Editor's Note:

The small cap indices outperformed their large cap rivals. Meanwhile financials delivered a strong session.

We have updated some stop losses and some entry point strategies in tonight's play updates.

-James

Current Portfolio:


CALL Play Updates

Abercrombie & Fitch - ANF - close: 72.21 change: -1.26

Stop Loss: 67.45
Target(s): 77.25
Current Option Gain/Loss: Unopened
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Comments:
10/26 update: Oh so close! Last night we changed our entry strategy to buy a dip at $70.25. ANF dipped to $70.53 this morning and rebounded back to $72.21. I am suggest we alter our strategy again. This time we want to buy this bounce but we only want to open bullish positions in ANF if both this stock and the S&P 500 index open positive tomorrow morning.

I am labeling this as an aggressive trade. ANF can be a volatile stock and we have a wide stop loss. Please note we do not want to hold over the mid November earnings report. Our exit target is $77.25.

FYI: Traders will want to take note of the fact that the most recent data listed short interest at 8% of the 85.8 million share float. Plus, the Point & Figure chart for ANF is bullish with a $98 target.

*See Entry Details Above*

- Suggested Positions -

buy the NOV $75 call (ANF1119K75) current ask $2.50

10/26 Adjusted entry point strategy. Buy calls tomorrow if ANF and S&P 500 index open positive.

Entry on October xx at $ xx.xx
Earnings Date 11/16/11 (unconfirmed)
Average Daily Volume = 2.1 million
Listed on October 24, 2011


Bed Bath & Beyond Inc. - BBBY - close: 60.94 change: -0.08

Stop Loss: 58.90
Target(s): 64.75
Current Option Gain/Loss: -31.3%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
10/26 update: BBBY underperformed today. We were expecting a dip to $60.00. Last night I suggested readers look for a dip near $60 as a new entry point. The stock slipped to $59.87 before bouncing. I would still consider new positions now if both BBBY and the S&P 500 index open positive tomorrow. More conservative traders may want to raise their stop loss closer to today's low.

*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


Costco Wholesale - COST - close: 83.73 change: +0.50

Stop Loss: 81.80
Target(s): 97.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Comments:
10/26 update: Yesterday I suggested that nimble traders consider buying a dip near $82.00 today. COST fell to $82.11 before rebounding. The stock did fail to close over short-term resistance at $84.00 but I suspect the path of least resistance is up (although I will point out the MACD on the daily chart is about to turn bearish).

I am suggesting a new entry point strategy on COST. We'll buy calls tomorrow but only if COST and the S&P 500 index open positive. We'll use a new stop loss at $81.80.

Earlier Comments:
Our multi-week exit target is $97.50. Cautious traders will want to consider an exit near $90 or $94 instead. Keep positions small.

(small positions) *See Entry Details Above*

- Suggested Positions -

buy the NOV $85 call (COST1119K85) current ask $1.11

- or -

buy the 2012 Jan $90 call (COST1221A90) ask $1.06

10/26 Adjusted entry point strategy. Buy calls tomorrow if COST and S&P 500 index open positive. New stop loss at $81.80.

Entry on October xx at $ xx.xx
Earnings Date 12/07/11 (unconfirmed)
Average Daily Volume = 2.9 million
Listed on October 22, 2011


iShares China 25 index ETF - FXI - close: 36.13 change: +1.40

Stop Loss: 33.90
Target(s): 39.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
10/26 update: Wow! The FXI really outperformed today with a +4.0% gain. That's frustrating since we postponed our entry point last night. I am suggesting we go ahead and open small bullish positions now but only if the FXI and the S&P 500 index open positive tomorrow morning. We'll adjust our stop loss to $33.90.

*See Entry Point Details Above*

- Suggested Positions -

buy the NOV $37 call (FXI1119K37) current ask $1.04

10/26 adjusted our entry point strategy. New stop loss @ 33.90

Entry on October xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 30 million
Listed on October 24, 2011


Goldman Sachs - GS - close: 106.33 change: +5.89

Stop Loss: 99.40
Target(s): 114.00
Current Option Gain/Loss: +34.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
10/26 update: Financial stocks were some of the best performers today in spite of the lack of progress in Europe. GS outperformed its peers with a +5.8% gain today and a breakout past resistance at $105 and resistance at its 50-dma. We are raising our stop loss to $99.40.

