Editor's Note:

The U.S. stock market has extended the current rally to four weeks in a row. The major indices have set a string of new record highs.

Our PRU and LL trades were closed on Friday morning.
We also closed half of our ADP trade on Friday morning (+93%). We want to exit our AMP traded on Monday. See play update for details.


Current Portfolio:


CALL Play Updates

Automatic Data Processing - ADP - close: 72.88 change: +0.06

Stop Loss: 71.75
Target(s): 74.00
Current Option Gain/Loss: + 87.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
07/20/13: ADP saw a brief spike lower on Friday morning but traders are still buying the dips. Shares rallied back to close virtually unchanged for the session. It looks like prior resistance near $72.00 is going to hold up as new support. We will raise our stop loss up to $71.75.

NOTE: Our plan was to lock in some gains and sell half of our position on Friday morning. ADP opened higher on Friday morning at $73.14 before its spike lower. The option opened a little bit higher and our exit (to sell half) was at $3.20, a +93.9% move). We will plan to exit the rest of our position when ADP hits $74.00.

- Suggested Positions -

Long Aug $70 call (ADP1317H70) entry $1.65

07/20/13 new stop loss @ 71.75
07/19/13 sold half at the open. ADP gapped open higher at $73.14
option exit at $3.20 (+93.9%)
07/18/13 prepare to sell half of our position at the open tomorrow to lock in some gains
07/15/13 new stop loss @ 70.95
07/11/13 new stop loss @ 69.85
07/10/13 new stop loss @ 69.40
07/06/13 new stop loss @ 68.40
06/27/13 new stop loss @ 67.90

chart:

Entry on June 18 at $69.25
Average Daily Volume = 1.8 million
Listed on June 17, 2013


Ameriprise Financial - AMP - close: 86.31 change: -0.53

Stop Loss: 85.40
Target(s): 89.25
Current Option Gain/Loss: -13.6%
Time Frame: exit PRIOR to earnings on July 24th
New Positions: see below

Comments:
07/20/13: Our time for this trade is almost up. AMP did not see any follow through on Thursday's rally. Shares actually gave back above half of Thursday's gain. It looks like $87.00 is new resistance for the stock.

AMP is scheduled to report earnings on July 24th. I am suggesting we exit this trade on Monday, July 22nd, at the closing bell. More aggressive traders may want to hold on and exit on the 24th at the closing bell, just before the earnings announcement.

Tonight we will adjust the stop loss up to $85.40, which is just under the rising 10-dma.

- Suggested Positions -

Long Aug $85 call (AMP1317H85) entry $3.30

07/20/13 new stop loss @ 85.40, prepare to exit positions on Monday, July 22nd, at the closing bell
07/15/13 new stop loss @ 84.65
07/11/13 trade opened on gap open at $86.17. Trigger was $85.25.

chart:

Entry on July 11 at $86.17
Average Daily Volume = 1.25 million
Listed on July 09, 2013


Borg Warner - BWA - close: 91.17 change: +0.35

Stop Loss: 87.75
Target(s): 93.00
Current Option Gain/Loss: +42.8%
Time Frame: exit PRIOR to earnings on July 25th
New Positions: see below

Comments:
07/20/13: BWA displayed relative strength again on Friday. Traders bought the dip on Friday morning and shares rebounded to a new all-time high. The company is due to report earnings on July 25th and we do not want to hold over the announcement. Therefore I am suggesting we prepare to exit positions on Tuesday, July 23rd, at the closing bell. Tonight we will adjust our stop loss higher to $87.75.

- Suggested Positions -

Long Aug $90 call (BWA1317H90) entry $2.10*

07/20/13 new stop loss @ 87.75, prepare to exit on Tuesday, July 23rd at the closing bell
07/15/13 new stop loss @ 86.40
07/11/13 trade opened on gap higher at $88.28. Trigger was $87.75
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on July 11 at $88.28
Average Daily Volume = 860 thousand
Listed on July 10, 2013


Eastman Chemical Co. - EMN - close: 75.71 change: +0.84

Stop Loss: 73.49
Target(s): 79.75
Current Option Gain/Loss: + 1.9%
Time Frame: exit PRIOR to earnings on July 29th
New Positions: see below

Comments:
07/20/13: We saw more dip-buying in EMN on Friday. Shares slipped to $74.42 before reversing. The stock ended the day at a new all-time closing high. Friday's move also looks like a new bullish entry point. Keep in mind we only have a few days for this trade to work.

Earlier Comments:
Our target is $79.75. However, we will plan on exiting positions prior to the earnings report on July 29th. FYI: The Point & Figure chart for EMN is bullish with a $91 target.

