Editor's Note:

It was a rough day for stocks. IBM's strength buoyed the Dow Jones Industrials but overall profit taking was the order of the day. We saw IBM and SPW hit our bullish profit targets but the action in SPW looks bearish. IPI hit our trigger to buy calls. I'm suggesting an early exit in SWK. JNPR hit our stop loss. I have dropped QCOM as a candidate.

We have been expecting a market top. While one day's decline doesn't make a trend this could be the beginning of something bigger. Readers will want to strongly consider taking profits early, raising stop losses, and reducing exposure to bullish candidates.

-James

Current Portfolio:


CALL Play Updates

Amazon.com Inc. - AMZN - close: 186.87 change: -4.38

Stop Loss: 183.40
Target(s): 192.50, 199.75
Current Option Gain/Loss: -74.8%, and -22.0%
Time Frame: 4 to 6 weeks
New Positions: See below

Comments:
01/19 update: Widespread selling swept across the market and AMZN retreated from its highs over $190. Shares lost -2.2% on the session. More conservative traders might want to raise their stops again. The 20-dma has been recent support and it's near the $184.75 mark, you could place your stop near there. Currently the newsletter's stop loss is at $183.40. The bad news today is that AMZN's drop back under $190 could be a fatal blow for our January $190 calls. More conservative traders will want to seriously consider an early exit right here! No new positions at this time.

- Suggested (SMALL) positions -

Long the 2011 January $190 calls (AMZN1122A190) Entry @ $2.35

- or -

Long the 2011 February $200 calls (AMZN1119B200) Entry @ $3.85

01/18: New stop loss at $183.40
01/15: New stop loss @ 181.80, New targets 192.50, 199.75

Entry on December 28th at $182.10
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume = 5.0 million
Listed on December 27th, 2010


Caterpillar - CAT - close: 95.54 change: -0.69

Stop Loss: 92.25
Target(s): 99.80
Current Option Gain/Loss: + 2.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/19 update: Shares of CAT held up reasonably well during the market's decline on Wednesday. Yesterday I suggested we look for a dip back toward $95 as a new entry point and we got that pull back today with CAT's low at $95.15. While I see this as a chance to buy calls on CAT I'm suggesting readers keep their positions small. Today's market drop could be the start of something bigger!

Our target to exit is $99.80. More aggressive traders could aim higher. Keep in mind that earnings are on the 27th of January and we don't want to hold over the event.

- Suggested Positions -

Long the 2011 February $100 calls (CAT1119B100) Entry @ $1.45

Entry on January 18th at $ 95.15
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume = 4.2 million
Listed on January 5th, 2010


Cummins Inc. - CMI - close: 111.43 change: -2.42

Stop Loss: 108.75
Target(s): 117.50
Current Option Gain/Loss: -95.5% and -15.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/19 update: With January options expiring at the end of this week, today's market decline and -2.1% drop in CMI is probably the end for our January $115 calls because they just evaporated to almost nothing. That's part of the risk of trading front month options during expiration week.

CMI should find some support in the $110-109 zone but I am not suggesting new bullish positions.

(small positions only to limit our risk)

- Suggested Positions -
Buy the 2011 January $115 calls (CMI1122A115) Entry @ $1.12

- or -

Buy the 2011 March $115 calls (CMI1119C115) Entry @ $4.73

01/04: New entry point on afternoon bounce.
01/01: Adjusted targets to $114.50, 117.50
12/27: CMI opens at $110.18
12/25: Buy calls now at current levels (small positions)
12/21: New entry point @ $110.25, New stop @ 108.75, New option strikes.

Entry on December 27th at $110.18
Earnings Date 02/02/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on December 11th, 2010


Cognizant Technology Solutions - CTSH - close: 74.55 change: -0.96

Stop Loss: 73.90
Target(s): 79.90, 83.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
01/19 update: The market's widespread decline pushed CTSH toward the bottom of its current trading range near $74 today. Shares were already rebounding higher into the closing bell. Aggressive traders could buy calls right here and just use a sop loss under the $73.50 mark (bottom of the range). I am suggesting we wait for a breakout with a trigger to buy calls at $76.65.

