Editor's Note:

The market has seen two weeks of profit taking from its September highs. Window dressing failed to lift stocks to another gain.

Current Portfolio:


CALL Play Updates

Alexion Pharma. - ALXN - close: 114.40 change: +1.15

Stop Loss: 110.75
Target(s): 118.50
Current Option Gain/Loss: +37.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/29/12: The bounce continues with traders buying the dip in ALXN at $112.00 on Friday morning. The stock closed up +1.0%. The stock has essentially been in rally mode since mid August with a couple of sideways consolidations along the way to alleviate any overbought conditions. The stock looks poised to breakout to new highs but that will probably depend on the strength of the broader market. I am not suggesting new positions at current levels.

Please note our new stop loss at $110.75.

Our multi-week target is $118.50. FYI: The Point & Figure chart for ALXN is bullish with a $124 target.

- Suggested Positions -

Long Oct $115 call (ALXN1220j115) Entry $2.83

09/29/12 new stop loss @ 110.75
09/20/12 new stop loss @ 109.40
09/15/12 new stop loss @ 107.75

chart:

Entry on September 10 at $110.72
Average Daily Volume = 905 thousand
Listed on September 08, 2012


Commvault Sys. - CVLT - close: 58.66 change: -0.65

Stop Loss: 54.40
Target(s): 59.85
Current Option Gain/Loss: +25.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/29/12: After Thursday's four dollar rally in CVLT it's not surprising to see some profit taking on Friday. It is still a little disappointing that momentum and window dressing didn't push shares to our exit target at $59.85.

I am not suggesting new positions at this time. More aggressive traders may want to aim higher.

Wednesday's low was $54.43. I am raising our stop to $54.40.

- Suggested Positions -

Long Oct $60 Call (CVLT1220j60) Entry $1.24

09/29/19 new stop loss @ 54.40

chart:

Entry on September 20 at $56.07
Average Daily Volume = 427 thousand
Listed on September 19, 2012


DSW Inc. - DSW - close: 66.72 change: +0.12

Stop Loss: 64.40
Target(s): 72.50
Current Option Gain/Loss: Oct70c: -50.0% & 2013jan$70c: -21.8%
Time Frame: exit prior to Oct 16th.
New Positions: see below

Comments:
09/29/12: DSW drifted higher on Friday but not quite enough to breakout past the $67.00 level. If the market cooperates we could see DSW hit new record highs soon. I am not suggesting new positions at this time.

We will tentatively aim for $72.50 but I suspect the $70.00 level might offer some resistance. More conservative traders may want to exit in the $69.50-70.00 zone. We will plan on closing positions prior to Oct. 16th.

- Suggested Positions -

Long Oct $70 call (DSW1220j70) Entry $0.50

- or -

Long 2013 Jan $70 call (DSW1319a70) Entry $2.75

chart:

Entry on September 24 at $66.45
Average Daily Volume = 353 thousand
Listed on September 22, 2012


EQT Corp. - EQT - close: 59.00 change: +0.16

Stop Loss: 56.45
Target(s): 63.00
Current Option Gain/Loss: +31.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/29/12: EQT bounced off its Friday morning lows and rose toward short-term resistance in the $59.40-59.50 area. The stock looks poised to breakout higher but that will probably depend on the market's strength this week. I am not suggesting new positions at this time.

- Suggested Positions -

Long Oct $60 call (EQT1220j60) Entry $0.61

09/27/12 new stop loss @ 56.45

chart:

Entry on September 24 at $ xx.xx
Average Daily Volume = 1.0 million
Listed on September 22, 2012


McDonald's Corp. - MCD - close: 91.75 change: -1.52

Stop Loss: 89.90
Target(s): 98.00
Current Option Gain/Loss: -54.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/29/12: Ouch! It was a painful day for Dow-component MCD. Before the opening bell MCD was downgraded thanks to one analyst firm who believes Wall Street is overestimating MCD's potential same-store sales growth. Shares of MCD gapped open lower at $92.01, dipped to $90.40, and then bounced back.

I have been warning readers to expect a pullback for days now but Friday's move was deeper than expected due to the downgrade. We can use the intraday bounce on Friday as a new bullish entry point.

Earlier Comments:
This is an aggressive, higher-risk trade. There is still additional resistance at the simple 200-dma, the $94.00 level, and another trend line of lower highs. We want to use small positions to limit our risk.

- Suggested (SMALL) Positions -

Long Oct $92.50 call (MCD1220j92.5) entry $2.00

09/28/12 MCD is downgraded before the bell.
09/22/12 I suspect MCD will see a pullback here.

chart:

Entry on September 19 at $93.24
Average Daily Volume = 4.7 million
Listed on September 18, 2012


Sears Holding Corp. - SHLD - close: 55.49 change: -0.87

Stop Loss: 53.95
Target(s): 62.50
Current Option Gain/Loss: - 6.8%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
09/29/12: Lack of follow through on Thursday's bounce is a bit troubling for our SHLD trade. Although we should note that the market produced a widespread decline on Friday. I would still consider new positions now. However, nimble traders could try and buy calls on a dip near $54.00. An alternative entry point would be to wait for a rally past $56.50.

Friday's gap down in the stock produced a gap down in the option price and our entry.

Earlier Comments:
SHLD could see some short covering. The most recent data listed short interest at 37% of the 31.3 million share float.

NOTE: There are two October $57.50 option strikes. Make sure you pick the normal one. Pay attention to the symbol.

- Suggested Positions -

Long Oct $57.50 call (SHLD1220j57.5) Entry $1.75

chart:

Entry on September 28 at $56.11
Average Daily Volume = 1.7 million
Listed on September 27, 2012


PUT Play Updates

Rockwell Automation - ROK - close: 69.55 change: +0.47

Stop Loss: 70.10
Target(s): 63.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
09/29/12: This is an entry point for more aggressive traders. I suggested a failed rally near $70.00 as an alternative entry point to buy puts and ROK just produced one on Friday. The newsletter will wait for confirmation and use a trigger to open positions at $67.90.

Trigger @ 67.90

- Suggested Positions -

buy the Oct $65 PUT (ROK1220v65)

chart:

Entry on September xx at $ xx.xx
Average Daily Volume = 1.1 million
Listed on September 26, 2012


Ross Stores - ROST - close: 64.59 change: -0.32

Stop Loss: 66.55
Target(s): 60.50
Current Option Gain/Loss: -16.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/29/12: ROST continues to sink. Shares hit new three-month lows on Friday morning with a spike down to $62.52. Unfortunately for the bears the stock produced a strong oversold bounce. I would expect a rebound back toward what should be new resistance in the $66.00 area. This level should be bolstered by the 10-dma and 100-dma.

I am not suggesting new positions at this time.

Our target is $60.50. Odds are good the $60.00 level and the simple 200-dma could be support, at least temporary support.

- Suggested Positions -

Long Oct $65 PUT (ROST1220v65) Entry $1.85

chart:

Entry on September 26 at $64.62
Average Daily Volume = 1.77 million
Listed on September 25, 2012