Editor's Note:

Stocks posted a three-day bounce but have yet to break the four-week bearish trend of lower highs and lower lows. We're approaching the month of June, which has been down the last several years, so history is against the bulls here.

-James

Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 337.41 change: +2.41

Stop Loss: 317.00
Target(s): 339.00, 359.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see trigger

Comments:
05/28 update: AAPL spent the week slowly drifting higher after Monday's drop to short-term support near $330. Now AAPL is nearing resistance at $340 again. The stock will also face several key moving averages, which could act as resistance. Currently our plan is to buy calls on a dip near support at $320, an area bolstered by the simple 200-dma. However, we might switch to a breakout entry point if we see rise past the $345 level of resistance.

Earlier Comments:
We have a buy-the-dip entry point at $321.00 with a stop loss at $317. We might switch to a breakout entry point if AAPL can rally past $345.

Buy-the-Dip Trigger @ $321.00

- Suggested Positions -

Buy the June $330 calls (AAPL1118F330)

- or -

Buy the July $330 calls (AAPL1116G330)

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


Alliance Data Systems - ADS - close: 93.72 change: +1.71

Stop Loss: 87.99
Target(s): 96.50, 99.75
Current Option Gain/Loss: +12.5% & + 8.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/28 update: As expected ADS continued to rally on Friday. Shares opened at $92.23 and then climbed past $94 intraday. Shares settled up +1.8%. You could argue ADS is short-term overbought here. Readers might want to consider waiting for a dip near $92 before considering new positions. I'm expecting a short squeeze to lift ADS toward its highs and beyond.

Earlier Comments:
This is an aggressive trade. We want to keep our position size small to limit our risk. FYI: The most recent data listed short interest at more than 26% of the float. This elevated short interest significantly raises the risk of a short squeeze.

- Suggested (SMALL) Positions -

Long June $95 call (ADS1118F95) Entry @ $1.20

- or -

Long July $95 call (ADS1116G95) Entry @ $2.45

chart:

Entry on May 27th at $92.23
Earnings Date 07/18/11 (unconfirmed)
Average Daily Volume = 999 thousand
Listed on May 26th, 2011


Boeing Co - BA - close: 76.99 change: +0.33

Stop Loss: 71.45
Target(s): 79.75, 84.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
05/28 update: BA spiked higher on Friday morning. Yet shares seemed to struggle after it filled the gap down from Monday morning. Shares were unable to close over their 30-dma, a level of resistance that's lasted all week long. If we see another bounce from the $75 level or the 50-dma then we'll reconsider our entry strategy. For now the plan is to buy calls on a dip at $74.00. If triggered our targets are $79.75 and $84.50. The Point & Figure chart for BA is bullish with an $87 target.

Trigger @ $74.00

- Suggested Positions -

Buy the June $80 call (BA1118F80) current ask $0.80

chart:

Entry on May xxth at $ xx.xx
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 4.8 million
Listed on May 17th, 2011


Baker Hughes Inc. - BHI - close: 73.46 change: -1.04

Stop Loss: 68.40
Target(s): 79.00
Current Option Gain/Loss: -15.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/28 update: Oil stocks lost some steam on Friday. BHI saw its rally fail at the $75.00 level. Look for a dip back toward the $72.00 or $71.00 levels, which we can use as a new entry point to buy calls. Our first target is $79.00. We want to keep our position size small to limit our risk. Oil and oil stocks can be a volatile bunch.

-Small Positions - Suggested Positions -

Long June $75 call (BHI1118F75) Entry @ $1.61

chart:

Entry on May 26th at $73.34
Earnings Date 08/03/11 (unconfirmed)
Average Daily Volume = 2.2 million
Listed on May 25th, 2011


Deere & Co - DE - close: 85.74 change: +0.80

Stop Loss: 82.20
Target(s): 89.75
Current Option Gain/Loss: +11.1% & +12.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/28 update: DE extended its bounce to four days in a row. Shares did manage to close above short-term resistance at its 10-dma and above the $85 level on Friday. The stock continues to look a little oversold here. We're planning to exit on a bounce near resistance at $90. If you're looking for a new entry point consider waiting for another bounce from the $84 level.

Earlier Comments:
Remember, this is a higher-risk, aggressive trade as we look for an oversold bounce from technical support at the 200-dma. Our exit target is $89.75. More nimble traders could aim for the 100-dma or 50-dma overhead. I would keep our position size small to limit our risk.

-Small Positions Only-

Long June $90 call (DE1118F90) Entry @ $0.45

- or -

Long June $87.50 call (DE1118F87.5) Entry @ $1.01

chart:

Entry on May 26th at $84.61
Earnings Date 08/17/11 (unconfirmed)
Average Daily Volume = 5.3 million
Listed on May 25th, 2011


Express Scripts - ESRX - close: 58.48 change: -1.05

Stop Loss: 56.75
Target(s): 64.00, 68.50
Current Option Gain/Loss: -71.2% & -37.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/28 update: There was big news in the pharmacy benefits industry today. CVS Caremark (CVS) won the Blue Cross Blue Shield contract from Medco Health Solutions (MHS). MHS plunged -9% on the news. CVS rallied +1.7%. ESRX initially rallied on the news but quickly failed and closed the day down -1.7%. Thus Friday's session has produced a big bearish engulfing candlestick pattern for ESRX with strong volume.

