Editor's Note:

We want to exit early and lock in gains on our JPM trade. Meanwhile the HITK trade has been triggered. WPI has been stopped out.

-James

Current Portfolio:


CALL Play Updates

Boeing Co. - BA - close: 73.53 change: -0.80

Stop Loss: 72.25
Target(s): 77.00
Current Option Gain/Loss: -44.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/05 update: Defense stocks stumbled today as the White House announced new budget cuts for defense spending. BA briefly traded under support near $73.00 but bounced at $72.74. Shares are still in the $73-75 trading range. We are not suggesting new positions at this time. I am raising our stop loss up to $72.25.

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

01/05/12 new stop loss @ 72.25
12/31/11 new stop loss @ 71.75
12/28/11 new stop loss @ 71.40
12/22/11 new stop loss @ 69.85
12/13/11 trade opened
12/12/11 adjusted stop loss to $69.25
12/12/11 trade did not open, try again.

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


Deere & Co. - DE - close: 81.64 change: +1.17

Stop Loss: 78.45
Target(s): 84.75
Current Option Gain/Loss: +25.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/05 update: DE continues to show relative strength. The stock outperformed the major indices today with a +1.4% gain. This helps confirm the breakout past resistance near $80 and its 200-dma. I am not suggesting new positions at this time.

Our target is $84.75. More aggressive traders could aim higher. FYI: The Point & Figure chart for DE is bullish with a $96 target.

- Suggested Positions -

Long 2012Jan $80 call (DE1221A80) entry $2.05

Entry on January 04 at $80.50
Earnings Date 02/15/12 (unconfirmed)
Average Daily Volume = 3.3 million
Listed on January 03, 2012


Dover Corp. - DOV - close: 58.17 change: -0.92

Stop Loss: 56.75
Target(s): 64.50
Current Option Gain/Loss: -52.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/05 update: DOV displayed some volatility this morning, which may have been a reaction to the company reaffirming its guidance. The stock gapped lower but found support (twice) in the $56.80 area. This was near the 150-dma and the exponential 200-dma. Shares managed to rally back into positive territory but DOV remains under resistance near its 200-dma and the $60.00 level.

Earlier Comments:
More conservative traders may want to wait for DOV to rally past the $60.00 level instead since $60.00 might be considered round-number resistance. If we are triggered at $59.55 our target is $64.50. FYI: The Point & Figure chart for DOV is bullish with a $75 target.

- Suggested Positions -

Long Jan $60 call (DOV1221A60) entry $1.25

01/03/12 DOV gapped open higher at $59.57, above our trigger, opening this trade.

Entry on January 03 at $59.57
Earnings Date 01/27/12 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on December 27, 2011


Hi Tech Pharmacal Co. - HITK - close: 40.99 change: +1.54

Stop Loss: 37.95
Target(s): 44.50
Current Option Gain/Loss: +17.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/05 update: After testing support yesterday HITK finally saw some follow through. The stock rallied past resistance near $40.00 and hit our trigger to buy calls at $40.15. The stock outperformed today with a +3.9% gain. Positive analyst comments helped fuel the move this morning. If you're looking for a new entry point wait for a bounce off the $40.00 mark.

Earlier Comments:
We want to keep our position size small to limit our risk. The most recent data listed short interest at more than 13% of the very small 10 million share float. Our target is $44.50. Readers might want to aim higher. The Point & Figure chart for HITK is bullish with a $58 target.

(small positions) - Suggested Positions -

Long 2012Jan $40 call (HITK1221A40) entry $1.45

01/05/12 trade opened at $40.15 (trigger)
01/04/12 still not open yet. Adjust stop loss to $37.95
12/27/11 new trigger @ 40.15, stop loss 38.85
12/22/11 not open yet. New Trigger @ 37.25, stop 36.70
12/21/11 trade not open yet. (SP500 opened lower) Try again. New stop loss @ 37.90

Entry on January 05 at $40.15
Earnings Date 03/12/12 (unconfirmed)
Average Daily Volume = 298 thousand
Listed on December 20, 2011


iShares Transportation - IYT - close: 90.42 change: -0.22

Stop Loss: 87.45
Target(s): 94.75 or 98.50
Current Option Gain/Loss: Jan$95c: - 100% & Feb$95c: -31.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/05 update: IYT slipped lower this morning but managed to pare its losses by the closing bell. I would wait for a new rise past $91.00 before considering new bullish positions. More conservative traders may want to inch up their stop loss.