- Suggested Positions -

Long Aug $75 call (EMN1317H75) entry $2.55

chart:

Entry on July 17 at $75.25
Average Daily Volume = 1.3 million
Listed on July 11, 2013


Sourcefire, Inc. - FIRE - close: 59.80 change: -0.45

Stop Loss: 57.95
Target(s): 64.75
Current Option Gain/Loss: -12.5%
Time Frame: exit PRIOR to the earnings report on July 29th
New Positions: see below

Comments:
07/20/13: FIRE's performance on Friday was disappointing. There was no follow through on Thursday's bullish breakout above resistance at $60.00. If the dip continues we can watch for possible support near $59.00 or near its 10-dma (currently 58.50ish). I would wait for a new rally above $60.00 before considering new positions.

Earlier Comments:
A breakout here could spark a short squeeze. The most recent data listed short interest at 18% of the 30.0 million-share float. Please note that we do not want to hold over the earnings report on July 29th. FYI: The Point & Figure chart for FIRE is bullish with a long-term $74 target.

- Suggested Positions -

Long Aug $65 call (FIRE1317H65) entry $2.00

chart:

Entry on July 18 at $60.25
Average Daily Volume = 431 thousand
Listed on July 17, 2013


Harman Intl. Industries - HAR - close: 56.06 change: +0.21

Stop Loss: 54.40
Target(s): 59.75
Current Option Gain/Loss: - 8.3%
Time Frame: Exit PRIOR to earnings on August 6th
New Positions: see below

Comments:
07/20/13: HAR saw a brief dip on Friday morning but shares recovered and eventually bounced to close above resistance near $56.00. Thursday's intraday high was $56.18. I would consider new positions now at current levels of you could wait for a rally above $56.18 as an alternative entry point.

Don't forget that we will plan on exiting positions prior to the company's earnings report on August 6th. FYI: The Point & Figure chart for HAR is bullish with a long-term $81 target.

- Suggested Positions -

Long Aug $57.50 call (HAR1317H57.5) entry $1.80*

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

chart:

Entry on July 18 at $56.10
Average Daily Volume = 785 thousand
Listed on July 13, 2013


Noble Energy - NBL - close: 66.07 change: +0.41

Stop Loss: 63.65
Target(s): 68.00
Current Option Gain/Loss: +74.0%
Time Frame: Exit PRIOR to earnings on July 25th
New Positions: see below

Comments:
07/20/13: After a little bit of profit taking on Friday morning shares of NBL turned around and marched to another new high. Readers may want to go ahead and take profits now.

NBL is due to report earnings on July 25th. I am suggesting we prepare to exit positions on Tuesday, July 23rd, at the closing bell. That's assuming NBL doesn't hit our exit target first. Speaking of exit targets I am lowering our exit target from $68.50 to $68.00. We will raise the stop loss to $63.65.

- Suggested Positions -

Long Aug $65 call (NBl1317H65) entry $1.35

07/20/13 new stop loss @ 63.65, adjust the exit target to $68.00
prepare to exit positions on Tuesday, July 23rd at the close
07/15/13 new stop loss @ 62.45
07/13/13 new stop loss @ 61.40

chart:

Entry on July 09 at $63.05
Average Daily Volume = 1.9 million
Listed on July 06, 2013


Visteon Corp. - VC - close: 65.60 change: +0.25

Stop Loss: 64.40
Target(s): 72.50
Current Option Gain/Loss: -50.0%
Time Frame: Exit PRIOR to earnings on Aug. 8th
New Positions: see below

Comments:
07/20/13: VC managed a minor gain on Friday. Shares remain below the $66.00 level. We remain cautious here. I am not suggesting new positions with VC below $66.00. More conservative traders may want to exit early now.

- Suggested Positions -

Long Aug $70 call (VC1317H70) entry $1.40

07/16/13 triggered on gap open higher at $66.89
suggested trigger was $66.75

chart:

Entry on July 16 at $66.89
Average Daily Volume = 484 thousand
Listed on July 13, 2013


PUT Play Updates

Green Mountain Coffee Roasters - GMCR - close: 73.62 change: -0.24

Stop Loss: 75.01
Target(s): 65.50
Current Option Gain/Loss: -20.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/20/13: GMCR did not see any follow through on Thursday's rally. That's good news for bears but we remain cautious here. The intermediate trend of lower highs and lower lows remains. Yet the current short-term consolidation is actually neutral. I am not suggesting new positions at this time.

