Current Portfolio:


CALL Play Updates

Dresser-Rand Group - DRC - close 38.02 change +0.03 stop 36.15

Target(s): 39.00, 39.95, 41.40
Key Support/Resistance Areas: 42.00, 40.00, 39.15, 37.50, 36.30
Current Gain/Loss: +14%
Time Frame: 2 to 3 weeks
New Positions: Yes

Comments:
10/12: DRC is finding resistance at $38.25 but it appears it only a matter of time before this is broken to the upside. I'm looking for DRC to move to our first target of $39.00 in the coming days and if thee market remains strong we should see $39.95, perhaps next week. I suggest traders use strength to begin to exit positions or tighten stops to protect profits. A move to $39 should produce a +55% gain while a move to $39.95 should produce a +90% gain.

10/9: Oil services stocks did well on Friday and DRC surged +2.4% on the back of more likely stimulus from the Fed after the lackluster employment report. DRC looks good here as long as the broader market cooperates. If we continue drifting higher this week DRC should easily reach our first target. However, a correction could certainly derail long positions. We'll tighten stops as the trade moves forward.

Current Position: Long November $40.00 CALL, entry was at $0.70

Entry on October 6, 2010
Earnings 10/28/2010 (unconfirmed)
Average Daily Volume: 570,000
Listed on October 5, 2010


Genco Shipping & Trading, LTD - GNK - close 16.79 change -0.12 stop 15.50

Target(s): 17.70, 18.05, 18.50
Key Support/Resistance Areas: 18.25, 17.75, 16.90, 15.75
Current Gain/Loss: +12.5%
Time Frame: 1 to 3 weeks
New Positions: Yes

Comments:
10/12: GNK traded right down to our trigger to enter positions at $16.55 and bounced. Our first target is near the July/August highs at $17.70, which should produce a gain of +65%. Our second target is below the February lows at $18.05 (adjusted) which should produce a +90% gain. Use strength to consider to exiting positions or tightening stops.

10/11: Basic materials have been exploding as investors are flocking to hard assets and the stocks that mine and produce them. However, the shippers haven't fared as well and I believe they are due for a run higher as these materials need to be stored and shipped around the world. GNK has been forming an ascending triangle over the past six weeks and closed near the top of its base today. I would prefer to catch a pullback in the stock but a breakout play is also a good set-up. I suggest we enter long positions if GNK trades to $17.15 (a breakout) or $16.55 (a pullback). Our stop is below the stock's 20 and 50-day SMA's and an ascending trend line and will be adjusted as the trade develops.

Current Position: Long November $17.00 CALL, entry was at $0.80

Note: Readers who want to give this more time to work may want to consider buying the JAN 2011 $17.50 CALLS

Entry on October 12, 2010
Earnings 11/1/2010 (unconfirmed)
Average Daily Volume: 1.2 million
Listed on October 11, 2010


Visa, Inc. - V - close 74.25 change -0.04 stop 67.40

Target(s): 74.90, 76.90, 79.40
Key Support/Resistance Areas: 79.80, 77.50, 75.00, 72.50, 70.50, 68.00
Current Gain/Loss: +13%
Time Frame: 3 to 5 weeks
New Positions: Yes

Comments:
10/12: I was somewhat disappointed in V's performance today as the stock closed flat on the day, while other financial stocks fared better. V is consolidating above its 100-day SMA. The stock has support at $72.50 which is also near its rising 20-day SMA. A move to our first target should produce a +30% to +40% gain, while a move to our 2nd target should produce a +80% to +90% gain. These are the primary targets and I suggest using moves into these areas as opportunities to exit positions or tighten stops.

10/9: V traded right down to our entry Friday morning and bounced. We are long November $75 calls at $1.92. I do not see V trading much lower than its rising 20-day SMA which is currently $71.55 and increasing about 30 cents per day. This puts the 20-day SMA in the $72.50 to $73.00 range later this week. Any pullback to this area will provide another good entry point. The stock also has support at $72.50 if there is bigger pullback earlier in the week. I like V to go higher as they have worked through the issues that caused the stock to sell-off over the past few months. Even a small move up to out 1st target should produce a +40% gain, while a move to our 2nd target should produce a +85% gain. I plan to tighten the stop in the coming days.

