Editor's Note:

Europe continues to plague the market. This time it was a downgrade of Ireland's debt to junk status. The S&P 500 has broken support near 1320 and 1315 in addition to breaking down under its 50-dma and 100-dma. The next stop looks like support near 1300.

Traders should be defensive here. You may want to exit early any questionable bullish positions.

-James

Current Portfolio:


CALL Play Updates

Agrium Inc. - AGU - close: 87.23 change: +0.15

Stop Loss: 85.90
Target(s): 94.00, 98.00
Current Option Gain/Loss: -14.8% & - 4.2%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
07/12 update: AGU saw an initial surge higher this morning but the rally failed near yesterday's highs. That's a little concerning. AGU was fading lower with the market into the closing bell. I am starting to grow a little concerned here. Readers may want to hesitate on launching new positions. Our exit targets are $94.00 and $98.00. FYI: The Point & Figure chart for AGU is bullish with a $104 target.

- Suggested Positions -

Long AUG $90 call (AGU1120H90) Entry @ $2.70

- or -

Long AUG $95 call (AGU1120H95) Entry @ $0.94

Entry on July 11 at $88.54
Earnings Date 08/03/11 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on July 9, 2011


Caterpillar - CAT - close: 106.93 change: -1.23

Stop Loss: 105.95
Target(s): 114.00
Current Option Gain/Loss: -10.4%
Time Frame: Until the earnings report
New Positions: see below

Comments:
07/12 update: It was a bumpy session for CAT with shares churning sideways in the $106.70-108.50 range. The close under $107 and its 10-dma is short-term bearish. It looks like CAT wants to drop toward support near $105 but the problem is we have a stop at $105.95. Aggressive traders willing to handle the risk may want to lower their stop under the $105 level. I am not suggesting new bullish positions today.

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

- Suggested Positions -

Long Aug. $110 call (CAT11H110) entry @ 3.15

07/11 Triggered @ 107.50.
07/09 adjusted trigger to $107.50, stop to $105.95, target to $114.00

Entry on July 11 at $107.50
Earnings Date 07/22/11 (confirmed)
Average Daily Volume = 8.4 million
Listed on July 2, 2011


Cerner Corp. - CERN - close: 62.29 change: -0.54

Stop Loss: 61.45
Target(s): 64.75
Current Option Gain/Loss: +34.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/12 update: CERN spent the day dancing back and forth across the $62.60 level. Shares eventually sank to their 10-dma. As discussed previously CERN looks headed for the $62 area. More conservative traders may want to exit early. We have a stop loss at $61.45. I would be tempted to buy calls again if we saw a bounce from support near $60 and its 50-dma.

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

- Suggested (small) Positions -

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

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


Diamond Foods Inc. - DMND - close: 76.62 change: +0.29

Stop Loss: 73.25
Target(s): 79.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
07/12 update: DMND saw a brief dip toward $75.00 and then a rebound. Shares managed to close in positive territory. The low today was only $75.19 so we're still waiting for a decline to $75.00 as our entry point. More conservative traders could wait for a dip closer to the 30-dma as their entry point instead.

If triggered our first target is $79.50. FYI: The Point & Figure chart for DMND is bullish with a $90 target.

Trigger @ $75.00

- Suggested Positions -

buy the AUG $75 call (DMND1120H75) -small positions-

Entry on July xx at $ xx.xx
Earnings Date 10/05/11 (unconfirmed)
Average Daily Volume = 237 thousand
Listed on July 11, 2011


Joy Global - JOYG - close: 93.78 change: -0.69

Stop Loss: 91.40
Target(s): 102.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see trigger

Comments:
07/12 update: JOYG spent most of Tuesday ricocheting between the $94 and $96 levels but eventually closed near its lows under $94. Currently our new plan is to buy calls on a dip at $93.00 with a stop at $91.40. More aggressive traders could place their stop under support at $90.00 instead. Our upside target is $102.00. I would keep positions small.

