Editor's Note:

The powers that be decided that the Fed Chairman's speech late this morning made a fine excuse to start taking profits. The DJIA is back under 13,000. The NASDAQ composite tagged round-number resistance at 3,000 and reversed. The S&P 500 gave up almost -0.5%. All in all the pullback wasn't that bad but it as widespread.

Our AXP, EMN, and PH trades were opened today. ROK was stopped out. I have removed VMW as a candidate.

Current Portfolio:


CALL Play Updates

Alexion Pharma. - ALXN - close: 83.73 change: -1.12

Stop Loss: 81.45
Target(s): 89.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/29 update: Our new ALXN trade is not open yet. Shares of ALXN gapped down this morning, negating our entry point. The stock is nearing what should be support at the bottom of its bullish channel. We will adjust our entry point to buy a dip at $82.50 with a stop loss at $81.45. FYI: The Point & Figure chart for ALXN is bullish with a $91 target.

We want to keep our position size small to limit our risk.

Trigger: buy a dip at $82.50, stop 81.45

- Suggested (SMALL) Positions -

buy the Apr $85 call (ALXN1221D85)

- or -

buy the Apr $90 call (AXLN1221D90)

02/29/12 trade not open yet. Adjust entry to use a buy the dip trigger at $82.50 with a stop loss at $81.45

Entry on February xx at $ xx.xx
Earnings Date 04/23/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on February 28, 2012


Airgas Inc. - ARG - close: 82.33 change: -0.16

Stop Loss: 78.90
Target(s): 87.00
Current Option Gain/Loss: -15.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/29 update: ARG recovered from its late morning swoon as traders bought the dip at $81.15. If the market had been opened a little longer then ARG may have closed positive. If both ARG and the S&P 500 index open positive tomorrow we can use it as a new bullish entry point.

FYI: The Point & Figure chart for ARG is bullish with a $92 target.

- Suggested Positions -

Long Mar $82.50 call (ARG1217C82.5) Entry $1.00

02/28/12 trade opened @ 82.21
02/27/12 not open yet, buy calls at the open tomorrow
02/24/12 not open yet, try again.

Entry on February 28 at $82.21
Earnings Date 05/07/12 (unconfirmed)
Average Daily Volume = 528 thousand
Listed on February 23, 2012


American Express Co - AXP - close: 52.89 change: -0.87

Stop Loss: 51.25
Target(s): 57.50
Current Option Gain/Loss: -21.6%
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Comments:
02/29 update: Financials hit some profit taking today. AXP gapped open lower at $53.46 and then fell to a -1.6% decline. The stock is nearing what should be support near $52.50. I'd wait for a bounce before considering new bullish positions.

The plan was to keep our position size small. Our multi-week target is $56.50. Keep in mind that AXP doesn't move super fast. FYI: The Point & Figure chart for AXP is bullish with a $75 target.

- Suggested Positions - (Small Positions)

Long Apr 52.50 call (AXP1221D52.5) Entry $2.40

02/29/12 AXP gapped down at $53.46
02/28/12 not open yet. buy calls at the open tomorrow.
02/27/12 not open yet, try again.

Entry on February 29 at $53.46
Earnings Date 04/19/12 (unconfirmed)
Average Daily Volume = 5.7 million
Listed on February 25, 2012


BorgWarner Inc. - BWA - close: 82.84 change: -0.42

Stop Loss: 79.25
Target(s): 89.00
Current Option Gain/Loss: -41.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/29 update: BWA tagged a new high at $84.00 before succumbing to the market's widespread profit taking. Look for support in the $81.00-80.00 zone.

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

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: 114.21 change: -1.55

Stop Loss: 112.75
Target(s): 122.50
Current Option Gain/Loss: -66.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/29 update: Uh-oh! CAT underperformed today with a -1.3% decline. Furthermore shares produced a bearish engulfing candlestick pattern, which is usually seen as a bearish reversal signal. The low today was $113.68. More conservative traders may want to consider an early exit or raise their stop loss. I am not suggesting new positions at this time.

