Editor's Note:

Stocks are starting to bounce from oversold levels. We noticed a lot of intraday reversals on Friday.

Current Portfolio:


CALL Play Updates

Netflix, Inc. - NFLX - close: 80.90 change: -0.58

Stop Loss: 78.20
Target(s): 89.75
Current Option Gain/Loss: - 21.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/17/12: Our new bullish play on NFLX has been triggered. Unfortunately shares failed to maintain its gains. The stock was somewhat volatile but traders bought the dip midday near $80.00. At this point I would wait for shares to rally past $82.00 again before consider new bullish positions.

Earlier Comments:
NFLX could see a short squeeze. The most recent data listed short interest at 31% of the 54.1 million share float. NFLX can be volatile so I am suggesting small positions to limit our risk.

- Suggested Positions -

Long DEC $85 call (NFLX1222L85) Entry $4.60

11/16/12 triggered @ 82.25

chart:

Entry on November 16 at $82.25
Average Daily Volume = 6.5 million
Listed on November 15, 2012


PUT Play Updates

Avalonbay Communities - AVB - close: 128.87 change: +1.18

Stop Loss: 132.05
Target(s): 121.50
Current Option Gain/Loss: - 12.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
11/17/12: I warned readers on Thursday that AVB looked ready to bounce. The stock should have potential resistance at the $130.00 level and the $132.00 level. We have our stop at $132.05. More conservative traders may want to lower their stop instead. I am not suggesting new positions at this time.

- Suggested Positions -

Long DEC $125 PUT (AVB1222x125) entry $1.65

11/14/12 triggered @ 129.75

chart:

Entry on November 14 at $129.75
Average Daily Volume = 593 thousand
Listed on November 13, 2012


Carpenter Tech. - CRS - close: 45.20 change: +0.39

Stop Loss: 48.05
Target(s): 42.50
Current Option Gain/Loss: +52.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/17/12: CRS dipped toward $44.00 before bouncing. Looking at the intraday chart I suspect the bounce is not over yet. Look for shares to rebound back into the $46.50-47.50 zone. I am lowering our stop loss down to $48.05.

I am suggesting we go ahead and take some money off the table by selling at least half of our position at the open on Monday.

Earlier Comments:
Our multi-week target is $42.50. CRS can be somewhat volatile so readers may want to limit their position size to reduce risk.

- Suggested Positions -

Long Dec $45 PUT (CRS1222x45) Entry $1.15

11/17/12 new stop loss @ 48.05, sell half of our position on Monday morning
11/14/12 new stop loss @ 49.05

chart:

Entry on November 12 at $48.23
Average Daily Volume = 460 thousand
Listed on November 10, 2012


Dow Jones Industrial Average (ETF) - DIA - close: 125.60 change: +0.42

Stop Loss: 128.15
Target(s): 125.25
Current Option Gain/Loss: +29.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/17/12: It looks like the DIA has also formed a short-term bottom. I would expect this ETF to bounce higher into the $127.50-128.00 zone. We will adjust our stop loss down to $128.15. I am not suggesting new positions at this time.

- Suggested Positions -

long DEC $125 PUT (DIA1222x125) entry $1.79

11/17/12 new stop loss @ 128.15
11/14/12 new stop loss @ 129.15
11/13/12 new stop loss @ 130.15
11/08/12 new stop loss @ 130.60

chart:

Entry on November 08 at $129.18
Average Daily Volume = 5.3 million
Listed on November 7, 2012


iShares Russell 2000 ETF - IWM - close: 77.48 change: +0.64

Stop Loss: 80.15
Target(s): 75.50
Current Option Gain/Loss: +20.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
11/17/12: I cautioned readers to expect a bounce in the IWM. This ETF added +0.8% on Friday. I am now expecting an oversold bounce into the $78.50-80.00 zone. I am not suggesting new positions at this time.

- Suggested Positions -

Long 2013 Jan $75 PUT (IWM1319m75) entry $1.53

11/17/12 the IWM looks poised to bounce
11/14/12 new stop loss @ 80.15
11/13/12 new stop loss @ 81.05

chart:

Entry on November 08 at $79.85
Average Daily Volume = 36 million
Listed on November 7, 2012


Lockheed Martin Corp. - LMT - close: 88.46 change: +0.88

Stop Loss: 90.65
Target(s): 84.25
Current Option Gain/Loss: -12.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/17/12: LMT added +1% on Friday. That outperformed the S&P 500. You could argue that LMT has potential resistance at $89.00, $90.00 and the $91.00 levels. We have our stop loss at $90.65. More aggressive traders may want to adjust their stop so it's above $91.00 instead. I am not suggesting new positions at this time but a failed rally at $89 or the $90 level could be used as a new entry point.

Earlier Comments:
We do want to keep our position size small because LMT has produced a new breakdown on its daily chart but it has not yet broken below potential support on the weekly chart. It is possible the stock could bounce off the trend line displayed on the weekly chart but I doubt it given the market's broader weakness.

