Editor's Note:

Disappointing economic data out of China sparked a widespread market sell-off. Yet once again dip buyers were active this afternoon.

ORLY, TMO, and YELP hit our stop losses today.
GMCR hit our entry trigger. We want to exit our STX trade tomorrow at the closing bell.


Current Portfolio:


CALL Play Updates

Accenture - ACN - close: 83.92 change: -1.48

Stop Loss: 83.25
Target(s): 89.50
Current Option Gain/Loss: -43.0%
Time Frame: exit PRIOR to February option expiration
New Positions: see below

Comments:
01/23/14: It was a rough day for shares of ACN. The stock had been showing strength but the market's widespread sell off today sparked some profit taking. ACN underperformed with a -1.7% decline. The low today was $83.50. Our stop is at $83.25. I am not suggesting new positions at this time.

- Suggested Positions -

Long Feb $85 call (ACN1422B85) entry $1.58

Entry on January 22 at $85.15
Average Daily Volume = 3.3 million
Listed on January 18, 2014


Chicago Bridge & Iron - CBI - close: 81.91 change: -1.04

Stop Loss: 79.65
Target(s): 89.50
Current Option Gain/Loss: -20.9%
Time Frame: Exit PRIOR to CBI's earnings report in February
New Positions: see below

Comments:
01/23/14: CBI was not immune to the market's weakness. Shares actually underperformed with a -1.2% decline. I do expect the $80 level and the 50-dma, near $80, to offer 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

12/28/13 new stop loss @ 79.65

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


Cigna Corp. - CI - close: 89.54 change: -0.12

Stop Loss: 88.40
Target(s): 95.00
Current Option Gain/Loss: -13.7%
Time Frame: exit PRIOR to earnings on February 7th
New Positions: see below

Comments:
01/23/14: CI almost hit our stop loss this morning. Shares gapped down at $88.72 and then spiked lower to $88.63. Our stop loss is at $88.40. Fortunately CI pared its losses and closed down -0.1% versus a -0.8% drop in the S&P 500. I am not suggesting new positions at this time.

Earlier Comments:
I am suggesting a $95.00 target. However, we'll plan on exiting prior to the earnings report on February 7th. FYI: The Point & Figure chart for CI is bullish with a $119 target.

Trigger @ 90.25

- Suggested Positions -

buy the Feb $90 call (CI1422B90) entry $2.47

01/21/14 triggered @ 90.25

Entry on January 21 at $90.25
Average Daily Volume = 1.0 million
Listed on January 15, 2014


Green Mountain Coffee Roasters - GMCR - close: 80.86 change: -0.29

Stop Loss: 77.95
Target(s): 88.00
Current Option Gain/Loss: -9.8%
Time Frame: exit PRIOR to earnings on February 5th
New Positions: see below

Comments:
01/23/14: GMCR saw some volatility this morning. The stock managed to tag a new relative high and hit our suggested entry point at $81.75 before almost immediately reversing lower. Thankfully traders bought the dip at $79.63. I would wait for a new high above $81.80 before launching new positions.

Earlier Comments:
A breakout could spark some short covering. The most recent data listed short interest at 46% of the 128 million-share float. We will plan on exiting prior to the earnings report in early February. FYI: The Point & Figure chart for GMCR is bullish with a $98 target.

- Suggested Positions -

Long Feb $85 call (GMCR1422B85) entry $3.66

01/23/14 triggered @ 81.75

Entry on January 23 at $81.75
Average Daily Volume = 2.3 million
Listed on January 22, 2014



Northrop Grumman - NOC - close: 117.50 change: -2.82

Stop Loss: 117.25
Target(s): 124.00
Current Option Gain/Loss: - 3.7%
Time Frame: exit PRIOR to earnings on January 30th
New Positions: see below

Comments:
01/23/14: NOC's rival Lockheed Martin (LMT) reported earnings this morning and LMT's results sparked a sell off across the defense contractors. LMT plunged -3.9% following its results. NOC followed it lower with a -2.4% decline and a drop to its simple 10-dma. The low today was $117.45. If there is any follow through lower tomorrow then we'll see NOC hit our stop at $117.25. Our NOC February $120 call was cut almost in half with today's decline.