Earlier Comments:
GMCR does have an above average level of short interest and shares will likely be volatile. We will want to keep our position size small to limit our risk. Our short-term target is $65.50. More aggressive traders could aim for the $61-60 zone instead since $60 looks like stronger support. FYI: The Point & Figure chart for GMCR is bearish with a $57 target.

- Suggested (Small) Positions -

Long Aug $65 PUT (GMCR1317T65) entry $3.65

07/18/13 new stop loss @ 75.01

chart:

Entry on July 17 at $71.90
Average Daily Volume = 4.0 million
Listed on July 16, 2013


Marathon Petroleum - MPC - close: 69.60 change: +1.31

Stop Loss: 70.15
Target(s): 61.00
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings on Aug. 1st
New Positions: Yes, see below

Comments:
07/20/13: MPC erased nearly all of Thursday's decline with a bounce from support near $68 on Friday. If this rebound continues we will likely drop MPC as a bearish candidate. Right now the plan is to buy puts on a breakdown with a trigger at $67.45.

If triggered our target is $61.00. More conservative traders may want to exit near $64.00 instead.

Trigger @ 67.45

- Suggested Positions -

buy the Aug $65 PUT (MPC1317T65)

chart:

Entry on July -- at $---.--
Average Daily Volume = 3.8 million
Listed on July 18, 2013



Longer-Term Play Updates



Chicago Bridge & Iron - CBI - close: 62.71 change: +0.44

Stop Loss: 55.75
Target(s): 74.50
Current Option Gain/Loss: +49.0%
Time Frame: 4 to 6 months
New Positions: see below

Comments:
07/20/13: CBI is up four weeks in a row, like most of the market. Shares are slowly climbing back toward resistance near $65.00. The company is expected to report earnings on July 30th.

The late June low was near $56.00. We are raising our stop loss up to $55.75. More conservative traders may want to adjust their stop loss closer to the simple 100-dma (currently near $58.23). I am not suggesting new positions at this time.

*Small Positions* - Suggested Positions -

Long 2014 Jan $65 call (CBI1418A65) entry $2.55

07/20/13 new stop loss @ 55.75
06/29/13 CBI might be poised to dip into the $57-55 zone again.
06/24/13 triggered @ 56.75
06/22/13 adjust entry trigger to $56.75
06/15/13 entry strategy change: change the breakout trigger at $65.25 to a buy-the-dip trigger at $56.50. Adjust the stop loss to $53.75.
Adjust the option strike to the 2014 Jan. $65 call

chart:

Entry on June 24 at $56.75
Average Daily Volume = 1.8 million
Listed on June 01, 2013


CLOSED BULLISH PLAYS

Prudential Financial - PRU - close: 78.19 change: -0.33

Stop Loss: 75.90
Target(s): 79.00
Current Option Gain/Loss: +66.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
07/20/13: Our plan was to exit positions on Friday morning. PRU gapped open lower at $78.07. The gap down should have pushed the option to open lower about 40 cents.

- Suggested Positions -

Aug $75 call (PRU1317H75) entry $2.40 exit $4.00* (+66.6%)

07/19/13 scheduled exit
*option exit price is an estimate since the option did not trade at the time our play was closed.
07/18/13 prepare to exit at the opening bell tomorrow
07/15/13 new stop loss @ 75.90, readers may want to exit now.
07/09/13 new stop loss @ 74.75, adjust exit target to $79.00
07/02/13 new stop loss @ 72.40

chart:

Entry on July 01 at $73.65
Average Daily Volume = 3.1 million
Listed on June 29, 2013


CLOSED BEARISH PLAYS

Lumber Liquidators - LL - close: 88.11 change: +1.06

Stop Loss: 88.25
Target(s): 80.25
Current Option Gain/Loss: -21.4%
Time Frame: exit PRIOR to earnings on July 24th
New Positions: see below

Comments:
07/20/13: LL was not cooperating so we suggested an early exit on Friday morning. The stock opened down at $86.90 before climbing to a +1.2% gain on Friday.

We could actually consider buying calls on a move above $88.50. However, LL is due to report earnings in two days (morning of July 24th) therefore the newsletter will not be adding LL as a call play.

Earlier Comments:
I want to point out that this is a higher-risk, more aggressive trade.

*use Small Positions* - Suggested Positions -

Aug $80 PUT (LL1317T80) entry $2.80 exit $2.20* (-21.4%)

07/19/13 scheduled exit
07/18/13 prepare to exit at the opening bell tomorrow

chart:

Entry on July 16 at $85.75
Average Daily Volume = 840 thousand
Listed on July 15, 2013