Editor's Note:

There was no follow through on Thursday's market bounce. Equity markets reversed lower again delivering the worst January performance since 2010.

SBAC and SHLD hit our entry triggers on Friday.

We want to exit our CBI trade on Monday morning.


Current Portfolio:


CALL Play Updates

Biotech ETF - BBH - close: 96.88 change: -1.35

Stop Loss: 93.75
Target(s): 109.00
Current Option Gain/Loss: -14.5%
Time Frame: 6 to 7 weeks
New Positions: see below

Comments:
02/01/14: The BBH gave back about half of Thursday's gains with its -1.3% decline on Friday. Traders did buy the dip on Friday morning near $96.25. Given the market's widespread weakness on Friday I would hesitate to launch new positions here. If the market does rally we do expect the biotechs to outperform.

Earlier Comments:
We're listing the March calls. You may want to consider the June calls. The Point & Figure chart for BBH is bullish with a $111.00 target.

Caution: The BBH does not see a lot of option volume. Traders may want to use small positions to limit their exposure.

- Suggested Positions -

Long MAR $100 call (BBH1422C100) entry $3.10*

01/30/14 triggered on gap open higher at $97.49. suggested trigger was $97.25
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on January 30 at $97.49
Average Daily Volume = 164 thousand
Listed on January 29, 2014


Chicago Bridge & Iron - CBI - close: 74.99 change: -1.14

Stop Loss: 73.15
Target(s): 82.50
Current Option Gain/Loss: -23.5%
Time Frame: Exit PRIOR to CBI's earnings report in February
New Positions: see below

Comments:
02/01/14: Warning! We are growing more concerned about CBI's poor performance. It looks like the oversold bounce is already rolling over. We are long-term bullish on this stock but the market seems to be telling us that the correction lower is not over yet.

Tonight we're suggesting an immediate exit on Monday morning. We'll just keep CBI on our watch list for another entry point down the road. I would not be surprised to see CBI find support near $70.00.

- Suggested Positions -

Buy the Mar $80 call (CBI1422C80) entry $1.70

02/01/14 prepare to exit immediately on Monday morning
01/30/14 CBI not performing well today. This could be a warning signal.
01/28/14 new stop loss @ 73.15

chart:

Entry on January 27 at $76.17
Average Daily Volume = 1.5 million
Listed on January 25, 2014


EnerNOC, Inc. - ENOC - close: 22.40 change: -0.50

Stop Loss: 21.90
Target(s): 25.75
Current Option Gain/Loss: -24.3%
Time Frame: EXIT PRIOR to earnings on February 13th
New Positions: see below

Comments:
02/01/14: Shares of ENOC garnered new bullish analyst comments on Friday and a new $28 price target. Yet this bullish analyst opinion failed to support the stock price. Shares underperformed the market on Friday with a -2.1% decline. The pullback stalled at short-term technical support on its simple 10-dma.

A bounce from here could be used as a new entry point. Tonight we're adjusting the stop loss to $21.90.

Earlier Comments:
We will plan to exit prior to ENOC's earnings report on February 13th. FYI: The Point & Figure chart for ENOC is bullish with a $28 target.

- Suggested Positions -

Long MAR $22.50 call (ENOC1422C22.5) entry $1.85*

02/01/14 new stop loss @ 21.90
01/30/14 triggered at $23.10
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on January 30 at $23.10
Average Daily Volume = 485 thousand
Listed on January 28, 2014


General Dynamics - GD - close: 101.31 change: +0.82

Stop Loss: 97.75
Target(s): 107.00
Current Option Gain/Loss: +13.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/01/14: Shares of GD continue to look strong. A lot of the defense contractor stocks displayed strength on Friday. GD tagged a new intraday high but failed to breakout past resistance near the $102.00 level.

More conservative traders may want to adjust their stop loss closer to today's low (98.83). A rally above today's high (102.18) could be used as an alternative entry point to launch bullish positions.

- Suggested Positions -

Long Mar $100 call (GD1422C100) entry $3.00*

01/28/14 triggered @ 100.50
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on January 28 at $100.50
Average Daily Volume = 2.6 million
Listed on January 27, 2014


iShares Russell 2000 ETF - IWM - close: 112.16 change: -0.84

Stop Loss: 110.85
Target(s): 118.00
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
02/01/14: The IWM gave back about half of yesterday's gains but that doesn't tell the whole story. This ETF dipped toward Wednesday's lows and bounced. This happens to be a test of its trend line of support.

The last few days we've been listing two different triggers. A trigger at $114.15 with a stop at $109.90 and a trigger to buy calls at $110.30 with a stop at $108.65. I am growing concerned that a breakdown below last week's lows (near $111.00) could spell trouble. There is a decent chance that the IWM might bounce from its simple 100-dma (currently near $110.65). However, I am suggesting we play defensively with this ETF.

More aggressive traders could buy calls now given Friday's intraday bounce and just use a tight stop loss. Tonight we're removing the trigger at $110.30. Instead we'll focus on a move above $114 and leave the one trigger at $114.15 but I'm adjusting our stop loss to $110.85. If this week we see the IWM dip to $110 and bounce then we might adjust our entry strategy again.

Buy Trigger @ $114.15, stop loss @ 110.85.

