Editor's Note:

The S&P 500 index accelerated lower on Wednesday and ended the session under its December 31st close at 1,257. The index did test round-number support near the 1,250 level. If this level does not hold then I am looking for the S&P 500 to drop toward the 1227-1225 zone, which would be a normal 38.2% Fibonacci retracement of the rally from late August through February. This area (near 1225) also lines up nicely with the old highs from November 2010 and April 2010. Broken resistance typically offers some support.

The 1275 level and 1300 area is now overhead resistance and I would expect traders to sell the first bounce at these levels. If you're looking for a bearish entry point then consider waiting for the next failed rally. Otherwise, I would be waiting for that dip near the 1225 zone as our next buy the dip entry point. FYI: If you were wondering a -10% correction from the 1344 high would be 1209. We are currently at a -6.5% correction in the S&P 500.

Don't forget - March options expire after Friday!

-James

Current Portfolio:


CALL Play Updates

Cerner Corp. - CERN - close: 101.07 change: -0.43

Stop Loss: 99.45
Target(s): 104.85, 109.00
Current Option Gain/Loss: -40.7%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/16 update: CERN is still holding support at the $100 level. Shares bounced from this round-number, psychological support this morning. While this "strength" is encouraging if the market continues to melt lower then we should expect CERN to follow it. We have a stop loss at $99.45. I am not suggesting new bullish positions at this time.

Our second and final target is $109.00.

FYI: I want to point out that the most recent data (as of Feb. 15th) listed short interest at 13.9% of CERN's 70-million share float. That definitely seems like a high amount of shorts and fuel for a short squeeze. Plus, the Point & Figure chart for CERN is bullish with a $115 target and what appears to be a relatively fresh quadruple top breakout buy signal.

- Suggested Positions -

Long the April $105 calls (CERN1116D105) Entry @ $2.70

03/12 New stop loss @ 99.45
03/04 1st Target Hit @ $104.85, Option @ $3.15 (+16.6%)

Entry on March 3rd at $102.62
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 600 thousand
Listed on March 2nd, 2010


Capital One Financial - COF - close: 50.20 change: -0.90

Stop Loss: 47.75
Target(s): 54.75, 59.00
Current Option Gain/Loss: -10.6% and - 7.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/16 update: The banking indices soured today with the BIX down -2.4% and the BKX down -1.6%. Shares of COF opened at $51.08 and faded lower toward broken resistance and what should be new support at $50.00. Technically this looks like a new bullish entry point, to buy calls on COF near support. However, with the stock market in breakdown mode readers may want to hesitate on launching new bullish positions. Our targets are $54.75 and $59.00.

- Suggested Positions -

Long the April $50 call (COF1116D50) Entry @ $2.63

- or -

Long the April $55 call (COF1116D55) Entry @ $0.65

Entry on March 16th at $51.08
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 4.4 million
Listed on March 15th, 2010


Fossil, Inc. - FOSL - close: 81.77 change: -0.78

Stop Loss: 79.40
Target(s): 82.00, 88.00
Current Option Gain/Loss: + 39.2%, and + 92.3%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/16 update: FOSL spiked higher this morning but the rally failed at its recent resistance near $85.00. The action is short-term bearish. We are almost out of time on our March calls so I am suggesting we exit the rest of our March calls immediately (tomorrow morning). I am not suggesting new positions at this time.

- Suggested Positions -

Long the March $80 calls (FOSL1119C80) Entry @ $1.40

- or -

Long the April $80 calls (FOSL1116D80) Entry @ $2.60

03/16 Exit the March calls ASAP (morning of 3/17) currently +39%
03/09 New stop loss @ 79.40
03/05 New stop loss @ 76.75
03/05 1st Target Hit @ $82.00, Options @ +142% and +92.3%
03/03 new stop loss @ 74.75

Entry on February 28th at $76.75
Earnings Date 05/11/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 26th, 2010


Jones Lang Lasalle Inc. - JLL - close: 95.81 change: -0.60

Stop Loss: 93.85
Target(s): 102.50, 109.00
Current Option Gain/Loss: -88.5%, and -16.1%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/16 update: Wednesday was a quiet session for JLL. The stock churned sideways in a narrow range. I am not suggesting new positions at this time but nimble traders could try and buy another dip or bounce near the $94.00 mark. We will plan to exit our March $100 calls at the closing bell tomorrow.

JLL has see a lot more volatility in the last month so let's keep our position size small to reduce our risk. Our targets are $102.50 and $109.00. FYI: March options are likely to be very volatile.

- Suggested Positions - (Small Positions)

Long the March $100 calls (JLL1119C100) Entry @ $1.75

- or -

Long the April $100 calls (JLL1116D100) Entry @ $3.40

03/10 New stop loss @ 93.85

Entry on February 28th at $97.96
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 386 thousand
Listed on February 26th, 2010


Polaris Industries, Inc. - PII - close: 80.50 change: +0.51

Stop Loss: 78.49
Target(s): 84.95, 89.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 7 weeks
New Positions: Yes, see trigger

Comments:
03/16 update: Believe it or not PII continues to show relative strength and posted a gain on Wednesday. Currently we have a trigger to buy calls at $82.25. If triggered I would keep our position size small to limit our exposure. If triggered our targets are $84.95 and $89.00. FYI: The Point & Figure chart for PII is bullish with a $98 target.

