Editor's Note:

The stock market looks vulnerable here. Will it finally see a correction lower? We are making some strategy changes tonight with plans to take profits in CTXS, FLS, and PLL tomorrow. See updates for details below.

Current Portfolio:


CALL Play Updates

Caterpillar, Inc. - CAT - close: 114.45 change: +0.75

Stop Loss: 111.95
Target(s): 119.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/15 update: CAT's rival DE reported earnings this morning that beat estimates by six cents but missed on the revenue estimate. Guidance was slightly positive and yet the stock sold off anyway. Shares DE opened lower and then plunged to a -5.3% decline. This weighed on shares of CAT, which fell to a -1.6% decline.

Let's wait and see if there is any follow through tomorrow.

I am suggesting a trigger to open bullish positions in CAT at $115.25. If triggered we'll use a stop loss at $111.95. Our initial target is $119.75. It's possible that the 2011 high near $116.50 could be resistance but I doubt it, not after CAT spent the last two weeks building up steam for a new leg higher.

FYI: The Point & Figure chart for CAT is bullish with a $165 target.

Trigger @ 115.25

- Suggested Positions -

buy the Mar $120 call (CAT1217C120)

Entry on February xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 7.5 million
Listed on February 14, 2012


Citrix Systems - CTXS - close: 74.16 change: +0.29

Stop Loss: 69.75
Target(s): Mar calls: $76.50
Current Option Gain/Loss: (Feb70c: + 8.1%) & Mar70c: +63.6%
Time Frame: 2 to 4 weeks
New Positions: , see below

Comments:
02/15 update: Warning! CTXS almost hit our exit target today. Shares rallied to $76.45 when our exit target is $76.50. The sharp pull back from its intraday highs makes today's session look like a potential short-term top.

I am suggesting we go ahead and exit positions immediately tomorrow morning at the opening bell.

Earlier Comments:
The plan was to keep our position size small.

(small positions!) - Suggested Positions -

Long Mar $70 calls (CTXS1217C70) Entry $3.30

02/15/12 prepare to exit at the opening bell tomorrow
CTXS almost hit our exit target today. Target = $76.50, high today = $76.45
02/13/12 new stop loss @ 69.75
02/10/12 planned exit for Feb. $70 calls @ the open.
bid on calls opened at $2.00 (+8.1%)
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: 53.97 change: -0.04

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:
02/15 update: Wow! CVLT refuses to move. The stock has been stuck in a very narrow range for almost four days in a row. The fact that shares did not sell-off today with the rest of the market is a positive. Yet we don't want to open positions at current levels.

No changes from my prior comments yet. Our plan is to buy calls on a dip at $51.50. More conservative traders may want to wait and buy the bounce from this area. 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: 87.69 change: -0.81

Stop Loss: 84.75
Target(s): 89.75 & 92.50
Current Option Gain/Loss:(Feb$87.5c:+130.0%) & Mar$87.5c: +10.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/15 update: DLTR spiked to a new high this morning at $88.79 and then reversed to erase yesterday's gains. Look for short-term support near $86.50 or on a dip near $85.00.

I am not suggesting new positions at this time. Our exit target for the March calls is $92.50 but the $90.00 level could be round-number resistance.

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

02/14/12 scheduled close for the Feb. $87.50 calls at the closing bell tonight. bid on the call option was $1.15 (+130%).
02/13/12 prepare to exit our Feb. calls at the close tomorrow
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: 116.58 change: -0.58

Stop Loss: 115.40
Target(s): 114.50 for Feb call & 118.00 for April call
Current Option Gain/Loss: (Feb $110c: +48.2%) & Apr$115c: +72.5%.
Time Frame: 3 to 4 weeks
New Positions: , see below

Comments:
02/15 update: Hmm... today was the second time in three days that FLS has struggled with the $117.50 area. I am growing concerned FLS could be getting tired. I am suggesting we go ahead and exit our remaining positions at the closing bell tomorrow. More conservative traders will want to exit at the opening bell instead. I am raising our stop loss to $115.40. Our exit target remains $118.00 should FLS show some strength tomorrow.

- Suggested Positions -

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

02/15/12 prepare to exit positions at the close tomorrow
02/15/12 new stpo loss @ 115.40
02/13/12 new stop loss @ 114.40, readers may want to exit now. April $115 call (bid) is at $7.20 (+80.0%)
02/11/12 new stop loss @ 112.40
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


3M Co. - MMM - close: 87.01 change: -0.39

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:
02/15 update: Shares of MMM are starting to fade after more than two weeks of failing to breakout past the $88.50 area. If the stock does correct lower I would expect some support near $85.00 and its simple 200-dma but a correction could take it down toward the $83.50 area. We'll give MMM another day or two but it looks like we will end up dropping this stock with the trade unopened.

