Editor's Note:

The U.S. markets bounced with widespread gains thanks in part to strength in financials and energy stocks.

Current Portfolio:


CALL Play Updates

BorgWarner Inc. - BWA - close: 80.75 change: +0.53

Stop Loss: 78.75
Target(s): 89.00
Current Option Gain/Loss: -67.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/23 update: BWA dipped to $79.40, just under its simple 10-dma, before rebounding. The intraday bounce looks like a new bullish entry point to buy calls although readers may want to wait and see that BWA follows through with new gains tomorrow morning before initiating positions.

Earlier Comments:
A breakout would mean new record highs and could produce a some short covering in BWA. The most recent data listed short interest at 14% of the 108 million share float. FYI: The Point & Figure chart for BWA is bullish with a $108 target.

- Suggested Positions -

Long Mar $85 call (BWA1217C85) Entry $1.55

02/17/12 trade opened on BWA's gap open higher at $82.49

Entry on February 17 at $82.49
Earnings Date 04/30/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on February 16, 2012


Caterpillar, Inc. - CAT - close: 116.20 change: +0.39

Stop Loss: 112.75
Target(s): 119.75
Current Option Gain/Loss: - 3.4%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/23 update: Traders bought the dip in CAT near $115.00 but shares are still unable to breakout past its 2011 highs near $116.50. At this point readers may want to wait for a rise pat $116.75 before considering new positions. I am raising our stop loss up to $112.75.

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

- Suggested Positions -

Long Mar $120 call (CAT1217C120) Entry $1.15

02/23/12 new stop loss @ 112.75

Entry on February 21 at $115.25
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 7.5 million
Listed on February 14, 2012


Capital One Financial - COF - close: 49.30 change: +1.05

Stop Loss: 47.75
Target(s): 54.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/23 update: Financial stocks closed the day with strength. Yesterday's underperformance was reversed with outperformance today. COF bounced +2.1% and is back above $49.00 and its 10-dma. I am suggesting a trigger to buy calls at $50.25. We want to keep our position size small to limit our risk. Our multi-week exit target is $54.75.

Trigger @ $50.25 (small positions)

- Suggested Positions -

buy the Mar $50 call (COF1217C50)

Entry on February xx at $ xx.xx
Earnings Date 04/23/12 (unconfirmed)
Average Daily Volume = 6.4 million
Listed on February 15, 2012


Eastman Chemical Co. - EMN - close: 54.05 change: +0.12

Stop Loss: 53.25
Target(s): 59.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/23 update: The bounce in EMN was pretty anemic. Fortunately we're still on the sidelines waiting for a breakout.

I am suggesting a trigger to open small bullish positions at $55.05 with a stop loss at $53.25. Our target is $59.00. More conservative traders may want to wait for EMN to trade past its all-time high of $55.36 (set in 2011) before initiating positions. FYI: The Point & Figure chart for EMN is bullish with a long-term $91 target.

Trigger @ $55.05

- Suggested Positions -

buy the Mar $55 call (EMN1217C55)

Entry on February xx at $ xx.xx
Earnings Date 04/30/12 (unconfirmed)
Average Daily Volume = 2.6 million
Listed on February 18, 2012


Goldman Sachs - GS - close: 115.80 change: +1.44

Stop Loss: 114.75
Target(s): 125.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/23 update: GS spiked lower at the open but shares reversed after testing technical support at its 200-dma near the $113 level. The intraday rebound pushed GS to a +1.2% gain. More aggressive traders might want to consider new bullish positions tomorrow if both GS and the S&P 500 index open positive. I am still suggesting we wait for a breakout past $118.00. We have a trigger to buy calls (small positions) at $118.25. GS can be a volatile stock at times so we want to keep our position size small. If triggered at $118.25 we will aim for $125.00.

Trigger @ $118.25 (small positions)

- Suggested Positions -

buy the Mar $120 call (GS1217C120) current ask $1.96

Entry on February xx at $ xx.xx
Earnings Date 04/19/12 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on February 21, 2012


Jones Lang LaSalle - JLL - close: 82.45 change: +1.50

Stop Loss: 79.95
Target(s): 89.50
Current Option Gain/Loss: -58.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/23 update: The market's widespread bounce allowed JLL to rebound from the bottom of its recent trading range. At this point I would not launch new positions. The next level of resistance is the $84.00 mark.

- Suggested Positions -

Long Mar $85 call (JLL1217C85) Entry $2.40

Entry on February 17 at $83.75
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 518 thousand
Listed on February 16, 2012


3M Co. - MMM - close: 87.90 change: +0.14

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:
02/23 update: MMM is still not making much progress. We are waiting for a breakout from this multi-week trading range.

Currently I am suggesting a trigger to buy calls when MMM trades at $88.50 or higher. More conservative traders may want to wait for MMM to actually close over $88.50 before considering bullish positions.

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


Parker-Hannifin - PH - close: 90.42 change: +0.42

Stop Loss: 88.45
Target(s): 96.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/23 update: PH recovered from its morning dip to close up +0.4% but the high today was only $90.65. More aggressive traders may want to buy calls on a rally past $90.50. I am suggesting at trigger to buy calls at $91.05 with a stop loss at $88.45. Our target is $96.50. FYI: The Point & Figure chart for PH is bullish with a $111 target.

Trigger @ 91.05

- Suggested Positions -

buy the Mar $90 call (PH1217C90)

Entry on February xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on February 22, 2012


Rockwell Automation - ROK - close: 81.64 change: -0.56

Stop Loss: 79.90
Target(s): 89.50
Current Option Gain/Loss: -64.5%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/23 update: Uh-oh! ROK did not participate in the market's widespread bounce today. That's a bit worrisome. ROK did pare its losses and shares still have a bullish trend of higher lows so I'm not giving up yet. FYI: The Point & Figure chart for ROK is bullish with a $95 target.

- Suggested Positions -

Long Mar $85 call (ROK1217C85) Entry $1.55

Entry on February 21 at $82.75
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 1.2 million
Listed on February 18, 2012


Sherwin-Williams - SHW - close: 100.96 change: +1.38

Stop Loss: 98.25
Target(s): 104.75
Current Option Gain/Loss: + 4.7%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
02/23 update: SHW temporarily traded under its 10-dma before bouncing back to outperform the major indices with a +1.3% gain. The intraday low was $99.10. More conservative traders may want to adjust their stop loss closer to this low.

If SHW and the S&P 500 index open positive tomorrow I would consider buying calls again.

- Suggested Positions -

Long Mar $100 call (SHW1217C100) Entry $2.10

02/22/12 new stop loss @ 98.25

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: 39.74 change: +0.59

Stop Loss: 36.90
Target(s): 43.00
Current Option Gain/Loss:(Feb37c: -48.1%) & Mar36c: +38.7%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/23 update: Crude oil continued to rally in spite of a bearish inventory number. Oil's strength helped fuel the rally in energy stocks. The XES added +1.5%.

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.

(small positions) - Suggested Positions -

Long Mar $36 call (XES1217C36) Entry $2.45

02/18/12 new stop loss @ $36.90
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: 61.14 change: +0.80

Stop Loss: 57.85
Target(s): 63.00
Current Option Gain/Loss: Mar$60c: +32.3% & Jun$60c: +15.8%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/23 update: The XOP erased yesterday's losses. This ETF bounced off short-term technical support at its rising 10-dma this morning. Yesterday I suggested readers look for a dip near the 10-dma as a possible entry point. We will raise our stop loss up to $57.85. 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

02/23/12 new stop loss @ 57.85

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


PUT Play Updates

Currently we do not have any active put trades.