Editor's Note:

It's usually bullish news when a stock is added to the S&P 500 index. Last night Standard & Poor's announced that JOYG would be added to the index but no date was set. The news pushed JOYG to gap open higher above our first profit target. I am removing FLR from the newsletter. Our trade on FLR never opened and we're running out of time. Meanwhile our EMN call play has been triggered. CLH has a new stop loss.

-James

Current Portfolio:


CALL Play Updates

Ashland Inc. - ASH - close: 61.08 change: +0.45

Stop Loss: 56.75
Target(s): 63.00, 67.00
Current Option Gain/Loss: +85.7%, and +37.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/17 update: The rally in ASH continues following yesterday's bullish breakout above the $60.00 level. I would look for dips near the rising 10-dma or a dip near $60.00-59.00 as our next entry point. Our first profit target is $63.00. Our final exit target is $67.00.

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


Peabody Energy Corp. - BTU - close: 66.04 change: -0.19

Stop Loss: 61.75
Target(s): 69.75, 74.00
Current Option Gain/Loss: - 9.3%, and - 5.5%
Time Frame: 6 to 8 weeks
New Positions: Yes

Comments:
02/17 update: BTU opened higher at $66.30 but then promptly plunged toward $64.00 before 10:00 a.m. Traders bought the dip at BTU's rising 10-dma and shares pared their losses by the close. I don't see any specific news to account for the sudden weakness. I would still consider new positions here at current levels. Our first exit target is $69.75.

The Point & Figure chart for BTU is bullish with an $80 target.

- Suggested Positions -

Long the March $70 calls (BTU1119C70) Entry @ $1.07

- or -

Long the June $70 calls (BTU1118F70) Entry @ $3.60

Entry on February 17th at $66.30
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 4.6 million
Listed on February 16th, 2010


Caterpillar Inc. - CAT - close: 103.36 change: -0.19

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:
02/17 update: CAT continues to consolidate sideways. There is no change from my prior comments. I am suggesting we buy calls at $101.00. Nimble or more cautious traders could wait for a dip closer to the $100.00 mark.

Trigger @ 101.00

- Suggested Positions -

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: 93.40 change: -0.03

Stop Loss: 91.45
Target(s): 94.95, 99.00
Current Option Gain/Loss: +19.4%
Time Frame: 12 days
New Positions: see below

Comments:
02/17 update: CLH is also seeing a sideways consolidation with the stock churning in a narrow range this week. We only have two days left. The newsletter will plan to exit this position on next Tuesday at the closing bell to avoid holding over earnings on Wednesday morning. The stock market is closed on Monday. More conservative traders may want to exit early tomorrow (Friday) at the closing bell. Given our time frame I am raising our stop loss to $91.45.

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

02/17 New stop loss @ 91.45
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: 56.65 change: -0.68

Stop Loss: 54.40
Target(s): 58.25, 62.00
Current Option Gain/Loss: +16.6%, and + 35.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/17 update: Readers should not be surprised here. COH has been struggling with resistance near $58.00 and I have been warning that the stock looked ready for a pull back. COH should find some support in the $56-55 zone. Readers can wait for a dip or a bounce in this area as a new entry point to launch bullish positions.

- 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: 74.84 change: -0.12

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

Comments:
02/17 update: Investors continue to buy the dips in COST near the $74.00 level. It happened again this morning. Shares quickly bounced back toward resistance near $75.00. 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: 76.88 change: +0.24

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:
02/17 update: CTSH gapped open lower but traders bought the dip at $76.00. The intraday rebound lifted CTSH to $77.26. I don't see any changes from my prior 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: 96.27 change: +2.46

Stop Loss: 90.75
Target(s): 99.75, 104.00
Current Option Gain/Loss: +20.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/17 update: Good news! EMN has finally broken out from its trading range. This morning some positive analyst comments from Morgan Stanley helped fuel the move higher. Then late this afternoon EMN announced that its Board of Directors had approved the next quarterly cash dividend ($0.47) and a $300 million stock buyback program.

Shares of EMN outperformed the market with a +2.6% gain and a new all-time high. Our trigger to buy calls was hit at $94.60. If you missed the entry point I would consider new positions on a dip near the $95 area. 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.

- Suggested Positions -

Long the March $95 calls (EMN1119C95) Entry @ $2.65

02/17 EMN breaks out. Hits trigger to buy calls @ 94.60

chart:

Entry on February 17th at $94.60
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 946 thousand
Listed on February 14th, 2010


Fastenal Co. - FAST - close: 63.09 change: -0.07

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:
02/17 update: FAST is going nowhere. I don't expect shares to see much movement tomorrow (option expiration Friday) either. 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


Joy Global Inc. - JOYG - close: 98.07 change: +1.19

Stop Loss: 91.75
Target(s): 97.25, 104.50
Current Option Gain/Loss: +50.6%, and +32.9%
Time Frame: 3 weeks
New Positions: see below

Comments:
02/17 update: Target exceeded! Good news, last night Standard & Poor's announced they would replace Allegheny Energy in the S&P 500 with JOYG. You know what that means. All of the funds that try and mimic the iconic index will have to buy shares of JOYG. Now that buying doesn't have to happen immediately but it's a bullish development. No date yet for the changeover has been announced.

