Editor's Note:

The ECB generated short squeeze caused significant spikes in our oversold stocks. Salesforce.com and SINA were both stopped out for sizeable losses on no news. It was purely market related. We are hostage to the headlines and I am betting those headlines will be less than pleasing next week.

James is on vacation this week.

Current Portfolio:


CALL Play Updates

Health Care REIT - HCN - close: 61.83 change: +0.78

Stop Loss: 59.85
Target(s): 64.75
Current Option Gain/Loss: -16.1%
Time Frame: exit prior to the Aug 6th earnings
New Positions: see below

Comments:
07/27/12 update: HCN finally edged up to a new high on Friday but it may take a positive market to see the stock move much higher before earnings on August 6th.

Let's keep the faith and see if it can add to its gains. Support has been strong at $61 so the risk appears to be minimal.

FYI: The Point & Figure chart for HCN is bullish with a $70 target.

- Suggested Positions -

Long Aug $60 call (HCN1218H60) entry $1.55

07/24/12 triggered @ 61.15

HCN Chart

Entry on July 24 at $61.15
Earnings Date 08/06/12 (confirmed)
Average Daily Volume = 1.5 million
Listed on July 23, 2012


Hess Corp. - HES - close: 48.38 change: +0.80

Stop Loss: 45.35 (new)
Target(s): 49.85
Current Option Gain/Loss: Aug$47.5c: +80.0% & Sep$47.5c: +41.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/27/12 update: Another nice gain for Hess thanks to the spike in commodities and decline in the dollar. Earnings are behind us for Hess so forward motion will be dependent on announced stimulus from the ECB and Fed and the impact on the dollar.

I raised the stop loss to $45.35 just in case the rally ends as abruptly as it started.

- Suggested Positions -

Long AUG $47.50 call (HES1218H47.5) Entry $1.05

- or -

Long SEP $47.50 call (HES1222I47.5) Entry $2.02

07/26/12 triggered on gap open higher at $46.65

HES Chart

Entry on July 26 at $46.65
Earnings Date 07/25/12
Average Daily Volume = 4.3 million
Listed on July 25, 2012


PUT Play Updates

Alliant Techsystems - ATK - close: 45.67 change: +1.03

Stop Loss: 46.50 (new)
Target(s): 40.50
Current Option Gain/Loss: - 38.2%
Time Frame: exit prior to the August 9th earnings
New Positions: see below

Comments:
07/27/12 update: ATK gained a buvk on Friday but the rebound was lackluster given the big gains in the market. There is significant resistance at $46.20. I changed the stop loss to $46.50 so our loss will be minimal if that resistance breaks.

Earnings are now confirmed for August 9th instead of the 2nd.

FYI: The Point & Figure chart for ATK is bearish with a $35 target.

- Suggested Positions -

Long Aug $45 PUT (ATK1218T45) Entry $1.70

07/23/12 triggered @ 44.75

ATK Chart

Entry on July 23 at $44.75
Earnings Date 08/09/12 (confirmed)
Average Daily Volume = 261 thousand
Listed on July 21, 2012


Wynn Resorts - WYNN - close: 94.61 change: +2.01

Stop Loss: 96.25
Target(s): 85.50
Current Option Gain/Loss: - 31.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/27/12 update: WYNN caught fire in the short squeeze on Friday. As a heavily shorted stock after the bleak reports on Vegas traffic and revenue declines, it was a candidate for a short squeeze on any good news. That good news came from the ECB rather than the gaming sector so the path of least resistance should still be down.

FYI: The Point & Figure chart for WYNN is bearish with a $60 target.

- Suggested Positions -

Long Aug $90 PUT (WYNN1218T90) Entry $2.20

07/24/12 triggered @ 93.75

WYNN Chart

Entry on July 24 at $93.75
Earnings Date 07/17/12
Average Daily Volume = 2.3 million
Listed on July 23, 2012


Best Buy Co. - BBY - close: 17.77 change: +0.53

Stop Loss: 18.51
Target(s): 15.05
Time Frame: exit prior to the Aug 21st earnings
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of BBY appear to be in a long-term decline. The company has struggled with the show-room phenomenon where consumers browse products in BBY's big-box stores but then buy the product online from competitors like Amazon.com (AMZN). Recent signs of weakness in consumer spending only add to BBY's troubles. The company recently laid off 2400 people.

The minor rebound on Friday was solely due to the short squeeze in the broader market. There is strong resistance at $19 but the stop is $18.51. With earnings two weeks from now and expectations low we are either going to get a downdraft this week or we will be out.

FYI: The Point & Figure chart for BBY is bearish with a $10 target.

- Suggested Positions -

Long Aug $17 PUT (BBY1218T17) @ $0.74

- or -

Long SEP $17 PUT (BBY1222U17) @ $1.48

BBY Chart

Entry on July 27 at $ 17.40
Earnings Date 08/21/12 (confirmed)
Average Daily Volume = 4.4 million
Listed on July 26, 2012


United Rentals, Inc. - URI - close: 29.63 change: +2.20

Stop Loss: 31.65
Target(s): 23.00
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
URI reported earnings last week and beat estimates by eight cents but that wasn't good enough. Traders sold the news. The oversold bounce failed early this week. Now URI is breaking down to new multi-month lows.

URI spiked +$2 on Friday thanks to market short covering. The stock has a clear pattern of rebounds following declines and the Friday bounce stopped right at the 300-day average at 29.84. For some stocks the 300-day is like an electric fence and URI has respected it in the past.

I am recommending we abandon the prior breakdown trigger and enter this put position at the open on Monday.

FYI: The Point & Figure chart for URI is bearish with a long-term $17 target.

Trigger: None - buy the open on Monday.

- Suggested Positions -

buy the Sep $26 PUT (URI1222U26) current ask $1.30

URI Chart

Entry on July xx at $ xx.xx
Earnings Date 07/17/12
Average Daily Volume = 4.4 million
Listed on July 26, 2012


CLOSED BULLISH PLAYS

No Closed Calls


CLOSED BEARISH PLAYS

Salesforce.com - CRM - close: 131.47 change: +6.88

Stop Loss: 130.25
Target(s): 111.00
Current Option Gain/Loss: - 7.2%
Time Frame: exit prior to the mid August earnings
New Positions: see below

Comments:
07/27/12 update: Ouch! The Thursday dip to $124 to trigger the entry to this play was a head fake under support at $125. When the broad market short squeeze began on Friday we saw CRM explode back above that $125 level for nearly a $7 gain. This stopped us out at the $130.25 stop loss.

Readers were cautioned this was an aggressive, higher-risk trade because CRM can be a volatile stock.

- Suggested Positions -

Long Aug $120 PUT (CRM1218T120) Entry $4.15, exit $2.30, -1.85 loss

07/26/12 triggered at $124.00

CRM Chart

Entry on July 26 at $124.00
Earnings Date 08/16/12 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on July 24, 2012


SINA Corp. - SINA - close: 46.20 change: +0.72

Stop Loss: 47.60
Target(s): 40.50
Time Frame: exit prior to the mid August earnings report
New Positions: see below

Comments:
07/27/12 update: The long bearish trend on SINA meant that it was heavily shorted and those shorts were squeezed on the broad market rally on Friday. There was no news at all on SINA. It was purely broad market short covering.

- Suggested Positions -

Long Aug $42.50 PUT (SINA1218T42.5) Entry $2.71, exit $1.22, -1.49 loss.

SINA Chart

Entry on July 23 at $43.99
Earnings Date 08/16/12 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on July 21, 2012