Editor's Note:

Shares of Rockwell Automation (ROK) hit our bullish target. The rest of the stock market stepped back on fiscal cliff uncertainty and a little profit taking.

GMCR and WPI were triggered. TIF was closed.

Current Portfolio:


CALL Play Updates

American Tower Corp. - AMT - close: 76.13 change: -0.67

Stop Loss: 75.40
Target(s): 79.85 & 82.00
Current Option Gain/Loss: -34.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/19/12: AMT spent the session churning sideways but closed on its lows with an -0.8% decline. If this pullback continues we could see AMT hit our stop loss at $75.40. More aggressive traders may want to adjust their stop so it's under the $75.00 level.

We have two targets. Our first target to take profits is at $79.85. Our second, more aggressive target is $82.00 but AMT will have to rally past potential resistance at $80.00 first. FYI: The Point & Figure chart for AMT is bullish with a triple-top breakout buy signal and an $88 target.

- Suggested Positions -

Long 2013 Jan $77.50 call (AMT1319a77.5) entry $1.30*

*option entry price is an estimate since the option did not trade at the time our play was closed.

Entry on December 18 at $77.05
Average Daily Volume = 1.7 million
Listed on December 15, 2012


Abercombie & Fitch - ANF - close: 47.83 change: -1.16

Stop Loss: 45.85
Target(s): 49.85
Current Option Gain/Loss: -20.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/19/12: After yesterday's outperformance ANF hit some profit taking today. Shares are now back under the $48 level, which was previously resistance. If the market slips again tomorrow we might see ANF test its 10-dma again near $47.00.

- Suggested Positions -

Long 2013 Jan $50 call (ANF1319a50) entry $1.58

12/18/12 new stop loss @ 45.85

Entry on December 10 at $47.48
Average Daily Volume = 5.4 million
Listed on December 08, 2012


Celgene Corp. - CELG - close: 79.70 change: -0.33

Stop Loss: 78.45
Target(s): 84.50 & 87.50
Current Option Gain/Loss: - 46.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/19/12: I am growing more worried about our CELG trade. Shares spent the session oscillating on either side of the $80.00 level but closed beneath it. If the market turns lower tomorrow there is a good chance we could see CELG hit our stop loss at $78.45.

Earlier Comments:
I am setting two targets. We'll take money off the table at $84.50 and our final target will be $87.50.

- Suggested Positions -

Long 2013 Jan $82.50 call (CELG1319a82.5) entry $2.03

12/18/12 new stop loss @ 78.45
12/15/12 traders should be defensive. The action this past week looks like a failed rally or bull trap pattern.

Entry on December 11 at $81.46
Average Daily Volume = 3.0 million
Listed on December 10, 2012


Energizer Holdings - ENR - close: 80.41 change: -0.53

Stop Loss: 79.40
Target(s): 84.50
Current Option Gain/Loss: -55.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/19/12: ENR spent the day slowly drifting lower. The stock should find support near $80 and its 20-dma near $79.80. More conservative traders may want to tighten their stop loss.

- Suggested Positions -

Long 2013 Jan $85 call (ENR1319a85) entry $0.90

12/15/12 new stop loss @ 79.40

Entry on December 07 at $80.76
Average Daily Volume = 784 thousand
Listed on December 06, 2012


Flowserve Corp. - FLS - close: 144.95 change: +0.26

Stop Loss: 139.95
Target(s): 148.50
Current Option Gain/Loss: +18.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/19/12: Some positive analyst comments today helped FLS outperform the major market indices but just barely. Shares were churning sideways inside the $144-146 range. I am not suggesting new positions at current levels. FYI: The Point & Figure chart for FLS is bullish with a $153 target.

- Suggested Positions -

Long 2013 Jan $145 call (FLS1319a145) Entry $2.70

12/18/12 new stop loss @ 139.95

Entry on December 05 at $141.50
Average Daily Volume = 518 thousand
Listed on December 04, 2012


Green Mountain Coffee Roasters - GMCR - close: 41.83 change: +0.84

Stop Loss: 39.20
Target(s): 47.50
Current Option Gain/Loss: + 8.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/19/12: The rebound in GMCR continued today. The stock opened just above $41.00 and hit our entry trigger at $41.35 today.

Earlier Comments:
GMCR could see a short squeeze. The most recent data listed short interest at 43% of GMCR's 120 million share float. The $45.00 could be round-number resistance but we will target a move to $47.50. GMCR can be a very volatile stock. I do consider this a more aggressive, higher-risk trade. Let's keep our position size small to limit our risk.

(small positions) - Suggested Positions -

Long 2013 Jan $45 call (GMCR1319a45) entry $1.18

Entry on December 19 at $41.35
Average Daily Volume = 8.3 million
Listed on December 18, 2012


iShares Russell 2000 - IWM - close: 84.12 change: +0.19

Stop Loss: 81.95
Target(s): 86.00
Current Option Gain/Loss: +41.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/19/12: The small caps managed to eke out a small gain, which is a good sign for the bulls. Yet the market seems to be trending lower afterhours tonight on disappointing fiscal cliff talk news. We'll have to see if things change tomorrow.

FYI: For the curious out there, no you're not seeing things. The value of the IWM is actually lower than it was at yesterday's close That's because the IWM began trading ex-dividend this morning. The gap down due to the dividend did not stop our calls from growing on today's gain.

- Suggested Positions -

buy the 2013 Jan $84 call (IWM1319a84) current ask $1.17

12/18/12 new stop loss @ 81.95
12/11/12 triggered on the gap open higher at $83.11 (trigger was 82.85)

Entry on December 11 at $83.11
Average Daily Volume = 38 million
Listed on December 10, 2012


Linkedin Corp. - LNKD - close: 114.78 change: -0.80

Stop Loss: 111.40
Target(s): 119.00
Current Option Gain/Loss: +32.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/19/12: LNKD produced a minor pullback today. I would not be surprised to see a dip to the 10-dma near $112.65 if the market were do turn lower tomorrow. No new positions at this time.

