Editor's Note:

The S&P 500 index is down four days in a row and down nine out of the last eleven days.

Today we had both ARG and JOSB hit our stops. I've dropped ASH as a candidate and we closed UNFI.

Current Portfolio:


CALL Play Updates

Amgen Inc. - AMGN - close: 70.98 change: +0.30

Stop Loss: 68.95
Target(s): 74.90
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
05/16 update: Outperformed the market yet again with a small gain. The stock looks poised to breakout higher. The plan is to buy calls if AMGN can trade at $71.25. Our target is $74.90. More aggressive traders could aim higher.

Trigger @ $71.25 (small positions)

- Suggested Positions -

buy the Jun $70 call (AMGN1216F70)

Entry on May xx at $ xx.xx
Earnings Date 07/26/12 (unconfirmed)
Average Daily Volume = 3.9 million
Listed on May 08, 2012


PUT Play Updates

Baidu, Inc. - BIDU - close: 122.26 change: -1.61

Stop Loss: 130.25
Target(s): 115.00
Current Option Gain/Loss:(May125P: +128.5%) & Jun120P: +54.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/16 update: The bounce attempt in BIDU reversed near the $125 level and shares closed down -1.3%.

This remains an aggressive, higher-risk trade. I am not suggesting new positions at this time. FYI: The Point & Figure chart for BIDU is bearish with a $106 target.

- Suggested Positions -

-closed position-
May $125 put (BIDU1219Q125) Entry $2.10, exit $4.80 (+128.5%)

- or -

Long Jun $120 put (BIDU1216R120) Entry $2.95

05/14/12 planned exit to sell our May $125 puts at the open this morning.
They opened with a bid at $4.80 (+128.5%)
05/12/12 new stop loss @ 130.25
Prepare to exit May $125 puts at the open on Monday, current bid $4.05
05/08/12 BIDU gapped open lower at $127.01

Entry on May 08 at $127.01
Earnings Date 07/25/12 (unconfirmed)
Average Daily Volume = 5.0 million
Listed on May 07, 2012


Fiserv, Inc. - FISV - close: 65.96 change: -0.22

Stop Loss: 70.05
Target(s): 63.50
Current Option Gain/Loss:(May$70p: +12.5%) & Jun65P: +38.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/16 update: FISV continues to hover near the $66 level and its rising 100-dma. I am expecting a breakdown but shares might just churn sideways here until May option expiration is over.

I am not suggesting new positions at this time.

- Suggested Positions -

- closed position -
May $70 put (FISV1219Q70) Entry $3.02 exit $3.40 (+12.5%)

- or -

Long Jun $65 put (FISV1216R65) Entry $0.90

05/15/12 closed May $70 puts at the open: bid @ 3.40 (+12.5%)
05/14/12 prepare to exit the May $70 puts at the open tomorrow
05/07/12 triggered on gap down at $67.26 (our trigger was 67.40)

Entry on May 07 at $67.26
Earnings Date 05/01/12
Average Daily Volume = 693 thousand
Listed on May 05, 2012


Fluor Corp. - FLR - close: 51.32 change: -0.36

Stop Loss: 55.05
Target(s): 50.25
Current Option Gain/Loss: +30.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/16 update: FLR tried to rally this morning but the bounce ran out of steam. Shares closed down -0.7% and at new relative lows. Our exit target is $50.25. More aggressive traders may want to aim lower.

- Suggested Positions -

Long Jun $52.50 PUT (FLR1216R52.5) Entry $2.15

05/15/12 new stop loss @ 55.05

Entry on May 14 at $53.05 (gap down)
Earnings Date 05/03/12
Average Daily Volume = 1.8 million
Listed on May 12, 2012


General Dynamic - GD - close: 65.20 change: -0.53

Stop Loss: 68.25
Target(s): 61.50
Current Option Gain/Loss: + 3.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/16 update: GD posted another loss (-0.8%) and hit new multi-month lows. I would still consider new positions at current levels.

More conservative traders may want to wait for a drop under $65.00 as their entry point instead. FYI: The Point & Figure chart for GD is bearish with a $60 target.