Trigger @ $93.00 (Small Positions)

- Suggested Positions - Buy the Aug $95 call (JOYG1120H95)

07/11 relist this play with a trigger at $93.00 and stop @ 91.40

07/11 JOYG hit our trigger at $96.00 (actually $95.97) and then hit our stop at $94.75. The option opened at $2.32 (ask) and we were stopped out at $2.20 (bid) for a loss of -5.1% We were fortune this loss was not larger!

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

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: 73.92 change: -0.75

Stop Loss: 73.40
Target(s): 79.75
Current Option Gain/Loss: -15.3%
Time Frame: up until its earnings report.
New Positions: see below

Comments:
07/12 update: Uh-oh! Our NSC trade is in trouble. Shares lost another -1% and closed under what should have been support at $74.00. More conservative traders may want to exit immediately. We have a stop loss at $73.40. I am not suggesting new positions at this time.

- Suggested (SMALL) Positions -

Long Aug. $75 call (NSC11H75) Entry @ $1.95

07/12 NSC has broken support at $74. Readers may want to exit early
07/11 triggered @ 74.50
07/09 new stop loss @ 73.40. Small positions!
07/06 adjusted entry trigger to $74.50 and stop to 71.75

Entry on July 11 at $74.50
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on July 2, 2011


Panera Bread Co. - PNRA - close: 130.21 change: +0.09

Stop Loss: 128.35
Target(s): 138.50, 144.00
Current Option Gain/Loss: -16.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/12 update: Shares of PNRA remain buoyant. You could argue that this lack of profit taking is a show of relative strength. The stock is hovering near support at $130. Please note that I am raising our stop loss to $128.35. If we get stopped out we might try again on a dip or bounce near the $125-123 area.

While PNRA is holding up readers may want to hesitate on launching new positions right now. We do not want to hold over the late July earnings report.

Don't forget that PNRA has significant short interest and could see a short squeeze higher. FYI: The most recent data listed short interest at 8.6% of the small 28.2 million-share float.

- Suggested Positions -

Long AUG $135 call (PNRA1120H135) Entry @ $3.40

07/12 new stop loss @ 128.35

Entry on July 11 at $130.61
Earnings Date 07/26/11 (unconfirmed)
Average Daily Volume = 337 thousand
Listed on July 9, 2011


Starbucks Corp. - SBUX - close: 39.57 change: -0.17

Stop Loss: 37.75
Target(s): 44.00
Current Option Gain/Loss: unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
07/12 update: The early morning bounce in SBUX failed. Shares look more and more like they want to correct toward support near $38.00. I am lowering our buy-the-dip entry point from $38.75 to $38.50. We do not want to hold positions over the late July earnings report.

Trigger @ $38.50

- Suggested (Small) Positions -

buy the AUG $40.00 call (SBUX1120H40)

07/12 adjust trigger to $38.50
07/11 Our first attempt at a call play on SBUX did not pan out. Shares opened lower at $39.98 and then hit our relatively tight stop loss at $39.45. The option opened at $1.49 (ask) and we were stopped out at $1.22 (bid)for an -18% loss.
We are reloading this trade with a buy-the-dip trigger at $38.75.

Entry on July xx at $ xx.xx
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 6.8 million
Listed on July 9, 2011


VMware, Inc. - VMW - close: 100.40 change: -1.73

Stop Loss: 99.75
Target(s): 109.75, 114.00
Current Option Gain/Loss: -11.2%
Time Frame: seven trading days
New Positions: see below

Comments:
07/12 update: Two down days in a row has put our VMW trade in jeopardy. The stock dipped to support near $100 and hit $99.80 intraday. We have a stop loss at $99.75. More aggressive traders may want to adjust their stop loss lower and give VMW more room to maneuver.

Technically the $100 level is still support so I would consider buying calls here. However, given the market's weakness this week readers may want to wait on initiating new positions.

We only have a few trading days. VMW is due to report earnings on July 19th and we do not want to hold over the announcement. I would keep positions small. VMW can be a little volatile.

- Suggested Positions -

Long AUG $110 call (VMW1120H110) Entry @ $3.10

Entry on July 11 at $103.19
Earnings Date 07/19/11 (confirmed)
Average Daily Volume = 1.9 million
Listed on July 9, 2011