- Suggested Positions -

Long Mar $120 call (CAT1217C120) Entry $1.15

02/29/12 CAT produced a bearish engulfing candlestick pattern
02/25/12 adjusted exit target to $122.50
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: 50.60 change: +0.23

Stop Loss: 47.75
Target(s): 54.75
Current Option Gain/Loss: Mar$50c: +11.5% & Apr$50c: + 6.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/29 update: COF managed to buck the market's down trend today with a +.4% gain. If the S&P 500 and COF both open positive tomorrow readers can use it as a new bullish entry point.

Earlier Comments:
We want to keep our position size small to limit our risk. Our multi-week exit target is $54.75.

(small positions)

- Suggested Positions -

Long Mar $50 call (COF1217C50) entry $1.30

- or -

Long Apr $50 call (COF1221D50) entry $2.30

02/28/12 triggered at $50.25

Entry on February 28 at $50.25
Earnings Date 04/23/12 (unconfirmed)
Average Daily Volume = 6.4 million
Listed on February 15, 2012


Coach, Inc. - COH - close: $74.84 change: -0.41

Stop Loss: 73.75
Target(s): 82.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
02/29 update: COH spiked higher at the open but the rally attempt failed at the $76.00 level. Shares drifted lower the rest of the session. My prior comments have not changed.

I am suggesting we launch new bullish positions when COH trades at $76.75 or higher. We'll use a stop loss at $73.75. Our target is $82.50 although don't be surprised if shares pause and pull back a bit when they initially test $80.00. You'll notice the chart below has a bull-flag consolidation pattern that COH is just now starting to breakout from. FYI: The Point & Figure chart for COH is bullish with a long-term $109 target.

Trigger @ $76.75

- Suggested Positions -

buy the Mar $75 call (COH1217c75)

- or -

buy the Apr $77.50 call (COH1221D77.5)

Entry on February xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on February 27, 2012


Eastman Chemical Co. - EMN - close: 54.13 change: -0.83

Stop Loss: 53.25
Target(s): 59.00
Current Option Gain/Loss: -14.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/29 update: After patiently waiting for EMN to breakout past resistance at $55.00 the stock finally pushes higher, hits our trigger at $55.05, and then reverses lower. The market's widespread declines pulled EMN to a -1.5% drop, which completely erased yesterday's bounce. I am not suggesting new positions at this time. More conservative traders may want to raise their stop loss. Today's morning move higher could be a bull-trap pattern.

(small positions) - Suggested Positions -

Long Apr $55 call (EMN1221D55) Entry $1.75

02/29/12 triggered at $55.05
02/27/12 adjusted suggested call from March to April.

Entry on February 29 at $55.05
Earnings Date 04/30/12 (unconfirmed)
Average Daily Volume = 2.6 million
Listed on February 18, 2012


Goldman Sachs - GS - close: 115.14 change: -1.97

Stop Loss: 114.75
Target(s): 125.00
Current Option Gain/Loss: -50.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/29 update: GS completely erased yesterday's gains. We were expecting some volatility this morning as investors reacted to news that GS had received a "Wells Notice". The stock actually rallied off the open but shares failed at resistance near $118.00 again. Now the stock is sitting just above the $115.00 level. If there is any follow through lower tomorrow GS will most likely hit our stop loss at $114.75.

Earlier Comments:
GS can be a volatile stock at times so we want to keep our position size small.

(small positions) - Suggested Positions -

Long Mar $120 call (GS1217C120) Entry $2.10

02/28/12 GS disclosed it has received a Wells Notice from the SEC
02/28/12 triggered at $118.25

Entry on February 28 at $118.25
Earnings Date 04/19/12 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on February 21, 2012


3M Co. - MMM - close: 87.60 change: -0.17

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:
02/29 update: MMM continues to churn inside its trading range. If we see shares close under $87.00 we will drop it as a bullish candidate.

I am suggesting a trigger to buy calls at $88.75. If our trade does open we want to keep our position size small!

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 (small positions)

- Suggested Positions -

buy the MAR $90 call (MMM1217C90)

- or -

buy the Apr $90 call (MMM1221D90)

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.

