Editor's Note:

It looks like the Santa Claus rally has finally arrived on Wall Street thanks to a bullish reaction to the Fed's taper news.

OTEX hit our entry trigger.


Current Portfolio:


CALL Play Updates

Advance Auto Parts - AAP - close: 109.36 change: +0.96

Stop Loss: 107.95
Target(s): 117.50
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings in February
New Positions: Yes, see below

Comments:
12/21/13: AAP displayed some relative strength on Friday with a +0.88% gain. Thus I'm willing to hold on another day or two and see if AAP will cooperate. The stock looks poised to breakout past resistance near $110 soon.

We will keep our suggested entry point to launch positions at $110.65. However, we will move our suggested option strike from January to the March $115 call.

Earlier Comments:
If triggered our short-term target is $117.50. Longer-term traders may want to aim higher since the Point & Figure chart for AAP is bullish with a $140 target.

Trigger @ 110.65

- Suggested Positions -

buy the Mar $115 call (AAP1422c110) current ask $3.60

12/21/13 adjust the option strike from the January $110 to the March $115 call

chart:

Entry on December -- at $---.--
Average Daily Volume = 923 thousand
Listed on December 14, 2013


Aon Plc. - AON - close: 82.94 change: -0.15

Stop Loss: 81.30
Target(s): 84.85
Current Option Gain/Loss: +28.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/21/13: Friday was another quiet day for shares of AON. We only have about four weeks left for our January calls. I am concerned that AON is not moving fast enough for our play to work as intended. More conservative traders may want to exit early now. I am not suggesting new positions.

- Suggested Positions -

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

12/18/13 new stop loss @ 81.30, adjust exit target to $84.85
12/17/13 new stop loss @ 80.90
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


Chicago Bridge & Iron - CBI - close: 81.69 change: +0.71

Stop Loss: 77.70
Target(s): 89.50
Current Option Gain/Loss: + 9.6%
Time Frame: Exit PRIOR to CBI's earnings report in February
New Positions: see below

Comments:
12/21/13: The bullish breakout in shares of CBI continued on Friday with a +0.8% gain and another record high. The stock's move to new highs has produced a new triple-top breakout buy signal on the point & figure chart.

If you're looking for a new entry point consider waiting for a dip closer to $80.00, which should be new support.

Earlier Comments:
Our target is $89.50. We want to exit prior to CBI's earnings report in February.

- Suggested Positions -

Long April $85 call (CBI1419D85) entry $3.10

chart:

Entry on December 19 at $80.35
Average Daily Volume = 1.5 million
Listed on December 18, 2013


3D Systems - DDD - close: 86.42 change: +3.23

Stop Loss: 79.90
Target(s): 89.00
Current Option Gain/Loss: +44.0%
Time Frame: exit PRIOR to January option expiration
New Positions: see below

Comments:
12/21/13: The 3D printer stocks were popular on Friday. DDD displayed relative strength with a +3.88% gain and a rally to new all-time highs. I am raising our stop loss to $79.90. More conservative traders may want to raise their stop even higher.

Keep in mind that DDD shares can be volatile. I am suggesting we keep our position size small to limit our risk.

*small positions* - Suggested Positions -

Long Jan $85 call (DDD1418a85) entry $3.54

12/21/13 new stop loss @ $79.90

chart:

Entry on December 17 at $82.05
Average Daily Volume = 5.7 million
Listed on December 14, 2013


Helmerich & Payne - HP - close: 82.03 change: +0.36

Stop Loss: 79.40
Target(s): 87.00
Current Option Gain/Loss: - 2.7%
Time Frame: exit PRIOR to January option expiration
New Positions: see below

Comments:
12/21/13: HP continued to push higher on Friday with a +0.44% gain. I would still consider new positions here at current levels but HP is testing a trend line of higher highs. You could wait for a possible dip back toward the $81 area as an alternative entry point.

Our short-term target is $87.00 but we will plan to exit prior to January option expiration.

- Suggested Positions -

Long Jan $82.50 call (HP1418a82.5) entry $1.80

chart:

Entry on December 19 at $81.75
Average Daily Volume = 1.0 million
Listed on December 18, 2013


Illumina Inc. - ILMN - close: 104.92 change: +1.41

Stop Loss: 99.45
Target(s): 109.00
Current Option Gain/Loss: +11.7%
Time Frame: Exit PRIOR to 2014 January option expiration
New Positions: see below

Comments:
12/21/13: ILMN saw some volatility on Friday but traders bought the dip near its 10-dma. Shares bounced +1.3% and erased Thursday's decline. More conservative investors might want to move their stop loss closer to the simple 10-dma (currently near $102). I am not suggesting new positions at this time.

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.