Trigger @ 82.25 (Small Positions)

- Suggested Positions -

Buy the April $85 calls (PII1116D85) current ask 1.50

Entry on March xxth at $ xx.xx
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 396 thousand
Listed on March 14th, 2010


Quality Systems Inc. - QSII - close: 78.89 change: -0.84

Stop Loss: 77.90
Target(s): 87.25, 94.50
Current Option Gain/Loss: -44.4%, and -20.5%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/16 update: The situation does not look healthy for QSII. Sahres spent the day in almost a $100 range and look poised to fall further. The next stop is probably the 50-dma near $77.70. Unfortunately that would mean we would get stopped out at $77.90. More aggressive traders might want to lower their stop and place the stop under the 50-dma. I am not suggesting new bullish positions at this time and more conservative traders will want to seriously consider an early exit now.

Prior Comments:
FYI: Readers will be interested to note that the most recent data listed short interest in QSII at almost 28% of the very small 17.5 million-share float. That's definitely a recipe for a short squeeze. Plus, the Point & Figure chart for QSII is bullish with a $119 target.

- Suggested Positions -

Long the April $85 calls (QSII1116D85) Entry @ $1.35

- or -

Long the June $85 calls (QSII1118F85) Entry @ $3.40

Entry on March 4th at $81.44
Earnings Date 05/31/11 (unconfirmed)
Average Daily Volume = 154 thousand
Listed on March 3rd, 2010


PUT Play Updates

Joy Global Inc. - JOYG - close: 88.75 change: -0.81

Stop Loss: 93.75
Target(s): 85.25
Current Option Gain/Loss: +16.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/16 update: JOYG has once again rallied and failed at resistance near $92 and its 50-dma. The action today looks like a new entry point to buy puts on JOYG. More conservative traders may want to move their stop closer to the $92.50 or $92.00 levels. The high today was $92.16.

Our target is $85.25. Aggressive traders could aim for the $84 lows or a drop closer to $80.

- Suggested Positions -

Long the April $85 puts (JOYG1116P85) Entry @ $2.50

03/15 New stop @ 93.75

Entry on March 11th at $90.00
Earnings Date 06/02/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on March 10th, 2010


CLOSED BULLISH PLAYS

Citrix Systems Inc. - CTXS - close: 67.74 change: -1.60

Stop Loss: 67.90
Target(s): 77.00, 79.90
Current Option Gain/Loss: -56.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/16 update: CTXS opened lower but tried to rally. Sadly the rally failed at $70.00 and CTXS hit our stop loss at $67.90 on the afternoon decline.

Prior Comments:
I do consider this a slightly more aggressive trade.

- Small Bullish Positions -

April $75 calls (CTXS1116D75) Entry @ $2.20, Exit @ $0.95 (-56.8%)

03/16 Stopped out. Option @ -56.8%
03/12 New stop loss @ 67.90

chart:

Entry on March 7th at $71.89
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on March 5th, 2010


F5 Networks - FFIV - close: 106.65 change: -4.02

Stop Loss: 107.75
Target(s): 119.75, 124.50
Current Option Gain/Loss: -33.3%, -32.3%
Time Frame: 4 to 5 weeks
New Positions: see trigger

Comments:
03/16 update: Technology stocks were some of the worst performers today. The NASDAQ gave up -1.89%. Yet this morning stocks like FFIV were trying to bounce. Shares opened at $111.22 and rebounded to $112.88 before reversing lower. Our trigger to open small bullish positions was hit at $112.75. Unfortunately the sell-off was too strong. FFIV fell -3.6% and in the process hit our stop loss at $107.75 closing this trade a few hours after it opened.

Prior Comments:
I would consider this an aggressive, higher-risk trade because FFIV can be so volatile. Keep your position size small.

- Suggested Positions -

April $115 call (FFIV1116D115) Entry @ $5.25, Exit @ 3.50 (-33.3%)

- or -

April $120 call (FFIV1116D120) Entry @ $3.25, Exit @ 2.20 (-32.3%)

03/16 Triggered and Stopped same day, Options @ -33.3% and -32.3%

Chart:

Entry on March 16th at $112.75
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume = 2.8 million
Listed on March 15th, 2010


Stericycle Inc. - SRCL - close: 84.81 change: -1.73

Stop Loss: 84.95
Target(s): 94.00, 99.00
Current Option Gain/Loss: -51.6%, and -43.4%
Time Frame: 6 to 8 weeks
New Positions: see trigger

Comments:
03/16 update: SRCL started the day off on a sour note and eventually fell toward the bottom of its recent trading range near $84.00-83.50. Our stop loss was hit at $84.95 prior to lunch time.

Prior comments:
Let's keep our position size small to limit our risk.

- Suggested (SMALL) Positions -

April $90 calls (SRCL1116D90) Entry @ 1.55, Exit @ 0.75 (-51.6%)

- or -

May $95 calls (SRCL1121E95) Entry @ 1.15, Exit @ 0.65 (-43.4%)

03/16 Stopped out. Options @ -51.6% and -43.4%

chart:

Entry on March 14th at $88.25
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 481 thousand
Listed on March 9th, 2010