Editor's Note:

The stock market has been very resilient. The jobs number on Friday morning was a huge miss. Yet stocks rebounded off their morning lows. It could have been significantly worse. The lack of selling is bullish.

We are going to take a more aggressive approach to new plays and adjust some triggers on the current play list. Stocks remain overbought so readers will want to strongly consider keeping your position size small to limit risk. Earnings season is about to start and we could see a spike in volatility.

-James

Current Portfolio:


CALL Play Updates

Caterpillar - CAT - close: 110.41 change: -1.22

Stop Loss: 105.95
Target(s): 114.00
Current Option Gain/Loss: Unopened
Time Frame: Until the earnings report
New Positions: Yes, see trigger

Comments:
07/09 update: I would really prefer to buy CAT on a dip near support at $105 but the stock may not get that low. I am suggesting a new buy-the-dip trigger at $107.50 with a tight stop loss at $105.95. If we get stopped out we can try again on a bounce from $105.00. Keep positions small! I am concerned that the action in CAT over the last three days with the gap up and gap down on Thursday and Friday actually looks like a bearish reversal pattern. Cautious traders may want to hold off and wait for the dip to $105 instead.

Don't forget that we do not want to hold over the July 22nd earnings report.

Trigger @ 107.50

- Suggested Positions -

Buy the Aug. $110 call (CAT11H110)

07/09 adjusted trigger to $107.50, stop to $105.95, target to $114.00

chart:

Entry on July xx at $ xx.xx
Earnings Date 07/22/11 (confirmed)
Average Daily Volume = 8.4 million
Listed on July 2, 2011


Cerner Corp. - CERN - close: 64.06 change: -0.23

Stop Loss: 61.45
Target(s): 64.75
Current Option Gain/Loss: +125.0% & +78.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/09 update: Shares of CERN held up very well on Friday. If the markets are positive on Monday I would not be surprised to see CERN hit our final target at $64.75. More aggressive traders may want to aim higher. Shares remain short-term overbought here. Broken resistance in the $62.00 area should be new support. I am raising our stop loss to $61.45, keeping the stop under its 10-dma.

It was our plan to exit our July calls on Friday at the closing bell.

Earlier Comments:
We do not want to hold over the late July earnings report.

- Suggested (small) Positions -

July $60 call (CERN1116G60) Entry @ $1.60, exit $3.60 (+125.0%)

- or -

Long Aug. $62.50 call (CERN1120H62.5) Entry @ $1.60

07/09 new stop loss @ 61.45
07/08 Planned exit. July calls @ +125.0%
07/07 new stop loss @ 60.90
07/07 plan on exiting July calls on Friday at the close.
07/02 New stop loss @ 58.75
07/02 Cautious traders may want to exit the July calls now for a gain

chart:

Entry on June 29 at $60.76
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 624 thousand
Listed on June 28, 2011


Joy Global - JOYG - close: 97.25 change: -1.66

Stop Loss: 94.75
Target(s): 102.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see trigger

Comments:
07/09 update: We are taking a more aggressive approach to entries on JOYG. We're raising our buy-the-dip entry point to $96.00. More conservative traders could hold out for a dip closer to $95.00 instead. We will adjust our stop loss to $94.75. Our upside target is $102.00. I would keep positions small.

Trigger @ $96.00 (Small Positions)

- Suggested Positions - Buy the Aug $100 call (JOYG1120H100)

07/09 Adjusted trigger to $96.00, stop to $94.75, target to $102.00, and option strike to Aug. $100 call.

chart:

Entry on June xx at $ xx.xx
Earnings Date 08/31/11 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on June 30, 2011


Norfolk Southern - NSC - close: 75.68 change: -1.31

Stop Loss: 73.40
Target(s): 79.75
Current Option Gain/Loss: Unopened
Time Frame: up until its earnings report.
New Positions: Yes, see trigger

Comments:
07/09 update: NSC is still trading near its all-time highs. Aggressive traders may want to buy calls now. I am keeping our buy-the-dip entry point at $74.50 but we're raising our stop loss to $73.40. More conservative traders could wait for a dip closer to $74.00 instead as your entry point. We do want to keep our position size small. Our target is $79.75 but we do not want to hold over the late July earnings report.

Trigger @ $74.50

- Suggested (SMALL) Positions -

Buy the Aug. $75 call (NSC11H75)

07/09 new stop loss @ 73.40. Small positions!
07/06 adjusted entry trigger to $74.50 and stop to 71.75

chart:

Entry on July xx at $ xx.xx
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on July 2, 2011


CLOSED BULLISH PLAYS

Sociedad Quimica Minera de Chile - SQM - close: 65.63 change: -0.17

Stop Loss: 59.75
Target(s): 67.25, 69.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
07/09 update: SQM saw a dip to $63.75 before paring its losses on Friday. I still believe that SQM offers opportunity on a dip in the $63-62 area but we are replacing it with a new trade in AGU tonight. See the AGU call trade in the new plays section.

Our trade in SQM was never opened.

Trade Never Opened.

chart:

Entry on July xx at $ xx.xx
Earnings Date 08/30/11 (unconfirmed)
Average Daily Volume = 558 thousand
Listed on July 6, 2011


Teradata Corp. - TDC - close: 61.17 change: -1.16

Stop Loss: 54.90
Target(s): 62.00, 64.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
07/09 update: The up trend in TDC is very alluring. Shares gave back -1.8% on Friday after three weeks of gains. We seriously consider buying this dip but eventually agreed that TDC is just too overbought. The safer trade is to wait for a pull back closer to its longer-term up trend.

We are temporarily removing TDC as a candidate and will keep it on the watch list for a dip into the $57 area.

Our Trade Never Opened.

07/09 removed from the play list. Wait for a dip.
07/05 new trigger @ 58.50, new targets 62.00 and 64.50
07/02 New trigger @ 57.55, new stop @ 54.90, new targets @ 61.00 & 64.00

chart:

Entry on June xx at $ xx.xx
Earnings Date 08/04/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on June 25, 2011


Toyota Motor Corp. - TM - close: 84.40 change: -0.24

Stop Loss: 79.40
Target(s): 85.75, 89.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
07/09 update: TM is still holding up reasonably well. I am replacing TM with new candidates this week. I still believe that Toyota offers potential. Most of the bad news is probably already priced into this stock. I'd keep it on your watch list and look for a dip or bounce in the $82 area.

Our Trade Never Opened.

chart:

Entry on July xx at $ xx.xx
Earnings Date 08/01/11 (unconfirmed)
Average Daily Volume = 539 thousand
Listed on July 05, 2011


CLOSED BEARISH PLAYS

Scotts Miracle Gro Co. - SMG - close: 51.85 change: +0.08

Stop Loss: 52.51
Target(s): 47.50, 45.50
Current Option Gain/Loss: -41.6%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
07/09 update: I am giving up on SMG. There has been no follow through on Tuesday's failed rally at $52.00. Instead shares have been coiling for a breakout above resistance at $52 and SMG actually posted a gain on Friday. We don't need a put play with this kind of relative strength.

I am suggesting an early exit immediately. Our plan was to keep positions small to limit our risk.

- Suggested (small) Positions -

Aug. $50 PUT (SMG1120T50) Entry @ $1.80, exit $1.05 (-41.6%)

07/09 exit early. option @ $1.05 (-41.6%)

chart:

Entry on July 6 at $50.20
Earnings Date 08/02/11 (confirmed)
Average Daily Volume = 991 thousand
Listed on July 5, 2011