Editor's Note:

Warning! The market looks vulnerable to profit taking. After a four-week rally stocks are overbought and today could be the beginning of a pullback. There were a lot of bullish engulfing candlestick reversal patterns in the market today.

The Federal Reserve ended their two-day meeting today. There were no changes in policy but stocks initially sold off following the Fed statement.

HON hit our entry trigger (and then reversed). VIAB hit our stop loss.


Current Portfolio:


CALL Play Updates

The Walt Disney Company - DIS - close: 68.47 change: -0.45

Stop Loss: 65.85
Target(s): 74.00
Current Option Gain/Loss: + 19.6%
Time Frame: exit PRIOR to earnings on November 7th.
New Positions: see below

Comments:
10/30/13: DIS saw a midday spike down toward support and traders bought the dip near $68.00 and its 10-dma. A bounce from current levels would look like an entry point for bullish positions. However, the broader market indices look vulnerable to more profit taking.

Our target is $74.00 but we will plan to exit prior to DIS' earnings report on November 7th.

FYI: Tuesday's rally has produced a new buy signal on the Point & Figure chart that is currently suggesting an $80 price target.

- Suggested Positions -

Long NOV $70 call (DIS1316K70) entry $0.66

Entry on October 22 at $68.10
Average Daily Volume = 7.1 million
Listed on October 21, 2013


Dover Corp. - DOV - close: 91.84 change: -0.23

Stop Loss: 89.95
Target(s): 99.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Comments:
10/30/13: DOV tried to rally twice today; once this morning and again mid afternoon. The stock eventually settled in the red. There is no change from my prior comments.

I see the mid-September peak near $92.85 as potential trouble. Therefore we're suggesting a trigger to buy calls at $93.00. If triggered our target is $99.50. The Point & Figure chart for DOV is bullish with a $105 target.

Trigger @ 93.00

- Suggested Positions -

Buy the DEC $95 call (DOV1322L95)

Entry on October -- at $---.--
Average Daily Volume = 1.0 million
Listed on October 29, 2013


Honeywell Intl. - HON - close: 86.72 change: -0.74

Stop Loss: 84.75
Target(s): 98.50
Current Option Gain/Loss: -25.5%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
10/30/13: Uh-oh! I am urging caution on our HON trade. The stock spiked higher this morning, rallied past resistance, hit our entry point to buy calls, and then reversed to close on its lows for the session. Today's move is a failed rally and bearish reversal pattern. More conservative traders may want to raise their stop loss.

- Suggested Positions -

Long 2014 Jan $90 call (HON1418a90) entry $1.45

10/30/13 Caution. HON hit our trigger but the stock produced a potential bearish reversal pattern today.

Entry on October 30 at $87.65
Average Daily Volume = 2.9 million
Listed on October 23, 2013


Helmerich & Payne, Inc. - HP - close: 77.51 change: -1.15

Stop Loss: 75.75
Target(s): 79.50
Current Option Gain/Loss: +34.1%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
10/30/13: Ouch! Today's -1.4% drop in HP shaved off a dollar on our option. More conservative traders may want to take profits now. I am not suggesting new positions.

We do not want to hold over the mid-November earnings report. FYI: The Point & Figure chart for HP is bullish with an $82 target.

- Suggested Positions -

Long NOV $75 call (HP1316K75) entry $2.31

10/29/13 new stop loss @ 75.75
10/24/13 new stop loss @ 74.25
10/22/13 new stop loss @ 73.75

Entry on October 14 at $74.50
Average Daily Volume = 1.1 million
Listed on October 12, 2013


iShares Russell 2000 ETF - IWM - close: 109.83 change: -1.52

Stop Loss: 107.75
Target(s): 114.00
Current Option Gain/Loss: +11.0%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/30/13: The IWM spent almost a week and a half churning sideways under the $111.50 area. It kept flirting with new highs but not making much progress. Today shares reversed with a -1.3% decline and a close below short-term support at its 10-dma and the $110 level. The next level of support should be the $108.00 level.

