Editor's Note:

Shares of SPX Corp. (SPW) outperformed the market with a +3% advance. The stock hit our exit target. We also closed LH prior to earnings out tomorrow. Our DLTR trade was finally triggered. I've adjusted the entry point strategy on the CVLT trade.

The market's rally is starting to look tired. Readers will want to double check their stop loss placement. It might be time to raise your stop. We raised a few of ours below.

Current Portfolio:


CALL Play Updates

Chicago Bridge & Iron - CBI - close: 43.65 change: +0.16

Stop Loss: 43.25
Target(s): 49.25
Current Option Gain/Loss: Unopened
Time Frame: up to the Feb. 23rd earnings report
New Positions: Yes, see below

Comments:
02/09 update: CBI ended a three-day losing streak with traders buying the dip near yesterday's lows. The larger trend is still up but the daily chart's MACD has turned bearish. If CBI doesn't show some improvement tomorrow we'll probably drop it as a candidate.

I am suggesting a trigger to open bullish positions at $45.25. If triggered we'll use a stop at $43.25. Our exit target is $49.25. We do not want to hold over the Feb 23rd earnings report. FYI: The Point & Figure chart for CBI is bullish with a long-term $70 target.

(Buy Calls) Trigger @ $45.25

- Suggested Positions -

buy the MAR $45 call (CBI1217C45)

Entry on February xx at $ xx.xx
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 852 thousand
Listed on February 04, 2012


Citrix Systems - CTXS - close: 71.98 change: +0.67

Stop Loss: 68.75
Target(s): Feb calls: $74.75, Mar calls: $76.50
Current Option Gain/Loss: Feb70c: +35.1% & Mar70c: +23.3%
Time Frame: 2 to 4 weeks
New Positions: Yes, see below

Comments:
02/09 update: CTXS continues to outperform. The stock gained another +0.9%. Shares are up eight days in a row. We should expect some sort of pull back sooner rather than later. I'm looking for short-term support near $70.00 or the 200-dma (near $69.00). A drop toward $69 also corresponds with a normal 38.2% Fib retracement of the current two-week rally. We will raise our stop loss to $68.75.

NOTE: I am suggesting we go ahead and exit our Feb. $70 calls at the opening bell tomorrow. Current bid is $2.50 (+35.1%).

The plan was to keep our position size small. Our target is $74.75 for the February calls and $76.50 for the March calls. There are less than two weeks left for February calls.

(small positions!) - Suggested Positions -

Long Feb $70 calls (CTXS1218B70) Entry $1.85

- or -

Long Mar $70 calls (CTXS1217C70) Entry $3.30

02/09/12 new stop loss @ 68.75
02/09/12 prepare to exit Feb. $70 calls at the open tomorrow. current bid $2.50 (+35%)

Entry on February 07 at $70.50
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 2.4 million
Listed on February 06, 2012


CommVault Systems - CVLT - close: 54.33 change: +1.33

Stop Loss: 49.75
Target(s): 58.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
02/09 update: Hmm... is our CVLT trade open? The S&P 500 index opened positive, albeit by a very slim margin. CVLT actually opened flat at $53.00. The very next trade was lower at $52.99. As much as I would like to say the CVLT trade is open, given today's strength, the action doesn't meet our suggested entry point requirements. The stock did rally to new highs and outperformed with a +2.5% gain. I would not chase it here.

Odds are growing the market could see a pull back. Let's adjust our entry point strategy to buy a dip at $51.50 with a stop loss at $49.75. FYI: The Point & Figure chart for CVLT is bullish with a long-term $86 target.

NOTE: We want to keep our position size small because the option spreads on CVLT are a bit wide.

buy-a-dip trigger @ 51.50

- Suggested Positions - (small positions!)

buy Mar $55 call (CVLT1217C55)

02/09/12 trade did not open (barely). Adjust entry point strategy to buy a dip at $51.50, stop loss $49.75

Entry on February xx at $ xx.xx
Earnings Date 05/10/12 (unconfirmed)
Average Daily Volume = 531 thousand
Listed on February 08, 2012


Dollar Tree - DLTR - close: 86.90 change: +1.62

Stop Loss: 84.75
Target(s): 89.75 & 92.50
Current Option Gain/Loss: Feb$87.5c: + 0.0% & Mar$87.5c: - 2.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/09 update: Our DLTR trade is finally open. The stock garnered some positive analyst comments this morning. Shares gapped higher and rallied to new highs. Our trigger to buy calls was hit at $86.75.

I want to remind you that February options expire in six trading days.

