Editor's Note:

The U.S. market looks vulnerable. Equities gave back their morning gains. Traders are nervous we're about to go over the fiscal cliff.

Our ANF, LULU, and NFLX trades have been stopped out. I am suggesting we close our ENR trade at the open tomorrow.

Current Portfolio:


CALL Play Updates

Akamai Tech. - AKAM - close: 41.25 change: -0.14

Stop Loss: 39.95
Target(s): 44.90
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
12/26/12: AKAM was little changed on the session with a tight, narrow range today. I don't see any changes from my prior comments.

Currently I am suggesting we buy calls when AKAM hits $42.05. Nimble traders may want to consider buying a dip near $40.00 instead. If triggered our target is $44.90. More aggressive traders could aim higher. FYI: The Point & Figure chart for AKAM is bullish with a $54 target.

Trigger @ 42.05

- Suggested Positions -

buy the 2013 Jan $45 call (AKAM1319a45) current ask $0.23

Entry on December xx at $ xx.xx
Average Daily Volume = 3.1 million
Listed on December 22, 2012


Affiliated Managers Group - AMG - close: 129.66 change: -1.44

Stop Loss: 128.95
Target(s): 139.00
Current Option Gain/Loss: +40.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
12/26/12: AMG underperformed the market today with a -1.0% decline. The close beneath its 10-dma and the $130.00 level is short-term bearish. If there is any follow through lower tomorrow AMG will likely hit our stop loss at $128.95. FYI: The Point & Figure chart for AMG is bullish with a $147 target.

- Suggested *SMALL* Positions -

Long March $135 call (AMG1316c135) entry $2.10

12/22/12 adjust stop loss to $128.95
12/21/12 trade opened on gap down at $130.54

Entry on December 21 at $13.54
Average Daily Volume = 271 thousand
Listed on December 20, 2012


American Tower Corp. - AMT - close: 76.29 change: -0.71

Stop Loss: 75.40
Target(s): 79.85 & 82.00
Current Option Gain/Loss: -46.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/26/12: Shares of AMT continue to churn sideways in the $76-77 range. If the stocks breaks down under support at $76.00 odds are pretty high we'll see AMT hit our stop loss at $75.40. More aggressive traders may want to adjust their stop so it's beneath potential round-number support at $75.00 instead.

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


Canadian Pacific Railway - CP - close: 101.18 change: -0.31

Stop Loss: 99.40
Target(s): 109.00
Current Option Gain/Loss: - 48.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/26/12: Aside from a little volatility this morning, CP spent the session churning sideways in a narrow range. It looks like traders did buy the dip near its 10-dma.

Our plan was to use small positions to limit our risk.

NOTE: CP will begin trading ex-dividend on Dec. 26, 2012. The quarterly cash dividend should be about 35.5 cents.

- Suggested *SMALL* Positions -

Long Jan $105 call (CP1319a105) entry $1.25

12/21/12 trade opened on gap down at $101.46

Entry on December 21 at $101.46
Average Daily Volume = 961 thousand
Listed on December 20, 2012


3D Systems - DDD - close: 51.85 change: -0.05

Stop Loss: 48.95
Target(s): 58.50
Current Option Gain/Loss: -18.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/26/12: Our new trade on DDD was triggered on Monday at $52.25. Unfortunately there has been no follow through higher. DDD has failed three times now at the $53.00 level. Readers may want to wait for a rally past $53.10 before considering new bullish positions. FYI: The Point & Figure chart for DDD is bullish with a $74 target.

- Suggested Positions -

Long FEB $55 call (DDD1316b55) entry $2.75*

12/24/12 triggered @ 52.25
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on December xx at $ xx.xx
Average Daily Volume = 1.9 million
Listed on December 22, 2012


Energizer Holdings - ENR - close: 79.58 change: -0.41

Stop Loss: 79.40
Target(s): 84.50
Current Option Gain/Loss: -83.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/26/12: The action in ENR doesn't bode well for the bulls. After trying to hug support at the $80.00 level all day shares have started to slip lower. In the last two weeks ENR has bounced twice at support near $79.50. This time I don't think it will hold. ENR could have been reaction to the disappointing holiday sales estimates. If consumers aren't buying toys and electronics for their kids then that could mean fewer batteries purchased.

I am suggesting an immediate exit tomorrow morning.

- Suggested Positions -

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

12/26/12 ENR is not working, prepare to exit tomorrow morning
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: 143.96 change: -0.50

Stop Loss: 141.85
Target(s): 148.50
Current Option Gain/Loss: -12.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/26/12: Profit taking in FLS was pretty mild and traders bought the dip near its 10-dma midday. I am not suggesting new positions at current levels. FYI: The Point & Figure chart for FLS is bullish with a $153 target.

