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Current Portfolio:


CALL Play Updates

ProShares UltraShort 20 YR Treasury - TBT - close 35.78 change -0.81 stop 35.55

Target(s): 36.90(hit), 37.50 (hit), 38.00, 39.25, 40.50
Key Support/Resistance Areas: 42.00, 41.00, 39.70, 38.25, 37.55, 34.65
Current Gain/Loss: -1.9%
Time Frame: Several Weeks
New Positions: NO

Comments:
8/7: The disappointing jobs data shocked the market and investors rushed money into the safety of the bond market again. Rising bonds are negative for this short bond ETF and the TBT gapped open lower and hit $35.70 on Friday afternoon. If this trend continues the TBT will hit our stop loss (35.55) on Monday.

If we do get stopped out I would keep the TBT on your watch list. Firms like Goldman Sachs are expecting the bond market rally to continue until the yields on the 10-year note hit the 2.25% region. That would be bearish for the TBT.

8/5: Both stocks and bonds are holding their breath for the Friday morning jobs report. If the report comes in strong it will help alleviate fears about the U.S. economy slowing down. This could inspire investors to sell bonds to raise money and buy stocks. On the other hand if the jobs number disappoints then investors will continue to seek shelter in the bond market, which is bad for our call play, since this is the ultrashort bond ETF. I would expect the TBT to gap open one way or the other tomorrow.

8/4: TBT is showing signs of life and I expect it move higher from here. This ETF (short bonds) is a good hedge against our short DIA position. After the big sell-off in TBT on Friday we offered a lowered target of $36.90 which was hit today. Options positions are now up nearly +10% and I am looking for TBT to trade to at least $37.50 which is below the 50-day SMA and still a valid target. I suggest tightening stops at this level. I suggest tightening stops at these levels to see if we can get more out of the trade. A break above the 50-day SMA should easily send TBT towards our more aggressive targets. We plan to tighten the stop in the coming days when we have a better reference point.

8/3: After a brief dip in early trading TBT recovered nicely. Prices are coiling on its intraday chart and a breakout should happen tomorrow or Thursday. If TBT breaks above today's highs it should easily trade to our first two targets which are both below the 50-day SMA. I suggest tightening stops at these levels to see if we can get more out of the trade. A break above the 50-day SMA should easily send TBT towards our more aggressive targets.

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

Annotated Chart:

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


PUT Play Updates

SPDR DJIA ETF - DIA - close 106.69 change -0.19 stop 108.75

Target(s): 106.25, 105.25, 104.30, 103.65
Key Support/Resistance Areas: 108.00, 107.00, 105.90, 104.75, 104.20, 103.50
Current Gain/Loss: -0.19%
Time Frame: 1 week
New Positions: Yes, see below

Comments:
8/7: The bearish jobs number would have been the perfect catalyst for stocks to breakdown but they did not. Traders actually covered their shorts into the closing bell ahead of the weekend. What are bears afraid of? I suspect they are worried about the FOMC meeting this Tuesday. What will the Fed say and what will they do. Many are expecting some form of quantitative easing to help spur the economy again.

I would still consider new bearish positions on the DIA but I would look for a decline under Friday's low. use a trigger at $104.90 as your entry point. I suspect this ETF will trade down toward its 50-dma or lower.

8/5: Stocks are drifting sideways in a very narrow range. The market is waiting for the results from July's jobs report. A strong, better than expected report "should" produce another move higher. On the other hand, if the jobs number disappoints, stocks could see some serious profit taking, especially after the +7% rally in July. Odds are really good that the DIA will gap open tomorrow morning. I would look for a move under $105.00 as a potential entry point although nimble traders could use a move under $105.50 as an entry. I would not surprise me to see the DIA trading near $100 in the next several days if the jobs data disappoints.

8/4: The markets melted higher again today despite an early attempt to sell-off. Our main goal with this trade is to fill the gap higher from Monday which is near 105.25. This is the area where readers should tighten stops, or use a trailing stop, to see if the selling intensifies or if buyers step in. The drop could happen fast so simply taking profits is also a smart move. A drop to this area will produce a winning trade and for options traders it should be a +20% gain. We are at resistance points so this is a logical place for the DJIA to turn lower to regain some energy before possibly moving higher. For readers looking for a quicker exit $106.25 could be considered which is near this week’s lows as the DJIA is stubbornly hanging onto the gap.

8/3: It was an inside day for DIA in that it traded within yesterday's high/low price range. DIA closed just about where it opened so we are currently breakeven on the position. I've raised the first target to $105.15 so that it is just above Friday's high as opposed to its closing price. A trip down to this level could happen fast and it is a good place to consider tightening stops or taking profits. For options traders this level should produce a +20% gain. Our next target is $104.30 which just above the 200-day SMA.

Current Position: Long September $106.00 PUTS, entry was at $2.70

Annotated Chart:

Entry on August 3, 2010
Earnings: N/A (unconfirmed)
Average Daily Volume: 14 million
Listed on August 2, 2010