Don't forget that this is an aggressive play and likely to be a short-term trade that only last a few days. We do not want to hold over the early February earnings report. If triggered at $76.65 our first target are $79.90. Keep your position very small to limit your risk. The Point & Figure chart for CTSH is bullish with a $105 target.

- Suggested Positions (very small positions only!) -

Trigger to open positions @ 76.65

Buy the 2011 February $75.00 call (CTSH1119B75) current ask $3.00

- or -

Buy the 2011 February $80.00 call (CTSH1119B80) current ask $1.00

Entry on January xxth at $ xx.xx
Earnings Date 02/09/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on January 18th, 2010


FedEx Corp. - FDX - close: 94.34 change: -1.46

Stop Loss: 91.75
Target(s): 99.90, 104.75
Current Option Gain/Loss: -97.5% and -23.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/19 update: FDX pulled back toward the $93.50 area and its 30-dma before trying to bounce late this afternoon. I don't see any changes from my prior comments and we are not suggesting new bullish positions. We only have two days left before our January calls expire. I have been suggesting that we sell our January calls at 40 cents if we can.

- Suggested Positions (only small positions so far) -

Buy the 2011 January $100 call (FDX1122A100) Entry @ $0.80

- or

Buy the 2011 April $100 call (FDX1116D100) Entry @ $2.96

01/13: New targets for the April calls (99.90 and 104.75)
01/12: New stop loss @ 91.75
01/08: New exit strategy for January calls. Try to exit at 40 cents or more.
12/17: FDX opens at $94.23 - our entry point.
12/16: Adjusted Entry - initiate small positions now (@ Friday's open)

Entry on December 17th at $94.23
Earnings Date 12/16/10 (confirmed)
Average Daily Volume = 2.1 million
Listed on November 29th, 2010


International Business Machines - IBM - close: 155.69 change: +5.04

Stop Loss: 147.85
Target(s): 154.50, 159.90
Current Option Gain/Loss: +46.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/19 update: Target achieved. Last night IBM delivered positive earnings news and the stock was trading higher after hours. We revised our exit targets so that our first target to take profits was at $154.50, which was hit this morning. Our April call was trading near $4.20 (+46.4%) at the time. The option hit $5.05 at its high.

IBM's +3.3% gain today helped buoy the Dow Jones Industrials and minimize losses for the index. IBM closed at new all-time highs and hit $156.13 intraday. We are raising our stop loss to $147.85. I am not suggesting new positions. Our final target is $159.90.

- Suggested Positions -

Long the 2011 April $155 calls (IBM1116D155) Entry @ $2.25

01/19: Target Hit @ 154.50. April call @ $4.20 (+46.4%)
01/18: New stop loss @ 146.40. New targets at $154.50 and $159.90
01/18: As planned, exit the January calls (+87.4%)
01/13: Exit the January calls on Tuesday before the close (& earnings)
01/06: New stop loss @ 144.75
01/03: New targets @ $152.50, and $159.50

Chart:

Entry on December 29th at $146.75
Earnings Date 01/18/11 (confirmed)
Average Daily Volume = 4.7 million
Listed on December 14th, 2010


Intrepid Potash, Inc. - IPI - close: 35.55 change: -3.79

Stop Loss: 34.75
Target(s): 39.90, 42.00
Current Option Gain/Loss: -60.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/19 update: Shares of Mosaic (MOS) plunged more than -10% on news that Cargill would split off its stake in MOS. This huge decline in MOS, combined with the widespread market weakness, fueled big losses across the industry. Investors were in a sell first, ask questions later mood today. IPI, with its big short interest, plunged in step with MOS even though the news had no affect on IPI.

We had a trigger to buy calls on a dip at $37.25. That trigger was obviously hit today. The Feb. $40 call was trading at $1.00. Currently our stop loss is at $34.75. If IPI doesn't bounce tomorrow shares might hit our stop. I'd wait for a bounce before considering new bullish positions. Our first target is $39.90. Our second, more aggressive target is $42.00.

