Editor's Note:

Strength in crude oil has fueled new relative highs for many of the oil stocks.

Current Portfolio:


CALL Play Updates

Airgas Inc. - ARG - close: 81.85 change: +0.02

Stop Loss: 78.90
Target(s): 84.90 or 88.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/25 update: ARG opened slightly higher on Friday morning and then spent the rest of the day drifting sideways in a very narrow 28-cent range. Technically our play is not open yet because the S&P 500 index opened flat instead of positive. I am suggesting we try again. The plan is to open bullish positions on Monday morning if both ARG and the S&P 500 index open positive. However, more conservative traders may want to wait and buy a dip near $81 or $80 as an alternative entry point.

Please note I am setting a conservative target at $84.90 and an aggressive target at $88.50. FYI: The Point & Figure chart for ARG is bullish with a $92 target.

Do not enter position unless ARG and the S&P 500 are both positive at the open

- Suggested Positions -

buy the Mar $82.50 call (ARG1217C82.5)

02/24/12 not open yet, try again.

chart:

Entry on February xx at $ xx.xx
Earnings Date 05/07/12 (unconfirmed)
Average Daily Volume = 528 thousand
Listed on February 23, 2012


BorgWarner Inc. - BWA - close: 82.43 change: +1.68

Stop Loss: 79.25
Target(s): 89.00
Current Option Gain/Loss: -45.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/25 update: BWA displayed relative strength on Friday with a +2.0% gain. Shares hit a new relative high intraday at $83.45. I am raising our stop loss up to $79.25.

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

02/25/12 new stop loss @ 79.25
02/17/12 trade opened on BWA's gap open higher at $82.49

chart:

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: 116.00 change: -0.20

Stop Loss: 112.75
Target(s): 122.50
Current Option Gain/Loss: -13.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/25 update: CAT continues to churn sideways under resistance near its 2011 highs (around $116.50). Shares did see a spike to $116.95 on Friday morning but the gains didn't last. Readers may want to wait for a rally past $117.00 before initiating new bullish positions. I am adjusting our bullish exit target to $122.50 but I am expecting the $120 level to act as short-term resistance.

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

- Suggested Positions -

Long Mar $120 call (CAT1217C120) Entry $1.15

02/25/12 adjusted exit target to $122.50
02/23/12 new stop loss @ 112.75

chart:

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: 49.29 change: -0.01

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:
02/25 update: COF did not make much progress on Friday but shares still have a bullish trend of higher lows. The stock appears to be coiling for a breakout past resistance near $50.00. 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)

chart:

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: 53.80 change: -0.25

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:
02/25 update: The major U.S. big cap indices were hitting new relative highs on Friday. The fact that EMN is not participating is a caution signal. If we see shares of EMN close under $53.50 we will drop it as a bullish candidate. At the moment we are still waiting for a breakout past resistance.

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 (small positions)

- Suggested Positions -

buy the Mar $55 call (EMN1217C55)

chart:

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: 115.87 change: +0.07

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:
02/25 update: Shares of GS are still consolidating under resistance near $118.00. We are waiting for a breakout higher. We have a trigger to buy calls 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)

chart:

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: 81.31 change: -1.14

Stop Loss: 79.95
Target(s): 89.50
Current Option Gain/Loss: -62.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/25 update: JLL's performance on Friday is troubling. There was no follow through on Thursday's bounce. More conservative traders may want to abandon ship and cut their losses now. For the moment JLL still has support near $80.00. I am not suggesting new positions at this time.

- Suggested Positions -

Long Mar $85 call (JLL1217C85) Entry $2.40

chart:

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: 88.20 change: +0.30

Stop Loss: 86.75
Target(s): 94.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
02/25 update: After more than three weeks of consolidating sideways shares of MMM might finally be ready to breakout higher. The stock was showing some relative strength on Friday. The intraday high was $88.46. I am adjusting our entry point trigger to buy calls to $88.75 and our stop loss to $86.75.