Earlier Comments:
LNKD can be volatile so I would use small positions to limit our risk.

*Small Positions* - Suggested Positions -

Long Jan $115 call (LNKD1319a115) Entry $3.10

12/18/12 new stop loss @ 111.40
12/17/12 adjust exit target to $119.00
12/15/12 new stop loss @ $109.00

Entry on December 10 at $110.25
Average Daily Volume = 1.8 million
Listed on December 08, 2012


Lululemon Athletica - LULU - close: 76.19 change: -1.00

Stop Loss: 72.95
Target(s): 79.85
Current Option Gain/Loss: +19.6%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
12/19/12: Shares of LULU also encountered some profit taking today. LULU traded up to $77.85 and then reversed, giving back a dollar on the session. I would not launch new positions at current levels.

Earlier Comments:
LULU could see a short squeeze that lifts it toward $80.00. The most recent data listed short interest at 20% of the 101 million share float. FYI: The Point & Figure chart for LULU is bullish with an $88 target.

- Suggested Positions -

Long 2013 Jan $75 call (LULU1319a75) entry $3.30

12/17/12 new stop loss @ 72.95, adjust exit to $79.85
61

Entry on December 12 at $74.25
Average Daily Volume = 2.1 million
Listed on December 11, 2012


Netflix, Inc. - NFLX - close: 93.98 change: -1.66

Stop Loss: 89.45
Target(s): 99.75
Current Option Gain/Loss: -20.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/19/12: After a multi-day rally shares of NFLX hit some profit taking with a -1.7% decline. Technically today's move has created a bearish engulfing candlestick reversal pattern. If the market turns lower tomorrow we could see NFLX dip toward the $91-90 zone. I am not suggesting new positions.

Earlier Comments:
NFLX can be a volatile stock so I do consider this a more aggressive, higher-risk trade and we will want to keep our position size small. Target is $99.75.

- Suggested Positions - *Small Positions*

Long 2013 Jan $100 call (NFLX1319a100) entry $3.88

Entry on December 14 at $92.67
Average Daily Volume = 1.1 million
Listed on December 13, 2012


Vulcan Materials - VMC - close: 53.10 change: -0.09

Stop Loss: 50.85
Target(s): 58.50
Current Option Gain/Loss: -21.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/19/12: VMC hit some profit taking this morning but traders were buying the dip near $52.40 and VMC pared its losses. If the market opens positive tomorrow I would still consider new positions here in VMC.

Earlier Comments:
Our target is $58.50. The $60.00 level looks like resistance. FYI: The Point & Figure chart for VMC is bullish with a long-term $70 target.

- Suggested Positions -

Long 2013 Jan $55 call (VMC1319a55) entry $1.15

Entry on December 18 at $53.00
Average Daily Volume = 870 thousand
Listed on December 17, 2012


Watson Pharma. - WPI - close: 88.90 change: -0.91

Stop Loss: 88.20
Target(s): 94.85
Current Option Gain/Loss: -42.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/19/12: Our new bullish play on WPI has been triggered but I fear the action in the stock today looks bearish. Shares saw an early morning spike higher past resistance near $90.00 and WPI hit our entry trigger at $90.50. Unfortunately the stock immediately reversed and spent the rest of the day hovering sideways on either side of the $89.00 level. If there is any follow through lower tomorrow we could see WPI hit our stop at $88.20. I am not suggesting new positions with WPI beneath the $90.00 level.

- Suggested Positions -

Long 2013 Jan $90 call (WPI1319a90) entry $2.00*
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on December 19 at $90.50
Average Daily Volume = 730 thousand
Listed on December 18, 2012


PUT Play Updates

Currently we do not have any active put trades.


CLOSED BULLISH PLAYS

Rockwell Automation - ROK - close: 83.59 change: -0.83

Stop Loss: 79.85
Target(s): 84.75
Current Option Gain/Loss: +90.0%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
12/19/12: Target achieved.

ROK rallied to a new relative high this morning before succumbing to profit taking. Actually the stock gapped open higher at $84.78 and hit $84.80 before reversing. Since our exit target was $84.75 the trade was closed at the open.

- Suggested Positions -

2013 Jan $85 call (ROK1319a85) entry $1.00* exit $1.90**

12/19/12 target hit
**option exit price is an estimate since the option did not trade at the time our play was closed.
12/17/12 new stop loss @ 79.85
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on December 10 at $80.60
Average Daily Volume = 1.0 million
Listed on December 05, 2012



CLOSED BEARISH PLAYS

Tiffany & Co - TIF - close: 58.99 change: -0.88

Stop Loss: 60.05
Target(s): 52.50
Current Option Gain/Loss: -60.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/19/12: It proved to be a down day for shares of TIF. The stock's four-day bounce was not working for us and last night we decided to exit positions and close this trade at the open this morning. TIF opened at $59.90 but spiked above resistance at $60.00 before lunchtime. Had we not closed this trade TIF would have hit our stop loss at $60.05. Unfortunately, the breakout past resistance didn't last. It seemed once TIF had triggered a few stops the stock reversed lower. More aggressive traders may want to reconsider new bearish positions with a stop above today's high. For the newsletter, the trade is closed.

- Suggested Positions -

Jan $55 PUT (TIF1319m55) entry $1.15 exit $0.45 (-60.8%)

12/19/12 closed this morning at the open
12/18/12 prepare to exit tomorrow morning at the open

chart:

Entry on December 10 at $57.75
Average Daily Volume = 2.3 million
Listed on December 08, 2012