- Suggested Positions -

Long the 2011 February $40 calls (IPI1119B40) Entry @ $1.00

01/19: Play triggered at $37.25

Chart:

Entry on January 19th at $ 37.25
Earnings Date 03/01/11 (unconfirmed)
Average Daily Volume = 717 thousand
Listed on January 12th, 2010


Millicom Intl. Cellular - MICC - close: 95.00 change: -2.12

Stop Loss: 93.75
Target(s): 99.90
Current Option Gain/Loss: -69.5% and + 0.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/19 update: MICC succumbed to profit taking with a -2.1% decline. Shares settled at the $95 level and its 100-dma. Yesterday I had suggested we exit our January calls today at the close to minimize our losses. These calls settled with a bid at $0.70 (-69.5%). I am not suggesting new positions at this time. Our target for the April calls is $99.90.

FYI: It looks like MICC must have had a special dividend because several of the options have odd strike prices ending in .40.

- Suggested Positions -

2011 January 95.40 calls (MICC1122A95.4) Entry @ $2.30, Exit @ 0.70 (-69.5%)

- or -

Long the 2011 April $100.00 calls (MICC1116D100) Entry @ $3.30

01/19: As planned, exit the January calls. Exit @ 0.70 (-69%)
01/13: New stop loss @ 93.75
01/06: New stop loss @ 92.49
01/03: New stop loss @ 91.75, New target at $99.90

Entry on December 23rd at $94.23
Earnings Date 02/09/11 (unconfirmed)
Average Daily Volume = 518 thousand
Listed on December 22nd, 2010


NetApp, Inc. - NTAP - close: 57.63 change: -1.36

Stop Loss: 54.90
Target(s): 62.25, 64.50
Current Option Gain/Loss: -36.0%
Time Frame: 4 to 5 weeks
New Positions: Yes, see below

Comments:
01/19 update: Buckle your seatbelts! Tomorrow could be really ugly. Wednesday saw NTAP pull back toward the $57.00 level, which is what we were expecting. Unfortunately, investors were unhappy with FFIV's earnings report tonight. The company beat the street by 5 cents but revenues were a miss and FFIV's guidance was lackluster. This news was fueling steep selling across the tech sector. FFIV was down -$30 in afterhours trading near $107. NTAP was down afterhours in the $54.00 area. Currently we have a stop loss at $54.90 for NTAP and if this afterhours weakness shows up tomorrow morning our play could be over! I am not suggesting new positions in NTAP at this time.

- Suggested Positions (small positions only) -

Long the 2011 February $60 calls (NTAP1119B60) Entry @ $2.50

Entry on January 12th at $59.04
Earnings Date 02/16/11 (unconfirmed)
Average Daily Volume = 3.8 million
Listed on January 11th, 2010


Research In Motion - RIMM - close: 63.28 change: -1.94

Stop Loss: 59.90
Target(s): 64.75, 67.50
Current Option Gain/Loss: +12.1%, and +12.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/19 update: RIMM underperformed today. The NASDAQ lost -1.4% but RIMM gave up -2.9% with a drop toward its rising 10-dma. I've been warning readers to expect some profit taking. The question now is where will RIMM find support. I'm watching the $62.00 and $60.00 levels as potential support. I am not suggesting new positions at this time. Our final target remains $67.50.

- Suggested Positions -

Long the 2011 February $62.50 calls (RIMM1119B62.5) Entry @ $2.47

- or -

Long the 2011 March $65.00 calls (RIMM1119C65) Entry @ $2.35

01/13: New stop @ 59.90
01/13: 1st Target Hit @ 64.75. Feb. call @ $4.00 (+61.9%) Mar. call @ $3.75 (+59.5%)
01/12: New stop loss @ 58.45

Entry on January 6th at $61.00
Earnings Date 03/31/11 (unconfirmed)
Average Daily Volume = 9.9 million
Listed on January 5th, 2010


SPX Corp. - SPW - close: 75.13 change: -0.69

Stop Loss: 71.75
Target(s): 77.40, 79.90
Current Option Gain/Loss: +13.4%
Time Frame: 4 to 6 weeks
New Positions: See below

Comments:
01/19 update: Target achieved! SPW spiked to $77.62 intraday and our first target to take profits was hit at $77.40. The option was trading near $3.35 and hit an intraday high of $3.50.

