Editor's Note:

Silver, copper, and gold helped lead the stock market's decline.

I am concerned that the market's intraday pull back yesterday and today's weakness looks like a failed rally and bearish reversal pattern. Combine that with the bear-flag pattern on the major indices and it does not bode well for stocks if you're bullish.

-James

Current Portfolio:


CALL Play Updates

Celgene Corp. - CELG - close: 62.40 change: -1.57

Stop Loss: 61.25
Target(s): 69.00
Current Option Gain/Loss: -25.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/28 update: It was an ugly day for stocks and CELG gave up -2.4%. The stock has pulled back to short-term support near $62.00 as expected. A bounce from here could be used as a new entry point. I am concerned that the market will continue lower and hit our stop loss at $61.25. Cautious traders may want to exit early now.

- Suggested Positions -

Long OCT $65 call (CELG1122J65) Entry $1.53

09/27 new stop loss @ 61.25

Entry on September 26 at $63.03
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 4.0 million
Listed on September 22, 2011


Cerner Corp. - CERN - close: 70.36 change: -2.52

Stop Loss: 69.50
Target(s): 74.90, 78.50
Current Option Gain/Loss: -41.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/28 update: CERN completely erased yesterday's gains and more with a -3.4% decline. I cautioned readers last night that a market pull back could pull CERN back down toward the $70.00 area. A bounce from here can be used as a new entry point. If the market continues lower tomorrow then odds are good we will get stopped out at $69.50.

- Suggested Positions -

Long OCT $75 call (CERN1122J75) Entry $1.95

09/27 new stop loss @ 69.50

Entry on September 27 at $72.79
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on September 26, 2011


Check Point Software - CHKP - close: 53.59 change: -0.97

Stop Loss: 50.80
Target(s): 55.75 , 57.75
Current Option Gain/Loss: - 8.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/28 update: CHKP lost less than one dollar and did so on low volume. Yet today's action still looks like a bearish reversal. We can probably expect another dip back toward the $52 area or its recent support at the exponential 200-dma. Nimble traders could buy another dip or a bounce near these levels.

- Suggested Positions -

Long OCT $55 call (CHKP1122J55) Entry $1.80

09/26 trade opened.

Entry on September 26 at $53.00
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on September 20, 2011


Dollar Tree Inc. - DLTR - close: 76.56 change: +0.85

Stop Loss: 74.75
Target(s): 79.75, 82.50
Current Option Gain/Loss: Oct$77.50: -18.5% & Nov$80: - 6.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/28 update: DLTR displayed some relative strength today. The stock closed well off its highs of the session but still posted a gain. Today's move does not confirm yesterday's bearish reversal candlestick pattern but DLTR remains in jeopardy. I am not suggesting new positions at this time.

NOTE: Readers might want to consider an early exit right now. Even though DLTR held up today the broader market looks very vulnerable. Traders may want to cut their losses early.

- Suggested Positions -

Long OCT $77.50 call (DLTR1122J77.5) Entry $2.70

- or -

Long NOV $80.00 call (DLTR1119K80) Entry $2.90

09/27 new stop loss @ 74.75, DLTR showing relative weakness today

Entry on September 26 at $76.51
Earnings Date 11/17/11 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on September 24, 2011


Hansen Natural Corp. - HANS - close: 89.30 change: -1.09

Stop Loss: 86.90
Target(s): 94.75, 99.00
Current Option Gain/Loss: -32.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/28 update: Today's close under the $90.00 level is short-term bearish but I'm honestly surprised that HANS' performance was not worse, especially given the market's widespread declines. We are not suggesting new positions at this time.

Earlier Comments:
This stock can be volatile so we do want to keep our position size small.

- Suggested Positions - (Small Positions)

Long OCT $95 call (HANS1122J95) Entry $3.50

09/27 new stop loss @ 86.90

Entry on September 27 at $92.17
Earnings Date 11/03/11 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on September 26, 2011


Hewlett Packard - HPQ - close: 23.19 change: -0.40

Stop Loss: 21.45
Target(s): 29.50
Current Option Gain/Loss: + 7.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/28 update: HPQ almost hit $24 this morning but shares reversed and closed down -1.6%. If the stock breaks down under $23.00 I suspect HPQ will see a quick drop toward the next level of support at $22.00. More conservative traders may want to raise their stop loss closer to the $22.00 level.

I am not suggesting new positions at current levels. Our multi-week target is $29.50.

- Suggested Positions -

Long 2012 Jan. $24 call (HPQ1221A24) Entry $2.14

09/27 new stop loss @ 21.45

Entry on September 23 at $22.52
Earnings Date 11/21/11 (unconfirmed)
Average Daily Volume = 26.6 million
Listed on September 22, 2011


Whole Foods Market - WFM - close: 70.09 change: -0.85

Stop Loss: 67.45
Target(s): 73.00, 77.50
Current Option Gain/Loss: OCT$70: + 0.0% & NOV$72.50: + 3.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/28 update: Shares of WFM held up reasonably well. The S&P 500 lost -2.0% while WFM only fell -1.1%. Holding the $70 level is encouraging but if the market continues to drop tomorrow I would expect WFM to decline toward the $68.00 level. More conservative traders may just want to abandon ship now. I am not suggesting new positions at this time.

