Editor's Note:

The stock market's rally has stumbled in the first two days of 2014. This has caught some market participants off guard since lately the first few days of January tend to be bullish.

EGN was stopped out. SLXP hit our entry trigger. We have removed UNH. I am also suggesting that we exit our AON, DISCA, and UPS trades immediately on Monday morning.


Current Portfolio:


CALL Play Updates

Advance Auto Parts - AAP - close: 112.88 change: +3.14

Stop Loss: 108.75
Target(s): 117.50
Current Option Gain/Loss: +10.2%
Time Frame: exit PRIOR to earnings in February
New Positions: see below

Comments:
01/04/14: Shares of AAP surged on Friday with the stock breaking out past resistance near $112 and outperforming the market with a +2.8% gain. We are raising our stop loss to $108.75.

Earlier Comments:
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.

- Suggested Positions -

Long Mar $115 call (AAP1422c110) entry $3.90*

01/04/14 new stop loss @ 108.75
12/24/13 triggered @ 110.65
*option entry price is an estimate since the option did not trade at the time our play was opened.
12/21/13 adjust the option strike from the January $110 to the March $115 call

chart:

Entry on December 24 at $110.65
Average Daily Volume = 923 thousand
Listed on December 14, 2013


Aon Plc. - AON - close: 82.60 change: +0.24

Stop Loss: 81.90
Target(s): 87.00
Current Option Gain/Loss: -23.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/04/14: I am growing concerned with our AON trade. Shares were hit hard on the market's sell off Thursday. Currently AON is still holding at short-term technical support near its 30-dma. However, I am suggesting we abandon ship and exit positions immediately on Monday morning.

- Suggested Positions -

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

01/04/14 prepare to exit on Monday morning, Jan 6th
12/31/13 adjust exit target higher to $87.00
12/28/13 new stop loss @ 81.90
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: 81.23 change: -0.34

Stop Loss: 79.65
Target(s): 89.50
Current Option Gain/Loss: - 4.8%
Time Frame: Exit PRIOR to CBI's earnings report in February
New Positions: see below

Comments:
01/04/14: The CBI has followed the market lower with a two-day decline. Friday's session does mark the first close below its simple 10-dma since early December. I suspect we will see CBI testing round-number support at $80.00 soon. Nimble traders can buy calls near $80.

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

12/28/13 new stop loss @ 79.65

chart:

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


Discovery Communications, Inc. - DISCA - close: 88.58 change: -0.52

Stop Loss: 87.90
Target(s): 97.50
Current Option Gain/Loss: -32.3%
Time Frame: exit PRIOR to earnings in mid February
New Positions: see below

Comments:
01/04/14: We've decided to cut our losses on this DISCA trade. The stock underperformed the market on Friday with a -0.58% decline. This stock could still bounce at what looks like short-term support near $88.00. However, we'll be dropping it on Monday morning at the opening bell. I'd look at DISCA again on a close above $91.00.

- Suggested Positions -

Long Feb $90 call (DISCA1422B90) entry $3.40*

01/04/14 prepare to exit on Monday morning, Jan. 6th
12/31/13 trade opened on gap higher at $90.76. Suggested trigger was $90.75
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on December 31 at $90.75
Average Daily Volume = 1.1 million
Listed on December 30, 2013


Demandware, Inc. - DWRE - close: 64.40 change: -0.36

Stop Loss: 62.75
Target(s): 69.50
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings in mid February
New Positions: Yes, see below

Comments:
01/04/14: DWRE briefly traded above resistance at the $65.00 level on Friday but shares did not hit our suggested entry point at $65.25. I don't see any changes from my Thursday night new play description.

Earlier Comments:
DWRE is in the technology sector. The company operates in the application software industry and provides cloud-based digital commerce solutions. The stock shot higher in early November on better than expected earnings. Then when trading in the mid $60s the stock plunged on November 19th on news that DWRE would issue a secondary offering of almost four million shares at $57. Since then DWRE has recovered with investors buying the dips at DWRE's rising 30-dma for a while. The last couple of weeks have seen DWRE consolidating sideways below resistance at the $65.00 level.

The stock looks poised to breakout. I am suggesting a trigger to buy calls at $65.25. If triggered our target is $69.50 but we'll plan to exit prior to earnings in mid February. FYI: The Point & Figure chart for DWRE is bullish with a $77 target.