More conservative traders may want to exit early now but I still see likely support in the $58-57 area. We're going to wait and see if ESRX has any follow through on Tuesday before we consider an early exit. I am not suggesting new positions at this time.

- Suggested Positions -

Long the June $60 call (ESRX1118F60) Entry @ $1.53

- or -

Long the August $60 call (ESRX1120H60) Entry @ 3.15

chart:

Entry on May 10th at $59.21
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 4.6 million
Listed on May 9th, 2011


Fossil Inc. - FOSL - close: 105.28 change: +0.13

Stop Loss: 99.39
Target(s): 109.75, 114.00
Current Option Gain/Loss: -16.6% & -11.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/28 update: The Friday before a long holiday weekend proved to be a quiet one for FOSL. Shares churned sideways near $105. I don't see any changes from my Thursday night comments. I'm suggesting bullish positions now or as an alternative consider waiting for a dip into the $103-102 area before starting positions. We do want to keep our position size small to limit our risk.

- Suggested (SMALL) Positions -

Long June $110 call (FOSL1118F110) Entry @ $1.38

- or -

Long July $110 call (FOSL1116G110) Entry @ $3.00

chart:

Entry on May 27th at $104.96
Earnings Date 08/09/11 (unconfirmed)
Average Daily Volume = 842 thousand
Listed on May 26th, 2011


Forest Labs Inc. - FRX - close: 35.78 change: +0.27

Stop Loss: 33.75
Target(s): 39.00, 42.50
Current Option Gain/Loss: -46.1% & -17.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/28 update: FRX has continued to climb ever since its intraday lows on Monday. Shares end the week at new two-year highs. If you're looking for a new entry point I'd wait for a dip near $35 or the 10-dma. I am raising our stop loss to $33.75. Our target is the $39.00 level and the $42.50 mark but I'm starting to worry that FRX just doesn't move fast enough. If you do launch new positions I'd buy the July or August calls.

- Suggested Positions -

Long the June $37 call (FRX1118F37) Entry @ $0.65

- or -

Long the August $37 call (FRX1120H37) Entry @ $1.40

05/28 New stop loss @ 33.75

chart:

Entry on May 20th at $35.29
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 3.2 million
Listed on May 19th, 2011


Goldman Sachs - GS - close: 138.66 change: +2.75

Stop Loss: 128.45
Target(s): 134.00, 137.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
05/28 update: The bounce in financial stocks actually started to gain some traction on Friday. GS outperformed with a +2.0% bounce. If we see GS close over the $140 level we'll re-evaluate this trade. At the moment our plan is to buy calls on a dip at $130.25. The 2010 lows are near $130. I am suggesting we launch very small bullish positions on a dip at $130.25. This is a very aggressive, higher-risk trade.

Trigger @ 130.25 (very small positions)

- Suggested Positions -

buy the June $135 call (GS1118F135)

chart:

Entry on May xxth at $ xx.xx
Earnings Date 07/19/11 (unconfirmed)
Average Daily Volume = 6.5 million
Listed on May 21st, 2011


Jos. A Bank Clothiers - JOSB - close: 56.01 change: +0.56

Stop Loss: 53.75
Target(s): 59.50
Current Option Gain/Loss: +40.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/28 update: We could be running out of time on this trade. JOSB is expected to report earnings on June 2nd although this is an unconfirmed earnings date. That only gives us a couple more trading days. I am raising our stop loss to $53.75 and I'm not suggesting new positions at this time.

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

- Suggested Positions -

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

05/28 new stop loss @ 53.75
05/18 new stop loss @ 52.90
05/14 Exit the May calls. May $55 call @ 0.90 (+28.5%)
05/12 New stop loss at $51.75

chart:

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


Union Pacific - UNP - close: 103.53 change: +0.29

Stop Loss: 98.95
Target(s): 109.00, 114.00
Current Option Gain/Loss: -22.8%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/28 update: It was a low-volume Friday ahead of a long holiday weekend. I am not surprised to see UNP rally to resistance at $104 and stall. Readers might want to wait for a close above the $104 level before considering new bullish positions.

- Suggested Positions -

Long the June $105 call (UNP1118F105) Entry @ $1.62

chart:

Entry on May 9th at $102.19
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on May 7th, 2011


United Technologies Corp. - UTX - close: 86.33 change: -0.06

Stop Loss: 83.80
Target(s): 89.50, 94.75
Current Option Gain/Loss: -62.5%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/28 update: There was almost no change in UTX on Friday. I am growing more concerned about this trade. UTX has struggled with resistance in the $86.50-86.75 area all week long. At this point I'd rather see another bounce from $85 or a rise past $87.50 before considering new bullish positions.

