Editor's Note:

The U.S. stock market is now negative for December with this past week's decline. Stocks did pare their losses with the Thursday-Friday oversold bounce but gains were muted on Friday.

-James

Current Portfolio:


CALL Play Updates

Boeing Co. - BA - close: 71.01 change: +0.40

Stop Loss: 69.25
Target(s): 77.00
Current Option Gain/Loss: -34.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/17 update: BA gain on Friday managed to outpace the S&P 500 but shares remain stuck in their trading range. The stock has been consolidating sideways in the $69.70-72.50 zone for over two weeks. Readers can use a breakout past $72.50 as a new entry point to buy calls.

Earlier Comments:
There is potential resistance at $75.00 and more conservative traders may want to exit there. I am aiming for $77.00. FYI: The Point & Figure chart for BA is bullish with a $79 target.

- Suggested Positions -

Long 2012Jan $75 call (BA1221A75) entry $1.08

12/13/11 trade opened
12/12/11 adjusted stop loss to $69.25
12/12/11 trade did not open, try again.

chart:

Entry on December 13 at $71.67
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on December 10, 2011


Phillip Morris Intl. - PM - close: 75.60 change: -0.32

Stop Loss: 74.25
Target(s): 78.50
Current Option Gain/Loss: + 38.3%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
12/17 update: PM lost 32 cents on Friday after the early morning rally failed near its highs for the week. This stock has also been consolidating sideways for over two weeks. If PM can produce a breakout past resistance at $77.00 it could see a run into the low $80s. I am adjusting our exit target from $78.50 to $79.75. We will raise our stop loss up to $74.25.

Earlier Comments:
Our multi-week target is $78.50. FYI: The Point & Figure chart for PM is bullish with a $95 target.

- Suggested Positions -

Long 2012 Jan $75 call (PM1221A75) Entry $1.12

12/17 new stop loss @ 74.25
12/05 Call is up +100%, readers may want to exit now!
12/03 new stop loss @ 73.75
11/30 new stop loss @ 71.40
11/23 adjusted stop loss to $69.49
11/22 trade opened. PM opened at $72.11

chart:

Entry on November 22 at $72.11
Earnings Date 02/09/12 (unconfirmed)
Average Daily Volume = 7.3 million
Listed on November 19, 2011


Boston Beer Co. Inc. - SAM - close: 103.05 change: +0.78

Stop Loss: 98.75
Target(s): 109.50
Current Option Gain/Loss: -19.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/17 update: Wednesday's bounce off support near $100.00 continues albeit slowly. Shares are essentially consolidating sideways in the $100-105 zone. Readers can choose to try and buy dips near $100 or wait for a breakout past $105. If you choose the latter entry point you'll want to adjust your stop loss significantly higher.

FYI: The short interest has risen from 20% to 22% of the float.

Earlier Comments:
Our exit target is $109.50. More aggressive traders may want to aim higher. FYI: The Point & Figure chart for SAM is bullish with a $117 target. NOTE: The most recent data listed short interest at 22% of SAM's extremely small 8.3 million-share float. That's definitely a recipe for a short squeeze.

(small positions) - Suggested Positions -

Long JAN $105 call (SAM1221A105) Entry $2.05

12/03/11 new stop loss @ 98.75
12/02/11 trade triggered at $102.00

chart:

Entry on December 02 at $102.00
Earnings Date 03/08/12 (unconfirmed)
Average Daily Volume = 72.3 thousand
Listed on December 01, 2011


Varian Medical Sys. - VAR - close: 63.19 change: -0.37

Stop Loss: 62.49
Target(s): 69.75
Current Option Gain/Loss: -49.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/17 update: The trading action in VAR on Friday was a bit bearish. Shares are still hovering near the bottom of its $63-65 trading range. I am cautious on this stock and not suggesting new positions at this time.

- Suggested Positions -

Long JAN $65 call (VAR1221A65) entry $2.65

12/14/11 adjust stop loss to $62.49

chart:

Entry on December 13 at $65.25
Earnings Date 01/25/12 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on December 12, 2011


PUT Play Updates

AGCO Corp. - AGCO - close: 40.31 change: -0.36

Stop Loss: 42.75
Target(s): 35.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
12/17 update: The Friday morning rally in AGCO failed under its 50-dma. The stock continued to underperform the market with a -0.8% decline. Yet shares have not yet broken the $40.00 mark.

More aggressive traders may want to open bearish positions now. I want to see AGCO trade under what could be round-number support at $40.00. I am listing a trigger to buy puts at $39.90. You could argue that AGCO is already short-term oversold so we'll try and limit our risk by keeping position size small. We'll start with a stop loss at $42.75, just above Wednesday's high. Our target is $35.25.

