Editor's Note:

The stock market quickly rebounded from yesterday's dip and closed at a new 32-month high. Material and resource names led the charge higher. I have updated stop losses on ASH, CLH, JOYG, PCAR, and TD.

-James

Current Portfolio:


CALL Play Updates

Ashland Inc. - ASH - close: 60.63 change: +1.82

Stop Loss: 56.75
Target(s): 63.00, 67.00
Current Option Gain/Loss: +67.8%, and +25.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/16 update: A widespread market rally helped propel ASH to a +3.0% gain. The stock has broken out past round-number resistance at the $60.00 level. Our first target to take profits is at $63.00. The stock will likely find some resistance in the $63.50 area. I will go ahead and add a secondary exit target at $67.00. Please note our new stop loss at $56.75.

The Point & Figure chart for ASH is bullish with a $83 target.

- Suggested Positions -

Long the March $60 calls (ASH1119C60) Entry @ $1.40

- or -

Long the April $60 calls (ASH1116D60) Entry @ $2.55

02/16 New stop loss @ 56.75, New 2nd target at $67.00

Entry on February 14th at $58.30
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 12th, 2010


Caterpillar Inc. - CAT - close: 103.55 change: +0.55

Stop Loss: 97.90
Target(s): 104.75, 107.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
02/16 update: CAT spiked to another new all-time high at $104.41 but pared its gains by lunchtime. Currently our plan is to buy calls on a dip at $101.00 with a stop loss at $97.90.

Trigger @ 101.00

Buy the March $105 calls (CAT1119C105) current ask $2.92

02/12 Adjusted our trigger, targets, stop loss and strike price.

Entry on February xxth at $ xx.xx
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on February 5th, 2010


Clean Harbors, Inc. - CLH - close: 92.83 change: -0.16

Stop Loss: 88.45
Target(s): 94.95, 99.00
Current Option Gain/Loss: +19.4%
Time Frame: 12 days
New Positions: see below

Comments:
02/16 update: CLH delivered a disappointing session. The stock's +0.6% gain was inline with the S&P 500's gain but I was expecting a better performance. I am inching up our stop loss to $88.45. Remember, we only have a few days left. More conservative traders might want to consider a stop loss closer to the $90.00 level.

Investors should note that the most recent data lists short interest at 11.3% of the very small 23.1 million-share float. That is a good recipe for a short squeeze higher. Please note that we'll plan on exiting ahead of the earnings on Feb. 23rd (still an unconfirmed date).

- Suggested Positions -

Long the March $95.00 call (CLH1119C95) Entry @ $1.80

02/16 New stop loss @ 88.45

Entry on February 11th at $92.25
Earnings Date 02/23/11 (unconfirmed)
Average Daily Volume = 181 thousand
Listed on February 10th, 2010


Coach Inc. - COH - close: 57.33 change: -0.04

Stop Loss: 54.40
Target(s): 58.25, 62.00
Current Option Gain/Loss: +42.8%, and + 70.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/16 update: COH definitely offered up a disappointing performance today. The stock tried to rally but failed at new resistance near $58.00. Looks like we should have set the exit at $58.00 and not $58.25. The high today was $58.10. Odds are growing that COH will see a pull back toward the $56-55 zone. I will repeat my previous comments that conservative traders may want to take profits now. Our first exit target is $58.25. Our final exit target is $62.00. No new positions at this time. Keep in mind that the $60.00 level could end up being round-number, psychological resistance.

- Suggested Positions -

Long the 2011 March $55.00 calls (COH1119C55) Entry @ $2.10

- or -

Long the 2011 March $57.50 calls (COH1119C57.5) Entry @ $0.85

02/12: Adjusted 1st target to $58.25
02/12: New stop loss @ 54.40
02/08: New stop loss @ 53.49

Entry on February 7th at $55.35
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume = 4.1 million
Listed on January 31st, 2011


Costco Wholesale Corp. - COST - close: 74.96 change: +0.63

Stop Loss: 72.95
Target(s): 79.75
Current Option Gain/Loss: Unopened
Time Frame: 3+ weeks
New Positions: Yes, see Trigger

Comments:
02/16 update: COST has bounced back to the top of its short-term $74-75 trading range. Shares look poised to breakout higher. Our official trigger to launch positions remains at $75.50. If triggered our target is $79.75. We will plan to exit ahead of COST's early March earnings report. That gives us three or four weeks.

