Editor's Note:

Friday's oversold bounce across the market faded lower but stocks ended the day generally higher.

-James

Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 346.66 change: -0.09

Stop Loss: 339.40
Target(s): 374.00, 395.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see trigger

Comments:
05/07 update: AAPL has been relatively immune to the market's sell-off this past week. However, the stock has developed a new trend of lower highs. I am adjusting our strategy on AAPL. Instead of waiting for a dip near $340 we are switching to a breakout entry point. I am suggesting we buy calls on AAPL at $352.50. There is possible resistance near $355 and $360 but if AAPL can breakout from this two-week consolidation I suspect it will launch into a new leg higher. We'll adjust our upside targets to $374.00 and $395.00. Our stop loss will change to $339.40.

In summary, instead of a buy-the-dip entry at $341.00 we want to use a breakout entry at $352.50.

Buy-the-breakout Trigger @ $352.50

- Suggested Positions -

Buy the June $370 calls (AAPL1118F370)

- or -

Buy the July $380 calls (AAPL1116G380)

chart:

Entry on May xxth at $ xx.xx
Earnings Date 07/20/11 (unconfirmed)
Average Daily Volume = 16.6 million
Listed on May 2nd, 2011


Fastenal Co. - FAST - close: 66.36 change: +0.44

Stop Loss: 63.75
Target(s): 69.50, 74.00
Current Option Gain/Loss: -13.6% & -20.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/07 update: FAST held up pretty well this past week. After consolidating sideways on either side of $66 and finding support near its 30-dma the stock looks poised to rally higher. I would buy calls here at current levels. Cautious traders might want to use a higher stop loss near $65.00 instead of our stop at $63.75.

Don't forget that May options expire in two weeks.

Our targets are $69.50 and $74.00. We should expect the $70.00 area to offer some resistance and FAST will likely pull back on the first test of $70.

FYI: FAST is due to split 2-for-1 on May 23rd. Plus, the Point & Figure chart for FAST is bullish with a $72 target.

- Suggested Positions -

Long the May $65.00 calls (FAST1121E65) Entry @ $2.20

- or -

Long the June $70.00 calls (FAST1118F70) Entry @ $0.75

chart:

Entry on April 26th at $66.25
Earnings Date 04/12/11 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on April 23rd, 2011


Google Inc. - GOOG - close: 535.30 change: +1.03

Stop Loss: 518.75
Target(s): 549.00, 558.00
Current Option Gain/Loss: -25.0%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
05/07 update: GOOG garnered some bullish analyst comments this morning and a $626 price target. Unfortunately the stock's early morning strength and rally over $540 faded. GOOG essentially spent the week bouncing around the $530-540 zone, which isn't bad considering the sell-off across the market. I remain very wary here and hesitant to launch new positions. We only have two weeks left before May options expire and we need to see GOOG make some progress pretty quickly or our May $550 calls will expire worthless. Currently our targets are at $549.00 and $558.00.

Prior Comments:
This is a very aggressive, higher-risk trade. Keep positions small.

(Very Small Positions) Suggested Positions:

Long the May $550 call (GOOG1121E550) Entry @ $3.00

04/30 Adjusted exit strategy. First target at $549.00. Final target at $558.00.

chart:

Entry on April 25th at $525.25
Earnings Date 04/14/11 (confirmed)
Average Daily Volume = 3.3 million
Listed on April 23rd, 2011


International Business Machines - IBM - close: 168.89 change: +1.18

Stop Loss: 164.75
Target(s): 174.00, 179.50
Current Option Gain/Loss: + 23.0%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
05/07 update: The bounce in IBM (+0.7%) wasn't bad but shares struggled at the $170 level. Overall I don't see any changes from my prior comments. This past week's dip toward the $168-167 area is an entry point to buy the dip and I would still consider new positions now. Our targets are $174.00 and $179.50. FYI: The Point & Figure chart for IBM is bullish with a $208 target.

