Editor's Note:

The U.S. market's decline hit its third down day in a row. Stocks in Asia and Europe also closed in the red on Thursday.

DIS was stopped out. JOE was closed this morning.

We want to exit our long-term VGK trade tomorrow morning.


Current Portfolio:


CALL Play Updates

Allergan, Inc. - AGN - close: 96.83 change: +1.18

Stop Loss: 94.95
Target(s): 102.50
Current Option Gain/Loss: -37.5%
Time Frame: Exit prior to January option expiration
New Positions: see below

Comments:
12/12/13: AGN managed a bounce today and outperformed the market with a +1.2% gain. This rebound was possibly due to bullish analyst comments from a Credit Suisse analyst suggesting AGN is a turnaround story. Unfortunately the bounce failed near short-term resistance and today is essentially an "inside day" suggesting investors indecision. I am not suggesting new positions at this time.

Our multi-week target is $102.50. More aggressive traders could aim higher. The Point & Figure chart for AGN is bullish with a $110 target.

- Suggested Positions -

Long 2014 Jan $100 call (AGN1418a100) entry $2.00

12/06/13 triggered on gap higher at $98.02, suggested trigger was $97.00

Entry on December 06 at $98.02
Average Daily Volume = 1.9 million
Listed on December 05, 2013


Aon Plc. - AON - close: 81.90 change: +0.15

Stop Loss: 80.75
Target(s): 85.00
Current Option Gain/Loss: -11.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/12/13: AON produced a bounce today but gains were fading into the closing bell. I would remain cautious. I am not suggesting new positions at this time.

- Suggested Positions -

Long 2014 Jan $82.50 call (AON1418a82.5) entry $1.70

12/07/13 new stop loss @ 80.75
11/23/13 new stop loss @ 79.85
11/18/13 new stop loss @ 79.45
11/13/13 new stop loss @ 78.75

Entry on November 08 at $80.50
Average Daily Volume = 2.3 million
Listed on November 06, 2013


Illumina Inc. - ILMN - close: 101.00 change: +1.74

Stop Loss: 97.75
Target(s): 109.00
Current Option Gain/Loss: -13.2%
Time Frame: Exit PRIOR to 2014 January option expiration
New Positions: , see below

Comments:
12/12/13: ILMN was showing some relative strength this morning with a quick surge higher. Following the morning rally shares spent the rest of the day slowly drifting but with a bullish trend of higher lows. ILMN ended the session with a +1.75% gain, which outperforms the major indices.

More conservative traders might want to consider a stop loss closer to the $99.00 level.

Earlier Comments:
Further gains could spark some short covering since the most recent data listed short interest at 26% of the 125 million-share float.

If triggered our target is $109.00. More aggressive traders may want to aim higher since the point & figure chart is bullish with a $146 target. P&F chart readers will also notice that ILMN is about to produce a new triple-top breakout buy signal.

NOTE: Biotech stocks can be volatile and the wrong headline could send shares gapping lower. Investors may want to limit their position size.

- Suggested Positions -

Long 2014 Jan $105 call (ILMN1418a105) entry $3.40

Entry on December 11 at $102.00
Average Daily Volume = 931 thousand
Listed on December 09, 2013


ITC holdings - ITC - close: 93.70 change: -0.33

Stop Loss: 90.95
Target(s): 98.50
Current Option Gain/Loss: -25.0%
Time Frame: four to six weeks.
New Positions: see below

Comments:
12/12/13: Thursday was a relatively quiet session for ITC. The stock churned sideways on either side of the $94 level all day long.

I would take a cautious approach to new positions. You could wait for a dip near $93.00, which could be very short-term support. Or if the market bounces tomorrow then a new rally above $94.60 might work as an alternative entry point.

Earlier Comments:
ITC can be a volatile stock. I could not find any explanation for the gap down on November 13th. Therefore I am suggesting small bullish positions to limit our risk. It's also worth noting that the $96.00 area and its simple 50-dma (also near $96) could be overhead resistance.

*small positions* - Suggested Positions -

Long 2014 Feb $95 call (ITC1422B95) entry $3.80*

12/11/13 trade opened on gap higher at $95.19, suggested trigger was $93.50
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on December 11 at $95.19
Average Daily Volume = 419 thousand
Listed on December 10, 2013


Michael Kors - KORS - close: 82.65 change: +2.07

Stop Loss: 78.49
Target(s): 89.00
Current Option Gain/Loss: + 2.7%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
12/12/13: KORS displayed some relative strength today. A lot of that strength was in the last 10 minutes of trading with a gain of about a $1.00 during that time on a big surge in volume. KORS is nearing its all-time highs set in mid November ($82.75-83.13 zone).

