Editor's Note:

The U.S. market is in rally mode with stocks hitting new multi-month highs. The S&P 500 is on the verge of hitting 1300. The small cap Russell 2000 index has broken out past its simple 200-dma.

We saw HITK get stopped out on negative headlines. Meanwhile two put plays were stopped out, CSTR and TSCO. This is not a friendly environment for bearish trades.

-James

Current Portfolio:


CALL Play Updates

Boeing Co. - BA - close: 74.53 change: +0.55

Stop Loss: 72.65
Target(s): 77.00
Current Option Gain/Loss: -12.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/10 update: BA is still inching higher but didn't quite keep up with the S&P 500's gain today. The stock is flirting with a breakout from its current trading range. Readers looking for a new entry point could use a breakout past $75.00 as a trigger but you'll want to consider aiming for a move into the $78-80 zone. Currently our exit target is $77.00.

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

01/07/12 new stop loss @ 72.65
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


Coach, Inc. - COH - close: 62.32 change: -0.54

Stop Loss: 60.75
Target(s): 65.75
Current Option Gain/Loss: -21.5%
Time Frame: up to the earnings report
New Positions: see below

Comments:
01/10 update: COH was a disappointment today with a -0.8% decline. Yet this was probably a reflection of the big drop (-10%) in shares of TIF who lowered their earnings guidance. I would still consider calls on COH if we see both the stock and the S&P 500 open positive.

Our upside target is $65.75. More aggressive traders could aim higher. NOTE: We do not want to hold over COH's late January earnings report, which is not confirmed yet (around January 25th).

- Suggested Positions -

Long Feb $65 call (COH1218B65) Entry $2.04

Entry on January 09 at $62.99
Earnings Date 01/25/12 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on January 07, 2012


Deere & Co. - DE - close: 83.75 change: +1.02

Stop Loss: 79.45
Target(s): 84.75
Current Option Gain/Loss: +95.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/10 update: DE continues to extend its gains. The stock is up another +1.2% today and up six days in a row. Readers may want to take profits now. I am raising our stop loss up to $79.45. 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

01/10/12 new stop loss @ 79.45, readers may want to take profits now! The 2012Jan $80 call is up to a $4.00 bid (+95.1%)

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


Starwood Hotel & Resorts - HOT - close: 51.94 change: +0.53

Stop Loss: 48.75
Target(s): 55.75
Current Option Gain/Loss: Unopened
Time Frame: exit prior to earnings
New Positions: Yes, see below

Comments:
01/10 update: Hmm... unfortunately our trade did not open this morning. The S&P 500 index opened positive but HOT actually opened lower before reversing higher to a +1.0% gain. I am still bullish on HOT but we will adjust our entry point strategy to buy a dip at $51.00 instead. FYI: The Point & Figure chart for HOT is bullish with a $64 target.

*See Entry Details Above*

- Suggested Positions - Trigger @ 51.00

buy the Feb $52.50 call (HOT1218B52.5)

01/10/12 initial entry point did not work. New strategy: buy a dip at $51.00.

Entry on January xx at $ xx.xx
Earnings Date 02/02/12 (confirmed)
Average Daily Volume = 2.4 million
Listed on January 09, 2012


iShares Transportation - IYT - close: 92.21 change: +1.31

Stop Loss: 88.75
Target(s): 94.75 or 98.50
Current Option Gain/Loss: Jan$95c: -50.0% & Feb$95c: -20.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/10 update: The transportation sector was showing some relative strength today. The IYT gapped open higher and rallied to a +1.4% gain versus a +0.8% gain for the S&P 500. I am surprised that the Jan. $95 call didn't see a bigger move today.

- 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

01/07/12 new stop loss @ 88.75
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


TJX Companies - TJX - close: 65.56 change: -0.14

Stop Loss: 63.25
Target(s): 68.00
Current Option Gain/Loss: Jan$65c: +20.0% & Feb$65c: +17.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/10 update: Some of the retail names were underperformers today. TJX saw another dip toward short-term support at $65.00. I am not suggesting new positions at this time. More conservative traders may want to exit now to lock in gains.

Earlier Comments:
On January 5th, management announced a 2-for-1 stock split payable on February 2nd, 2012.

- Suggested Positions -

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

- or -

Long Feb $65 call (TJX1218B65) Entry $1.75

01/07/12 readers may want to take profits now (Jan$65call +90%, Feb$65call +57%)
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


Whole Foods Market, Inc. - WFM - close: 72.68 change: -0.21

Stop Loss: 69.25
Target(s): 74.00
Current Option Gain/Loss: +50.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/10 update: WFM spiked to $73.86 this morning before retreating lower toward $72. Shares underperformed the broader averages with a -0.2% decline. Readers may want to go ahead and lock in gains now. Our exit target remains $74.00. More aggressive traders could aim higher.

Earlier Comments:
We should expect a minor gap down on Wednesday morning. WFM begins trading ex-dividend on January 11th for its dividend payable on Jan. 23rd (WFM's annual yield is 0.8%).

- Suggested Positions -

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

01/10/12 WFM begins trading ex-dividend tomorrow morning
01/07/12 new stop loss @ 69.25
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

Accenture Plc, - ACN - close: 52.63 change: +0.89

Stop Loss: 54.15
Target(s): 48.50
Current Option Gain/Loss: -48.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/10 update: Widespread market gains helped ACN to a +1.7% bounce. If shares breakout past $54.00 it will look like a possible bullish double bottom pattern. I am not suggesting new positions at this time.

Our target is $48.50. We'll use a stop loss at $54.15, just above Wednesday's high. FYI: The Point & Figure chart for ACN is bearish with a $43 target.