- Suggested Positions -

Long Jun $65 PUT (GD1216R65) Entry $1.50

05/15/12 triggered @ 65.75

Entry on May 15 at $65.75
Earnings Date 07/25/12 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on May 09, 2012


Humana Inc. - HUM - close: 76.06 change: -0.92

Stop Loss: 80.25
Target(s): 71.50
Current Option Gain/Loss: Jun80p: +63.3% Jun75P: +78.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/16 update: HUM underperformed both the S&P 500 and the HMO healthcare index with the stock's -1.2% decline today. I am lowering our stop loss down to $80.25. I am not suggesting new positions at current levels. Our exit target is $71.50 but do not be surprised if HUM finds some support and bounces in the $76-75 area. FYI: The Point & Figure chart for HUM is bearish with a $69 target.

- Suggested Positions -

Long Jun $80 put (HUM1216R80) Entry $3.00

- or -

Long Jun $75 put (HUM1216R75) Entry $1.15

05/16/12 new stop loss @ 80.25

Entry on May 10 at $79.56
Earnings Date 07/30/12 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on May 09, 2012


Informatica - INFA - close: 42.40 change: -1.92

Stop Loss: 45.25
Target(s): 40.25
Current Option Gain/Loss: +41.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/16 update: The sell-off in INFA accelerated lower with a -4.3% decline today. Shares hit $41.67 intraday. I am lowering our stop loss down to $45.25. I am not suggesting new positions at this time. FYI: The Point & Figure chart for INFA is bearish with a $39 target.

- Suggested Positions -

Long Jun $45 PUT (INFA1216R45) Entry $2.40

05/16/12 new stop loss @ 45.25
05/14/12 triggered at $44.50

Entry on May 14 at $44.50
Earnings Date 07/26/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on May 10, 2012


iShares Russell 2000 ETF - IWM - close: 77.16 change: -0.56

Stop Loss: 80.05
Target(s): 72.00-70.00 zone
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
05/16 update: The IWM has now closed below its 150-dma and its 300-dma. More nimble or aggressive traders may want to launch bearish put positions now. I don't see any changes from my prior comments.

Earlier Comments:
The small cap IWM ETF has created what is arguably a bearish head-and-shoulders pattern. A breakdown under $78.00 should signal a drop toward the $72.00. Unfortunately there are several moving averages in the $77-78 area that clouds where potential support could be (200-Ema, 300-dma, 150-dma). Therefore, I am suggesting a trigger to buy puts on the IWM but only if the IWM closes under $77.00. We'll buy puts the next day with a stop loss at $80.05. Our multi-week target is the $72-70 zone. FYI: The Point & Figure chart for IWM is bearish with a $73 target.

Trigger: a close under $77.00, buy puts the next morning.

- Suggested Positions -

buy the Jul $74 PUT (IWM1221S74)

Entry on May xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 53 million
Listed on May 12, 2012


Siemens AG - SI - close: 84.22 change: -0.17

Stop Loss: 87.75
Target(s): 80.25
Current Option Gain/Loss: + 7.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/16 update: SI gapped open higher this morning at $84.94 but the bounce ran out of steam. Shares eventually closed on their lows. FYI: The Point & Figure chart for SI is bearish with a $74 target.

- Suggested (SMALL) Positions -

Long Jun $80 PUT (SI1216R80) Entry $1.35

05/16/12 SI gapped open higher at $84.94

Entry on May 16 at $84.94
Earnings Date --/--/--
Average Daily Volume = 832 thousand
Listed on May 15, 2012


Tiffany & Co. - TIF - close: 62.15 change: +0.90

Stop Loss: 64.25
Target(s): 59.00
Current Option Gain/Loss: -14.8%
Time Frame: exit prior to the May 24th earnings report
New Positions: see below

Comments:
05/16 update: TIF ignored market weakness and spiked higher this morning hitting $63.28 intraday. I am not suggesting new positions at this time. We will lower our stop loss down to $64.25. We do not want to hold over the May 24th earnings report.

- Suggested Positions -

Long Jun $60 put (TIF1216R60) current ask $2.35

05/16/12 new stop loss @ 64.25
05/14/12 TIF gapped down at $61.67, under our trigger.