Current Position: Long November $75.00 CALL, entry was at $1.92

Entry on October 7, 2010
Earnings 10/27/2010 (unconfirmed)
Average Daily Volume: 6.8 million
Listed on October 4, 2010


Thompson Creek Metals - TC - close 11.39 change +0.00 stop 10.45

Target(s): 11.75, 12.40
Key Support/Resistance Areas: 12.60, 11.80, 11.00, 10.55
Current Gain/Loss: +5%
Time Frame: 1 to 3 weeks
New Positions: Yes, on pullbacks

Comments:
10/12: TC sold off to $11.15 early this morning, bounced, and then made another low at $11.11 which was one penny from our desired trigger at $11.10. When the stock bounced at $11.15 and then turned back to test it the position was opened early at $11.15. TC bounced nicely and closed above its 200-day SMA for the 2nd straight day. My guess is that TC will continue to consolidate at these levels and any dips can be viewed as buying opportunities.

10/9: It seems there is no stopping the basic materials sector as the lackluster employment report is sure to be followed by additional stimulus. Molybdenum is high strength metal and is used to make aircraft parts, electrical contacts, industrial motors and filaments to name a few. Technically, TC broke through resistance near $11.00 and touched its 200-day SMA on Friday. I would like to see the stock retrace some of those gains and suggest we enter long positions with a trigger of $11.10 which is -18 cents lower than Friday's close. Our targets are about +6% and +11.5% higher than our trigger.

Current Position: Long November $11.00 CALL, entry was at $0.90

Entry on October XX
Earnings 10/4/2010 (unconfirmed)
Average Daily Volume: 1.7 million
Listed on October 9, 2010


PUT Play Updates

Alliant Techsystems - ATK - close 73.98 change -0.52 stop 76.25

Target(s): 72.25, 71.50, 70.50
Key Support/Resistance Areas: 76.00, 74.00, 72.00, 71.25, 70.00
Current Gain/Loss: -20%
Time Frame: 1 to 2 weeks
New Positions: Yes, with tight stops

Comments:
10/12: Not much has changed from my comments from previous days. ATK has been drifting lower and consolidating below its 200-day SMA the past several days, but is still holding onto its 20-day SMA. My primary target is a move to the 50-day SMA which is rising so I've raised the target to $71.50. A move to this level should produce a +20% gain, while a move to our first target will get us out of the trade with a small profit. Use weakness to consider closing positions or tightening stops.

10/9: ATK formed a perfect bearish head and shoulders pattern on its hourly chart turned lower right where it should have. Now we follow through to the downside. The stock remains below its 200-day SMA and I am ultimately looking for a move towards its 50-day SMA and our second target of $71.25. I do think a sell-off will likely get bought so be prepared to take profits or tighten stops to protect them.

Current Position: Long November $70.00 PUT, entry was at $1.45

Entry on October 4, 2010
Earnings: 11/11/2010 (unconfirmed)
Average Daily Volume: 310,000
Listed on October 2, 2010


Isilon Systems, Inc - ISLN - close 25.70 change +0.24 stop NONE

Target(s): 23.20, 21.50, 20.50
Key Support/Resistance Areas: 26.35, 25.00, 21.40, 20.40, 19.00
Current Gain/Loss: -40%
Time Frame: 1 to 2 weeks
New Positions: Neutral

Comments:
10/12: Not much has changed from my previous comments. The double top play is still in play and a move back down to the $23.00 area is still in the cards, which should get us out of the position near breakeven. $23.20 and $21.50 are the primary targets but the 20-day SMA should also be considered. Begin to look for an exit to preserve capital.

10/9: ISLN has not followed through lower as I anticipated. In fact, it snapped right back up to its highs before the sell-off on 10/5. I picked the wrong stock in the sector as others such as F5 Networks (FFIV), Red Hat (RHT), and VM Ware (VMW) remain near their lows. In any event, our puts are still hanging in there and I suggest we give this some time to see if the stock turns lower. I chose further out of the money puts to limit losses for these reasons. Now there is a possible double top play that could be met with selling this week. A move back down to the $23 area is still certainly in the cards and that should get us out of the position near breakeven. The 20-day SMA is another target readers should consider. I've adjusted the targets. Finally, trying a short position at this level could work out nicely for a quick trade. I would suggest trying the $22.5 puts and use a stop near $26.80.