Currently the plan is to open bullish positions at $88.50.

NOTE: MMM begins trading ex-dividend on Feb. 15th. We can expect shares to gap down by 60 cents.

Earlier Comments:
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.

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: 63.26 change: -0.86

Stop Loss: 61.75
Target(s): 64.75
Current Option Gain/Loss:(Feb$60c: + 91.4%) & Mar$60c: +34.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/15 update: It looks like it's time for us to hit the exit button. PLL spiked higher to $64.55 before turning lower as the market retreated. Unfortunately our exit target has been $64.75. I am suggesting we go ahead and exit positions immediately at the opening bell tomorrow.

- Suggested Positions -

Long MAR $60 call (PLL1217C60) Entry $2.90

02/15/12 prepare to exit positions at the opening bell tomorrow
02/13/12 readers may want to exit early to lock in gains on our March calls.
02/10/12 exit Feb $60 call, bid @ $3.35 (+91.4%)
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


Sherwin-Williams - SHW - close: 99.22 change: -0.58

Stop Loss: 97.45
Target(s): 104.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 5 weeks
New Positions: Yes, see below

Comments:
02/15 update: SHW tried to rally past the $100 level this morning but could not do it given the market's widespread weakness. Shares slowly faded to a -0.5% decline. The trend of higher lows remains intact for now. Our plan is to open bullish positions if SHW can trade at $100.25 or higher. If triggered we'll aim for $104.75.

Trigger @ $100.25

- Suggested Positions -

buy the Mar $100 call (SHW1217C100)

Entry on February xx at $ xx.xx
Earnings Date 04/23/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 14, 2012


S&P Oil ETF - XES - close: 37.43 change: -0.42

Stop Loss: 36.45
Target(s): 43.00
Current Option Gain/Loss:(Feb37c: -48.1%) & Mar36c: -22.5%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/15 update: Another bounce in crude oil prices failed to help the XES today. XES chopped sideways for the first half of the session and closed down -1.1%. Today's move has produced a bearish engulfing candlestick pattern.

At the moment I would expect a dip toward $37.00 or possibly the 200-dma near $36.50. I am not suggesting new positions at this time.

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 Mar $36 call (XES1217C36) Entry $2.45

02/14/12 exited Feb. calls at the close: bid @ $0.70 (-48.1%)
02/13/12 prepare to exit our Feb. $37 calls at the closing bell tomorrow.

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


Oil & Gas Exploration ETF - XOP - close: 59.22 change: +0.46

Stop Loss: 56.45
Target(s): 63.00
Current Option Gain/Loss: Mar$60c: +13.5% & Jun$60c: + 4.8%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/15 update: The XOP managed to outperform the XES and the S&P 500 with a +0.7% gain. Shares did stall at round-number, psychological resistance near $60.00 but the ETF closed at new six-month highs. We remain bullish on this ETF but readers may want to wait for a dip near $58.00 before considering new positions. FYI: The Point & Figure chart for XOP is bullish with a $74 target.

- Suggested Positions -

Long Mar $60 call (XOP1217C60) Entry $1.70

- or -

Long Jun $60 call (XOP1216F60) Entry $4.10

Entry on February 14 at $58.75
Earnings Date --/--/--
Average Daily Volume = 3.8 million
Listed on February 13, 2012


PUT Play Updates

Green Mountain Coffee Roasters - GMCR - close: 65.75 change: -1.57

Stop Loss: 65.01
Target(s): 56.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/15 update: The early morning rally in GMCR reversed and shares underperformed the market with a -2.3% decline.

Currently I am suggesting a trigger to buy puts $61.75 with a stop loss at 65.01. Our exit target is $56.00. GMCR can be a volatile stock so we want to keep our position size small. Plus, the $60.00 level could still act as potential support.

Buy Puts Trigger @ $61.75 (small positions)

- Suggested Positions -

buy the Mar $60 PUT (GMCR1217O60)

Entry on February xx at $ xx.xx
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 6.4 million
Listed on February 11, 2012


WellPoint Inc. - WLP - close: 65.15 change: -0.54

Stop Loss: 65.15
Target(s): 58.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/15 update: Hmm... aggressive traders might want to consider new bearish positions in WLP right here. Today saw the stock reverse near the top of its trading range near $66 resistance. You could buy puts with a stop above today's high. Officially I am suggesting a trigger to open bearish positions at $63.25. If triggered our target is $58.50 but more conservative traders may want to exit near $60.00 which could act as round-number support.

Buy Puts Trigger @ 63.25

- Suggested Positions -

buy the Mar $62.50 PUT (WLP1217O62.5)

Entry on February xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 4.1 million
Listed on February 11, 2012