Editor's Note:

Investors expectations for a resolution to the fiscal cliff took a turn for the worse on Friday and stocks were accelerating lower toward the closing bell.

Our VMC trade has been stopped out.

Current Portfolio:


CALL Play Updates

Akamai Tech. - AKAM - close: 40.40 change: -0.63

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:
12/29/12: AKAM is still fading slowing toward what should be support near $40.00 and I am still tempted to buy calls on a dip there with a tight stop loss (maybe $39.50ish) but officially the newsletter is suggesting a trigger to buy calls at $42.05.

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)

chart:

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


Canadian Pacific Railway - CP - close: 100.78 change: -0.88

Stop Loss: 99.40
Target(s): 109.00
Current Option Gain/Loss: - 56.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/29/12: CP erased Thursday's bounce with an 88-cent decline on Friday. Shares have closed beneath short-term technical support at the 10-dma for the first time in weeks. That's a troubling sign but I am still expecting likely support at the $100.00 mark for now. Readers may want to wait for a bounce off the $100 level before considering new positions.

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

- Suggested *SMALL* Positions -

Long Jan $105 call (CP1319a105) entry $1.25

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

chart:

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


Flowserve Corp. - FLS - close: 142.86 change: -2.24

Stop Loss: 141.85
Target(s): 148.50
Current Option Gain/Loss: -22.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/29/12: FLS also erased Thursday's gain with a decline on Friday. The Friday morning rally reversed under the $145 level and shares closed near their 20-dma. If there is any follow through on Monday we will likely see FLS hit our stop loss at $141.85. 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

12/20/12 new stop loss @ 141.85
12/18/12 new stop loss @ 139.95

chart:

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


Green Mountain Coffee Roasters - GMCR - close: 40.35 change: -1.05

Stop Loss: 39.70
Target(s): 47.50
Current Option Gain/Loss: -58.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/29/12: Friday was not a good day for GMCR. The stock broke down from a sideways consolidation and closed under its 10-dma with a -2.5% drop on the session. The next level of support is $40.00. I am concerned and we're raising our stop loss to $39.70. I am not suggesting new positions at this time.

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

12/29/12 new stop loss @ 39.70

chart:

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


iShares Russell 2000 - IWM - close: 82.53 change: -0.59

Stop Loss: 81.95
Target(s): 86.00
Current Option Gain/Loss: -26.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/29/12: The small cap IWM ETF spent most of Friday churning sideways beneath its 10-dma and closed on its lows. Many of its short-term oscillators have clearly turned bearish. Readers will want to seriously consider an early exit now. I am not suggesting new positions at this time.

- Suggested Positions -

buy the 2013 Jan $84 call (IWM1319a84) entry $1.17

12/29/12 the IWM is starting to look bearish!
12/18/12 new stop loss @ 81.95
12/11/12 triggered on the gap open higher at $83.11 (trigger was 82.85)

chart:

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


Linkedin Corp. - LNKD - close: 112.89 change: -1.14

Stop Loss: 111.40
Target(s): 119.00
Current Option Gain/Loss: -14.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/29/12: Friday's action in LNKD does not bode well for the bulls. Shares broke down to a new two-week low and almost hit our stop loss. I am worried that if the market is negative on Monday we will see LNKD hit our stop. More aggressive traders willing to give LNKD more room to maneuver may want to readjust their stop loss so it is under likely support near $110.00 instead. 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

chart:

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


Monsanto Co. - MON - close: 93.08 change: -0.91

Stop Loss: 89.95
Target(s): 99.50
Current Option Gain/Loss: + 6.4%
Time Frame: exit prior to Jan 8th.
New Positions: see below

Comments:
12/29/12: The stock market's widespread weakness on Friday helped knock about -1% off of MON. Shares are still near their highs but we are running out of time and only have a few days left. We do not want to hold over the January 8th earnings report.

Readers may want to start raising their stop loss!

Earlier Comments:
Our plan was to keep our position size small.

*Small Positions*

- Suggested Positions -

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

12/24/12 triggered @ 93.05

chart:

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


Sohu.com - SOHU - close: 46.47 change: +1.31

Stop Loss: 43.45
Target(s): 49.75
Current Option Gain/Loss: +21.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/29/12: Chinese Internet stock SOHU continues to rally and hit new multi-month highs with Friday's +2.9% gain. The stock stalled right at its 300-dma. If the markets are weak on Monday we can look for SOHU to pullback toward the $45.00 level. I am raising our stop loss to $43.45.

Earlier Comments:
SOHU can be a volatile stock so we want to limit our position size to reduce our risk. If triggered our target is $49.75. More aggressive traders may want to aim higher since SOHU seems to have built a decent bottom over the last several months. With enough time you could aim for the $55-60 zone. FYI: The Point & Figure chart for SOHU is bullish with a $66 target.

- Suggested Positions -

Long Feb $47.50 call (SOHU1316b47.5) entry $2.05

12/29/12 new stop loss @ 43.45

chart:

Entry on December 27 at $45.20
Average Daily Volume = 606 thousand
Listed on December 26, 2012


PUT Play Updates

Tiffany & Co - TIF - close: 56.44 change: -0.59

Stop Loss: 58.75
Target(s): 52.00
Current Option Gain/Loss: + 8.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/29/12: The intraday bounce in TIF on Friday reversed and shares gave up -1.0%. The stock looks poised to hit new relative lows. I would use Friday's move as a new bearish entry point to buy puts.

- Suggested Positions -

Long 2013Jan $55 PUT (TIF1319m55) entry $1.08

chart:

Entry on December 27 at $56.67
Average Daily Volume = 2.4 million
Listed on December 26, 2012


CLOSED BULLISH PLAYS

Vulcan Materials - VMC - close: 51.20 change: -0.50

Stop Loss: 50.85
Target(s): 58.50
Current Option Gain/Loss: -86.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/29/12: The sell-off from Thursday continued into Friday's session for VMC. The stock gapped open lower on Friday at $51.29 and fell to $50.68 intraday. Our stop was hit at $50.85.

I remain longer-term bullish on the stock. Readers may want to keep VMC on their watch list for a new bullish entry point down the road.

- Suggested Positions -

Long 2013 Jan $55 call (VMC1319a55) entry $1.15 exit $0.15 (-86.9%)

12/28/12 stopped out at $50.85

chart:

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