Trigger @ 39.90

- Suggested Positions -

buy the Jan $40 PUT (AGCO1221M40)

chart:

Entry on December xx at $ xx.xx
Earnings Date 02/07/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on December 15, 2011


BMC Software Inc. - BMC - close: 33.17 change: -0.39

Stop Loss: 35.05
Target(s): 30.05
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
12/17 update: BMC also saw its early morning Friday rally fail. Yet the stock is still trading above support near $33.00. I don't see any changes from my prior comments.

I am suggesting a trigger to open bearish put positions at $32.75. We'll start this trade with a wide stop at $35.05. More conservative traders may want to use a tighter stop loss instead. Our target is $30.50. FYI: The Point & Figure chart for BMC is bearish with a $29 target.

Trigger @ 32.75

- Suggested Positions -

buy the 2012Jan $32.50 PUT (BMC1221M32.5)

chart:

Entry on December xx at $ xx.xx
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on December 14, 2011


Check Point Software - CHKP - close: 54.18 change: +1.46

Stop Loss: 55.05
Target(s): 48.00
Current Option Gain/Loss: -50.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/17 update: Hmm... Friday was not a good day for the bears. The reversal higher that appears to have started on Wednesday was gaining steam on Friday. CHKP managed to breakout over one trendline of lower highs. The stock remains under its simple 200-dma and additional bearish resistance. If the rally continues on Monday we could see CHKP hit our stop loss at $55.05. On the other hand if this rally fades, then a failure at the 200-dma could be used as a new bearish entry point.

Earlier Comments:
There is potential support near $51.00 but we're aiming for the $48.00 level. More aggressive traders could aim lower. FYI: The Point & Figure chart for CHKP is bearish with a $46 target.

(Small Positions) - Suggested Positions -

Long Jan $50 PUT (CHKP1221M50) Entry $1.20

12/13/11 new stop loss @ 55.05

chart:

Entry on December 09 at $53.29
Earnings Date 01/30/12 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on December 08, 2011


Fluor Corp. - FLR - close: 48.09 change: -0.18

Stop Loss: 52.05
Target(s): 45.15
Current Option Gain/Loss: - 8.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/17 update: Friday's session looks a lot like Thursday with the gap open rally fading by lunchtime. FLR has been able to find short-term support at the $48.00 level this week. A breakdown could signal a drop toward the October lows. I would hesitate to buy puts with FLR sitting on short-term support.

We have our stop loss at $52.05. More conservative traders may want to adjust theirs down toward $51 or $50 instead.

Earlier Comments:
We want to keep our position size small because FLR is arguably already oversold but that doesn't mean it can't get more oversold. FYI: The Point & Figure chart for FLR is bearish with a $43 target.

- Suggested Positions - (Small Positions)

Long 2012Jan $45 PUT (FLR1221M45) entry $1.20

chart:

Entry on December 14 at $49.35
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on December 13, 2011


Juniper Networks - JNPR - close: 18.35 change: -0.25

Stop Loss: 20.55
Target(s): 16.75
Current Option Gain/Loss: + 24.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/17 update: Bearish analyst comments on JNPR helped the stock underperform on Friday. Shares lost -1.3% but failed to hit new lows for the week. I am concerned that JNPR is very short-term oversold here. Readers may want to go ahead and take profits early now. I am not suggesting new positions at this time.

(small positions) - Suggested Positions -

Long 2012Jan $17.50 PUT (JNPR1221M17.5) entry $0.57

12/17/11 readers may want to take profits now. JNPR looks short-term oversold
12/14/11 new stop loss @ 20.55
12/12/11 JNPR gapped open lower at $19.58, opening our trade. Stop loss at $20.75

chart:

Entry on December 12 at $19.58
Earnings Date 01/24/12 (unconfirmed)
Average Daily Volume = 8.8 million
Listed on December 10, 2011


Monsanto Co - MON - close: 68.14 change: -0.27

Stop Loss: 71.05
Target(s): 60.50
Current Option Gain/Loss: -21.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/17 update: MON's oversold bounce failed to see much follow through on Friday and shares underperformed with a -0.3% decline. Shares are still trading under the trendline of lower highs and resistance near $70 and its 200-dma. I would consider new positions here or you could wait for a new relative low (67.00).

Earlier Comments:
Our target is $60.50. More conservative traders may want to exit near $63.00 instead. FYI: The Point & Figure chart for MON is bearish with a $60 target.

