Editor's Note:

After weeks of gains the stock market's rally is growing more vulnerable.

We want to exit our KMB trade early on Monday.


Current Portfolio:


CALL Play Updates

Cameron Intl. - CAM - close: 63.95 change: +0.80

Stop Loss: 64.75
Target(s): 69.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/23/13: CAM recovered on Friday with a +1.2% gain. Yet the bounce stalled right at resistance near $64.00, which was the bottom of its recent trading range. Right now our suggested entry point is still at $66.25.

Trigger @ 66.25

- Suggested Positions -

buy the MAR $65 call (CAM1316c65)

chart:

Entry on February -- at $---.--
Average Daily Volume = 3.0 million
Listed on February 14, 2012


Check Point Software Tech. - CHKP - close: 52.23 change: +1.22

Stop Loss: 50.75
Target(s): 54.50
Current Option Gain/Loss: +34.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/23/13: CHKP was showing relative strength on Friday with a +2.3% rebound. Shares closed above recent resistance at the $52.00 level. I am not suggesting new positions at this time.

*Small Positions* - Suggested Positions -

Long Mar $50 call (CHKP1316c50) entry $1.90

02/20/13 new stop loss @ 50.75
02/16/13 CHKP looks poised to dip back toward support at $50.00
02/13/13 new stop loss @ 49.90
02/06/13 new stop loss @ 49.40

chart:

Entry on February 01 at $50.25
Average Daily Volume = 2.7 million
Listed on January 31, 2012


Kimberly-Clark Corp. - KMB - close: 94.50 change: +2.64

Stop Loss: 89.25
Target(s): 94.75
Current Option Gain/Loss: Mar$90c:+139.3% & Apr95.5c:+159.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/23/13: KMB shot higher on Friday. This might be a reaction to its dividend news from Thursday (see Thursday's newsletter). Shares displayed significant relative strength on Friday with a +2.8% gain and a new high. We've been aiming for $94.75 but I am suggesting we go ahead and exit immediately on Monday morning! (more aggressive traders could aim higher)

- Suggested Positions -

Long Mar $90 call (KMB1316c90) entry $1.88

- or -

Long Apr $92.50 call (KMB1320c92.5) entry $1.10

02/23/13 prepare to exit on Monday morning Feb. 25th

chart:

Entry on February 18 at $91.33
Average Daily Volume = 2.2 million
Listed on February 16, 2012


3M Company - MMM - close: 103.54 change: +0.82

Stop Loss: 101.85
Target(s): 104.85
Current Option Gain/Loss: +32.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/23/13: MMM's bounce on Friday (+0.79%) helped save the week from a decline. Shares are now up eight weeks in a row and up 13 out of the last 14 weeks. More conservative traders may want to take profits early or exit early in the $104.40-104.50 area. Currently we are still aiming for $104.85. I am not suggesting new positions.

Earlier Comments:
I am suggesting we keep our position size small to limit our risk.

- Suggested Positions - *Small Positions*

long Mar $100 call (MMM1316c100) entry $2.95

02/19/13 new stop loss @ 101.85, adjust exit target to $104.85
02/16/13 new stop loss @ 101.30

chart:

Entry on February 06 at $102.25
Average Daily Volume = 3.0 million
Listed on February 05, 2012


CBOE Volatility Index - VIX - close: 14.17 change: -1.05

Stop Loss: 11.45
Target(s): 22.00-25.00 range
Current Option Gain/Loss: -21.0%
Time Frame: 8 to 9 weeks
New Positions: see below

Comments:
02/23/13: The VIX retreated as stocks rebounded on Friday. I would still consider new positions now. However, the S&P 500 might bounce up and kiss its recent high before rolling over. If that happens you could get a lower entry point in the VIX.

