for a pullback in the broader market and COST should easily trade towards our revised targets giving us the chance to exit a winning position.

7/24: COST traded to $55.50 which triggered our entry for short positions. There is intraday resistance right at this level plus a downtrend line from 6/15 so this is a logical spot for COST to retrace some of the gains from the past two days. COST has now had two powerful rallies since 7/7 off of the $53.50 support level (i.e. double bottom). There is obviously a lot of support at this level and I just don't see it revisiting those lows for awhile. As such, we need to adjust so I suggest we stay nimble on this trade and begin looking for an exit. I have adjusted our targets above to use as a guide to tighten stops or simply take profits. I am looking for a small gain on this trade, nothing more. At a minimum COST should turn back to test its 20-day SMA near $55.40. Our next targets are $54.80 and $54.30. I expect the broader market to be weak early this week which should get COST moving towards these targets.

Closed Position: September $55.00 PUTS at $0.89, entry was at $1.48

Annotated chart:

Entry on July 23,2010
Earnings 10/7/10 (unconfirmed)
Average Daily Volume: 3.76 million
Listed on July 20, 2010