- Suggested Positions -

Long Jan $95 call (IYT1221A95) entry $0.20
target 94.75

- or -

Long Feb $95 call (IYT1218B95) entry $1.45
target 98.50

01/03/12 IYT gapped open higher at $91.20, above our trigger at $90.75

Entry on January 03 at $91.20
Earnings Date --/--/--
Average Daily Volume = 582 thousand
Listed on December 22, 2011


JPMorgan Chase & Co - JPM - close: 35.68 change: +0.73

Stop Loss: 32.35
Target(s): 37.50
Current Option Gain/Loss: Jan$33c: +180.0% & Feb$35c: +137.7%
Time Frame: exit prior to earnings
New Positions: see below

Comments:
01/05 update: Take profits now!

JPM continues to show strength. The stock rallied +2.0% and broke through resistance near $35.00 and its simple 150-dma. Volume has been healthy this week too. However, we are concerned the financials might see some profit taking tomorrow. I am suggesting readers exit immediately tomorrow morning at the open.

- Suggested Positions -

Long 2012Jan $33 call (JPM1221A33) entry $1.05

- or -

Long February $35 call (JPM1218B35) entry $0.90

01/05/12 Plan to exit immediately tomorrow morning!
01/03/12 new stop loss @ 32.35, readers may want to take profits now
2012Jan $33 call +111.4%, Feb $35 call +81.1%
12/31/11 new stop loss @ 31.70
12/31/11 adjust our time frame. We want to exit prior to the January 13th earnings report.

Entry on December 22 at $32.75
Earnings Date 01/13/12 (confirmed)
Average Daily Volume = 45.3 million
Listed on December 20, 2011


TJX Companies - TJX - close: 66.31 change: +1.88

Stop Loss: 63.25
Target(s): 68.00
Current Option Gain/Loss: Jan$65c: +85.0% & Feb$65c: +51.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/05 update: I cautioned readers yesterday that the retail stocks could be volatile today. In TJX's case the volatility was bullish. The stock actually opened lower but quickly rebounded and soared to a +2.9% gain and a new all-time high. The move was powered by positive news this morning. TJX announced strong December same-store sales of +8% versus estimates for +2.4%. Management also announced a 2-for-1 stock split payable on February 2nd, 2012.

I am raising our stop loss to $63.25.

- Suggested Positions -

Long 2012Jan $65 call (TJX1221A65) Entry $1.00

- or -

Long Feb $65 call (TJX1218B65) Entry $1.75

01/05/12 new stop loss @ 63.25, TJX announced strong same-store sales and a 2:1 split.
12/31/11 new stop loss @ 62.75

Entry on December 22 at $64.10
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on December 21, 2011


Waters Corp. - WAT - close: 73.71 change: -0.74

Stop Loss: 72.75
Target(s): 79.50
Current Option Gain/Loss: -46.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/05 update: WAT underperformed the market again with a -0.9% drop on Thursday. I am strongly tempted to close this trade now. I am not suggesting new positions at this time. Readers may want to exit early immediately.

- Suggested Positions -

Long Jan $75 call (WAT1221A75) entry $2.25

01/04/12 new stop loss @ 72.75
01/03/12 new stop loss @ 71.75
12/28/11 Traders may want to exit early now.

Entry on December 22 at $74.55
Earnings Date 01/24/12 (unconfirmed)
Average Daily Volume = 787 thousand
Listed on December 20, 2011


Whole Foods Market, Inc. - WFM - close: 72.75 change: +1.26

Stop Loss: 68.75
Target(s): 74.00
Current Option Gain/Loss: +63.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/05 update: Today's +1.7% gain is a nice follow up to yesterday's breakout above resistance near $70.00. I would not chase WFM at this point. The 2011 highs could be resistance. Our exit target is $74.00 but more aggressive traders may want to aim higher. We are raising our stop loss to $68.75.

- Suggested Positions -

Long 2012Jan $70 call (WFM1221A70) entry $1.90

01/05/12 new stop loss @ 68.75
01/03/12 WFM gapped open higher at $70.55, above our trigger (70.25)

Entry on January 03 at $70.55
Earnings Date 02/08/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on December 28, 2011


PUT Play Updates

Autodesk, Inc. - ADSK - close: 30.82 change: +0.61

Stop Loss: 31.25
Target(s): 25.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
01/05 update: The stock market's early morning weakness pushed ADSK under support at $30.00 but the low today was only $29.82. Shares rebounded +2.0% to erase yesterday's decline.

We are waiting for a breakdown. The late November low was $29.76. I am suggesting a trigger to buy puts at $29.65. Our exit target is $25.50. FYI: The Point & Figure chart for ADSK is bearish with a $23 target.