Earlier Comments:
I am setting individual targets for our options below. Keep a wary eye on the $90.00 level since it might be round-number resistance. FYI: The Point & Figure chart for DLTR is bullish with a long-term $113 target.

(small positions) - Suggested Positions -

Long Feb $87.50 call (DLTR1218B87.5) entry $0.50
exit target: 89.75

- or -

Long Mar $87.50 call (DLTR1217C87.5) entry $2.30
exit target: 92.50

02/09/12 trade opened
02/04/12 Only open small (half-sized) positions if DLTR hits our entry point at $86.75

Entry on February 09 at $86.75
Earnings Date 02/22/12 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on February 02, 2012


Flowserve Corp. - FLS - close: 115.36 change: +1.36

Stop Loss: 111.75
Target(s): 114.50 for Feb call & 118.00 for April call
Current Option Gain/Loss: (Feb $110c: +48.2%) & Apr$115c: +52.5%.
Time Frame: 3 to 4 weeks
New Positions: , see below

Comments:
02/09 update: FLS continues to show strength and the stock rallied to new relative highs today. We are raising our stop loss to $111.75. More conservative traders may want to lock in profits now or place their stop closer to $113.00 instead. I am not suggesting new positions at this time. FYI: The Point & Figure chart for FLS is bullish with a $139 target.

- Suggested Positions -

Long APR $115 call (FLS1221D115) Entry $4.00
exit target: $118.00

02/09/12 new stop loss @ 111.75
02/04/12 new stop loss @ 109.45
02/03/12 exit target hit at $114.50 for Feb. $110 calls. exit $5.00 (+48.2%)
02/02/12 new stop loss @ 107.95
02/01/12 new stop loss @ 106.95
02/01/12 adjusted exit targets: $114.50 for Feb call, $118.00 for Apr call
01/30/12 new stop loss at $105.75
01/26/12 trade opened on FLS' gap open higher at $109.21.
01/25/12 adjusted entry point strategy to buy calls when FLS hits $109.05, and use a stop loss at $105.45

Entry on January 26 at $109.21
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 400 thousand
Listed on January 21, 2012


iShares Transportation - IYT - close: 94.81 change: +0.25

Stop Loss: 93.90
Target(s): 98.50
Current Option Gain/Loss:(Jan$95c: -100%) Feb$95c: -41.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/09 update: For the second day in a row shares of the IYT bounced near short-term support at $94 and its rising 20-dma. I am concerned that the bullish trend is waning. More conservative traders may want to cut their losses now. I am raising our stop loss up to $93.90. We only have six trading days left for February options. I am not suggesting new positions at this time.

- Suggested Positions -

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

02/09/12 new stop loss @ 93.90
02/04/12 new stop loss @ 93.40
01/31/12 new stop loss @ 92.45
01/28/12 new stop loss @ 91.75
01/21/12 new stop loss @ 91.40
01/21/12 January $95 calls have expired.
01/12/12 new stop loss @ 89.45
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


3M Co. - MMM - close: 88.02 change: +0.05

Stop Loss: 86.45
Target(s): 94.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
02/09 update: MMM was downgraded this morning but the news didn't have much impact. Shares continued to churn sideways near resistance at $88.00. Our trigger has not been hit yet at $88.50. I don't watch Jim Cramer's Mad Money show but I happened to catch a few seconds of him today and he was bullish on MMM tonight.

The plan is to buy calls when MMM trades at $88.50 or higher. The $90 level could be round-number resistance but we're setting our exit target at $94.00. FYI: The Point & Figure chart for MMM is bullish with a $109 target.

NOTE: I am removing the February option since Februarys expire in six trading days.

Breakout Trigger (buy calls) @ $88.50

- Suggested Positions -

buy the MAR $90 call (MMM1217C90)

02/09/12 removed the February call.

Entry on February xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on February 07, 2012


Pall Corp. - PLL - close: 63.73 change: +0.77

Stop Loss: 61.75
Target(s): 64.75
Current Option Gain/Loss: Feb$60c: +105.7% & Mar$60c: +48.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/09 update: PLL continues to show relative strength. The stock outperformed today with a +1.2% gain. Our February calls have doubled. I am suggesting we exit our February $60 calls at the open tomorrow. The current bid is $3.60 (+105%). I am raising our stop loss on the remaining position (March calls) to $61.75. Our exit target for the March calls remains $64.75. More aggressive traders could aim higher.