Trigger @ 65.25

- Suggested Positions -

Buy the Feb $70 call (DWRE1422B70) current ask $2.20

chart:

Entry on January -- at $---.--
Average Daily Volume = 275 thousand
Listed on January 02, 2014


General Dynamics - GD - close: 94.74 change: -0.01

Stop Loss: 93.85
Target(s): 99.50
Current Option Gain/Loss: -14.0%
Time Frame: exit PRIOR to earnings on January 17th
New Positions: see below

Comments:
01/04/14: Shares of GD were downgraded on Friday but the news didn't have much of an effect. GD rebounded from its midday lows near $94.34 and closed virtually unchanged on the session. I am not suggesting new positions at this time.

NOTE: Our time frame has changed. We will plan to exit prior to GD's earnings report on January 17th.

Earlier Comments:
Our target is $99.50. More aggressive traders may want to aim higher since the Point & Figure chart for GD is bullish with a $105 target. I am suggesting small positions.

*small positions* - Suggested Positions -

Long Feb $95 call (GD1422B95) entry $2.21

chart:

Entry on December 31 at $95.25
Average Daily Volume = 1.1 million
Listed on December 28, 2013


Honeywell Intl. - HON - close: 90.52 change: +0.20

Stop Loss: 88.40
Target(s): 94.75
Current Option Gain/Loss: + 2.8%
Time Frame: exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/04/14: Traders bought the dip in HON near its rising 10-dma on Friday. It's worth noting that the bounce didn't get very far. I would expect shares to retest the $90.00 level soon. If you are looking for an entry point I'd wait for a new bounce off the $90 level.

Earlier Comments:
Our short-term target is $94.75. More aggressive traders may want to aim for the $97-100 zone instead.

- Suggested Positions -

Long Mar $92.50 call (HON1422c92.5) entry $1.75*

12/28/13 new stop loss @ 88.40
12/24/13 triggered @ 90.30
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on December 24 at $90.30
Average Daily Volume = 2.4 million
Listed on December 23, 2013


Helmerich & Payne - HP - close: 83.05 change: +0.80

Stop Loss: 81.65
Target(s): 87.00
Current Option Gain/Loss: - 0.0%
Time Frame: exit PRIOR to January option expiration
New Positions: see below

Comments:
01/04/14: HP managed to recoup most of Thursday's losses. I remain cautious here. We are not suggesting new positions at this time. Keep in mind that we are down to our last two weeks for January options.

Please note our new stop loss at $81.65.

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
01/04/14 new stop loss @ 81.65
12/24/13 new stop loss @ 79.90

chart:

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



LyondellBasell Industries - LYB - close: 78.71 change: -0.07

Stop Loss: 77.75
Target(s): 85.00
Current Option Gain/Loss: -32.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/04/14: Thursday's bearish reversal in LYB was disappointing. More conservative traders may want to abandon ship right now. If LYB does not show enough improvement on Monday we will likely drop this stock as an active trade. I am not suggesting new positions at this time.

- Suggested Positions -

Long Feb $80 call (LYB1422B80) entry $2.90

chart:

Entry on December 31 at $80.25
Average Daily Volume = 3.1 million
Listed on December 24, 2013


Open Text Corp. - OTEX - close: 92.71 change: +0.98

Stop Loss: 90.75
Target(s): 98.50
Current Option Gain/Loss: + 6.8%
Time Frame: exit PRIOR to February expiration
New Positions: see below

Comments:
01/04/14: OTEX is bouncing from its recent test of short-term support at the simple 10-dma. The stock outperformed the market on Friday with a +1.0% gain. The stock is poised to breakout past resistance near $93.00 again. I would be tempted to buy calls on a new high past $93.30.

Tonight we are raising the stop loss to $90.75.

Our target is $98.50. FYI: The Point & Figure chart for OTEX is bullish with a $107 target.

- Suggested Positions -

Long FEB $95 call (OTEX1422b95) entry $2.90*

01/04/14 new stop loss @ 90.75
12/30/13 new stop loss @ 89.65
12/23/13 new stop loss @ 88.90
*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


Polaris Industries, Inc. - PII - close: 144.62 change: -0.38

Stop Loss: 139.75
Target(s): 149.00
Current Option Gain/Loss: + 0.0%
Time Frame: EXIT prior to earnings on January 28th
New Positions: see below

Comments:
01/04/14: PII pared its losses with a bounce from its simple 10-dma on Friday. I am not suggesting new positions at this time.