- Suggested *Small* Positions -

Long Dec $85 PUT (LMT1222x85) Entry $1.60

chart:

Entry on November 15 at $88.02
Average Daily Volume = 1.6 million
Listed on November 14, 2012


Lufkin Industries - LUFK - close: 50.09 change: -0.09

Stop Loss: 51.55
Target(s): 45.15
Current Option Gain/Loss: -53.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/17/12: Shares of LUFK are not moving. The stock appears stuck in the $49.50-51.00 zone. While the larger pattern still looks bearish I am suggesting we go ahead and close positions early on Monday morning.

- Suggested Positions -

Long DEC $45 PUT (LUFK1222x45) entry $1.50

11/17/12 prepare to exit early on Monday morning
11/14/12 time to turn cautious. LUFK is not participating in the market weakness. new stop loss @ 51.55

chart:

Entry on November 09 at $48.95
Average Daily Volume = 467 thousand
Listed on November 8, 2012


Las Vegas Sands - LVS - close: 40.56 change: -0.36

Stop Loss: 44.05
Target(s): 36.50
Current Option Gain/Loss: Dec40p: - 2.7% & Jan40p: + 1.8%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
11/17/12: It has been a volatile week for shares of LVS. The stock's sharp breakdown has been follow up with a sharp bounce as well. LVS rebounded right back to technical resistance at its 10-dma and 100-dma on Friday. I am not suggesting new positions at this time. More conservative traders may want to lower their stop loss.

- Suggested Positions -

Long DEC $40 PUT (LVS1222x40) Entry $1.10

- or -

Long 2013 Jan $40 PUT (LVS1319m40) entry $1.65

11/14/12 triggered @ 42.25

chart:

Entry on November 14 at $42.25
Average Daily Volume = 6.4 million
Listed on November 13, 2012


Vornado Realty - VNO - close: 73.23 change: -0.05

Stop Loss: 75.25
Target(s): 72.50
Current Option Gain/Loss: Dec75p: +85.7% & 2013Jan$75p: +68.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/17/12: On Thursday night I was concerned that VNO was too oversold and might see a big bounce on Friday. Our plan was to take some money off the table and sell half of our position on Friday morning at the open. Fortunately for us VNO opened at $73.38 and actually fell to a new relative low at $72.64 before paring its losses.

The stock remains oversold. More conservative traders may want to exit completely. I am lowering our stop loss down to $75.25.

- Suggested Positions -

Long DEC $75 PUT (VNO1222x75) entry $1.40*

- or -

Long 2013 Jan $75 PUT (VNO1319m75) entry $1.90*

11/16/12 sold half of our position to lock in gains.
1/2 exit Dec $75 put @ $2.55 (+82.1%)
1/2 exit 2013 Jan $75 put @ $3.10 (+63.1%)
adjust the stop loss down to $75.25
11/15/12 SELL HALF of our positions to lock in gains tomorrow morning,
move the stop loss down to $76.25 for the rest
11/14/12 readers may want to start taking profits now
new stop loss @ 78.05
11/12/12 trade opened on gap down at $76.89
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on November 12 at $76.89
Average Daily Volume = 1.1 million
Listed on November 10, 2012


Whole Foods Market - WFM - close: 90.54 change: +1.92

Stop Loss: 91.05
Target(s): 82.50
Current Option Gain/Loss: - 44.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/17/12: I did not see any headlines to explain the relative strength in WFM on Friday. Shares rallied +2.1% and closed back above what should have been resistance at $90.00 and its 200-dma and exponential 200-dma. This is very bad news for our bearish trade. Odds are very strong that WFM will hit our stop loss at $91.05 on Monday. I am not suggesting new positions at this time.

Earlier Comments:
I am suggesting small positions because it is possible that WFM could bounce on its long-term trend line but given the market's widespread weakness I am expecting new lows.

- Suggested *small* Positions -

Long DEC $87.50 PUT (WFM1222x87.5) entry $2.69

11/16/12 the bounce on Friday is very bad news for our put position and WFM will likely hit our stop on Monday

chart:

Entry on November 15 at $88.02
Average Daily Volume = 1.6 million
Listed on November 14, 2012


CLOSED BEARISH PLAYS

Mercadolibre - MELI - close: 75.43 change: +0.98

Stop Loss: 75.55
Target(s): 70.25
Current Option Gain/Loss: -25.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/17/12: I cautioned readers that Thursday's session had produced a bullish reversal candlestick pattern. Friday's rally confirmed the reversal and shares pushed past likely resistance at $75.00. Our stop loss was hit at $75.55.

Earlier Comments:
I do consider this a higher-risk trade. MELI can be volatile and is arguably already oversold with a four-week decline. Of course stocks can always get more oversold.

- Suggested *Small* Positions -

DEC $72.50 PUT (MELI1222x72.5) entry $2.75 exit $2.05 (-25.4%)

11/16/12 stopped out at $75.55
11/14/12 new stop loss @ 75.55
11/13/12 play triggered on gap down at $74.56. suggested trigger was $74.75

chart:

Entry on November 13 at $74.56
Average Daily Volume = 603 thousand
Listed on November 12, 2012