The Point & Figure chart for COST is bullish with an $88 target.

Trigger @ 75.50

- Suggested Positions -

Buy the March $75 calls (COST1119C75) current ask $1.71

Entry on February xxth at $ xx.xx
Earnings Date 03/02/11 (confirmed)
Average Daily Volume = 5.8 million
Listed on February 7th, 2010


Cognizant Technology - CTSH - close: 76.64 change: +0.14

Stop Loss: 74.45
Target(s): 84.50, 89.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
02/16 update: If you look at an intraday chart of CTSH it would appear that shares rallied above $77.25 today but did not yet hit $77.50. However, two different quote services are listing the actually high today at only $76.88.

Nothing has changed from my Tuesday night comments. We want to buy calls at $77.55. If triggered our targets are $84.50 and $89.00. The Point & Figure chart for CTSH is bullish with a $105 target.

Trigger to buy calls @ 77.55

- Suggested Positions -

Buy the March $80 call (CTSH1119C80) current ask $0.85

- or -

Buy the April $80 call (CTSH1116D80) current ask $1.60

Entry on February xxth at $ xx.xx
Earnings Date 05/04/11 (unconfirmed)
Average Daily Volume = 2.4 million
Listed on February 15th, 2010


Eastman Chemical Co. - EMN - close: 93.81 change: +2.15

Stop Loss: 90.75
Target(s): 99.75, 104.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
02/16 update: EMN completely erased yesterday's -2% drop with a +2.3% gain. The stock is back to challenging resistance at the $94.00 level. The breakout could happen tomorrow. I am suggesting we buy calls at $94.60. If triggered our targets are $99.75 and $104.00. Expect the $100.00 level to initially act as overhead resistance. The Point & Figure chart for EMN is bullish with a $133 target.

Trigger @ 94.60

- Suggested Positions -

Buy the March $95 calls (EMN1119C95) current ask $2.20

Entry on February xxth at $ xx.xx
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 946 thousand
Listed on February 14th, 2010


Fastenal Co. - FAST - close: 63.16 change: +0.31

Stop Loss: 59.40
Target(s): 64.75, 67.25
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
02/16 update: FAST briefly hit a new relative high this morning at $63.56. I do not see any changes from my prior comments. We are waiting for a dip. We have a trigger to buy calls on the dip at $61.65, with a stop loss at $59.40. Our targets are $64.75 and $67.25. FYI: The Point & Figure chart for FAST is bullish with a $73 target. Readers may want to keep in mind that the most recent data listed short interest at 11.4% of the 132 million-share float.

Trigger @ 61.55

- Suggested Positions -

Buy the March $60 calls (FAST1119C60) current ask $3.30

- or -

Buy the March $65 calls (FAST1119C65) current ask $0.75

02/12 New trigger @ 61.55, new stop loss @ 59.40

Entry on February xxth at $ xx.xx
Earnings Date 04/12/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 8th, 2010


Fluor Corp. - FLR - close: 75.07 change: +1.76

Stop Loss: 69.25
Target(s): 77.25, 79.75
Current Option Gain/Loss: Unopened
Time Frame: 7 trading days
New Positions: Yes, see trigger

Comments:
02/16 update: I am getting the impression that FLR is not going to cooperate. Shares are likely to run away without us. Yet I am not interesting in raising our risk by chasing it at new 52-week highs. The stock rallied toward round-number resistance at $75 today. At the moment we want to buy calls on a dip at $72.00. I'm thinking about raising our buy-the-dip entry point to $73.00 instead.

Please note that this is a short-term trade. We only have a few days. FLR is due to report earnings on Wednesday, Feb. 23rd before the opening bell. Therefore we will plan to exit on Tuesday, Feb. 22nd at the closing bell, if FLR hasn't hit our exit target before then.

The Point & Figure chart for FLR is bullish with an $84 target.

Trigger @ $72.00

- Suggested Positions -

Buy the March $75.00 calls (FLR1119C75) current ask $2.50

Entry on February xxth at $ xx.xx
Earnings Date 02/23/11 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on February 12th, 2010


Joy Global Inc. - JOYG - close: 96.88 change: +2.81

Stop Loss: 89.45
Target(s): 97.25, 99.85
Current Option Gain/Loss: +29.8%, and +12.7%
Time Frame: 3 weeks
New Positions: see below

Comments:
02/16 update: Resource and material names were showing lots of strength on Wednesday. JOYG outperformed the major averages with a +2.9% gain and another new high. Our exit targets to take profits are at $97.25 and $99.85 but more aggressive traders may want to aim higher. Please note I am raising the stop loss to $89.45.