Fueling this move was SPW's earnings guidance out this morning. SPW expects 2011 earnings slightly under consensus but revenues were expected to be healthy. Trading saw a big spike in volume and SPW gave back all of its gains. While our first target was hit the action today actually looks like a bearish failed rally pattern. More conservative traders may want to exit completely right here! I am not suggesting new bullish positions.

- Suggested Positions -

Long the 2011 February 75.00 calls (SPW1119B75) Entry @ $2.16

01/19: 1st Target Hit @ 77.40. Option @ $3.35 (+55%)
01/18: New stop loss @ 71.75

chart:

Entry on January 11th at $73.49
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 396 thousand
Listed on January 10th, 2010


Wynn Resorts Ltd. - WYNN - close: 118.18 change: -0.68

Stop Loss: 116.95
Target(s): 124.75, 128.00
Current Option Gain/Loss: - 37.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/19 update: Casino stocks were showing some relative strength this morning but WYNN's rally ran out of steam before lunch time. That's two failed rallies in a row! More conservative traders will want to seriously consider an early exit right now. I am not suggesting new positions at this time.

Our plan was to keep our positions very small because this is an aggressive, higher-risk trade. Our first target is $124.75.

(Very Small Positions) - Suggested Positions -

Long the 2011 February $125.00 calls (WYNN1119B125) Entry @ $3.24

01/19: Cautious traders may want to exit early now.
01/18: Play triggered on gap open higher at $120.50

Entry on January 18th at $120.50
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on January 15th, 2010


CLOSED BULLISH PLAYS

Juniper Networks - JNPR - close: 36.90 change: -1.05

Stop Loss: 36.70
Target(s): 39.90, 41.75
Current Option Gain/Loss: -43.5% and + 4.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/19 update: The sell-off in the NASDAQ was too much for JNPR. Shares of this stock fell to new four-week lows under support near the $36.75 area. Our stop loss was hit at $36.70 today. Our plan was to use small positions to limit our risk.

- Suggested Positions (only small positions so far) -

2011 January $38.00 calls (JNPR1122A38) Entry @ $0.78, Exit @ 0.15 (-80.7%)

- or -

2011 April $40.00 calls (JNPR1116D40) Entry @ $1.50, Exit @ 1.20 (-20.0%)
01/19: Stopped out @ 36.70. Options exit at -80% and -20%
01/15: New stop loss @ 36.70
01/06: New stop loss @ 35.75, new 1st target @ 39.90.
12/17: JNPR opens at $36.91
12/16: Adjusted Entry - initiate small positions now (@ Friday's open)

chart:

Entry on December 17th at $36.91
Earnings Date 01/25/11 (unconfirmed)
Average Daily Volume = 5.5 million
Listed on December 11th, 2010


QUALCOMM Inc. - QCOM - close: 52.14 change: -0.89

Stop Loss: 48.75
Target(s): 54.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions:

Comments:
01/19 update: Given the sharp afterhours weakness in the technology sector tonight I am dropping QCOM as a bullish candidate with the play unopened. We can still keep it on our watch list and wait for a dip or bounce near what should be support near $50.00.

No Chart - Our play never opened.

Entry on January xxth at $ xx.xx
Earnings Date 01/26/11 (unconfirmed)
Average Daily Volume = 12.1 million
Listed on January 8th, 2010


Stanley Black & Decker, Inc. - SWK - close: 65.96 change: -2.14

Stop Loss: 64.75
Target(s): 69.90, 72.45
Current Option Gain/Loss: -100%, and -65.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/19 update: I'm suggesting an early exit from our SWK play. The stock had been stuck near the $68 level and shares really underperformed on Wednesday with a -3.1% decline. There is potential support near $65.00 but I don't want to bet on it. I'm suggesting we exit here. Our plan was to keep our position size small to limit risk.

- Suggested Positions -

2011 January $70 calls (SWK1122A70) Entry @ $0.70, exit 0.00 (-100%)

- or -


01/19: Exit Early.
01/15: Consider selling the January calls early @ 35 cents or more
01/06: New stop loss @ 64.75

chart:

Entry on January 4th at $68.15
Earnings Date 01/27/11 (confirmed)
Average Daily Volume = 1.6 million
Listed on January xxth, 2010