Editor's Note:

Technology stocks underperformed this morning and the NASDAQ failed to bounce back into positive territory.

Overall investors seem to be content to just run down the clock as we wait for the week to end and for the weekend EU summit to begin. There was some profit taking this morning but the major indices pared their losses and the S&P 500 index closed in positive territory. The Dow Transportation average looks poised to breakout, which would be bullish for the overall market.

Unfortunately, with the tech weakness today, we did see HPQ, QQQ, and the SMH all get stopped out.

-James

Current Portfolio:


CALL Play Updates

Bed Bath & Beyond Inc. - BBBY - close: 59.71 change: -0.47

Stop Loss: 58.90
Target(s): 64.75
Current Option Gain/Loss: -37.3%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
10/20 update: The first half of today was fueled by profit taking but BBBY bounced at $58.98. That was almost low enough to hit our stop loss at $58.90. If there is any follow through lower tomorrow we will most likely get stopped out. Bears could argue that Monday and Wednesday's session have produced a short-term bearish double top pattern. I am not suggesting new positions at this time.

*Small Positions*- Suggested Positions -

Long NOV $62.50 call (BBBY1119K62.5) Entry $1.50

Entry on October 14 at $61.00
Earnings Date 12/21/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on October 12, 2011


iShares Transportation ETF - IYT - close: 84.39 change: +1.31

Stop Loss: 81.30
Target(s): 90.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
10/20 update: The transports were showing some relative strength on Thursday. The $TRAN index (and the IYT) advanced +1.5%. The IYT looks poised to breakout past resistance at $85.00 soon. Currently the newsletter is suggesting a breakout trigger at $85.20 to buy calls.

Earlier Comments:
The 100-dma and exponential 200-dma could be potential resistance but we're aiming for $90.00. Readers will want to keep our position size small since the transports are short-term overbought given the huge bounce from its October lows.

Trigger @ $85.25 (small positions)

- Suggested Positions -

buy the NOV $87 call (IYT1119K87)

Entry on October xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 662 thousand
Listed on October 18, 2011


SPX Corp. - SPW - close: 51.04 change: -0.63

Stop Loss: 49.15
Target(s): 57.75
Current Option Gain/Loss: + 5.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/20 update: Our trade on SPW is now open. Both the stock and the S&P 500 opened higher today. Unfortunately SPW was unable to build on its morning strength and the stock underperformed with a -1.2% decline for the session. Nimble traders could try buying calls on a dip or a bounce near the $50.00 mark. More conservative traders may want to wait for a breakout past $53.55 as their entry point instead.

Earlier Comments:
This is an aggressive trade so we want to keep our position size small. FYI: The Point & Figure chart for SPW is bullish with a $78 target.

(Small Positions)- Suggested Positions -

Long NOV $55 call (SPW1119K55) Entry $1.80

10/19 Trade still not open. Try again.
10/18 New entry point on this bounce. See entry details above
10/17 Trade not open. Remove entry point for 24 hours, then re-evaluate.

10/20 trade opened at $51.80

chart:

Entry on October 20 at $51.80
Earnings Date 11/02/11 (unconfirmed)
Average Daily Volume = 701 thousand
Listed on October 15, 2011


PUT Play Updates

Currently we do not have any active put trades.


CLOSED BULLISH PLAYS

Hewlett Packard - HPQ - close: 24.98 change: -0.63

Stop Loss: 24.45
Target(s): 29.50
Current Option Gain/Loss: +35.5%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/20 update: Technology stocks were some of the worst performers today. HPQ slipped to a new two-week low and hit $24.27 midday. Our stop loss was hit at $24.45.

- Suggested Positions -

2012 Jan. $24 call (HPQ1221A24) Entry $2.14, Exit $2.90 (+35.5%)

10/20 stopped out at $24.45
10/17 HPQ could gap open lower tomorrow on IBM's earnings news
10/15 new stop loss @ 24.45
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

chart:

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


PowerShares QQQ ETF - QQQ - close: 56.59 change: -0.28

Stop Loss: 56.45
Target(s): 59.25
Current Option Gain/Loss: -33.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/20 update: The Qs retreated lower this morning and our stop loss at $56.45 was hit prior to lunchtime. This ETF dipped under its 200-dma and bounced back to pare its losses to less than -0.5%. Bears could argue that the QQQ has produced a very short-term bearish double top this week.

(Small Positions)

NOV $58 call (QQQ1119K58) Entry $1.74, Entry $1.15 (-33.9%)

10/20 stopped out at $56.45

chart:

Entry on October 19 at $57.71
Earnings Date --/--/--
Average Daily Volume = 87 million
Listed on October 18, 2011


Semiconductor ETF - SMH - close: 30.24 change: -0.26

Stop Loss: 29.45
Target(s): 33.45
Current Option Gain/Loss: -49.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/20 update: Xilinx Inc. (XLNX) reported earnings last night. They beat the bottom line but then guided lower going forward. This negative guidance weighed on the semiconductor sector. The SMH gapped open lower at $30.10 and eventually hit our stop loss at $29.45 before bouncing near its simple 50-dma. Our play is closed but I would keep the SMH on your watch list for a breakout past $31.00 or its 100-dma as a bullish entry point.

Earlier Comments:
I would keep our position size small.

(small positions)

- Suggested Positions -

NOV $31.50 call (SMH1119K31.5) Entry $0.63 Exit $0.32 (-49.2%)

chart:

Entry on October 19 at $30.75
Earnings Date --/--/--
Average Daily Volume = 12.7 million
Listed on October 18, 2011