Editor's Note:

Stocks closed near their lows for the week with Wall Street wondering why the Santa Claus rally is late.

QCOM has been removed. STZ was stopped out. Our long-term trade on VGK was closed Friday 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: -40.0%
Time Frame: Exit prior to January option expiration
New Positions: see below

Comments:
12/14/13: Friday proved to be a relatively quiet day for AGN. Shares bounced off their morning lows near $96.00 but didn't make it back into positive territory (much like the S&P 500). Shares appear to be consolidating sideways in a more neutral pattern of lower highs and higher lows. I'm starting to lean towards the idea of an early exit. 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

chart:

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


Aon Plc. - AON - close: 81.61 change: -0.29

Stop Loss: 80.75
Target(s): 85.00
Current Option Gain/Loss: -17.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/14/13: AON delivered a similar move with shares bouncing off their morning lows but failing to rebound back into the green. Shares look poised to drop back toward the $81.00 level. 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

chart:

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


Illumina Inc. - ILMN - close: 102.43 change: +1.43

Stop Loss: 97.75
Target(s): 109.00
Current Option Gain/Loss: + 0.0%
Time Frame: Exit PRIOR to 2014 January option expiration
New Positions: , see below

Comments:
12/14/13: ILMN continued to show relative strength on Friday with a +1.4% gain and a new closing high. The stock may have received a boost from news that ILMN will be added to the NASDAQ-100 index starting on December 23rd. Funds that track the NASDAQ-100 will need to buy shares of ILMN. As long as ILMN shares do not gap open higher on Monday I would consider new positions now at current levels.

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

chart:

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


ITC holdings - ITC - close: 94.34 change: +0.64

Stop Loss: 92.40
Target(s): 98.50
Current Option Gain/Loss: -21.0%
Time Frame: four to six weeks.
New Positions: see below

Comments:
12/14/13: ITC managed to outperform the market on Friday with a +0.6% gain. Shares did see a midday spike lower that pierced the 100-dma and fell just low enough to fill the gap before rebounding. Given Friday's strength and the bounce from the $93 level I would be tempted to buy calls here at current levels. Please note our new stop loss at $92.40.

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*

12/14/13 new stop loss @ 92.40
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.

chart:

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


Michael Kors - KORS - close: 82.27 change: -0.38

Stop Loss: 79.90
Target(s): 89.00
Current Option Gain/Loss: -10.8%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
12/14/13: KORS spiked higher on Friday morning and shares hit new all-time highs before paring their gains. The $83.00 level remains short-term overhead resistance for now. Traders could use a new rally above $83.00 as an alternative entry point to buy calls. Tonight we're moving our stop loss to $79.90. More aggressive traders may want to leave their stop below the December 6th low of $78.59 instead.

- Suggested Positions -

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

12/14/13 new stop loss @ 79.90
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.

chart:

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



United Parcel Service - UPS - close: 101.38 change: +0.43

Stop Loss: 100.45
Target(s): 108.00
Current Option Gain/Loss: -46.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
12/14/13: UPS displayed a little bit of strength on Friday with a +0.4% gain but I would remain cautious here. The stock briefly traded to a new three-week low ($100.65) before bouncing. Unfortunately Friday's bounce stalled at short-term resistance near its 10 and 20-dma. Technically last week's performance has created a bearish engulfing candlestick reversal pattern on UPS' weekly chart. More conservative traders may want to abandon ship and exit early now.

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

chart:

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


Western Digital Corp. - WDC - close: 79.05 change: +0.19

Stop Loss: 77.70
Target(s): 84.75
Current Option Gain/Loss: Unopened
Time Frame: Exit PRIOR to January option expiration
New Positions: Yes, see below

Comments:
12/14/13: WDC inched higher on Friday but shares remain below round-number resistance at the $80.00 mark. I don't see any changes from my earlier comments.

We're suggesting a trigger to buy calls at $80.25. If triggered our short-term target is $84.75. More aggressive traders may want to aim higher since the Point & Figure chart for WDC is bullish with a $100 target.