Shares of JOYG gapped open higher at $98.65 this morning. That was above our first exit target at $97.25. The options opened at $5.80 (+50.6%) and $4.90 (+41.6%). JOYG does look a little bit overbought here so I wouldn't be surprised to see a dip.

Normally, I would expect the $100.00 mark to act as round-number, psychological resistance on the way up. Given last night's news I wonder if $100 will still slow down the rally in JOYG. I am going to adjust our final exit target from $99.85 to $104.50. Hopefully this decision doesn't backfire. We will raise the stop loss on JOYG to $91.75.

- Suggested Positions -

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

- or -

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

02/17 New stop loss @ 91.75
02/17 1st Target Exceeded on Gap Higher. Options @ +50.6% and +41.6%
02/16 New stop loss @ 89.45

chart:

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: 86.04 change: +0.29

Stop Loss: 83.85
Target(s): 88.00, 89.90
Current Option Gain/Loss: +24.4%, and +24.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/17 update: The market's early morning weakness was strong enough to push NKE to a new low for the week but shares rally off its 30 and 100-dma. The big bounce has created a bullish engulfing candlestick pattern (bullish reversal). I would use this move as a new bullish entry point to buy calls on NKE. Our targets are $88.00 and $89.90. More aggressive traders may want to aim for the highs near $92.00 instead.

- 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: 52.41 change: -0.57

Stop Loss: 49.95
Target(s): 53.45
Current Option Gain/Loss: + 73.3%, and +28.5%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
02/17 update: Our rebound play in PCAR seems to be suffering a setback. Shares are failing near their 20-dma. More conservative traders might want to take profits early given today's relative weakness. I am not suggesting new bullish positions at this time. Currently our final exit target is $53.45 but more aggressive traders could aim higher.

UPDATE: Yesterday I suggested that we exit our February options on Thursday at the close.

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

February $49.70 call (PCAR1119B49.7) Entry @ $1.50, Exit @ $2.60 (+73.3%)

- or -

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

02/17 Planned Exit for February calls @ close: $2.60 (+73.3%)
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: 79.21 change: -0.29

Stop Loss: 77.95
Target(s): 84.90, 89.00
Current Option Gain/Loss: -58.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/17 update: QSII is still showing some relative weakness, which is sending off warning signals for me. I will repeat my prior comments that more conservative traders will want to consider an early exit. Yet in spite of the decline QSII has not yet broken the bottom of its three-week trading range with support near the $78.50-78.00 zone. We have a stop loss at $77.95. I'd like to hold this stock a couple of more days assuming we don't get stopped out and see what happens on Monday after option expiration. 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: 81.92 change: +0.22

Stop Loss: 76.90
Target(s): 84.00, 89.00
Current Option Gain/Loss: +107.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/17 update: TD managed to just barely tag another new high (82.54 today) before paring its gains. There is no change from my prior comments. Shares look short-term overbought and due for a little profit taking. 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: 48.22 change: +0.70

Stop Loss: 42.99
Target(s): 49.75, 54.00
Current Option Gain/Loss: + 1.8%
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: 83.26 change: +0.58

Stop Loss: 78.65
Target(s): 84.95, 87.25
Current Option Gain/Loss: +14.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/17 update: The rally continues in the small caps with another two-year high today. The Russell 2000 index is looking a little bit short-term overbought so I would not be surprised to see a dip in the next few days. We can take advantage of that dip and use it to buy calls.

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: 16.59 change: +0.02

Stop Loss: N/A
Target(s): 24.00, 28.00
Current Option Gain/Loss: -53.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/17 update: The VIX is still hovering near its multi-year lows. However, on a very short-term basis we're starting to see a nascent trend of higher highs and higher lows but it's so small I would probably consider it just noise. I don't see any changes from my prior comments.

Last 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 BULLISH PLAYS

Fluor Corp. - FLR - close: 75.63 change: +0.56

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:
02/17 update: I believe we have missed the entry point on FLR. The stock never provided a big enough dip to buy. The trend is still bullish but we're out of time. FLR is due to report earnings on Feb. 23rd next week. I would put this stock back on your radar screen to see what happens after the post-earnings dust settles. Maybe FLR will see some profit taking and we can re-evaluate buying calls on a dip.

Our trade never opened! (no chart today)

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