Editor's Note:

It was the worst week in over a month for stocks. The major indices are producing some technical breakdowns.

-James

Current Portfolio:


CALL Play Updates

Pioneer Nat. Res. - PXD - close: 89.82 change: -1.25

Stop Loss: 89.45
Target(s): 99.75
Current Option Gain/Loss: Dec$100c: -65.6% & Jan$100c: -50.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/19 update: It's not looking very good for PXD. The intraday reversal on Wednesday combined with a two-day decline is suggesting a potential bearish reversal for the stock price. Shares hit $89.69 on Friday afternoon. Our stop is at $89.45. If the market continues lower on Monday we'll probably see PXD get stopped out.

I am not suggesting new positions at this time.

Earlier Comments:
We want to keep our position size small because PXD can be a volatile stock and we're using a wide stop loss.

(Small Positions Only) - Suggested Positions -

Long DEC $100 call (PXD1117L100) Entry $3.20

- or -

Long JAN $100 call (PXD1221A100) Entry $5.50

chart:

Entry on November 16 at $95.05
Earnings Date 02/06/12 (unconfirmed)
Average Daily Volume = 2.6 million
Listed on November 15, 2011


Stanley Black & Decker Inc. - SWK - close: 63.66 change: -0.86

Stop Loss: 63.25
Target(s): 69.50
Current Option Gain/Loss: Dec$65c: -30.9% & Jan70c: -27.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/19 update: Our SWK is not off to a very good start. Shares gapped higher at $65.09. Combine that with a positive open in the S&P 500 and our trade was opened on Friday morning. Unfortunately SWK quickly reversed lower and broke down under its exponential 200-dma. The low today was $63.26 and our stop loss happens to be $63.25. Our trade is still open but if the market moves lower on Monday then odds are we will see SWK get stopped out. I am not suggesting new positions at this time.

- Suggested Positions -

Long DEC $65 call (SWK1117L65) Entry $2.75

- or -

Long JAN $70 call (SWK1221A70) Entry $2.20

11/18 trade opened. SWK gapped higher at $65.09
11/17 new entry strategy. Buy calls if both SWK and S&P500 open positive tomorrow morning. New stop loss @ 63.25.

chart:

Entry on November 18 at $65.09
Earnings Date 01/26/12 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on November 15, 2011


PUT Play Updates

Deutsche Bank - DB - close: 36.57 change: +0.54

Stop Loss: 41.55
Target(s): 30.50
Current Option Gain/Loss: Dec$35p: -11.5% & Jan$30p: + 6.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/19 update: I cautioned readers to expect an oversold bounce. DB ended Friday up +1.49%. Nothing has changed for the big picture. European banks are likely to struggle as investors grow more uncomfortable with the lack of progress in Europe.

Nimble traders could look for a new failed rally in the $39-40 zone as a new entry point or even a breakdown under $36.00 but if you choose the breakdown as your entry then I would lower my stop loss.

Earlier Comments:
Keep position size small to limit risk. This is going to be a volatile trade. FYI: The Point & Figure chart for DB is bearish with a $30 target.

- Suggested Positions - (small positions)

Long DEC $35 PUT (DB1117x35) Entry $2.60

- or -

Long JAN $30 PUT (DB1221m30) Entry $2.09

11/12 new stop loss @ 41.55
11/11 DB gapped open higher at $39.00

chart:

Entry on November 11 at $39.00
Earnings Date 02/02/12 (unconfirmed)
Average Daily Volume = 4.3 million
Listed on November 10, 2011


PACCAR Inc. - PCAR - close: 39.16 change: -0.25

Stop Loss: 42.05
Target(s): 35.50
Current Option Gain/Loss: - 5.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/19 update: PCAR managed to find support near its simple 50-dma before closing with a -0.6% decline on Friday. There is no change from my prior comments. Readers can open positions now or you could wait for a bounce or failed rally near the $40.00 level or the 100-dma near $40.60 as an alternative entry point.

We have a stop loss at $42.05 but more conservative traders may want to use a stop closer to $41.50 instead.

Earlier Comments:
NOTE: It is possible that the 50-dma near 39.00 could be technical support so more conservative traders may want to wait for a drop under the 50-dma as their entry point instead.

- Suggested (Small) Positions -

Long DEC $39 PUT (PCAR1117X39) Entry $1.75

chart:

Entry on November 18 at $39.42
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 3.7 million
Listed on November 17, 2011


Western Digital Corp. - WDC - close: 26.04 change: +0.78

Stop Loss: 27.75
Target(s): 21.00
Current Option Gain/Loss: Dec$25p: -22.1% & Jan22.50p: - 2.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/19 update: WDC experienced a bounce on Friday. Shares gapped higher at $25.56 but the rally ran out of steam at $26.65. I don't see any changes from my Thursday night comments. I would still consider new put positions here or more conservative traders can wait for a breakdown under short-term support at $25.00 as their alternative entry point.

Earlier Comments:
It is possible that the 2010 lows near $23.00 could be support but we're aiming for a drop to the $21.00-20.00 zone. We do want to keep our position size small because WDC has been very volatile the last few weeks.

- Suggested (Small) Positions -

Long DEC $25 PUT (WDC1117X25) Entry $1.49

- or -

Long JAN $22.50 PUT (WDC1221M22.5) Entry $1.13

chart:

Entry on November 18 at $26.04
Earnings Date 01/18/12 (unconfirmed)
Average Daily Volume = 6.4 million
Listed on November 17, 2011