- Suggested *SMALL* Positions -

Buy the Mar $115 call (IWM1422C115) current ask $1.85

02/01/14 remove trigger at $110.30. Adjust stop loss higher.
02/01/14 *Use small positions to limit risk*
01/29/14 adjust stop on buy-the-dip entry point to 108.65
01/28/14 add a secondary entry point to buy calls at $114.15
01/27/14 adjust the entry point trigger to $110.30 and move the stop loss to $108.85.

chart:

Entry on January -- at $---.--
Average Daily Volume = 31.7 million
Listed on January 25, 2014


NASDAQ-100 ETF - QQQ - close: 86.27 change: -0.23

Stop Loss: 83.90
Target(s): 92.00
Current Option Gain/Loss: + 1.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/01/14: The QQQ gapped down Friday morning at $85.54 but bounced back high enough to fill the gap. That's not necessarily a good thing and the rebound was fading lower into the closing bell on Friday, also not a good thing. Investors could just be worried about holding positions over a weekend with so many currencies worries for emerging market countries.

More conservative traders might want to adjust their stop loss closer to Wednesday's low near $84.76. I am not suggesting new positions at this time.

NOTE: The QQQ posted a loss on Friday but our option rose in value. That is a bit odd.

*small positions* - Suggested Positions -

Long Mar $87 call (QQQ1422C87) entry $1.60

01/27/14 adjust stop loss to $83.90
01/27/14 triggered at $86.00

chart:

Entry on January 27 at $86.00
Average Daily Volume = 29 million
Listed on January 25, 2014


SBA Communications - SBAC - close: 92.75 change: +0.46

Stop Loss: 89.90
Target(s): 99.50
Current Option Gain/Loss: - 10.2%
Time Frame: Exit PRIOR to earnings on February 25th
New Positions: see below

Comments:
02/01/14: Our new trade on SBAC has been triggered. Like most of the market shares of SBAC spiked down on Friday morning but they quickly bounced. By Friday afternoon the stock had broken out to new highs and hit our suggested entry point at $93.05. Unfortunately by the closing bell shares had retreated back below the $93 level. I would wait for a new rally above $93.00 if you're looking for an entry point.

FYI: The Point & Figure chart for SBAC is bullish with a $107 target. A move above $93.00 would produce a new buy signal.

- Suggested Positions -

Long MAR $95 call (SBAC1422C95) entry $1.95

01/31/14 triggered at $93.05

chart:

Entry on January 31 at $93.05
Average Daily Volume = 1.3 million
Listed on January 30, 2014




PUT Play Updates

Philip Morris Intl. - PM - close: 78.14 change: -0.95

Stop Loss: 80.15
Target(s): 75.25
Current Option Gain/Loss: +74.8%
Time Frame: Exit PRIOR to earnings on Feb 6th
New Positions: see below

Comments:
02/01/14: Shares of PM have been very cooperative. The stock underperformed the market again on Friday with a -1.2% decline. If we do not count the three-cent bounce on Tuesday then PM is down six days in a row. Readers may want to take profits soon with our option up more than +74%. PM is scheduled to report earnings on February 6th and we do not want to hold over the report. That means we only have three trading days left. We might choose to exit early on Tuesday. I am lowering our stop loss to $80.15.

- Suggested Positions -

Long Feb $80 PUT (PM1422N80) entry $1.43

02/01/14 new stop loss @ 80.15, prepare to exit before Feb. 6th
01/29/14 triggered @ 79.85

chart:

Entry on January -- at $---.--
Average Daily Volume = 5.9 million
Listed on January 27, 2014


Restoration Hardware - RH - close: 56.74 change: +0.35

Stop Loss: 60.25
Target(s): 51.00
Current Option Gain/Loss: -25.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/01/14: RH managed to outperform the market on Friday with a +0.6% gain. Yet the bounce failed at short-term resistance near $58.00. More conservative traders may want to tighten their stop closer to Friday's high ($58.10).

Earlier Comments:
Please note that I do consider this a somewhat more aggressive, higher-risk trade because RH does have above average short interest (about 10% of the 34 million-share float). Our multi-week target is $51.00. More aggressive traders could aim lower. The Point & Figure chart for RH is bearish with a $43 target.

*Small Positions* - Suggested Positions -

Long MAR $55 PUT (RH1422o55) entry $3.00*

01/29/14 trade opened this morning. RH gapped down at $56.47.
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on January 29 at $56.47
Average Daily Volume = 981 thousand
Listed on January 28, 2014


Sears Holding - SHLD - close: 36.37 change: -0.13

Stop Loss: 38.55
Target(s): 30.25
Current Option Gain/Loss: - 8.5%
Time Frame: exit PRIOR to earnings in late February
New Positions: see below

Comments:
02/01/14: The stock market's weakness on Friday morning helped push SHLD to new relative lows. The stock hit our suggested entry point at $35.85. The stock then bounced near the $35.00 level and almost made it back into positive territory before the closing bell on Friday. This relative strength is a bit worrisome if you're holding put options. More conservative traders may want to tighten their stop loss closer to $38.00 or even the $37.50 area.

Earlier Comments:
I do consider this a more aggressive trade because there is so much short interest. The shorts are probably right on this stock but SHLD could still see short-term spikes if some of the weaker shorts rush to cover on any unexpected good news. The most recent data listed short interest at 54% of the 50.7 million share float.

I am suggesting a trigger to buy puts at $35.85. If triggered our target is $30.25. More aggressive traders could aim lower since the Point & Figure chart for SHLD is bearish with a $20 target. However, I would not hold over the earnings report expected in late February.

- Suggested Positions -

Long MAR $30 PUT (SHLD1422o30) entry $1.63

01/31/14 triggered @ $35.85

chart:

Entry on January 31 at $35.85
Average Daily Volume = 2.6 million
Listed on January 29, 2014