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

12/16/13 new stop loss @ 99.45

chart:

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


Russell 2000 ETF - IWM - close: 113.93 change: +1.89

Stop Loss: 109.25
Target(s): TBD
Current Option Gain/Loss: +55.6%
Time Frame: exit PRIOR to January option expiration
New Positions: see below

Comments:
12/21/13: The small cap index and ETF were showing relative strength on Friday. The IWM surged +1.68% and closed near its November high in the $114 area.

If you're looking for an entry point I would not be surprised to see a dip back toward $113.00.

Earlier Comments:
We're not setting a target price yet. It will probably be in the $115-120 zone.

- Suggested Positions -

Long 2014 Jan $112 call (IWM1418a112) entry $1.78

chart:

Entry on December 18 at $111.65
Average Daily Volume = 35 million
Listed on December 17, 2013


Michael Kors - KORS - close: 83.88 change: -0.04

Stop Loss: 79.90
Target(s): 89.00
Current Option Gain/Loss: - 5.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
12/21/13: Friday proved to be a quiet session for KORS. The stock churned sideways inside the $83-84 zone most of the session. There is no change from my earlier comments. More conservative investors may want to raise their stop loss.

- 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



Lockheed Martin - LMT - close: 144.21 change: +1.22

Stop Loss: 139.75
Target(s): 149.00
Current Option Gain/Loss: +34.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
12/21/13: It was a very bullish week for LMT. The stock climbed to new all-time highs and tested the $145 level on Friday. I would not be surprised to see a little pullback here. Tonight we're raising our stop loss to $139.75.

Earlier Comments:
Our multi-week target is $149.00. Keep in mind that the $144-145 area is currently overhead resistance.

I'm listing the March calls. If you want to take a more short-term approach then the 2014 January calls are much cheaper.

- Suggested Positions -

Long Mar $145 call (LMT1422C145) entry $3.35

12/21/13 new stop loss @ 139.75

chart:

Entry on December 16 at $140.25
Average Daily Volume = 2.0 million
Listed on December 14, 2013


Open Text Corp. - OTEX - close: 91.64 change: +1.08

Stop Loss: 87.90
Target(s): 98.50
Current Option Gain/Loss: + 6.8%
Time Frame: exit PRIOR to February expiration
New Positions: see below

Comments:
12/21/13: OTEX extended its rally to six up days in a row with Friday's display of relative strength (+1.1%). This is a new all-time high for the stock. Shares hit our suggested entry point to buy calls at $91.05.

Our target is $87.90. FYI: The Point & Figure chart for OTEX is bullish with a $107 target.

- Suggested Positions -

Long FEB $95 call (OTEX1422b95) entry $2.90*
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on December 20 at $91.05
Average Daily Volume = 325 thousand
Listed on December 19, 2013


Tiffany & Co - TIF - close: 90.62 change: +0.19

Stop Loss: 88.45
Target(s): 98.50
Current Option Gain/Loss: -18.6%
Time Frame: exit PRIOR to February option expiration
New Positions: see below

Comments:
12/21/13: TIF has not seen any follow through on Wednesday's rally to new highs. The last couple of days have seen shares just drift sideways. Traders could try buying a bounce from $90.00 or it might be easier to wait for a breakout past $91.50 as an alternative entry point.

Earlier Comments:
The Point & Figure chart for TIF is bullish with a $102 target.

- Suggested Positions -

Long FEB $95 call (TIF1422b95) entry $2.15

chart:

Entry on December 18 at $91.25
Average Daily Volume = 1.25 million
Listed on December 16, 2013


United Parcel Service - UPS - close: 103.33 change: +0.15

Stop Loss: 100.90
Target(s): 108.00
Current Option Gain/Loss: -16.3%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
12/21/13: Late Friday morning shares of UPS surged to new highs. Unfortunately the rally faded and the stock gave back almost all of its gains. The intraday pullback is worrisome. Broken resistance at $103.00 should be new support but I suspect we will see UPS trade down closer to $102 again. I am raising our stop loss to $100.90.

- Suggested Positions -

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

12/21/13 new stop loss @ 100.90
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




PUT Play Updates

Sears Holdings - SHLD - close: 45.94 change: +0.45

Stop Loss: 48.60
Target(s): 40.15
Current Option Gain/Loss: -41.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/21/13: SHLD's oversold bounce continued on Friday with a +0.9% gain. That's two up days in a row. SHLD hasn't had two gains in a row in almost a month. There is no change from my Thursday night comments. More conservative traders may want to lower their stops. I am not suggesting new positions.

FYI: If you want to get technical then Thursday's move is a bullish engulfing candlestick reversal pattern. Friday's gain is confirmation of the reversal. Readers may want to just abandon ship since downward momentum has slowed.

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

12/16/13 new stop loss @ 48.60

chart:

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