- Suggested Positions -

Long FEB $60 call (PLL1218B60) Entry $1.75

- or -

Long MAR $60 call (PLL1217C60) Entry $2.90

02/09/12 prepare to exit Feb calls at the open tomorrow. current bid is $3.60 (+105%)
02/09/12 new stop loss @ 61.75
02/04/12 new stop loss @ 59.45

Entry on February 02 at $61.00
Earnings Date 03/12/12 (unconfirmed)
Average Daily Volume = 769 thousand
Listed on January 31, 2012


S&P Oil ETF - XES - close: 37.88 change: -0.33

Stop Loss: 36.45
Target(s): 43.00
Current Option Gain/Loss: Feb37c: -33.3% & Mar36c: - 2.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/09 update: I cautioned readers yesterday to expect a dip in XES. I don't think it's over yet. Readers may want to wait for a dip or a bounce in the $37.50-37.00 zone before initiating new positions.

I would not buy February options, which expire in six trading days.

Earlier Comments:
The option spreads on the XES a bit wide, which makes this a higher-risk trade. I am suggesting we keep our position size small to limit our risk. Our multi-week exit target is $43.00. I prefer the March calls but short-term traders can use February options but these expire in two weeks.

(small positions) - Suggested Positions -

Long Feb $37 call (XES1218B37) Entry $1.35

- or -

Long Mar $36 call (XES1217C36) Entry $2.45

Entry on February 06 at $37.75
Earnings Date --/--/--
Average Daily Volume = 177 thousand
Listed on February 04, 2012


PUT Play Updates

Currently we do not have any active put trades.


CLOSED BULLISH PLAYS

Laboratory Corp. - LH - close: 92.11 change: +0.12

Stop Loss: 90.75
Target(s): 94.00
Current Option Gain/Loss: - 6.6%
Time Frame: up to the Feb. 10th earnings report.
New Positions: see below

Comments:
02/09 update: We have run out of time with our LH trade. The plan was to exit tonight at the close to avoid holding over the earnings announcement tomorrow morning.

Unfortunately it looks like we're getting screwed by the market makers. Yesterday the option closed with a bid/ask of $2.60/2.95. Today shares of LH dipped to $91.20 and bounced back to a gain at $92.11. The ask on our call option rose to $3.00. Yet the bid on the call option has plunged to $1.40. Ridiculous! The bid should be about $2.65.

If the bid was $2.65 our play is up +76.6%.

With a bid at $1.40 our play is down -6.6%.

- Suggested Positions -

Feb $90 call (LH1218B90) Entry $1.50 exit $1.40 (?)

02/09/12 planned exit at the close
02/08/12 prepare to exit tomorrow at the close
02/04/12 new stop loss @ 90.75, adjust target to $94.00
02/01/12 new stop loss @ 89.65
01/31/12 If you haven't done so yet readers may want to take profits now (+80%)
01/28/12 new stop loss @ 88.40
01/26/12 sold half @ the open, bid @ $2.65 (+76.6%)
01/25/12 sell half at the open tomorrow. Bid on the Feb. $90 call is at $3.10 (+106%).
01/25/12 new stop loss @ 87.90
01/24/12 rival DGX delivers a strong earnings report
01/23/12 trade triggered at $89.00
01/21/12 new stop loss at $86.90. Still waiting for LH to hit our entry point at $89.00.

chart:

Entry on January 23 at $89.00
Earnings Date 02/10/12 (confirmed)
Average Daily Volume = 564 thousand
Listed on January 10, 2012


SPX Corp. - SPW - close: 74.50 change: +2.17

Stop Loss: 69.90
Target(s): 74.75
Current Option Gain/Loss: +126.6%
Time Frame: up to the Feb. 16 earnings report
New Positions: see below

Comments:
02/09 update: Target achieved at $74.75.

It was a very volatile day for SPW. Shares spiked down to $70.45 and immediately reversed higher. Shares closed the day up +3%. The stock tested resistance near $75.00 twice this afternoon. Our exit target was hit at $74.75.

The only news I could find that might account for this move was a headline that SPW had won a $40 million contract to build a dairy processing plant in China. SPW currently has revenues of $5.3 billion a year. I don't see why a $40 million contract would move the stock this much.

Earlier Comments:
Our target is the $74.75 mark but more aggressive traders could aim higher. We do not want to hold over the Feb. 16th earnings report. FYI: The Point & Figure chart for SPW is bullish with an $82 target.

- Suggested Positions -

Feb $70 call (SPW1218B70) Entry $2.25 exit $5.10*(+126.6%)

02/09/12 target hit at $74.75
*exit price is an estimate. option did not trade at time SPW hit our exit target.
02/04/12 new stop loss @ 69.90, readers may want to exit now to lock in gains.

chart:

Entry on January 31 at $70.50
Earnings Date 02/16/12 (unconfirmed)
Average Daily Volume = 711 thousand
Listed on January 26, 2012