NOTE: I am listing the 2014 January $80 calls but you might want to consider the April $85 calls instead to give you more time.

Trigger @ 80.25

- Suggested Positions -

Buy the 2014 Jan $80 call (WDC1418a80) current ask $2.51

chart:

Entry on December -- at $---.--
Average Daily Volume = 1.9 million
Listed on December 12, 2013




PUT Play Updates

Intl. Business Machines - IBM - close: 172.80 change: -0.57

Stop Loss: 178.65
Target(s): 170.25
Current Option Gain/Loss: + 53.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/14/13: IBM had some interesting headlines on Friday. The Louisiana Sheriff's Pension and Relief Fund is suing IBM for its participation in the NSA surveillance program. The investors are claiming that IBM's participation has hurt the company's sales in China and thus hurting shareholders. In reality a lot of big U.S. tech companies participated in the NSA program and many believe this is hurting all sales outside the U.S. It's a curse that could haunt the U.S. tech industry for years to come.

Meanwhile shares of IBM are essentially testing the October lows near $172.60. More conservative traders will want to seriously consider an early exit right now to lock in gains since IBM might see a bounce here (near the October lows). The newsletter's target is $170.25 but more aggressive traders could aim for the bottom of its bearish channel, currently near $165 (see chart).

- Suggested Positions -

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

12/14/13 readers may want to take profits now with IBM testing its October lows.
12/09/13 new stop loss @ 178.65

chart:

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


Kansas City Southern - KSU - close: 117.44 change: +0.39

Stop Loss: 120.50
Target(s): 114.00
Current Option Gain/Loss: - 8.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/14/13: Railroad stocks bounced on Friday. KSU pared its gains and the move on Friday looks like a new lower high. More conservative traders may want to lower their stop closer to the simple 10-dma near $119.00.

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.

chart:

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


Sears Holdings - SHLD - close: 45.36 change: -1.25

Stop Loss: 50.05
Target(s): 40.15
Current Option Gain/Loss: + 3.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/14/13: SHLD's attempt at a bounce on Friday morning failed. The stock reversed and underperformed the market with a -2.6% decline. It is possible that SHLD might find some short-term support at the $45.00 mark but we would expect any bounce to be short-lived.

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

chart:

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



Longer-Term Play Updates



Currently we do not have any active long-term trades



CLOSED BULLISH PLAYS

QUALCOMM Inc. - QCOM - close: 72.58 change: -0.15

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

Comments:
12/14/13: QCOM is not cooperating. Overall sentiment on the stock remains bullish but shares were unable to breakout past resistance near $74.00 this past week. The recent action looks like a reversal. Our suggested entry point at $74.25 has not been triggered.

Tonight we are removing QCOM as an active candidate but I would keep it on your watch list. The $70.00 level should be significant support so a dip near $70.00 could be our next potential entry point to buy calls.

Trade did not open.

12/14/13 removed from the newsletter. suggested entry trigger was $74.25.

chart:

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


Constellation Brands Inc. - STZ - close: 69.32 change: -0.77

Stop Loss: 69.40
Target(s): 74.75
Current Option Gain/Loss: -45.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/14/13: There was no follow through on yesterday's intraday bounce in STZ. The stock underperformed the market on Friday and broke down to new two-week lows. Shares hit our stop loss at $69.40.

STZ is another stock I would keep on your watch list to buy after it is done correcting lower.

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

*small positions* - Suggested Positions -

2014 Jan $72.50 call (STZ1418a72.5) entry $1.75 exit $0.95 (-45.7%)

12/13/13 stopped out
12/03/13 new stop loss at $69.40

chart:

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


CLOSED LONG-TERM PLAYS

Vanguard FTSE Europe ETF - VGK - close: 55.36 change: -0.04

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:
12/14/13: European markets continued to sink on Friday. The VGK opened two cents higher at $55.42 and closed virtually unchanged on Friday. Our plan was to exit on Friday morning to avoid or minimize any losses.

- Suggested Positions -

2014 Mar $55 call (VGK1422C55) entry $1.80* exit $1.80 (+ 0.0%)

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

chart:

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