I do consider this a more aggressive, higher-risk trade because our stop loss is a little wide. You could try a tighter (more conservative) stop loss but JOYG can see sudden bouts of volatility. Our upside targets are $97.25 and $99.85.

The Point & Figure chart for JOYG is bullish with a $113 target.

- Suggested Positions -

Long the March $95 calls (JOYG1119C95) Entry @ $3.85

- or -

Long the April $100 calls (JOYG1116D100) Entry @ $3.46

New stop loss @ 89.45

Entry on February 14th at $94.44
Earnings Date 03/02/11 (unconfirmed)
Average Daily Volume = 1.4 million
Listed on February 12th, 2010


Nike Inc. - NKE - close: 85.75 change: +0.20

Stop Loss: 83.85
Target(s): 88.00, 89.90
Current Option Gain/Loss: +17.7%, and +17.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/16 update: NKE's bounce today was a little disappointing but it is moving the right direction. I would still consider new positions now at current levels. Our targets are $88.00 and $89.90.

- Suggested Positions - (Small Positions Only!)

Long the March $85 calls (NKE1119C85) Entry @ $2.09

- or -

Long the April $90 calls (NKE1116D90) Entry @ $0.94

Entry on February 15th at $85.25
Earnings Date 03/17/11 (unconfirmed)
Average Daily Volume = 2.2 million
Listed on February 9th, 2010


PACCAR Inc. - PCAR - close: 52.98 change: +0.44

Stop Loss: 49.95
Target(s): 53.45
Current Option Gain/Loss: +113.3%, and +85.7%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
02/16 update: So far so good. The oversold bounce in PCAR continues. Shares hit $53.29 intraday. I am raising our stop loss to $49.95. You might want to consider raising yours even higher. Currently our final exit target is $53.45 but more aggressive traders could aim higher.

NOTE: I am suggesting we exit our February options tomorrow (Thursday) at the closing bell, unless of course PCAR hits our exit first. I am not suggesting new positions at this time.

Prior Comments:
This should be a short-term trade. Aggressive traders could use February calls. I'm listing both February and March. Just remember that Februarys expire soon. Note: A lot of the option strikes are odd. PCAR must have had some sort of dividend.

Open Small Positions Now

Long the February $49.70 call (PCAR1119B49.7) Entry @ $1.50

- or -

Long the March $55 call (PCAR 1119C55) Entry @ $0.35

02/16 New stop loss @ 49.95
02/12 Adjusted our final exit target to $53.45

Entry on February 7th at $50.60
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume = 2.9 million
Listed on February 5th, 2010


Quality Systems Inc. - QSII - close: 79.50 change: -0.03

Stop Loss: 77.95
Target(s): 84.90, 89.00
Current Option Gain/Loss: -52.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/16 update: All right, now I'm worried. The market rebounds to a new 32-month high and QSII does not participate. The early morning rebound in this stock failed. It might be time to consider an early exit and cautious traders may want to start scaling out of positions now. I am not suggesting new bullish positions at this time.

The Point & Figure chart for QSII is bullish with a $119 target.

- Suggested Positions -

Long the March $85 calls (QSII1119C85) Entry @ $0.85

Entry on February 14th at $80.75
Earnings Date 05/31/11 (unconfirmed)
Average Daily Volume = 202 thousand
Listed on February 12th, 2010


The Toronoto-Dominion Bank - TD - close: 81.70 change: +1.56

Stop Loss: 76.90
Target(s): 84.00, 89.00
Current Option Gain/Loss: +100.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/16 update: It looks like TD suffered a bad tick at the open with a trade near $78.00 but most quote services are listing the low at $80.70. At any rate, the stock was showing strength today (+1.9%) and TD closed at new relative highs. I am raising our stop loss to $76.90. No new positions at this time. Our targets are $84 and $89. We will plan to exit ahead of the early March earnings report (unconfirmed date).

FYI: The Point & Figure chart for TD is bullish with a $98 target.