NOTE: FLS should begin trading ex-dividend on Dec. 27th. The quarterly cash dividend should be about 36 cents.

- Suggested Positions -

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

12/20/12 new stop loss @ 141.85
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: 41.68 change: -0.19

Stop Loss: 39.20
Target(s): 47.50
Current Option Gain/Loss: -32.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/26/12: GMCR held up relatively well today with only minor profit taking. I don't see any changes from my prior comments. Readers may want to wait for a bounce before considering new bullish positions.

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: 84.19 change: -0.35

Stop Loss: 81.95
Target(s): 86.00
Current Option Gain/Loss: - 3.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/26/12: Lack of progress in the small caps is not helping our trade. The current sideways churn in the IWM is letting our option fade. Today's market-wide dip didn't help either. Yet I am not suggesting new positions at this time.

- Suggested Positions -

buy the 2013 Jan $84 call (IWM1319a84) entry $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: 114.96 change: -1.06

Stop Loss: 111.40
Target(s): 119.00
Current Option Gain/Loss: +22.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/26/12: LNKD was up on Monday and spiked to a new relative high above $117 this morning. Yet shares gave back their Wednesday gains and more with a -0.9% pullback. I am not suggesting new positions at current levels.

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


Monsanto Co. - MON - close: 94.10 change: +1.30

Stop Loss: 89.95
Target(s): 99.50
Current Option Gain/Loss: + 28.0%
Time Frame: exit prior to Jan 8th.
New Positions: see below

Comments:
12/26/12: The rally continues for shares of MON. The stock bounced off its 10-dma on Monday and hit our trigger to buy calls at $93.05 with Monday's gain. MON opened higher this morning and surged to a new high with a +1.4% gain.

Our plan was to keep our position size small. NOTE: This is a short-term trade. We do not want to hold over the January 8th earnings report.

*Small Positions*

- Suggested Positions -

Long 2013 Jan $95 call (MON1319a95) entry $1.25

12/24/12 triggered @ 93.05

Entry on December 24 at $93.05
Average Daily Volume = 2.2 million
Listed on December 19, 2012


Vulcan Materials - VMC - close: 52.81 change: -0.16

Stop Loss: 50.85
Target(s): 58.50
Current Option Gain/Loss: -47.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/26/12: The sideways consolidation in VMC seems to be narrowing somewhat. That might suggest a breakout soon, one way or the other. I am not suggesting new positions at current levels.

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: 89.49 change: -0.87

Stop Loss: 88.20
Target(s): 94.85
Current Option Gain/Loss: -37.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/26/12: WPI gave up about -0.9% today. The close back beneath the $90.00 level is a bit disappointing but WPI remains above short-term technical support at its 10-dma and 20-dma. I am not suggesting new positions at the moment.

- 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

Abercombie & Fitch - ANF - close: 45.44 change: -1.66

Stop Loss: 45.85
Target(s): 49.85
Current Option Gain/Loss: -62.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/26/12: Many of the retail stocks were weak today on worries that holiday sales may have been less than expected. Shares of ANF plunged -3.5% and hit our stop loss at $45.85.

- Suggested Positions -

Long 2013 Jan $50 call (ANF1319a50) entry $1.58 exit $0.60 (-62.0%)

12/26/12 stopped out
12/18/12 new stop loss @ 45.85

chart:

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


Lululemon Athletica - LULU - close: 73.38 change: -2.38

Stop Loss: 73.75
Target(s): 79.85
Current Option Gain/Loss: -25.7%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
12/26/12: Sudden worries that this year's holiday spending may not have been as strong as expected sank a number of retail stocks today, including shares of LULU. LULU plunged to a -3.1% decline and hit our stop loss at $73.75.

- Suggested Positions -

Long 2013 Jan $75 call (LULU1319a75) entry $3.30 exit $2.45 (-25.7%)

12/26/12 stopped out at $73.75
12/20/12 new stop loss @ 73.75
12/17/12 new stop loss @ 72.95, adjust exit to $79.85

chart:

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


Netflix, Inc. - NFLX - close: 90.65 change: +0.42

Stop Loss: 89.45
Target(s): 99.75
Current Option Gain/Loss: -62.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/26/12: Our NFLX trade was stopped out on Monday, Dec. 24th when the stock dipped under support at $90.00 and hit our stop loss at $89.45. Shares tried to bounce back today but failed at its 10-dma.

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*

2013 Jan $100 call (NFLX1319a100) entry $3.88 exit $1.45 (-62.6%)

12/24/12 stopped out at 89.45

chart:

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