Current Position: Long November $20.00 PUT, entry was at $0.70

Entry on October 6, 2010
Earnings: 10/21/2010 (unconfirmed)
Average Daily Volume: 1.2 million
Listed on October 6, 2010


PNC Financial - PNC - close 53.05 change +0.21 stop 54.92

Target(s): 51.05, 50.35, 49.50, 48.75
Key Support/Resistance Areas: 54.50, 53.50, 50.50, 49.50, 48.75, 47.00
Current Gain/Loss: -40%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
10/12: This morning PNC broke down and out of its bear flag that has been forming since 9/23, but it was one big head fake as the stock bounced and closed back inside of it. The chart continues to look terrible and any meaningful market correction should quickly send this stock down to our targets. The stock remains below its primary downtrend line and has been struggling over the past few days. Now we need follow through to the downside. Use weakness to consider exiting positions or tightening stops.

10/9: PNC has been drifting higher in a bear flag and now sits at the bottom of the channel. The stock turned lower this past week right at it 50-day SMA and descending trend line. If the broader market corrects I'm looking for PNC to break lower towards $49.50 to $50.35 level which is our 2nd and 3rd targets. I suggest we begin to exit positions or tighten stops if PNC heads lower early this week.

Current Position: Long November $48.00 PUT, entry was at $1.26

Entry on September 30, 2010
Earnings: 10/20/2010 (unconfirmed)
Average Daily Volume: 5 million
Listed on September 29, 2010


Whole Foods Market - WFMI - close 34.57 change -0.65 stop 37.10

Target(s): 32.85, 31.80, 31.05
Key Support/Resistance Areas: 36.00, 35.00, 34.00, 32.80, 31.00
Current Gain/Loss: -5%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
10/12: WFMI traded to our higher trigger to enter short positions so we are long NOV $33 puts at 90 cents. Today's +2.6% rally smells more like short covering than anything else. There is solid resistance near $36.00 which is where the stock struggled today. The 20-day and 50-day SMA's are also declining and both overhead. I like new positions at these levels with a fairly tight stop. A move to our to our $32.85 (adjusted up 5 cents) target should produce a +90% gain. Even a move smaller move back down to support at $34.00 should produce a +50% gain. I think this play has some potential but we are going to need to see broader market weakness to book a winning trade.

10/9: A weak consumer does not bode well for a high end supermarket like WFMI. There is some serious selling happening in stock over the past few days that feels like an institution. WFMI has support at $34.00 which is where the stock is hanging onto, but it is making lower highs in the process, i.e. a descending triangle. The stock is now below all of its moving averages which should keep bounces in check. I would like to see the bounce continue up towards its 200-day SMA which sets up a good shorting opportunity. However, a break below $34.00 should also be considered. Let's use a bounce to $35.65 or a breakdown to $33.85 as triggers to enter short positions. WFMI has a gap to fill all the way down near $31.00.

Trigger: $35.65 or $33.85

Current Position: Long November $33.00 PUT, entry was at $0.90

Entry on October 12, 2010
Earnings: 11/3/2010 (unconfirmed)
Average Daily Volume: 2.5 million
Listed on October 9, 2010


CLOSED BEARISH PLAYS

SPDR DJIA ETF - DIA - close 110.26 change +0.00 stop 110.55

Target(s): 107.50, 106.55, 105.40
Key Support/Resistance Areas: 112.00, 110.00, 107.30, 106.40, 105.00
Final Gain/Loss: -48.5%

Time Frame: 1 to 3 weeks
New Positions: Yes, with tight stops

Comments:
10/12: The rip higher this afternoon after the FOMC minutes hit our stop in DIA so we are flat the position for a loss. I was worried about the reaction and sure enough we were taken out by 8 measly cents, or 8 DOW points. Nonetheless, the broader indexes keep chipping away at resistance, but the trap door could open at any time. I would be inclined to stick with this position if you still have it and use weakness to trail stops down.

10/9 & 10/11: There are not many changes to my comments. We have a tight stop overhead if DIA breaks out. However, I would be leery of any opening gap higher which could be sold into. I am also leery of possible volatility with the FOMC minutes released Tuesday afternoon as it feels like we could get a false breakout. As such, this is how I suggest readers manage the trade. Temporarily remove the stop and wait for the open. If there is a gap higher near our stop, place a new protective stop above the opening range. This provides us the chance to measure the true strength or weakness of DIA. Often times this will keep you in the trade and looking for a better exit. At these elevated levels it would not surprise me to see a gap higher and an immediate sell-off so we don't want to have a GTC stop in place that gets taken out if DIA is only going to head lower. This is just a scenario. If the markets are surging higher and convincingly break the opening range then we need to get out of the way.

Closed Position: Long November $105.00 PUT at $0.90, entry was at $1.75

Annotated Chart:

Entry on September 30, 2010
Earnings: N/A (unconfirmed)
Average Daily Volume: 6.5 million
Listed on September 25, 2010