(small positions) - Suggested Positions -

Long 2012Jan $65 PUT (MON1221M65) entry $2.05

chart:

Entry on December 14 at $67.35
Earnings Date 01/05/12 (unconfirmed)
Average Daily Volume = 3.7 million
Listed on December 13, 2011


SPDR S&P 500 ETF - SPY - close: 121.59 change: +0.19

Stop Loss: 125.55
Target(s): 120.50
Current Option Gain/Loss: + 7.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/17 update: The SPY tagged a new low for the week early Friday afternoon but pared its losses to inch back into positive territory. After a -3% decline for the week you might argue that stocks are a bit oversold but the path of least resistance remains lower.

I am not suggesting new positions at this time but we are adjusting our stop loss down to $125.55. More conservative traders may want to move their stop closer to $124 instead. Our exit target is $120.50 but you may want to aim lower.

Earlier Comments:
We want to keep our position size small to limit our risk.

- Suggested Positions -

Long 2012Jan $120 PUT (SPY1221M120) Entry $2.67

12/17/11 new stop loss @ 125.55
12/02/11 trade opened at $126.12 (gap higher), trigger was 126.00

chart:

Entry on December 02 at $126.12
Earnings Date --/--/--
Average Daily Volume = 224 million
Listed on November 30, 2011


Thermo Fisher Scientific - TMO - close: 43.84 change: -0.31

Stop Loss: 46.15
Target(s): 42.75
Current Option Gain/Loss: Dec$45p: +111.1% & Jan$45P: +50.0%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
12/17 update: Friday's early morning pop failed at $44.50 and TMO spent the rest of the day drifting lower. This failure is good news since Thursday's session had the potential for a bullish reversal higher. TMO is arguably oversold here so we're not suggesting new positions. Readers might want to lower their stops.

- Suggested Positions -

(December position closed 12/15/11)
DEC $45 put (TMO1117X45) Entry $0.45 exit $0.95 (+111.1%)

- or -

Long JAN $45 put (TMO1221M45) Entry $1.40

12/15/11 planned exit for Dec. $45 put. bid @ 0.95 (+111.1%)
12/14/11 Prepare to exit Dec. $45 puts at the open tomorrow, current bid on these puts is $1.20 (+166.6%)
12/14/11 new stop loss @ 46.15
12/05/11 TMO gapped open higher at $47.10

chart:

Entry on December 05 at $47.10
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 3.5 million
Listed on December 03, 2011


Watson Pharmaceuticals - WPI - close: 60.12 change: -0.79

Stop Loss: 64.25
Target(s): 56.00
Current Option Gain/Loss: Dec$60p: -12.5% & Jan$60p: + 2.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/17 update: Friday's move was good news for the bears. WPI's oversold bounce failed at the 10-dma. Shares were left hovering near round-number support at $60.00. It's possible that WPI could find support at the August low ($58.84) but we're aiming for a drop to $56.00 instead.

Currently we have a stop above $64.00 near its simple 200-dma.

- Suggested Positions -

(December position closed 12/15/11)
DEC $60 PUT (WPI1117X60) Entry $0.80 exit $0.70 (-12.5%)

- or -

Long JAN $60 PUT (WPI1221M60) Entry $2.00

12/15/11 planned exit for Dec. $60 puts, bid $0.70 (-12.5%)
12/14/11 Prepare to exit Dec. $60 puts at the open tomorrow, current bid on these puts is $0.65

chart:

Entry on December 07 at $61.75
Earnings Date 02/14/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on December 03, 2011


CLOSED Market Neutral Plays

iShares Russell 2000 ETF - IWM - close: 72.26 change: +0.56

Stop Loss: n/a
Target(s): TBD
Current Option Gain/Loss: -67.6%
Time Frame: up to December options expiration
New Positions: Must Be Opened on Thursday 12/08

Comments:
12/17 update: Thursday's bounce continued into Friday and the small cap indices and ETFs were some of the better performers. That was unfortunate for our December strangle trade. It was our plan to exit at the closing bell on Friday.

- Market Neutral Strangle - cost: 2.04 value: 0.66 (-67.6%)

Long DEC $77 call (IWM1117L77) Entry $0.58, current bid/ask $0.00/0.01

- Also Buy the -

Long DEC $73 put (IWM1117X73) Entry $1.46, current bid/ask $0.66/0.78

12/15/11 prepare to exit at the closing bell tomorrow

chart:

Entry on December 08 at $73.90
Earnings Date --/--/--
Average Daily Volume = 61 million
Listed on December 07, 2011