I am not suggesting new positions.

- Suggested Positions -

Long 2014 Jan $110 call (IWM1418a110) entry 2.80

10/29/13 new stop loss @ 107.75
10/23/13 new stop loss @ 105.95

Entry on October 16 at $108.55
Average Daily Volume = 41 million
Listed on October 14, 2013


J2 Global, Inc. - JCOM - close: 54.95 change: -0.79

Stop Loss: 53.75
Target(s): 59.75
Current Option Gain/Loss: -18.6%
Time Frame: exit PRIOR to earnings on November 5th
New Positions: see below

Comments:
10/30/13: Hmm... I am urging caution here. JCOM erased all of yesterday's gains with a -1.4% decline and a bearish engulfing candlestick reversal pattern. More conservative traders may want to raise their stop closer to Monday's low (54.45).

We plan to exit prior to earnings on November 5th.

Earlier Comments:
The stock looks ready to launch its next leg higher. New highs could spark a short squeeze. The most recent data listed short interest at 31% of the 43.7 million share float. Our target is $59.75 but more aggressive traders could aim higher. The Point & Figure chart for JCOM is bullish with a $77 target.

- Suggested Positions -

Long NOV $55 call (JCOM1316K55) entry $2.15

10/29/13 new stop loss @ 53.75

Entry on October 21 at $55.05
Average Daily Volume = 329 thousand
Listed on October 19, 2013


Medtronic, Inc. - MDT - close: 57.94 change: -0.56

Stop Loss: 56.45
Target(s): 59.75
Current Option Gain/Loss: +44.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/30/13: MDT tagged another new high this morning but shares succumbed to profit taking. The stock closed down -0.9%. I am not suggesting new positions at this time. Look for short-term support near its 10-dma or the $57.00 level.

- Suggested Positions -

Long NOV $55 call (MDT1316K55) entry $2.07

10/29/13 new stop loss @ 56.45

Entry on October 22 at $56.75
Average Daily Volume = 3.4 million
Listed on October 21, 2013


Packaging Corp. of America - PKG - close: 61.78 change: +0.04

Stop Loss: 59.75
Target(s): 67.50
Current Option Gain/Loss: - 30.0%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
10/30/13: There was no follow through on yesterday's bearish candlestick in PKG. The stock managed to buck the market's down trend today. Yet I would stay cautious here. I'm not suggesting new positions at the moment.

- Suggested Positions -

Long 2014 Jan $65 call (PKG1418a65) entry $1.50

Entry on October 28 at $62.50
Average Daily Volume = 1.0 million
Listed on October 23, 2013


Pall Corp. - PLL - close: 80.53 change: -0.39

Stop Loss: 77.90
Target(s): 86.00
Current Option Gain/Loss: -22.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/30/13: PLL managed to tag a new record high this morning before reversing. Unfortunately, today's pullback has produced a bearish engulfing candlestick reversal pattern. I would not be surprised to see a dip back toward the simple 10-dma near $79.50.

Earlier Comments:
Our target is $86.00. However, we will plan to exit prior to PLL's earnings report in late November (not date set yet). FYI: The Point & Figure chart for PLL is bullish with a long-term $113 target.

- Suggested Positions -

Long DEC $85 call (PLL1321L85) entry $1.10

Entry on October 28 at $80.50
Average Daily Volume = 551 thousand
Listed on October 23, 2013


SanDisk Corp. - SNDK - close: 69.86 change: -0.94

Stop Loss: 67.90
Target(s): 74.75
Current Option Gain/Loss: -18.5%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
10/30/13: Shares of SNDK gave up -1.3% on Wednesday. This morning the stock was downgraded by Bank of America from "buy" to "neutral" on valuation concerns. SNDK did find some short-term technical support at its 10-dma.

Our target is $74.75 but we may want to aim higher. The Point & Figure chart for SNDK is bullish with an $82 target.