Earlier Comments:
We want to keep our position size small to limit our risk. Our target is $114.00. More conservative traders may want to exit near $110 instead.

(Small Positions) - Suggested Positions -

Long NOV $110 call (GS1119K110) Entry $1.84

10/26 new stop loss @ 99.40

Entry on October 24 at $102.65
Earnings Date 10/18/11 (confirmed)
Average Daily Volume = 8.2 million
Listed on October 22, 2011


iShares Transportation ETF - IYT - close: 86.14 change: +0.39

Stop Loss: 82.95
Target(s): 90.00
Current Option Gain/Loss: - 2.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/26 update: Traders bought the dip in the IYT at $84.50 and its rising 10-dma today. This intraday bounce looks like a new bullish entry point. We are raising our stop loss to $82.95.

Earlier Comments:
Readers will want to keep our position size small since the transports are short-term overbought given the huge bounce from its October lows.

(small positions)

- Suggested Positions -

Long NOV $87 call (IYT1119K87) Entry $2.15

10/26 new stop loss @ 82.95
10/22 new stop loss @ 82.45
10/21 Gap higher entry @ 85.33

Entry on October 21 at $85.33
Earnings Date --/--/--
Average Daily Volume = 662 thousand
Listed on October 18, 2011


Rockwell Automation - ROK - close: 65.39 change: +0.79

Stop Loss: 62.90
Target(s): 71.75
Current Option Gain/Loss: -27.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/26 update: It was another rocky day for ROK but traders bought the dip at $64.35 intraday. I would use this afternoon bounce as a new entry point but only if ROK and the S&P 500 index both open positive tomorrow. We are raising our stop loss to $62.90. You might want to raise your stop even higher.

Earlier Comments:
Let's keep our position size small. Our exit target is $71.75. FYI: The Point & Figure chart for ROK is bullish with a $91 target.

(Small Positions)- Suggested Positions -

Long NOV $70 call (ROK1119K70) Entry $1.65

10/26 new stop loss @ 62.90
10/24 new stop loss @ 62.40

Entry on October 24 at $66.62
Earnings Date 11/08/11 (confirmed)
Average Daily Volume = 1.7 million
Listed on October 22, 2011


SPX Corp. - SPW - close: 52.94 change: +0.21

Stop Loss: 51.75
Target(s): 57.75
Current Option Gain/Loss: - 2.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/26 update: Whew! It was a close call today. SPW almost hit our stop loss. Shares dipped to $51.86 before rebounding. I would use this bounce as a new entry point but only if SPW and the S&P 500 index open positive tomorrow.

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

10/24 new stop loss @ 51.75
10/20 trade opened at $51.80
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.

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


PUT Play Updates

Currently we do not have any active put trades.


Market Neutral Play Updates

iShares Russell 2000 ETF - IWM - close: 71.36 change: -2.06

Stop Loss: n/a
Target(s): To Be Determined
Current Option Gain/Loss: - 5.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/26 update: Small caps saw another volatile session. The IWM dipped to its rising 10-dma and rebounded sharply, closing up +1.7% on the day.

We are not suggesting new strangle positions at this time.

FYI: A strangle involves buying both an out of the money call (OTM call) and an out of the money put (OTM put). The expectation is that the underlying equity (IWM in this case) will move enough to make one side profitable and cover the entire position and then some.

- Strangle Position cost: 4.55 current value: 4.29 (-5.7%)

Out-of-the-Money Call option:
Long NOV $72 call (IWM1119K72) Entry $2.30, current bid $2.95

- and -

Out-of-the-Money Put option:
Long NOV $68 put (IWM1119W68) Entry $2.25, current bid $1.34

Entry on October 21 at $70.57
Earnings Date --/--/--
Average Daily Volume = 89 million
Listed on October 20, 2011