CALL Play Updates

Human Genome Sciences - HGSI - close 25.27 change -0.43 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: -13%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/28: HGSI pulled back to its upward trend line and 50-day SMA as mentioned in last night's updates. The stock remains in its upward channel and above its 50-day and 20-day SMA's. I am looking for HGSI to bounce from here and believe this is a good entry point with a tight stop.

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.

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

Entry on July 27, 2010
Earnings Date 10/25/10 (unconfirmed)
Average Daily Volume: 4.2 million
Listed on 7/24/10


ProShares UltraShort 20 YR Treasury - TBT - close 36.97 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: +9%
Time Frame: Several Weeks
New Positions: Yes

Comments:
7/28: TBT found resistance right at $37.50 as mentioned in last night's updates and this proved to be a good spot to take a portion of your profits off the table. TBT has intraday support at current levels and all the way down to its 20-day SMA which also corresponds to the backside of the broken downtrend line $36.25. The ETF could pullback down to this area and still be considered bullish. I'm comfortable giving this some room to work and am looking for a better reference point to tighten the stop.

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.

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

Entry on July 26, 2010
Earnings N/A (unconfirmed)
Average Daily Volume: 3.8 million
Listed on July 24, 2010


ProShares Ultra Basic Materials - UYM - close 30.13 change -0.31 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:
7/28: Our trigger to enter long positions at $29.10 is getting close. $29.00 is a key support/resistance area dating back to the fall of 2009 which is why I am sticking with the $29.10 entry price. However, I will also add that the 38.2% retracement from the 7/20 lows to the 7/27 highs is $29.28, the 50% retracement is $28.54, and the 61.8% retracement is $27.78. And the 50-day SMA is near $28.00. All of these areas can be considered as good long entry points but it is a decision that needs to be made as market conditions develop. Conservative traders may want to consider lowering their entry to the $28.55 area but I'm just not certain UYM will make it down there. The broader market strength or weakness will determine how far UYM pulls back.

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 gain some energy before pushing higher. NOTE: This is a leveraged ETF so please use proper position size to limit risk.

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

Semiconductor HOLDRS Trust - SMH - close 28.08 change -0.45 stop 29.66

Target(s): 27.55, 27.15
Key Support/Resistance Areas: 29.00, 28.20, 27.40, 27.00
Current Gain/Loss: +17.7%
Time Frame: 1 week
New Positions: Yes

Comments:
7/28: Short positions were initiated in SMH this morning and the ETF proceeded to break down and out of the ascending wedge and dark cloud cover mentioned in yesterday's play release. SMH has intraday support at current levels but if it breaks we should hit our first target of $27.55 (raised 5 cents) relatively quick. This is near the 20-day SMA and a good place to tighten stops to protect profits. SMH will probably bounce there and it may happen fast so please protect profits.

7/27: I'm sticking with ETF's for now to filter out some of the earnings noise. SMH finds itself at the top of a trading range between $26.00 and $29.00 for the past three months. Today's candle on the ETF is a dark cloud cover pattern which is considered a reversal signal. The candle opened above yesterday's high and then pierced half of the prior day's candle. This is considered an exhaustion gap and I believe SMH, along with the broader market, will retrace some of the recent gains. SMH has also formed a bearish wedge over the past couple of weeks and it should break to the downside for a price correction, especially considering the overbought conditions. We'll place an initial stop at $29.66 to give this some room and will adjust it once we are in the position.

Suggested Position: September $28.00 PUTS, entry was at $1.07

Entry on July 28, 2010
Earnings: N/A (unconfirmed)
Average Daily Volume: 15 million
Listed on July 27, 2010


SPDR S&P 500 ETF - SPY - close 110.83 change -0.72 stop 113.55

Target(s): 110.30, 109.55, 108.60, 107.75
Key Support/Resistance Areas: 113.20, 111.65, 110.00, 109.50, 108.55
Current Gain/Loss: +21.7%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
7/28: SPY drifted lower the entire day and came within 16 cents of hitting our $110.30 target. I believe SPY is destined to touch its upward trend line from the 7/1 lows which is near our 2nd target of $109.50, however, protecting profits against a reversal is highly suggested. A trip down to this area could happen fast so I suggest placing an order and be ready to take profits if we get there. SPY may also bounce in the $110 area which is the mid-July highs and just below our first target. I'm not quite ready to tighten the stop yet.

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