- Suggested Positions -

Long the March $80.00 call (TD1119C80) Entry @ $1.35

02/16 New stop loss @ 76.90

Entry on February 11th at $78.89
Earnings Date 03/03/11 (unconfirmed)
Average Daily Volume = 583 thousand
Listed on February 10th, 2010


Proshares Ultra(long) Russell 2000 - UWM - close: 47.52 change: +0.70

Stop Loss: 42.99
Target(s): 49.75, 54.00
Current Option Gain/Loss: + 0.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Small Positions - UWM Position -

Long the April $48 calls (UWM1116D48) Entry @ $2.75

02/14 UWM opened at $46.90. Option opened @ $2.75

iShares Russell 2000 - IWM - close: 82.68 change: +0.66

Stop Loss: 78.65
Target(s): 84.95, 87.25
Current Option Gain/Loss: + 1.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/16 update: The UWM and IWM erased yesterday's losses to close at relative highs. There is no change from my prior comments. I would prefer to open new positions on a dip.

Small Positions - IWM Position -

Long the April $84 calls (IWM1116D84) Entry @ $1.92

02/14 IWM opened @ 82.11. Option opened @ 1.92

UWM Entry on February 14th at $46.90
IWM Entry on February 14th at $82.11
Listed on February 12th, 2010


CBOE Market Volatility Index - VIX - close: 16.57 change: +0.35

Stop Loss: N/A
Target(s): 24.00, 28.00
Current Option Gain/Loss: -56.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/16 update: Normally the VIX tends to move lower as stocks rally but that is not always the case. The VIX might be rising on news reports that Iranian gunboats are expected to cross through the Suez Canal on their way to Syria but this news has not been validated by sentries in Egypt. I don't see any changes from my prior comments.

Over the weekend I suggested (again) that more conservative traders consider an early exit. Or you could keep this trade as some sort of hedge against a sudden market decline but bear in mind that this option expires on March 16th. I am not suggesting new positions at this time.

Earlier Comments:
Just because the VIX bounced near the 15.00-15.50 level in the past doesn't mean it can go crashing through it but this would be a good area to speculate on a rebound. I will point out that between 2005 and 2006 the VIX was pretty much dead, limping along the 10.00 area for two years.

- Suggested Positions -

Long the 2011 March $22.50 calls (VIX1116C22.5) Entry @ $1.60

Entry on January 26th at $17.00
Earnings Date --/--/--
Average Daily Volume =
Listed on January 25th, 2010


CLOSED BEARISH PLAYS

Google Inc. - GOOG - close: 624.22 change: + 0.07

Stop Loss: n/a
Target(s): n/a
Current Option Gain/Loss: see below
Time Frame: 1 month
New Positions: No

THIS IS A STRANGLE TRADE (not a simple put play)

Comments:
02/16 update: GOOG is going nowhere fast. There is no change from my prior comments. There is virtually zero chance of this trade actually performing or being salvaged with two days left before February options expire, I am writing it off now.

I have to be honest. This was one of the worst strangle trades I have ever published and you're unlikely to see another one in this newsletter. If you do, we'll exit the day after the event.

STRANGLE TRADE: Buy an out of the money CALL and PUT

STRANGLE #2 (February) initial cost $15.10, currently: $0.00 (-100%)

2011 February $680 call (GOOG1119B680) Entry @ $6.20

- AND -

2011 February $580 put (GOOG1119N580) Entry @ $8.90

02/16: -100%
01/22: Exit the January strangle at the open.

chart:

Entry on January 20th at $626.77
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on January 19th, 2010


iShares Russell 2000 Index - IWM - close: 82.68

Stop Loss: --.--
Target(s): 75.00
Current Option Gain/Loss: -100.0%
Time Frame: 1 to 2 weeks
New Positions: see below

Comments:
02/16 update: Unless the Russell 2000 index suddenly sees a big drop lower real soon, nothing is going to save this put play. Given our bullish market bias, we don't want it to improve. I'm removing this put play, which has been dead for days, from the newsletter.

Small Position only

Long the 2011 February $77 puts (IWM1119N77) Entry @ $1.65

02/16 -100%
02/03 Remove the stop loss
01/29 New stop loss @ 80.25

chart:

Entry on January 20th at $78.14
Earnings Date --/--/--
Average Daily Volume = 38 million
Listed on January 19th, 2010