I am not suggesting new positions at this time. We will plan on exiting prior to earnings on January 30th.

Earlier Comments:
Our target is $124.00. I'll confess that might be a little bit optimistic since the $120 level could be round-number resistance.

- Suggested Positions -

Long FEB $120 call (NOC1422B120) entry $1.35

01/23/14 NOC plunges following earnings from LMT
01/22/14 new stop loss @ 117.25
01/14/14 new stop loss @ 114.65
01/10/14 triggered @ 116.50

Entry on January 10 at $116.50
Average Daily Volume = 1.3 million
Listed on January 09, 2014


QUALCOMM Inc. - QCOM - close: 75.87 change: +0.09

Stop Loss: 74.65
Target(s): 79.75
Current Option Gain/Loss: +14.2%
Time Frame: Exit PRIOR to earnings on January 29th
New Positions: see below

Comments:
01/23/14: Shares of QCOM held up well today with traders buying the dip midday near $75.00. The stock managed to bounce back into positive territory. QCOM was making headlines today with news it had purchased approximately 2,400 patents from Hewlett-Packard (HPQ).

I am raising our stop loss to $74.65.

Earlier Comments:
Our short-term target is $79.75. This is a short-term trade. QCOM is due to report earnings on January 29th. Yet Apple (AAPL), who QCOM does a lot of business with, reports earnings on January 27th. We will definitely plan to exit prior to QCOM's earnings report and might consider an exit ahead of AAPL's report.

FYI: The Point & Figure chart for QCOM is bullish with a $93 target.

- Suggested Positions -

Long Feb $75 call (QCOM1422B75) entry $1.96

01/23/14 new stop loss @ 74.65
01/21/14 triggered @ 75.25

Entry on January 21 at $75.25
Average Daily Volume = 8.3 million
Listed on January 16, 2014


NASDAQ-100 ETF - QQQ - close: 88.48 change: -0.30

Stop Loss: 86.75
Target(s): 94.00
Current Option Gain/Loss: + 0.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/23/14: The market's major indices suffered widespread profit taking today. Yet the pullback in the NASDAQ-100 index wasn't that bad. The QQQ dipped to short-term support near its 10-dma and bounced only closing down -0.33% versus -0.5% drop in the NASDAQ composite and a -0.88% drop in the S&P 500.

More conservative traders may want to raise their stop loss.

Earlier Comments:
We wanted to use small positions to limit our risk. Our optimistic, multi-week target is $94.00.

*small positions* - Suggested Positions -

Long Mar $90 call (QQQ1422C90) entry $1.20

Entry on January 22 at $88.75
Average Daily Volume = 29 million
Listed on January 21, 2014


Seagate Technology - STX - close: 60.74 change: -0.26

Stop Loss: 59.65
Target(s): 65.00
Current Option Gain/Loss: - 8.7%
Time Frame: exit PRIOR to earnings on January 27th.
New Positions: see below

Comments:
01/23/14: I warned readers last night that STX would likely be weak this morning. Sure enough the stock gapped open lower and shares opened at $59.78. Fortunately there was almost no follow through and STX pared its losses by the closing bell. The trend is higher and I would expect STX to rally from here. However, earnings are coming up on Monday, January 27th. I am suggesting we plan on exiting our STX positions tomorrow, Friday, at the closing bell (as we do not want to hold over the earnings report).

FYI: The low today was $59.69. Our stop loss remains at $59.65.