- Suggested Positions -

Long the June $170 calls (IBM1118F170) Entry @ $2.60

chart:

Entry on May 5th at $167.50
Earnings Date 04/19/11
Average Daily Volume = 4.8 million
Listed on April 27th, 2011


Intuit - INTU - close: 53.98 change: -0.57

Stop Loss: 53.45
Target(s): 58.75
Current Option Gain/Loss: -62.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/07 update: Readers may want to exit early. Nothing has changed from my Thursday comments on INTU. While the stock didn't see that big of a decline last week the tone has turned bearish and the stock is testing the $53.50 area. If there is any follow through lower on Monday we will likely get stopped out at $53.45. I am not suggesting new positions at this time. We do not want to hold over the mid May earnings date.

I would keep our position size small to limit our risk (1/2 or less than your normal trade size).

- Suggested Positions -

Long the May $55.00 call (INTU1121E55) Entry @ $2.40

04/30 Adjusted target to $58.75

chart:

Entry on April 20th at $55.25
Earnings Date 05/19/11 (unconfirmed)
Average Daily Volume = 2.4 million
Listed on April 14th, 2011


Jos. A Bank Clothiers - JOSB - close: 52.03 change: +0.00

Stop Loss: 49.95
Target(s): 59.50
Current Option Gain/Loss: - 71.4% and -34.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/07 update: JOSB closed unchanged on Friday near the $52 level. The stock fared better than most last week but JOSB has short-term resistance near $53.00. A breakout past this level might spark a short squeeze. Yet I'm reluctant to launch positions right here. I'd look for another bounce in the $50.50-51.00 zone as an entry point or a rally past its high near $53.40 as an entry point. Don't forget that May calls expire in two weeks.

FYI: The most recent data listed short interest in JOSB at more than 21% of the small 27.3 million-share float. Together the increase the risk of a short squeeze.

- Suggested Positions -

Long the May $55 calls (JOSB1121E55) entry @ $0.70

- or -

Long the June $55 calls (JOSB1118F55) entry @ $1.75

chart:

Entry on April 26th at $52.75
Earnings Date 06/02/11 (unconfirmed)
Average Daily Volume = 510 thousand
Listed on April 25th, 2011


O'Reilly Automotive - ORLY - close: 59.70 change: -0.17

Stop Loss: 57.75
Target(s): 62.75, 67.25
Current Option Gain/Loss: -28.5% & -12.1%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/07 update: ORLY tried to rally again and once again it failed. Even though ORLY hit another new relative high on Friday morning the move is short-term bearish for the stock. I would expect another dip to $59.00, possibly $58.00. Wait for the dip before considering new bullish positions. Look for additional short-term support near the rising 10-dma. The plan was to keep our position size small to limit our risk.

- Suggested (Small) Positions -

Long the May $60 calls (ORLY1121E60) Entry @ $1.05

- or -

Long the June $60 calls (ORLY1118F60) Entry @ $1.65

chart:

Entry on May 4th at $60.15
Earnings Date 04/27/11
Average Daily Volume = 1.1 million
Listed on April 30th, 2011


Powershares QQQ ETF - QQQ - close: 58.47 change: +0.19

Stop Loss: 56.45
Target(s): 64.00
Current Option Gain/Loss: - 8.4% & - 7.0%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
05/07 update: The QQQ posted a gain on Friday but the pull back from its morning high is worrisome and does not inspire a lot of confidence. Bigger picture I'm still bullish on the NASDAQ-100 index but I'm wondering if the QQQs will test the $57.50-57.00 zone before making any significant gains. I would still launch new bullish positions on dips near $58.00 but more conservative traders could wait and hope for a dip a little bit lower. Our upside target is $64.00. The Qs don't move very fast so we'll have to be patient.

