Editor's Note:

The stock market's oversold bounce off its June lows continued on Friday.

We have updated a couple of stop losses and removed NVS from the newsletter.

Current Portfolio:


CALL Play Updates

Costco Wholesale - COST - close: 88.74 change: +0.61

Stop Loss: 87.25
Target(s): 91.50
Current Option Gain/Loss: +32.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/09 update: COST continued to rally on Friday but shares failed to close above the late April highs. We are going to try and reduce our risk by raising the stop loss to $87.25. More aggressive traders will want to keep their stop loss underneath the simple 10-dma, currently at $86.68.

- Suggested Positions -

Long Jul $90 call (COST1221G90) Entry $1.10

06/09/12 new stop loss @ 87.25
06/06/12 new stop loss @ 86.25
06/06/12 triggered at $87.25

chart:

Entry on June 06 at $87.25
Earnings Date 10/03/12 (unconfirmed)
Average Daily Volume = 2.6 million
Listed on June 04, 2012


Monster Beverage - MNST - close: 76.10 change: +1.60

Stop Loss: 73.25
Target(s): 79.50
Current Option Gain/Loss: + 29.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/09 update: MNST has finally closed above resistance near $75.00. Shares outperformed on Friday with a strong +2.1% gain. We are going to try and reduce our risk by raising the stop loss to $73.25. More aggressive traders will want to keep their stop under the simple 20-dma for now (it's currently at $71.90).

- Suggested Positions -

Long Jul $80 call (MNST1221G80) Entry $1.70

06/09/12 new stop loss @ 73.25
06/06/12 new stop loss @ 70.75
06/06/12 triggered at $74.25

chart:

Entry on June 06 at $74.25
Earnings Date 08/02/12 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on June 04, 2012


Ross Stores Inc. - ROST - close: 64.50 change: +1.58

Stop Loss: 62.45
Target(s): 68.50
Current Option Gain/Loss: - 4.7%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
06/09 update: After disappointing on Thursday shares of ROST were back to showing strength again on Friday with a big +2.5% gain. This is a new all-time closing high and shares look poised to hit a new record intraday high soon. If ROST and the S&P 500 both open positive on Monday I would use this move as a new bullish entry point.

- Suggested Positions -

Long Jul $65 call (ROST1221G65) Entry $2.10

06/07/12 triggered on gap higher at $64.47

chart:

Entry on June 07 at $64.47
Earnings Date 08/16/12 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on June 06, 2012


PUT Play Updates

Baxter Intl. - BAX - close: 50.62 change: +0.14

Stop Loss: 51.51
Target(s): 48.00
Current Option Gain/Loss: Jun$50p: -60.6% & Jul50p: -24.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/09 update: BAX is still hovering in the $51-50 zone and remains in a bearish trend with short-term overhead resistance at the 10-dma. More conservative trades may want to adjust their stops closer to the $51.00 level.

- Suggested Positions -

Long Jun $50 PUT (BAX1216R50) Entry $0.66

- or -

Long Jul $50 PUT (BAX1221S50) Entry $1.55

06/02/12 new stop loss @ 51.51
05/31/12 triggered at $50.95

chart:

Entry on May 31 at $50.95
Earnings Date 07/19/12 (unconfirmed)
Average Daily Volume = 2.4 million
Listed on May 29, 2012


Coach Inc. - COH - close: 64.00 change: +1.93

Stop Loss: 64.05
Target(s): 58.50
Current Option Gain/Loss: -31.8%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
06/09 update: Some of the retail names were showing relative strength on Friday and COH helped lead the pack with a +3.1% rally. Shares rose right to the $64.00 level and almost hit our stop loss at $64.05. If the market opens positive on Monday we could see COH actually gap higher above our stop and close this trade. I am not suggesting new positions at this time.

- Suggested Positions -

Long Jul $60 PUT (COH1221S60) Entry $2.20

06/07/12 triggered at $62.25

chart:

Entry on June 07 at $62.25
Earnings Date 07/31/12 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on June 06, 2012


NASDAQ OMX Group - NDAQ - close: 22.12 change: +0.01

Stop Loss: 22.55
Target(s): 20.15
Current Option Gain/Loss: -35.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/09 update: The Facebook IPO nightmare for the NASDAQ will not go away. Now UBS is planning to sue NDAQ for up to $350 million in trading losses due to faulty and delayed quotes and filled orders. Yet in spite of this bad news shares of NDAQ really didn't move much on Friday. Shares are hovering near $22.00. On a short-term basis NDAQ actually looks poised to bounce higher and thus more conservative traders may want to abandon ship now and exit early.

I am not suggesting new positions.

(SMALL Positions) - Suggested Positions -

Long July $21 PUT (NDAQ1221S21) Entry $0.85

chart:

Entry on June 06 at $21.95
Earnings Date 07/25/12 (unconfirmed)
Average Daily Volume = 3.8 million
Listed on June 05, 2012


Netflix, Inc. - NFLX - close: 65.64 change: +1.00

Stop Loss: 67.25
Target(s): 60.25
Current Option Gain/Loss: -15.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/09 update: NFLX managed a bounce on Friday and recouped almost all of Thursday's declines. Yet the trend is still bearish. The stock spent most of Friday in the $65-66 zone so we can use a new drop under $65.00 as a new entry point to buy puts.

Earlier Comments:
I am suggesting we keep our position size small because NFLX can be volatile at times and being short the stock is a popular position with short interest at 20% of the 54 million share float. Our first target is $60.25. More aggressive traders could aim a lot lower. The Point & Figure chart is suggesting a $48 target although I suspect the $50 level could be significant support.

(Small positions) - Suggested Positions -

Long Jul $60 PUT (NFLX1221S60) Entry $3.57

chart:

Entry on June 08 at $64.37
Earnings Date 07/23/12 (unconfirmed)
Average Daily Volume = 4.9 million
Listed on June 07, 2012


Oil States Intl. - OIS - close: 66.22 change: -0.53

Stop Loss: 68.55
Target(s): 61.50
Current Option Gain/Loss: -33.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/09 update: OIS saw an early spike down to $65 before paring its losses on Friday. I don't see any changes from my Thursday night comments. The oversold bounce from its June lows has stalled at resistance. OIS looks poised to resume its bearish trend of lower highs and lower lows. I would still consider new put positions here.

- Suggested Positions -

Long Jul $60 PUT (OIS1221S60) Entry $2.25

chart:

Entry on June 08 at $66.04
Earnings Date 07/30/12 (unconfirmed)
Average Daily Volume = 720 thousand
Listed on June 07, 2012


CLOSED BEARISH PLAYS

Novartis AG - NVS - close: 52.47 change: +0.29

Stop Loss: 52.25
Target(s): 48.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/09 update: NVS is not cooperating. The long-term trend, most easily seen on the weekly chart, still looks very bearish. Yet there has been no follow through lower. NVS has spent the last three weeks churning sideways. The stock is either building a bottom or it's just a temporary speed bump before it resumes the trend lower. On a short-term basis NVS looks poised to rally and break out of its $51.25-52.75 trading range. If that happens then shares might rally toward their 200-dma again.

Our plan was to buy puts at $51.00 but the trade has not been triggered yet. That's unlikely to happen any time soon so I am removing NVS from the play list.

Trigger @ 51.00

Trade did not open.

06/09/12 removed from the play list.

chart:

Entry on June xx at $ xx.xx
Earnings Date 07/19/12 (unconfirmed)
Average Daily Volume = 1.75 million
Listed on June 05, 2012