- Suggested Positions - (Small Positions)

Long OCT $70 call (WFM1122J70) Entry $3.18

- or -

Long NOV $72.50 call (WFM1119K72.5) Entry $4.10

09/27 new stop loss @ 67.45
09/26 new stop loss @ 65.90

Entry on September 26 at $69.10
Earnings Date 11/02/11 (unconfirmed)
Average Daily Volume = 2.2 million
Listed on September 22, 2011


Watson Pharmaceuticals - WPI - close: 70.61 change: -1.49

Stop Loss: 69.75
Target(s): 74.75, 78.50
Current Option Gain/Loss: Oct$75: -35.0% & NOV$75: -19.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/28 update: The -2% drop in WPI was in-line with the -2% drop in the market's major indices. The $70.00 level should offer some short-term support and if it does not we'll be stopped out at $69.75. I'd wait for a bounce from $70.00 before considering new bullish positions.

- Suggested Positions -

Long OCT $75 call (WPI1122J75) Entry $1.00

- or -

Long NOV $75 call (WPI1119K75) Entry $2.10

09/27 new stop loss @ 69.75

Entry on September 26 at $71.26
Earnings Date 11/01/11 (confirmed)
Average Daily Volume = 1.4 million
Listed on September 24, 2011


PUT Play Updates

Caterpillar Inc. - CAT - close: 75.08 change: -2.59

Stop Loss: 80.25
Target(s): 73.50, 70.50
Current Option Gain/Loss: +45.0%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
09/28 update: Our new CAT put play is off to a good start. Shares opened at $78.13, failed at $79.15 and then dropped to a -3.3% loss for the session. Our targets are $73.50 and $70.50.

- Suggested Positions -

Long OCT $75 PUT (CAT1122V75) Entry $2.93

Entry on September 28 at $78.13
Earnings Date 10/24/11 (unconfirmed)
Average Daily Volume = 11.2 million
Listed on September 27, 2011


CLOSED BULLISH PLAYS

iPath Copper ETN - JJC - close: 40.95 change: -3.17

Stop Loss: 41.75
Target(s): 46.50, 49.75
Current Option Gain/Loss: Oct$45: -33.3% & Dec$45: -12.5%
Time Frame: 10 weeks
New Positions: Yes, see below

Comments:
09/28 update: Copper prices were crushed lower today and the JJC fell -7.1%. It was a very ugly day for the metals. JJC actually closed at a new 52-week low. Our stop loss was hit at $41.75. If this sell-off continues then the next level of significant support appears to be the $37.00 area.

JJC gapped open lower this morning, which pushed the options to really gap down. The bid on the October $45 calls was trading near $0.50 when JJC hit our stop loss. The bid on the Dec. $45 calls was trading near $1.75.

- Suggested Positions -

OCT $45 call (JJC1122J45) Entry $0.75, Exit $0.50 (-33.3%)

- or -

DEC $45 call (JJC1117L45) Entry $2.00, Exit $1.75 (-12.5%)

09/28 stopped out @ 41.75
09/27 new stop loss @ 41.75
09/27 Consider taking profits now:
bid Oct. $45 call @ 1.25 (+66.6%), bid Dec. $45 call @ 2.65 (+32.5%)
09/26 new stop loss @ 40.95

chart:

Entry on September 26 at $41.92
Earnings Date --/--/--
Average Daily Volume = 267 thousand
Listed on September 24, 2011


ishares Silver ETF - SLV - close: 28.87 change: -2.30

Stop Loss: 28.75
Target(s): 34.50, 37.75
Current Option Gain/Loss: Nov$32: +17.4% & Jan$35: + 1.2%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
09/28 update: Silver was also hammered lower and the SLV gave up -7.3%. The breakdown under $30 and $29 is bearish and shares hit our stop loss at $28.75 late in the day.

- Suggested Positions - (Small Positions)

NOV $32 call (SLV1119K32) Entry $1.36, Exit $1.60 (+17.4%)

- or -

2012 Jan $35 call (SLV1221A35) Entry $1.58, Exit $1.60 (+1.2%)

09/28 stopped out at $28.75
09/27 new stop loss @ 28.75
09/27 readers may want to take profits now:
bid Nov $32 call @ 2.49 (+83.0%), bid on Jan $35 call @ 2.29 (+44.9%)

chart:

Entry on September 26 at $27.51
Earnings Date --/--/--
Average Daily Volume = 24.4 million
Listed on September 22, 2011