- Suggested Positions -

Long Feb $60 call (STX1422B60) entry $3.10

01/23/14 prepare to exit tomorrow (Friday) at the closing bell
01/22/14 be careful. STX looks like it could gap down tomorrow morning
01/21/14 new stop loss @ 59.65
01/15/14 triggered @ 60.85

Entry on January 15 at $60.85
Average Daily Volume = 3.5 million
Listed on January 14, 2014




PUT Play Updates

Rock-Tenn Co. - RKT - close: 99.77 change: -0.27

Stop Loss: 100.65
Target(s): 97.00
Current Option Gain/Loss: + 0.0%
Time Frame: Exit PRIOR to earnings on January 28th
New Positions: see below

Comments:
01/23/14: I continue to urge caution on RKT. The stock briefly broke down below technical support at its 50-dma but shares quickly rebounded from the $98 area. RKT posted a loss of -0.2% versus the -0.88% drop in the S&P 500. The simple 10-dma looks like overhead resistance so we'll adjust our stop loss down to $100.65.

- Suggested Positions -

Long FEB $100 PUT (RKT1422N100) entry $3.70

01/23/14 new stop loss @ 100.65
01/22/14 new stop loss @ 101.15
01/18/14 new stop loss @ 102.25
01/16/14 new stop loss @ 102.55
01/13/14 new stop loss @ 103.55
01/11/14 adjust exit target from $96.00 to $97.00

Entry on January 09 at $101.96
Average Daily Volume = 656 thousand
Listed on January 08, 2014



CLOSED BULLISH PLAYS

O'Reilly Automotive - ORLY - close: 136.02 change: +0.03

Stop Loss: 133.90
Target(s): 144.00
Current Option Gain/Loss: -25.5%
Time Frame: Exit PRIOR to earnings on February 5th
New Positions: see below

Comments:
01/23/14: ORLY is not cooperating with us. Shares tagged a new high yesterday, hit our suggested entry point, and then reversed. Today's market sell off pulled ORLY to a -1.2% decline and shares fell toward short-term technical support at its simple 10-dma. The stock also hit our suggested stop loss at $133.90.

- Suggested Positions -

Feb $140 call (ORLY1422B140) entry $2.62 exit $1.95* (-25.5%)

01/23/14 stopped out at $133.90
*option exit price is an estimate since the option did not trade at the time our play was closed.

chart:

Entry on January 22 at $136.55
Average Daily Volume = 545 thousand
Listed on January 21, 2014


Thermo Fisher Scientific - TMO - close: 112.81 change: -1.89

Stop Loss: 113.90
Target(s): 119.75
Current Option Gain/Loss: -32.8%
Time Frame: Exit PRIOR to earnings in late January or Early February
New Positions: see below

Comments:
01/23/14: We were worried about TMO yesterday and in last night's newsletter adjusted the stop loss to $113.90. That turned out to be a good move as TMO underperformed the market with a -1.6% decline today. TMO hit our stop within the first 15 minutes of trading today. If shares don't see a decent rebound tomorrow then the weekly chart will form a bearish engulfing candlestick reversal pattern.

- Suggested Positions -

Feb $115 call (TMO1422B115) entry $3.35* exit $2.25** (-32.8%)

01/23/14 stopped out
01/22/14 new stop loss @ 113.90
01/21/14 Caution: Today's move has created a bearish candlestick pattern
01/15/14 triggered @ 115.25
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on January 15 at $115.25
Average Daily Volume = 1.8 million
Listed on January 14, 2014


Yelp, Inc. - YELP - close: 79.45 change: -1.83

Stop Loss: 79.75
Target(s): 98.00
Current Option Gain/Loss: -38.3%
Time Frame: Exit PRIOR to earnings on Feb. 5th
New Positions: see below

Comments:
01/23/14: After touching a new all-time high on Tuesday shares of YELP are down three days in a row. The stock gapped open lower at $80.24 and quickly spiked down toward the $77.50 area. Our stop was hit at $79.75.

Earlier Comments:
I do consider this an aggressive, higher-risk trade. YELP can be volatile and because of that volatility the options are not cheap. I am suggesting small positions.

*small positions* - Suggested Positions -

Feb $90 call (YELP1422B90) entry $4.87 exit $3.00 (-38.3%)

01/23/14 stopped out
01/21/14 triggered @ 83.75

chart:

Entry on January 21 at $83.75
Average Daily Volume = 2.7 million
Listed on January 18, 2014