- Suggested Positions -

Long Apr $16 call (VIX1317D16) entry $1.90

chart:

Entry on February 10 at $13.37
Average Daily Volume = n/a
Listed on February 09, 2012


PUT Play Updates

Capital One Financial - COF - close: 52.28 change: +0.07

Stop Loss: 54.55
Target(s): 48.50
Current Option Gain/Loss: + 4.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/23/13: Hmm... I am urging a little more caution on shares of COF. The stock has found support near $52.00 three days in a row. I suspect odds are growing that COF could see an oversold bounce back to the $53.50-54.00 area.

- Suggested Positions - *Small Positions*

Long Mar $52.50 PUT (COF1316o52.5) entry $1.23

02/23/13 be careful here. COF is holding support at the $52 level. Shares could be poised to bounce.

chart:

Entry on February 20 at $52.25
Average Daily Volume = 5.9 million
Listed on February 19, 2012


EV Energy Partners - EVEP - close: 54.63 change: +0.76

Stop Loss: 56.15
Target(s): 50.50
Current Option Gain/Loss: - 9.5%
Time Frame: exit prior to earnings on Mar 1st.
New Positions: see below

Comments:
02/23/13: EVEP is not cooperating. The market's widespread rebound on Friday helped EVEP to a +1.4% bounce. Shares are still under short-term technical resistance at their 10-dma. Yet we're quickly running out of time. EVEP is scheduled to report earnings on March 1st. We will plan on exiting positions on Feb. 28th at the closing bell assuming we don't get stopped out first. Speaking of stops, I am lowering our stop loss to $56.15.

- Suggested Positions -

Long Mar $55 put (EVEP1316o55) entry $3.65

02/23/13 new stop loss @ 56.15, prepare to exit on Feb. 28th or sooner.

chart:

Entry on February 11 at $54.75
Average Daily Volume = 300 thousand
Listed on February 09, 2012


Panera Bread - PNRA - close: 157.17 change: +2.02

Stop Loss: 158.05
Target(s): 141.00
Current Option Gain/Loss: -41.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/23/13: PNRA is not cooperating with us either. The stock broke support, hit new relative lows on Thursday, and hit our trigger to buy puts. Unfortunately the stock is bouncing and Friday's market-wide rebound pushed PNRA to a +1.3% gain. Shares did find resistance where they should have at the simple 200-dma near $157.50. If there is any follow through higher we'll see PNRA hit our stop loss at $158.05.

I am not suggesting new positions at this time.

- Suggested Positions -

Long Mar $150 PUT (PNRA1316o150) entry $2.30

chart:

Entry on February 21 at $154.00
Average Daily Volume = 731 thousand
Listed on February 20, 2012


Time Warner Cable Inc. - TWC - close: 86.39 change: +1.64

Stop Loss: 86.30
Target(s): 80.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/23/13: TWC saw some intraday volatility on Friday. The opening pop faded but traders bought the dip near its 300-dma. TWC eventually closed up +1.9% to outperform the market. We're still waiting for some follow through. Right now I am suggesting we launch small bearish positions at $84.50. If triggered our short-term target is $80.25. We do want to keep our position size small because TWC is arguably already oversold.

FYI: The Point & Figure chart for TWC is bearish with a $70 target. Plus, you may also want to note that TWC has a 65-cent dividend coming up soon and the ex-dividend date is Feb. 26th.

Trigger @ 84.50 *Small Positions*

- Suggested Positions -

buy the Mar $82.50 PUT (TWC1316o82.5)

chart:

Entry on February -- at $---.--
Average Daily Volume = 3.6 million
Listed on February 21, 2012


Varian Medical Sys. - VAR - close: 70.12 change: +0.64

Stop Loss: 71.00
Target(s): 66.00
Current Option Gain/Loss: -30.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/23/13: The broad based market bounce on Friday fueled a rebound in VAR. Yet shares spent most of the session hovering near round-number resistance at $70.00. I would wait for a new decline under $69.50 before launching new bearish put positions. Our target is the $66.00 level. More aggressive traders could aim for $65.00 or maybe the 200-dma near $64.00.

- Suggested Positions -

Long Mar $70 PUT (VAR1316o70) entry $1.80

chart:

Entry on February 21 at $69.50
Average Daily Volume = 874 thousand
Listed on February 20, 2012