Entry on May 14 at $61.67
Earnings Date 05/24/12 (confirmed)
Average Daily Volume = 1.5 million
Listed on May 12, 2012


CLOSED BULLISH PLAYS

Airgas Inc. - ARG - close: 89.23 change: -1.39

Stop Loss: 89.65
Target(s): 97.50
Current Option Gain/Loss: May92.5c: - 100% & Jun95c: -68.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/16 update: ARG succumbed to the market's widespread weakness. Shares dropped -1.5% and broke down under support near $90.00. Our stop was hit at $89.65.

Earlier Comments:
We want to keep our position size small. You could argue that ARG is forming a wedge pattern, which could be considered bearish.

(small positions) - Suggested Positions -

May $92.50 call (ARG1219E92.5) Entry $1.15 exit $0.00 (-100.0%)

- or -

Jun $95.00 call (ARG1216F95) Entry $1.45 exit $0.45 (- 68.9%)

05/16/12 stopped out at $89.65
05/10/12 triggered @ 92.50

chart:

Entry on May 10 at $92.50
Earnings Date 05/03/12
Average Daily Volume = 476 thousand
Listed on May 05, 2012


Ashland Inc. - ASH - close: 64.92 chagne: -0.72

Stop Loss: 64.49
Target(s): 74.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
05/16 update: ASH reversed near its 10-dma today and closed under the $65.00 level. The stock has not closed under $65 in weeks. At this point it's unlikely that shares will breakout from its trading range any time soon. I am removing it from the newsletter.

Trigger @ 67.75

Our trade did not open.

05/16/12 removed from the newsletter.

chart:

Entry on May xx at $ xx.xx
Earnings Date 07/26/12 (unconfirmed)
Average Daily Volume = 763 thousand
Listed on May 12, 2012


United Natural Foods - UNFI - close: 50.75 change: -0.03

Stop Loss: 49.90
Target(s): 52.75
Current Option Gain/Loss: -26.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/16 update: UNFI held up reasonably well, closing almost unchanged on the session. If the market continues to sink we could see UNFI dip toward its 20-dma, which would mean a breakdown under $50. If you have June calls I would be tempted to hold on. It was our plan to exit the May calls at the closing bell tonight.

Unfortunately in the last two days the spread on these calls has exploded, putting us at a disadvantage.

- Suggested Positions -

May $50 call (UNFI1219E50) Entry $0.95, exit 0.70 (-26.3%)
the option closed with a bid/ask $0.70/1.60

05/16/12 closed our May calls today
05/15/12 new stop loss @ 49.90, prepare to exit tomorrow at the closing bell
05/14/12 May options expire soon. Readers may want to exit early now. We will be looking for an exit soon.
05/14/12 new stop loss @ 49.40, adjust exit target to $52.75

chart:

Entry on May 03 at $49.90
Earnings Date 05/31/12 (unconfirmed)
Average Daily Volume = 250 thousand
Listed on May 02, 2012


CLOSED BEARISH PLAYS

Jos. A Bank Clothiers - JOSB - close: 46.90 change: +0.51

Stop Loss: 47.25
Target(s): 45.25
Current Option Gain/Loss: May50p: - 8.3% or May$45p: - 100%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/16 update: The oversold bounce in JOSB continued for a second day in a row. The stock traded above technical resistance at its 10-dma and hit our stop loss at $47.25.

Earlier Comments:
We want to limit our position size because JOSB has an elevated amount of short interest. The most recent data listed short interest at 18.7% of the very small 27.5 million share float and this raises the risk for a short squeeze. Our short-term target is $45.25. More aggressive traders may want to aim for the $42-41 area instead.

(small positions)

May $50 PUT (JOSB1219Q50) Entry $3.00, exit $2.75 (- 8.3%)

- or -

May $45 PUT (JOSB1219Q45) Entry $0.65, exit $0.00 (-100.0%)

05/16/12 stopped out at $47.25
05/14/12 new stop loss @ 47.25
05/12/12 new stop loss @ 48.15
05/05/12 new stop loss @ 49.25

chart:

Entry on April 23 at $47.50
Earnings Date 05/30/12 (unconfirmed)
Average Daily Volume = 596 thousand
Listed on April 21, 2012