- Suggested Positions -

Long 2014 Jan $85 call (KORS1418a85) entry $1.85

12/07/13 new stop loss @ 78.49, readers may want to consider an early exit right here
11/22/13 trigger hit at $81.05
11/21/13 adjust entry strategy. Instead of buying a dip at $76.50, move the entry trigger to $81.05. Adjust the stop loss to $77.75. Adjust the option strike to 2014 Jan. $85 call.

Entry on November 22 at $81.05
Average Daily Volume = 7.2 million
Listed on November 20, 2013


QUALCOMM Inc. - QCOM - close: 72.73 change: -0.28

Stop Loss: 71.75
Target(s): 79.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
12/12/13: This morning, before the opening bell, there was a Reuters article out suggesting that Chinese regulators have "substantial evidence" regarding price fixing by QCOM. This news may have contributed to QCOM's weakness this morning. Today's decline has pushed QCOM below short-term support near $73.00. If the stock doesn't recover soon we might drop it (or we could look to buy a dip near $70.00 support).

Earlier Comments:
Currently QCOM has been consolidating sideways and actually weathered the market's recent five-day decline pretty well. Shares are now poised to breakout past resistance at $74.00. I am suggesting a trigger to buy calls at $74.25. If triggered our target is $79.50. More aggressive traders may want to aim higher since the Point & Figure chart for QCOM is bullish with a $93 target.

FYI: Don't forget that QCOM does significant amount of business with Apple (AAPL) and if AAPL has any bad headlines it could impact QCOM shares.

Trigger @ 74.25

- Suggested Positions -

Buy the 2014 Jan $75 call (QCOM1418a75)

- or -

Buy the 2014 Feb $75 call (QCOM1422b75)

Entry on December -- at $---.--
Average Daily Volume = 11.5 million
Listed on December 07, 2013


Constellation Brands Inc. - STZ - close: 70.09 change: +0.01

Stop Loss: 69.40
Target(s): 74.75
Current Option Gain/Loss: -28.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/12/13: Wow! It doesn't get any closer. STZ dipped to $69.41 this morning before bouncing back to close unchanged on the session. Our stop loss is at $69.40. I am not suggesting new positions at this time.

Earlier Comments:
Our plan was to limit our risk by using small positions.

*small positions* - Suggested Positions -

Long 2014 Jan $72.50 call (STZ1418a72.5) entry $1.75

12/03/13 new stop loss at $69.40

Entry on November 25 at $70.55
Average Daily Volume = 1.3 million
Listed on November 23, 2013



United Parcel Service - UPS - close: 100.95 change: +0.08

Stop Loss: 100.45
Target(s): 108.00
Current Option Gain/Loss: -53.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
12/12/13: Shares of UPS eked out a very small bounce but the rally didn't get very far before the stock pared its gains. I am concerned shares are headed lower. More conservative traders may want to exit early now. We are raising the stop loss to $100.45. More aggressive traders will want to consider leaving their stop below $100.00, which could prove to be round-number support.

I am not suggesting new positions at this time.

- Suggested Positions -

Long 2014 Jan $105 call (UPS1418a105) entry $0.98

12/12/13 new stop loss @ 100.45
11/23/13 new stop loss @ 99.75
11/20/13 new stop loss @ 98.95

Entry on November 14 at $101.25
Average Daily Volume = 3.8 million
Listed on November 13, 2013




PUT Play Updates

Intl. Business Machines - IBM - close: 173.37 change: -1.83

Stop Loss: 178.65
Target(s): 170.25
Current Option Gain/Loss: + 42.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/12/13: The weakness in IBM continues with another -1.0% decline and a breakdown below the $175.00 mark.

I heard some analyst comments today suggesting that IBM could be headed for the $150-160 area.

Earlier Comments:
Our target is $170.25, a new lower low. However, more conservative traders may want to exit near the October lows near $172.50 since they could be potential support.