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) @ $88.75

- Suggested Positions -

buy the MAR $90 call (MMM1217C90) current ask $0.42

- or -

buy the Apr $90 call (MMM1221D90) current ask $1.35

02/25/12 adjusted trigger to $88.75 and stop to $86.75
Added the April $90 call
02/09/12 removed the February call.

chart:

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: 89.63 change: -0.79

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:
02/25 update: PH rallied to short-term resistance near $91.00 and failed. The larger trend is still bullish but I am adjusting our entry point strategy. We want to buy calls if PH hits $91.25 or higher. If triggered our target is $96.50. FYI: The Point & Figure chart for PH is bullish with a $111 target.

Trigger @ 91.25

- Suggested Positions -

buy the Mar $90 call (PH1217C90)

02/25/12 adjusted trigger to buy calls to $91.25

chart:

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: 82.67 change: +1.03

Stop Loss: 79.90
Target(s): 89.50
Current Option Gain/Loss: -54.8%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/25 update: After a two-day pull back traders bought the dip in ROK and shares displayed relative strength on Friday with a +1.2% gain. If both ROK and the S&P 500 index open positive on Monday I would use it as a new bullish entry point.

FYI: The Point & Figure chart for ROK is bullish with a $98 target.

- Suggested Positions -

Long Mar $85 call (ROK1217C85) Entry $1.55

chart:

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: 101.06 change: +0.10

Stop Loss: 98.90
Target(s): 104.75
Current Option Gain/Loss: + 7.1%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
02/25 update: The drift higher in SHW continues. Traders can use the breakout past $100 as a bullish entry point but we want to keep our position size small. SHW is overbought with gains in 9 out of the last 10 weeks. Thursday's low was $99.10. I am adjusting our stop loss up to $98.90.

- Suggested Positions -

Long Mar $100 call (SHW1217C100) Entry $2.10

02/25/12 new stop loss @ 98.90
02/22/12 new stop loss @ 98.25

chart:

Entry on February 17 at $100.25
Earnings Date 04/23/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 14, 2012


Weight Waters Intl. - WTW - close: 79.61 change: -0.41

Stop Loss: 77.45
Target(s): 86.50
Current Option Gain/Loss: -39.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/25 update: WTW's performance on Friday was a bit disappointing. The stock rallied Friday morning, as we expected, but shares couldn't hold on to gains. The stock gapped open higher at $80.26, which was above our trigger to buy calls at $80.25, but WTW ended the session down -0.5%. The intraday high was $80.67. Our trade is open but I would wait for WTW to trade over $80.75 before considering new bullish positions. More nimble traders could try and buy a dip near the rising 10-dma approaching $78.00 instead.

Earlier Comments:
WTW could see a potential short squeeze. The most recent data listed short interest at 24.6% of the relatively small 35.1 million-share float. The stock has rallied to significant resistance near $80.00. A breakout could spark some short covering. FYI: The Point & Figure chart for WTW is bullish with a $106 target.

- Suggested Positions -

Long Mar $80 call (WTW1217C80) Entry $1.40

02/24/12 WTW gapped open higher at $80.26, which was above our trigger at $80.25.

chart:

Entry on February 24 at $80.26
Earnings Date 05/07/12 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on February 23, 2012


S&P Oil ETF - XES - close: 39.89 change: +0.15

Stop Loss: 36.90
Target(s): 43.00
Current Option Gain/Loss:(Feb37c: -48.1%) & Mar36c: +42.5%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/25 update: Strength in crude oil prices continues to fuel gains for the energy sector. The XES added another +0.3% on Friday. This ETF is now testing potential round-number resistance at the $40.00 mark. It might be time for a dip. We can look for the 10-dma to offer a little short-term support. 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.

(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.

chart:

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: 61.34 change: +0.20

Stop Loss: 57.85
Target(s): 63.00
Current Option Gain/Loss: Mar$60c: +38.2% & Jun$60c: +18.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/25 update: The XOP continues to drift higher thanks to strength in crude oil. Shares of this energy stock ETF hit new six-month highs on Friday morning. I am not suggesting new positions at this time. 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

chart:

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.