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: 89.81 change: -0.43

Stop Loss: 88.45
Target(s): 96.50
Current Option Gain/Loss: -37.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/29 update: Our PH trade is open but we need to be careful here. Shares spiked higher at the open, hit our trigger at $91.25, and then reversed lower under $91.50. The close back below the $90.00 level is bearish. I am not suggesting new positions at this time. FYI: The Point & Figure chart for PH is bullish with a $111 target.

- Suggested Positions -

Long Mar $90 call (PH1217C90) Entry $2.65

02/29/12 triggered at $91.25
02/25/12 adjusted trigger to buy calls to $91.25

Entry on February 29 at $91.25
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on February 22, 2012


Sherwin-Williams - SHW - close: 103.15 change: +0.78

Stop Loss: 99.40
Target(s): 104.75
Current Option Gain/Loss: +71.4%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
02/29 update: SHW continues to show relative strength and outperformed the market with a +0.7% gain. Given the market's potential reversal lower today readers may want to go ahead and take profits in SHW now. I am not suggesting new positions at this time.

- Suggested Positions -

Long Mar $100 call (SHW1217C100) Entry $2.10

02/28/12 new stop loss @ 99.40
02/27/12 readers may want to take profits now (@ +80.9%)
02/25/12 new stop loss @ 98.90
02/22/12 new stop loss @ 98.25

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: 77.98 change: +0.10

Stop Loss: 77.45
Target(s): 86.50
Current Option Gain/Loss: -78.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/29 update: WTW spent the session trading sideways with a bounce off the intraday low at $77.60. If the market continues lower tomorrow WTW could easily breakdown and hit our stop at $77.45. I am not suggesting new positions at this time.

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.

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: 38.63 change: -0.62

Stop Loss: 36.90
Target(s): 43.00
Current Option Gain/Loss:(Feb37c: -48.1%) & Mar36c: + 0.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/29 update: Crude oil the commodity managed a bounce today in spite of the dollar's rise. While energy stocks followed the market lower. XES lost -1.5% and closed under its 10-dma. We can look for potential support near $38.00 and $37.00. 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.

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: 59.32 change: -1.13

Stop Loss: 57.45
Target(s): 63.00
Current Option Gain/Loss: Mar$60c: -34.1% & Jun$60c: - 9.7%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/29 update: The XOP underperformed with a -1.8% decline. This ETF did manage a minor bounce off its rising 20-dma. If the market continues to sink we could see the XOP test what should be support near $58.00. Please note that I am adjusting our stop loss from $57.85 to $57.45 so it's just underneath the late October and early November 2011 highs (around $57.65ish). 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

02/29/12 adjusting stop loss to $57.45
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.


CLOSED BULLISH PLAYS

Rockwell Automation - ROK - close: 79.98 change: -0.88

Stop Loss: 79.90
Target(s): 89.50
Current Option Gain/Loss: -90.3%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/29 update: Our ROK has been stopped out at $79.90. We've been cautious on ROK the last couple of days and shares eventually broke down under the $80.00 mark in the last few minutes of trading tonight.

- Suggested Positions -

Mar $85 call (ROK1217C85) Entry $1.55 exit $0.15 (-90.3%)

02/29/12 stopped out at $79.90

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


VMware, Inc. - VMW - close: 98.89 change: -1.30

Stop Loss: 97.25
Target(s): 108.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/29 update: Our VMW trade is still not open. The stock gapped open lower, bounced, and then reversed. The stock eventually lost -1.2% on the session and closed under short-term technical support at its 10-dma.

I am removing VMW as a bullish candidate. Our entry conditions were never met. Look for possible short-term support near $98.00 but I would hesitate to consider buying a dip here.

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

Our Trade Did Not Open.

02/29/12 trade did not open. We are removing VMW from the newsletter
02/28/12 not open yet. try again.
02/27/12 not open yet. try again.

chart:

Entry on February xx at $ xx.xx
Earnings Date 04/19/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on February 25, 2012