After Friday's short squeeze pushed the Dow to a two month high the index failed to move higher on mediocre volume.

Editor's Note:

We should not be too surprised about the lack of market direction on Monday. The Friday short squeeze was driven by European comments about pending ECB action and the ECB does not meet until later this week.

The markets are in wait and see mode for the most part although the Nasdaq slipped on losses in ISRG, GOOG, FFIV, CSTR and BIDU. It would have been worse but Apple rallied +10 on rumors they will announce the iPhone 5 in September rather than October.

The market moving economic reports and the announcement from the Fed do not happen until Wednesday so Tuesday could be another day where traders churn the market as they bide their time waiting for the news.

The IWM and URI positions were both started this morning.

Current Portfolio:


CALL Play Updates

Health Care REIT - HCN - close: 62.24 change: +0.41

Stop Loss: 59.85
Target(s): 64.75
Current Option Gain/Loss: +54%
Time Frame: exit prior to the Aug 6th earnings
New Positions: see below

Comments:
07/30/12 update: Another new high on Monday 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

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: 48.17 change: -0.18

Stop Loss: 45.35
Target(s): 49.85
Current Option Gain/Loss: Aug$47.5c: +70.0% & Sep$47.5c: +35.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/30/12 update: Hess moved sideways along with oil prices as we await the news on possible QE programs by the ECB and the Fed. Earnings are behind us for Hess so forward motion will be dependent on announced stimulus and the impact on the dollar.

- 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

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

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
Comments:
07/30/12 update: I recommended in the weekend newsletter to open this play at the open on Monday. The Friday short squeeze faded as expected.

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.

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

Trigger: None - buy the open on Monday.

Positions

Long Sep $26 PUT (URI1222U26) @ $1.25

Entry on July 30 at $ 29.70
Earnings Date 07/17/12
Average Daily Volume = 4.4 million
Listed on July 26, 2012


iShares Russell 2000 ETF - IWM - close: 79.05 change: -0.27

Stop Loss: 81.25
Target(s): 75.75
Time Frame: 2-4 weeks
New Positions: Yes, see below

Company Description
Comments:
07/30/12 update: The market spiked at the open but then sold off slightly after the initial spike. The trigger at $78.85 was hit and we entered the play. The Russell was the biggest percentage loser of the day so we have the right index if the market decides to roll over on lackluster central bank actions or bad economics.

The target is a decline to the June support at $75.

Trigger: IWM at $78.85, hit at 11:40 AM on July 39th

Positions

Long Oct $78 PUT (IWM1220V78) @ $3.26, Stop $81.25 on IWM

Entry on July 30 at $ 78.85
Average Daily Volume = 60.0 million
Listed on July 28, 2012


CLOSED BULLISH PLAYS

No Closed Calls


CLOSED BEARISH PLAYS

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

Stop Loss: 46.50 (new)
Target(s): 40.50
Current Option Gain/Loss: - 55%
Time Frame: exit prior to the August 9th earnings
New Positions: see below

Comments:
07/30/12 update:
ATK spiked intraday to hit the new stop at $46.50 and take us out of this position.

- Suggested Positions -

Long Aug $45 PUT (ATK1218T45) Entry $1.70, exit $.75, -0.95 loss.

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: 94.55 change: -.06

Stop Loss: 96.25 Hit at the open
Target(s): 85.50
Current Option Gain/Loss: - 38.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/30/12 update: WYNN spiked $2 at the open o stop us out at $96.25 before losing all its gains and closing negative for the day.

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

- Suggested Positions -

Long Aug $90 PUT (WYNN1218T90) Entry $2.20, exit $.95, -$1.25

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: 18.07 change: +0.30

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

Company Description
Comments:
07/30/12 update: BBY spiked over 6% at the open on news founder Richard Schluze has been recruiting executives to lead the company if he is successful in taking it private.

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

- Suggested Positions -

Long Aug $17 PUT (BBY1218T17) @ $0.74, exit $0.45, -.29 loss

- or -

Long SEP $17 PUT (BBY1222U17) @ $1.48, exit $1.09, -.39 loss

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