NOTE: SNDK will begin trading ex-dividend on October 31st. The quarterly cash dividend should be 22.5 cents.

- Suggested Positions -

Long 2014 Jan $72.50 call (SNDK1418a72.5) entry $2.75

Entry on October 29 at $70.60
Average Daily Volume = 5.0 million
Listed on October 28, 2013


Constellation Brands - STZ - close: 64.69 change: -0.95

Stop Loss: 63.40
Target(s): 68.50
Current Option Gain/Loss: + 81.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
10/30/13: Uh-oh! STZ more than reversed yesterday's gains. The stock produced a bearish engulfing candlestick reversal pattern. More conservative traders may want to exit immediately to lock in gains. I am adjusting our stop loss a little higher to $63.40.

Our potential option gains went from +139% to +81%.

- Suggested Positions -

Long NOV $62.50 call (STZ1316k62.5) entry $1.38

10/30/13 new stop loss @ 63.40
10/29/13 new stop loss @ 63.25
10/28/13 adjust exit target to $68.50
10/22/13 new stop loss @ 61.90, readers may want to take profits now. Our option is up +84%.
10/16/13 new stop loss @ 59.75
10/11/13 trade opened on gap higher at $61.25,
trigger was $61.10

Entry on October 11 at $61.25
Average Daily Volume = 1.9 million
Listed on October 10, 2013


PUT Play Updates


Currently we do not have any active put trades.




Longer-Term Play Updates



Vanguard FTSE Europe ETF - VGK - close: 57.08 change: -0.22

Stop Loss: 53.90
Target(s): Sell half @ $58.00, sell the rest at $63.00
Current Option Gain/Loss: +66.6%
Time Frame: exit PRIOR to 2014 March option expiration
New Positions: see below

Comments:
10/30/13: Shares of the VGK were actually holding up relatively well. That changed after the FOMC announcement this afternoon and suddenly the VGK hit some profit taking. If you want to be picky about today's trading then the VGK has created a bearish engulfing candlestick reversal pattern. This ETF has been overbought and momentum has stalled in recent days. I would not be surprised to see a correction into the $56-55 area. I am not suggesting new positions.

Don't forget that we have two exit targets for this trade! More conservative traders could lock in gains now with our option up +94%.

Earlier Comments:
We are taking a multi-month time frame with this trade. FYI: The Point & Figure chart for VGK is bullish with a $63 target.

- Suggested Positions -

Long 2014 Mar $55 call (VGK1422L55) entry $1.80*

10/22/13 Strategy Update: Plan to exit half @ $58.00 and exit the rest at $63.00. New stop loss @ 53.90
10/19/13 new stop loss @ 52.75
09/11/13 trade opens. VGK @ 53.60
*option entry @ 1.80 is an estimate. Ask closed at $1.75 yesterday
09/10/13 entry trigger met. open positions tomorrow.
09/10/13 new stop loss @ 50.95
08/24/13 adjust the option strike from 2013 Dec $55 to $2014 Mar $55.

Entry on September 11 at $---.--
Average Daily Volume = 3.0 million
Listed on August 10, 2013


CLOSED BULLISH PLAYS

Viacom, Inc. - VIAB - close: 83.49 change: -1.22

Stop Loss: 83.40
Target(s): 89.50
Current Option Gain/Loss: -35.4%
Time Frame: exit PRIOR to earnings on November 14th.
New Positions: see below

Comments:
10/30/13: Warning! VIAB displayed a sharp increase in volatility and today's session produced a bearish engulfing candlestick reversal pattern. I couldn't find any news to explain the sharp spike higher (to a new record high) or the sell-off (-1.44%). Our stop loss was hit at $83.40 this afternoon.

- Suggested Positions -

DEC $85 call (VIAB1322L85) entry $3.10 exit $2.00 (-35.4%)

10/30/13 stopped out
10/29/13 new stop loss @ 83.40

chart:

Entry on October 24 at $85.30
Average Daily Volume = 2.6 million
Listed on October 22, 2013