Trigger @ 29.65

- Suggested Positions -

buy the 2012Jan $30 PUT (ADSK1221M30)

- or -

buy the Feb $28 PUT (ADSK1218N28)

Entry on December xx at $ xx.xx
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 2.9 million
Listed on December 29, 2011


Coinstar, Inc. - CSTR - close: 43.37 change: -0.91

Stop Loss: 46.60
Target(s): 40.25
Current Option Gain/Loss: +18.1%
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Comments:
01/05 update: Our CSTR put play is off to a good start. Shares opened at $44.38. Traders bought the initial dip near $43.25 but the bounce rolled over and CSTR lost -2.0% on the session. I would still consider new positions now.

Earlier Comments:
I do want to point out that the larger trend for CSTR is suggesting a long-term target in the $25.00 area. If you've got the patience then consider aiming for the $27-25 zone over the next three or four months. The real signal will be a breakdown under significant support in the $38.50-37.50 zone.

NOTE: I have to warn you that being short CSTR is a popular trade. The most recent data listed short interest at almost 45% of the very small 28.2 million-share float. Any unexpected surge higher could produce a short squeeze. We will want to keep our position size small to limit our risk.

FYI: The Point & Figure chart for CSTR is bearish with a $34 target.

(SMALL Positions) - Suggested Positions -

Long Jan $45 PUT (CSTR1221M45) Entry $2.20

Entry on January 05 at $44.38
Earnings Date 02/02/12 (unconfirmed)
Average Daily Volume = 846 thousand
Listed on January 04, 2012


Fossil, Inc. - FOSL - close: 78.08 change: -1.19

Stop Loss: 83.05
Target(s): 73.50
Current Option Gain/Loss: -42.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/05 update: Warning! The action in FOSL today is troubling. The stock started weak, thanks to the widespread market weakness this morning, but then FOSL rebounded and rallied to a +4.3% gain. Broken support at $80.00 should have been new resistance. This bounce makes the recent breakdown under $80 look like a bear trap pattern.

I am not suggesting new positions at this time and readers may want to exit immediately to limit any losses.

Earlier Comments:
Our target is $73.50. More conservative traders may want to exit in the $75 area instead. FYI: The Point & Figure chart for FOSL is bearish with a $71 target.

- Suggested Positions -

Long 2012Jan $75 PUT (FOSL1221M75) entry $0.95

01/05/12 Today's move might be a bullish reversal. Readers may want to consider an early exit immediately

Entry on January 03 at $81.12
Earnings Date 02/15/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on December 31, 2011


LinkedIn Corp. - LNKD - close: 64.13 change: +2.34

Stop Loss: 62.55
Target(s): 51.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
01/05 update: LNKD is a volatile stock so it's not unexpected to see some choppiness. The stock rallied today (+3.7%) but failed at its descending 30-dma. The stock has failed at this moving average multiple times over the last month. Shares closed just enough to erase yesterday's decline.

Aggressive traders could buy puts here with a stop just above $66.00. The newsletter is suggesting readers wait for a breakdown with a trigger to buy puts at $59.75 instead. Our exit target is $51.50. FYI: The Point & Figure chart for LNKD is bearish with a $55 target.

Trigger @ 59.75 (small positions)

- Suggested Positions -

buy the Jan $57.50 PUT (LNKD1221M57.5)

Entry on January xx at $ xx.xx
Earnings Date 02/09/12 (unconfirmed)
Average Daily Volume = 1.2 million
Listed on January 04, 2012


Tractor Supply Company - TSCO - close: 69.42 change: +0.07

Stop Loss: 72.55
Target(s): 65.50
Current Option Gain/Loss: -15.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/05 update: TSCO managed to bounce at $68.50 this morning but the rebound was very minor. I would still consider new bearish positions now.

Earlier Comments:
We will aim for a drop to $65.50 but more aggressive traders may want to aim for the $62-60 zone instead.

- Suggested Positions -

Long Jan $70 PUT (TSCO1221M70) entry $2.20

Entry on January 03 at $69.50
Earnings Date 01/26/12 (unconfirmed)
Average Daily Volume = 550 thousand
Listed on December 31, 2011


CLOSED BEARISH PLAYS

Watson Pharmaceuticals - WPI - close: 60.31 change: -0.32

Stop Loss: 62.55
Target(s): 56.00
Current Option Gain/Loss: Jan$60p: -70.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/05 update: Our WPI trade has been stopped out. Shares held support at the $60.00 level this morning while the major indices were weak. That was our first warning sign. Then WPI consistently inched higher all day long. Yet by 3:40 p.m. WPI was trading near $61.20. Then suddenly in the next ten minutes the stock shot higher with a move past $62.80 before paring its gains. I do not see any news behind this late day surge higher. Our stop loss was hit at $62.55.

- Suggested Positions -

Long JAN $60 PUT (WPI1221M60) Entry $2.00 exit 0.60 (-70.0%)

01/05/12 stopped out at $62.55
12/28/11 new stop loss @ 62.55
12/19/11 new stop loss @ 63.05
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