Earlier Comments:
Our multi-week target is $149.00. More aggressive traders could aim higher since the Point & Figure chart for PII is bullish with a $158 target.

- Suggested Positions -

Long Mar $150 call (PII1422c150) entry $4.48
12/30/13 new stop loss @ 139.75
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on December 23 at $142.25
Average Daily Volume = 457 thousand
Listed on December 21, 2013


PVH Corp. - PVH - close: 137.62 change: +1.04

Stop Loss: 132.95
Target(s): 147.50
Current Option Gain/Loss: + 2.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/04/14: PVH has thus far ignored the market's weakness in 2014. Shares have continued to rally and hit new highs again on Friday.

Earlier Comments:
Our multi-week target is $147.50. Do not be surprised if we see PVH temporarily stall near the $140 level, which could be round-number resistance. More aggressive investors with a longer time frame might want to aim higher since the Point & Figure chart for PVH is bullish with a $172 target.

- Suggested Positions -

Long Feb $140 call (PVH1422B140) entry $3.50

chart:

Entry on January 02 at $136.55
Average Daily Volume = 939 thousand
Listed on December 31, 2013


Salix Pharmaceuticals - SLXP - close: 91.20 change: +2.11

Stop Loss: 87.40
Target(s): 98.50
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/04/14: SLXP displayed relative strength on Friday. The rally started about 10:15 a.m. on a surge of volume. Shares tagged $92.31 before paring their gains and settling with a +2.3% gain for the day. Our trigger to buy calls was hit at $90.25.

Earlier Comments:
SLXP is poised to breakout past resistance at the $90.00 level. If shares can breakout past $90 the next major milestone would be the $100 mark. If triggered our multi-week target is $98.50.

- Suggested Positions -

Long Feb $95 call (SLXP1422B95) entry $2.50*

01/03/14 triggered @ 90.25
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on January 03 at $90.25
Average Daily Volume = 790 thousand
Listed on December 31, 2013


Tiffany & Co - TIF - close: 92.28 change: -0.27

Stop Loss: 89.75
Target(s): 98.50
Current Option Gain/Loss: -10.2%
Time Frame: exit PRIOR to February option expiration
New Positions: see below

Comments:
01/04/14: TIF has followed the market lower with a two-day pullback but profit taking has been minor. Shares found support again near $92.00. If the $92 level breaks the next levels of support are $91.50 and then $90.00. I am not suggesting new positions at this time.

- Suggested Positions -

Long FEB $95 call (TIF1422b95) entry $2.15

12/31/13 new stop loss @ 89.75
12/26/13 TIF stock seems unaffected by the negative legal news from Monday
12/23/13 TIF reacts to news that a Dutch court orders it to pay Swatch $449 million in damages.

chart:

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


Tractor Supply Co. - TSCO - close: 76.48 change: -0.32

Stop Loss: 74.50
Target(s): 79.75
Current Option Gain/Loss: - 4.6%
Time Frame: EXIT PRIOR to January expiration
New Positions: see below

Comments:
01/04/14: Friday proved to be a quiet session for TSCO. Shares consolidated sideways near $76.00. I am not suggesting new positions at this time.

Don't forget that we only have two weeks left on our January calls.

Earlier Comments:
Our short-term target is $79.75. More aggressive traders may want to aim higher since the Point & Figure chart just produced a new quadruple top breakout buy signal and is forecasting an $87 target.

I listed the January calls. I'd rather play February options but (at the time) TSCO didn't have any Februarys or Marchs available yet and the bid/ask spread on the April options is getting a bit wide.

- Suggested Positions -

Long Jan $75 call (TSCO1418a75) entry $2.15

12/28/13 new stop loss @ 74.50
12/23/13 triggered on gap higher at $77.00. Suggested trigger was $75.60

chart:

Entry on December 23 at $77.00
Average Daily Volume = 875 thousand
Listed on December 21, 2013


United Parcel Service - UPS - close: 103.09 change: -0.23

Stop Loss: 102.75
Target(s): 108.00
Current Option Gain/Loss: -64.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
01/04/14: Thursday's sell off in UPS was a rough one with the stock erasing seven days worth of gains. The bounce attempt on Friday failed and shares closed near their lows for the session. That doesn't bode well. We only have two weeks left before January options expire. Tonight we're suggesting an immediate exit on Monday morning to avoid further losses.

