Editor's Note:

Is the stock market rally out of gas and about to roll over? Or is it merely pausing to catch its breath before making another run higher? That's the question traders are asking. Stocks are definitely short-term overbought. Readers may want to think about taking profits early now.

-James

Current Portfolio:


CALL Play Updates

Green Mountain Coffee Roasters - GMCR - cls: 93.62 chg: +0.58

Stop Loss: 89.90
Target(s): 99.75
Current Option Gain/Loss: -20.4%
Time Frame: less than 2 weeks
New Positions: see below

Comments:
10/11 update: GMCR managed to outperform the market today with a +0.6% gain. You could argue that shares are building a short-term bullish trend of higher lows and higher highs over the last several days. I'm still concerned that the action in GMCR is not more convincing. I am not suggesting new positions at this time but an intraday bounce near $90.00 would change my mind.

(Small positions) - Suggested Positions -

Long OCT $95 call (GMCR1122J95) Entry $4.65

10/10 trade opened. GMCR gapped higher at $93.71.

Entry on October 10 at $93.71
Earnings Date 12/07/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on October 08, 2011


Hewlett Packard - HPQ - close: 25.92 change: +0.18

Stop Loss: 22.90
Target(s): 29.50
Current Option Gain/Loss: +77.5%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/11 update: Our plan was to take some money off the table and sell half of our position this morning at the open. HPQ opened lower at $25.59 but traders bought the dip. Shares bounced back toward resistance near $26.00 and its 50-dma to close near its highs for the session.

We will also try and reduce our risk by raising our stop loss to $22.90. More conservative traders may want to consider a stop loss closer to $24.00 instead.

No new positions at this time.

Earlier Comments:
I am not suggesting new positions at this time. The next level of resistance for HPQ is the $26.25-26.50 zone.

- Suggested Positions -

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

10/11 new stop loss @ 22.90
10/11 planned to sell half at the open
bid 2012 Jan. $24 call @ $3.60 (+68.2%)
10/10 Take some $$ off the table. Sell 1/2 at the open tomorrow
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


Sears Holding - SHLD - close: 66.96 change: +2.06

Stop Loss: 59.45
Target(s): 69.75
Current Option Gain/Loss: Oct$65 +30.7% & Nov $67.50: +13.4%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
10/11 update: SHLD displayed relative strength with a +3.1% gain and a breakout past its 100-dma and the $66 level. Volume was a little below average but I'm not complaining. The next hurdle is potential technical resistance at the exponential 200-dma near $68.85 and more conservative traders will want to seriously consider an early exit near the 200-ema. Our target is $69.75. I am not suggesting new positions tonight.

Earlier Comments:
It's worth noting that the Point & Figure chart on SHLD has reversed higher and is now pointing to an $83 target. FYI: The most recent data listed short interest at 47% of the float.

- Suggested Positions -

Long OCT $65 call (SHLD1122J65) Entry $2.41

- or -

Long NOV $67.50 call (SHLD1119K67.5) Entry $3.35

10/08 new stop loss @ 59.45, new target 69.75

Entry on October 7 at $64.13
Earnings Date 11/17/11 (unconfirmed)
Average Daily Volume = 644 thousand
Listed on October 06, 2011


United Technologies - UTX - close: 73.74 change: -0.01

Stop Loss: 69.75
Target(s): 74.50
Current Option Gain/Loss: +88.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/11 update: UTX took its cues from the major averages and drifted sideways in a narrow range today. I am still suggesting that more conservative traders consider taking profits now. I am not suggesting new positions at this time. Our target to exit is $74.50.

NOTE: We do not want to hold over UTX's earnings report on Oct. 19th.

- Suggested Positions -

Long OCT $70 call (UTX1122J70) Entry $2.24

10/10 new stop loss at $69.75

Entry on October 05 at $69.61
Earnings Date 10/19/11 (confirmed)
Average Daily Volume = 6.3 million
Listed on October 04, 2011


PUT Play Updates

None. Currently there are no active put plays.