- Suggested Positions -

Long the June $60 calls (QQQ1118F60) Entry @ 0.59

- or -

Long the July $60 calls (QQQ1116G60) Entry @ 1.00

chart:

Entry on May 4th at $58.15
Earnings Date --/--/--
Average Daily Volume = 50 million
Listed on April 30th, 2011


Ross Stores Inc. - ROST - close: 78.19 change: -0.36

Stop Loss: 74.75
Target(s): 77.25, 79.90
Current Option Gain/Loss: +157.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/07 update: ROST tagged a new all-time high at $79.63 on Friday morning and the drifted back toward the $78 level. The stock remains short-term overbought and probably due for more profit taking. I am not suggesting new positions at this time. More conservative traders may want to take profits now and exit completely. Our final target is $79.90. We do not want to hold over the mid May earnings report.

- Suggested Positions -

Long the May $72.50 calls (ROST1121E72.5) Entry @ $2.25

05/05 New stop loss @ 74.75. Adjusted 2nd target to $79.90 from $79.50.
05/05 1st Target Hit @ 77.25. Option @ $5.00 (+122.2%)

chart:

Entry on April 28th at $73.55
Earnings Date 05/19/11 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on April 23rd, 2011


ProShares Ultra(long) S&P 500 - SSO - close: 54.46 change: +0.44

Stop Loss: 52.75
Target(s): 59.00
Current Option Gain/Loss: -10.6% and -11.0%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
05/07 update: Friday produced an oversold bounce for the markets but the fade lower into the weekend does not inspire confidence. Overall nothing has changed for us. I would still consider bullish positions now at current levels. Or nimble traders could try and jump in on a dip near 454.00 or the $53.00 level, which should be underpinned by technical support with the 50-dma. The SSO is twice as volatile as the market so we want to keep our position size small. Our multi-week target is the $59.00 level.

Small Positions Only - Suggested Positions -

Long the June $56 call (SSO1118F56) Entry @ $1.60

- or -

Long the September $60 call (SSO1117I60) Entry @ $2.00

chart:

Entry on May 5th at $54.39
Earnings Date --/--/--
Average Daily Volume = 11.3 million
Listed on May 4th, 2011


United Technologies Corp. - UTX - close: 89.21 change: +0.68

Stop Loss: 83.49
Target(s): 89.50, 94.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see trigger

Comments:
05/07 update: UTX has seen above average volume the last three days, which might suggest distribution (a.k.a. selling) in this stock. I'm unwilling to chases it at these levels. Currently our plan is to buy calls on a dip at $86.50. If triggered at $86.50 we'll use a stop loss at $83.49. Our targets are $89.50 and $94.00.

Buy-the-dip Trigger @ $86.50

- Suggested Positions -

Buy the June $90 calls (UTX1118F90)

chart:

Entry on April xxth at $ xx.xx
Earnings Date 04/20/11
Average Daily Volume = 3.7 million
Listed on April 27th, 2011


PUT Play Updates

Molycorp - MCP - close: 68.93 change: +0.47

Stop Loss: 76.15
Target(s): 63.50
Current Option Gain/Loss: -25.0%
Time Frame: only 4 days
New Positions: See below.

Comments:
05/07 update: Like most of the market on Friday, shares of MCP were up in the morning and faded lower into the closing bell. Shares seem to be holding support at their 30-dma. We only have a couple of days left. We will exit on May 10th at the close to avoid holding over earnings.

Small Positions Only!

Long the May $65 put (MCP1121Q65) Entry @ $1.80

chart:

Entry on May 5th at $70.05
Earnings Date 05/10/11 (confirmed)
Average Daily Volume = 7.3 million
Listed on May 4th, 2011


Panera Bread Co. - PNRA - close: 119.39 change: -0.86

Stop Loss: 123.25
Target(s): 110.50, 102.50
Current Option Gain/Loss: -18.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/07 update: Entry point alert! PNRA, for the second day in a row, has failed near the $122.00-122.50 area. Friday's failed rally is a new entry point to buy puts. However, I would keep position sizes small. I suspect the market is poised to bounce this coming week. Our targets are the 100-dma (currently near $112.00, we'll take profits at $112.50) and the $102.50 level.

Suggested Positions

Long the June $110 PUTS (PNRA1118R110) Entry @ $1.60

chart:

Entry on May 4th at $119.00
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 647 thousand
Listed on May 3rd, 2011