- Suggested Positions -

Long 2014 Jan $175 PUT (IBM1418m175) entry $3.15

12/09/13 new stop loss @ 178.65

Entry on December 03 at $176.90
Average Daily Volume = 5.1 million
Listed on December 02, 2013


Kansas City Southern - KSU - close: 117.05 change: +0.04

Stop Loss: 120.50
Target(s): 114.00
Current Option Gain/Loss: + 2.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/12/13: KSU delivered a quiet session with the stock churning sideways and closing virtually unchanged. Nimble traders could use a new failed rally near $118 as another entry point for bearish positions.

If triggered our target is $114.00. More aggressive traders may want to aim lower for the simple 200-dma instead.

- Suggested Positions -

Long 2014 Jan $115 PUT (KSU1418m115) entry $2.40*

12/11/13 triggered @ 117.75
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on December 11 at $117.75
Average Daily Volume = 486 thousand
Listed on December 07, 2013


Sears Holdings - SHLD - close: 46.61 change: +0.30

Stop Loss: 50.05
Target(s): 40.15
Current Option Gain/Loss: - 7.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/12/13: Thursday proved to be a quiet day for shares of SHLD as well. The stock opened at $46.18 and spent most of the session drifting sideways. I don't see any changes from my Wednesday night new play description and we would still consider new bearish positions here at current levels.

Earlier Comments:
Our short-term target is $40.15. Keep in mind that there are already a lot of bears in this stock. The most recent data listed short interest at 56% of the 50.7 million share float. That's plenty of fuel for a short squeeze if the stock can bounce. It's another reason to keep your position size small.

- Suggested Positions - *small positions*

Long 2014 Jan $39 PUT (SHLD1418m39) entry $1.66

Entry on December 12 at $46.18
Average Daily Volume = 1.5 million
Listed on December 11, 2013



Longer-Term Play Updates



Vanguard FTSE Europe ETF - VGK - close: 55.40 change: -0.58

Stop Loss: 54.90
Target(s): Sell half @ $58.00, sell the rest at $63.00
Current Option Gain/Loss: + 0.0%
Time Frame: exit PRIOR to 2014 March option expiration
New Positions: see below

Comments:
12/12/13: The major stock market indices were down across the globe in Asia, Europe and the U.S. That helped spark a gap down in shares of the VGK. This ETF lost -1.0% and closed at a new six-week low.

We are concerned that the VGK's up trend has been broken. Tonight we're suggesting an immediate exit tomorrow morning to avoid or minimize any losses. The bid on our call closed at $1.80.

- Suggested Positions -

Long 2014 Mar $55 call (VGK1422C55) entry $1.80*

12/12/13 prepare to exit positions at the open tomorrow
11/30/13 new stop loss @ 54.90
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

The Walt Disney Co. - DIS - close: 69.63 change: -0.89

Stop Loss: 68.95
Target(s): 77.50
Current Option Gain/Loss: -30.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
12/12/13: It was a rough day for DIS shares. The stock gapped open lower at $69.28 and dipped below what should have been short-term support near $69.00 before bouncing back to $70.00. DIS ended the session with a -1.2% decline, underperforming the major indices.

I didn't see any specific news to account for today's relative weakness in DIS. Today's weakness did hit our stop loss at $68.95.

- Suggested Positions -

2014 Jan $70 call (DIS1418a70) entry $1.66 exit $1.15 (-30.7%)

12/12/13 stopped out
12/07/13 new stop loss @ 68.95
11/30/13 new stop loss @ 68.45
11/26/13 new stop loss @ 67.95

chart:

Entry on November 22 at $70.25
Average Daily Volume = 6.6 million
Listed on November 14, 2013


CLOSED BEARISH PLAYS

The St. Joe Company - JOE - close: 17.68 change: -0.03

Stop Loss: n/a *use small positions*
Target(s): $11.00-13.00 range
Current Option Gain/Loss: -61.5%
Time Frame: 2 to 3 months
New Positions: see below

Comments:
12/12/13: Shares of JOE have not been cooperating with us. In last night's newsletter we decided to exit positions at the opening bell today. I suggested that more aggressive traders may want to let it ride. The bearish story on JOE hasn't changed.

*Small Positions* - Suggested Positions -

2014 March $15 PUT (JOE1422o15) entry $0.52 exit $0.20* (-61.5%)

12/12/13 planned exit
*option exit price is an estimate since the option did not trade at the time our play was closed.
12/11/13 prepare to exit tomorrow morning

chart:

Entry on November 25 at $17.50
Average Daily Volume = 627 thousand
Listed on November 23, 2013