- Suggested Positions -

Long the June $90 calls (UTX1118F90) Entry @ 0.40

05/26 New stop loss @ 83.80

chart:

Entry on May 23rd at $86.41
Earnings Date 04/20/11
Average Daily Volume = 3.7 million
Listed on April 27th, 2011


Wynn Resorts Ltd. - WYNN - close: 146.40 change: +1.06

Stop Loss: 146.40
Target(s): 159.75, 169.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
05/28 update: WYNN is still inching higher. The stock is now approaching resistance near in the $150-152 area. Currently our plan is to buy calls at $152.00.

Trigger @ $152.00

- Suggested Positions -

Buy the June $160 calls (WYNN1118F160)

- or -

Buy the July $160 calls (WYNN1116G160)

chart:

Entry on May xxth at $ xx.xx
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 2.1 million
Listed on May 11th, 2011


PUT Play Updates

DaVita Inc. - DVA - close: 83.62 change: -0.32

Stop Loss: 85.35
Target(s): 80.50, 77.00
Current Option Gain/Loss: -18.7% & -58.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/28 update: Wow! DVA flat lined most of Friday. There was virtually no trading action. I remain cautious here. Readers may want to wait for a new failed rally type of move under the $85 level and/or its 50-dma before initiating new bearish positions.

Our first target is $80.50 (near the 100-dma). The $80 area will probably be short-term support so we can expect a bounce there. Our secondary target is $77.00.

We want to keep our position size small to limit our risk. The wide spreads on the June $80 puts definitely put us at a disadvantage.

(small positions) - Suggested Positions -

Long Jun $85 PUT (DVA1118R85) Entry @ $2.40

- or -

Long Jun $80 PUT (DVA1118R80) Entry @ $0.60

chart:

Entry on May 25th at $83.30
Earnings Date 08/02/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on May 24th, 2011


Perrigo Co. - PRGO - close: 85.00 change: +0.29

Stop Loss: 86.15
Target(s): 78.00
Current Option Gain/Loss: -75.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/28 update: PRGO popped higher at the open on Friday and then spent the rest of the day drifting sideways. The high was $85.36. I have been suggesting that readers watch for resistance in the $85.50-86.00 area. Wait for this bounce to reverse before considering new bearish positions. Our plan was to keep our position size small to limit our risk. Our first target is the $78.00 level (or the 100-dma).

Small Positions!

Long June $80 PUT (PRGO1118R80) Entry @ $1.00

05/25 Gap down entry @ 81.74

chart:

Entry on May 25th at $81.74
Earnings Date 08/11/11 (unconfirmed)
Average Daily Volume = 654 thousand
Listed on May 24th, 2011


Pioneer Natural Resources - PXD - close: 91.14 change: +0.02

Stop Loss: 93.05
Target(s): 85.25
Current Option Gain/Loss: -37.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/28 update: PXD has been stuck in the $90-92 zone for the last four days in a row. I remain concerned about our put play. The strength in oil stocks stalled on Friday but this past week has been bullish for the group. PXD looks like it wants to rally from this sideways consolidation. However, the stock has been underperforming its peers the last few days. I'm not ready to abandon ship just yet but I'm not suggesting new positions. If we see PXD close over $92.00 I'll probably close this trade early.

Earlier Comments:
We want to keep our position size small to limit our risk because oil and oil stocks have been increasingly volatile lately. Our target is $85.25. FYI: The Point & Figure chart for PXD is bearish with a $72 target.

-Small Bearish-

Long the June $90 PUT (PXD1118R90) Entry @ $3.30

05/25 Energy stocks look ready to rally. Consider an early exit from this trade now. New stop loss @ 93.05.

chart:

Entry on May 16th at $91.64
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on May 14th, 2011


Roper Industries - ROP - close: 82.99 change: +0.62

Stop Loss: 84.05
Target(s): 78.00, 75.50
Current Option Gain/Loss: -45.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/28 update: ROP's bounce from the $80 level is now three days old. Friday saw shares close above the 100-dma and the 10-dma. The action this past week has created what looks like a potential bullish reversal on the weekly chart. If the market continues to rebound there is a good chance ROP could hit our stop this coming week. In the meantime, ROP still has a bearish trend of lower highs and lowers but this trend could change soon. ROP should have some overhead resistance at $84.00 and at its 50-dma. I am not suggesting new positions at this time.

Earlier Comments:
Our targets are $78.00 and $75.50. The $80 level might offer a little support so don't be surprised to see a bounce. I would keep our position size small to limit our risk.

(small positions) Suggested Positions -

Long the June $80 PUT (ROP1118R80) Entry @ $1.20

chart:

Entry on May 23rd at $81.75
Earnings Date 07/26/11 (unconfirmed)
Average Daily Volume = 570 thousand
Listed on May 21st, 2011