(small positions) - Suggested Positions -

Long 2012Jan $52.50 PUT (ACN1221M52.5) Entry $1.35

Entry on January 06 at $51.91
Earnings Date 03/26/12 (unconfirmed)
Average Daily Volume = 4.6 million
Listed on January 05, 2012


Cash America Intl. - CSH - close: 45.56 change: +0.13

Stop Loss: 46.75
Target(s): 40.50
Current Option Gain/Loss: Unopened
Time Frame: up to the earnings report.
New Positions: Yes, see below

Comments:
01/10 update: CSH is still consolidating sideways above support at $45.00. If you study the intraday chart shares look poised to breakdown soon.

We want to use a trigger to buy puts at $44.75 with a stop loss at $46.75. Our target is $40.50. FYI: The Point & Figure chart for CSH is bearish with a $33 target.

NOTE: We do not want to hold over CSH's earnings report on January 26th.

Trigger @ 44.75

- Suggested Positions -

buy the Jan $45 PUT (CSH1221M45)

- or -

buy the Feb $45PUT (CSH1218N45)

Entry on January xx at $ xx.xx
Earnings Date 01/26/12 (confirmed)
Average Daily Volume = 292 thousand
Listed on January 05, 2012


Fossil, Inc. - FOSL - close: 80.67 change: +1.69

Stop Loss: 82.80
Target(s): 73.50
Current Option Gain/Loss: -26.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/10 update: FOSL was not immune to the market's widespread gains today. The stock rallied off the $78 level to close up +2.1%. If the market continues to rally tomorrow we could see shares hit our stop loss. Speaking of stops I am lowering ours down to $82.80.

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

01/10/12 new stop loss @ 82.80
01/06/12 there was no follow through on Thursday's bounce.
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: 66.01 change: +2.46

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:
01/10 update: Bears are on the defensive with the market in rally mode. LNKD rose +3.8% and is flirting with a breakout at the top its $61-66 trading range. If LNKD closes higher tomorrow we will probably drop it as a bearish entry point.

Bigger picture the stock seems to have a bearish pattern of lower highs and lower lows. Furthermore LNKD has tens of millions of shares that will come to market when their lock up period expires in mid February.

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


Walter Energy, Inc. - WLT - close: 56.87 change: -1.86

Stop Loss: 62.05
Target(s): 50.50
Current Option Gain/Loss: +17.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/10 update: WLT added +1% but the stock pared its advance off the opening high. It looks like a failed rally near short-term resistance at $60.00 and a potential entry point to buy puts. However, given the market's recent strength readers may want to hesitate on launching new bearish positions.

Earlier Comments:
Before I continue I have to warn you that WLT can be a volatile stock. What makes this trade even more challenging is that WLT has been considered a potential takeover candidate for months. Rumors consistently spark short-term spikes in this stock. Yet the overall trend is definitely bearish. We want to keep our position size pretty small to limit our risk. More conservative traders may want to exit near the 2011 low ($53.41). I am listing our exit target at $50.50. FYI: The Point & Figure chart for WLT is bearish with a $49 target.

- Suggested Positions -

Long Feb $55 PUT (WLT1218N55) Entry $3.50

01/09/12 new trigger 62.05

Entry on January 09 at $57.75
Earnings Date 02/15/12 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on January 07, 2012


CLOSED BULLISH PLAYS

Hi Tech Pharmacal Co. - HITK - close: 35.31 change: -6.53

Stop Loss: 39.40
Target(s): 44.50
Current Option Gain/Loss: -65.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/10 update: Moves like the one in HITK today are a prime example of why you always want to play with a stop loss. You never know when bad news will strike and send a stock down sharply. This morning news hit that one of its rivals had gotten a competing drug approved by the FDA The real issue is a new competitor in this particular generic drug could take a significant bite out of HITK's revenues. Shares of HITK were down more than -20% at one point and settled with a -15.6% loss. Our stop loss was hit at $39.40 early this morning.

The really sad news is that our Jan. $40 call, which closed at $2.65 yesterday opened at $0.90 this morning when HITK gapped down this morning. Our trade went from +51% to -65% in a blink.

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, exit $0.50 (-65.5%)

01/10/12 stopped out @ 39.40 on negative headlines
01/07/12 new stop loss @ 39.40
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

chart:

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


CLOSED BEARISH PLAYS

Coinstar, Inc. - CSTR - close: 44.18 change: +1.00

Stop Loss: 44.75
Target(s): 40.25
Current Option Gain/Loss: - 27.2%
Time Frame: 2 to 3 weeks
New Positions: , see below

Comments:
01/10 update: The stock market is clearly not cooperating with our bearish trades. CSTR has seen a sharp two-day bounce. Our stop loss was at $44.75. Today's intraday high just happened to hit $44.77 so our trade is closed. I warned readers that unexpected strength could spark short covering, which explains the sharp bounce. The larger trend is still bearish. Unfortunately our put went from +100% to -27% in two days.

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, exit $1.60 (-27.2%)

01/10/12 stopped out at $44.75
01/07/12 new stop loss @ 44.75
Readers may want to take profits now. The put option has already doubled (+100%).

chart:

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


Tractor Supply Company - TSCO - close: 72.69 change: +2.09

Stop Loss: 72.15
Target(s): 65.50
Current Option Gain/Loss: -83.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/10 update: TSCO got a boost from Goldman Sachs this morning when the broker upgraded the stock from a "sell" to a "neutral". TSCO gapped open higher at $72.27, which was above our stop loss at $72.15. The play was closed immediately. TSCO has now broke through resistance at its 50-dma and through its four-week trend line of lower highs.

- Suggested Positions -

Jan $70 PUT (TSCO1221M70) entry $2.20, exit $0.37 (-83.1%)

01/10/12 stopped out at $72.27, gap open above our stop
01/07/12 new stop loss @ 72.15

chart:

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