- Suggested Positions -

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

01/04/14 prepare to exit on Monday morning, January 6th
12/30/13 new stop loss @ 102.75
12/24/13 new stop loss @ 101.90
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


United Technologies - UTX - close: 112.90 change: +0.41

Stop Loss: 110.40
Target(s): 118.50
Current Option Gain/Loss: -26.1%
Time Frame: exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/04/14: UTX was showing some relative strength on Friday by posting a gain (+0.3%). There is still a good chance that UTX will test the $112.00 level as support so nimble traders may want to look for a new entry point there (near $112).

Earlier Comments:
Our target is $118.50 but we'll plan on exiting prior to UTX's earnings report in late January. More aggressive investors might want to consider aiming higher. The Point & Figure chart for UTX is bullish with a $139 target.

- Suggested Positions -

Long Feb $115 call (UTX1422B115) entry $1.80

12/31/13 trade opened on gap higher at $113.16. Suggested trigger was $113.05

chart:

Entry on December 31 at $113.16
Average Daily Volume = 2.8 million
Listed on December 26, 2013


Wyndham Worldwide - WYN - close: 72.49 change: -1.03

Stop Loss: 71.75
Target(s): 78.50
Current Option Gain/Loss: -35.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/04/14: Friday was a rough day for WYN with shares underperforming the market with a -1.4% decline. I didn't see any news to account for the relative weakness. If shares don't bounce near the $72 level then we'll see WYN hit our stop at $71.75 soon. I am not suggesting new positions.

FYI: The Point & Figure chart for WYN is bullish with a $102 target.

- Suggested Positions -

Long Feb $75 call (WYN1422B75) entry $1.95*

12/23/13 triggered on gap open at $73.27. Suggested entry point was $73.25
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on December 23 at $73.27
Average Daily Volume = 1.1 million
Listed on December 21, 2013




PUT Play Updates

SodaStream Intl. - SODA - close: 48.32 change: +0.21

Stop Loss: 51.25
Target(s): 41.50
Current Option Gain/Loss: + 6.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/04/14: SODA managed a bounce on Friday but shares spent most of the day churning sideways. More conservative traders may want to adjust their stop loss closer to the $50.00 level.

Earlier Comments:
I am suggesting we use small positions to limit our risk. There are a lot of bears already in this trade. The most recent data listed short interest at more than 50% of the very small 17.5 million share float.

Our target is $41.50. However, I want to warn you that the $45.00 level could be potential support.

*small positions* - Suggested Positions -

Long Feb $45 PUT (SODA1422N45) entry $2.40

chart:

Entry on December 31 at $48.70
Average Daily Volume = 980 thousand
Listed on December 30, 2013


CLOSED BULLISH PLAYS

Energen Corp. - EGN - close: 68.19 change: -0.48

Stop Loss: 67.95
Target(s): 75.75
Current Option Gain/Loss: -37.7%
Time Frame: exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/04/14: Our EGN trade has been stopped out at $67.95. Friday saw shares spike below what should have been support near $68.00. The stock looks like it's headed for its December lows near $66.00 now.

Earlier Comments:
Our plan was to keep our position size small to limit our risk.

*small positions* - Suggested Positions -

Feb $75 call (EGN1422B75) entry $2.17 exit $1.35* (-37.7%)

01/03/14 stopped out
*option exit price is an estimate since the option did not trade at the time our play was closed.
12/30/13 triggered at $71.05

chart:

Entry on December 30 at $71.05
Average Daily Volume = 727 thousand
Listed on December 28, 2013


UnitedHealth Group - UNH - close: 75.10 change: +0.53

Stop Loss: 73.95
Target(s): 82.50
Current Option Gain/Loss: Unopened
Time Frame: Exit PRIOR to earnings on January 16th.
New Positions: see below

Comments:
01/04/14: UNH displayed relative strength on Friday. Unfortunately we're running out of time. UNH is due to report earnings on January 16th and our trade is not even open yet. We've been waiting for a breakout past the September high with a suggested trigger at $76.05. Thus far that hasn't happened.

Tonight we are removing UNH as an active candidate. We can check it out again after its earnings report.

Trade did not open.

01/04/14 trade did not open. suggested trigger was $76.05

chart:

Entry on December -- at $---.--
Average Daily Volume = 4.4 million
Listed on December 26, 2013