Editor's Note:

The market's rally off its February lows paused again on Friday thanks in part to option expiration.

ALKS and IMPV hit our entry triggers. SBUX has been removed.


Current Portfolio:


CALL Play Updates

Alkermes plc. - ALKS - close: 52.96 change: +1.36

Stop Loss: 50.65
Target(s): 59.00
Current Option Gain/Loss: - 9.5%
Time Frame: Plan to exit on Feb 26th at the closing bell
New Positions: see below

Comments:
02/22/14: I've got good news and bad news on our new ALKS trade. The good news is that shares displayed relative strength on Friday and hit our suggested entry point at $53.25 on its way to a new high. The bad news is that our time frame just changed. Previously it looked like we might have a few weeks and would plan to exit prior to ALKS' earnings report in March. The company's earnings announcement has now been set for February 27th. That is next Thursday. I am suggesting we plan to exit on Wednesday, Feb. 26th at the close to avoid holding over the report.

Given our new time frame I am not suggesting new positions. Our plan was to keep the position size small to limit risk.

*small positions* - Suggested Positions -

Long MAR $55 call (ALKS1422C55) entry $2.10

02/22/14 Our time frame has unexpectedly changed.
ALKS is now expected to report earnings on Feb. 27th. We want to exit prior to the earnings announcement
02/21/14 triggered @ 53.25

chart:

Entry on February 21 at $53.25
Average Daily Volume = 986 thousand
Listed on February 20, 2014


Caterpillar Inc. - CAT - close: 97.50 change: +0.58

Stop Loss: 94.85
Target(s): 99.65
Current Option Gain/Loss: +29.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/22/14: CAT continues to push higher and extended its rally to four up weeks in a row. I am adjusting our exit target just a bit from $99.85 down to $99.65. The concern is that the $100.00 level could be round-number resistance. The 2013 high was $99.70.

The Point & Figure chart for CAT is bullish with a $117 target.

small positions - Suggested Positions -

Long MAR $97.50 call (CAT1422C97.5) entry $1.45

02/22/14 adjust exit target to $99.65
02/20/14 new stop loss @ 94.85
02/18/14 new stop loss @ 94.40
02/13/14 planned entry at the opening bell
CAT gapped down at $95.29

chart:

Entry on February 13 at $95.29
Average Daily Volume = 8.3 million
Listed on February 12, 2014


Salesforce.com - CRM - close: 63.59 change: +0.58

Stop Loss: 60.90
Target(s): 67.50
Current Option Gain/Loss: +10.6%
Time Frame: Exit PRIOR to earnings on Feb. 27th
New Positions: see below

Comments:
02/22/14: CRM tagged a new high on Friday but pared its gains by the closing bell. Shares still managed to show some relative strength with a +0.9% gain.

Please note that CRM is at an important test on its daily chart. The rally tagged resistance at a trend line of higher highs and then faded lower. I have drawn what appears to be a bearish (rising) wedge on CRM's chart. Our stop loss is just below the blue support line.

We are almost out of time on this trade. CRM has set its earnings date for Feb. 27th. That is next Thursday. We will plan to exit prior to earnings.

- Suggested Positions -

Long Mar $62.50 call (CRM1422C62.5) entry $3.30*

02/20/14 new stop loss @ 60.90
02/11/14 new stop loss @ 59.90
02/05/14 triggered @ 61.75
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on February 05 at $61.75
Average Daily Volume = 4.8 million
Listed on February 01, 2014


Computer Sciences - CSC - close: 62.20 change: -0.15

Stop Loss: 59.45
Target(s): 68.00
Current Option Gain/Loss: Mar $60c - 5.6% & Jun $65c: - 3.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/22/14: CSC's performance the last few days has not been very inspiring. Shares look like they are forming a short-term top. More conservative traders may want to raise their stop loss. I am not suggesting new positions at this time.

Earlier Comments:
Our target is $68.00. I will point out that CSC did see additional resistance in the past near the $63-64 zone back in 2007. I prefer the June calls but I'm listing March as well for shorter-term traders. FYI: The Point & Figure chart for CSC is bullish with a $78 target.

- Suggested Positions -

Long MAR $60 call (CSC1422C60) entry $2.81*

- or -

Long JUN $65 call (CSC1421F65) entry $2.27*

02/13/14 triggered @ 62.15
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on February 13 at $62.15
Average Daily Volume = 1.59 million
Listed on February 12, 2014


F5 Networks - FFIV - close: 110.28 change: -0.24

Stop Loss: 108.60
Target(s): 118.50
Current Option Gain/Loss: -41.7%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
02/22/14: FFIV has spent the last week consolidating sideways inside the $109-113 zone. Shares just failed at the top of this trading range again on Friday.

I am not suggesting new positions at this time.

Earlier Comments:
Our multi-week target is $118.50. We'll start with a stop loss at $106.90. More conservative traders will want to consider a higher stop loss.

- Suggested Positions -

Long MAR $115 call (FFIV1422C115) entry $3.14

02/19/14 FFIV looks poised to hit our stop loss tomorrow
02/13/14 new stop loss @ 108.60
02/11/14 triggered @ 111.10

chart:

Entry on February 11 at $111.10
Average Daily Volume = 2.8 million
Listed on February 10, 2014


Gilead Sciences - GILD - close: 82.59 change: -0.22

Stop Loss: 79.75
Target(s): 89.75
Current Option Gain/Loss: Mar $85c: -19.0% & Apr $85c: - 6.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/22/14: The biotech stocks have continued to show leadership. Yet GILD is lagging behind some of its peers. This stock is still struggling with resistance near its January highs. I would wait for a breakout higher before considering new positions.

Earlier Comments:
Our target is $89.50. I am listing both the March and the April calls. Pick a month that best suits your time frame.

FYI: The Point & Figure chart for GILD is currently bearish but a move above $83.00 should produce a new triple-top breakout buy signal.

- Suggested Positions -

Long MAR $85 call (GILD1422c85) entry $2.00

- or -

Long APR $85 call (GILD1419D85) entry $3.04*

02/13/14 new stop loss @ 79.75
02/12/14 triggered @ 82.50
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on February 12 at $82.50
Average Daily Volume = 13.7 million
Listed on February 11, 2014


Imperva Inc. - IMPV - close: 61.92 change: +2.57

Stop Loss: 58.65
Target(s): 68.00
Current Option Gain/Loss: +11.7%
Time Frame: exit prior to March option expiration
New Positions: see below

Comments:
02/22/14: IMPV displayed relative strength on Friday with a +4.3% gain and a breakout past resistance at $60.00 to close at all-time highs. Our suggested entry point to buy calls was hit at $60.50.

I am raising our stop loss to $58.65.

NOTE: There was a typo in IMPV's option data. I suggested the March $60 call but listed the March $65 option symbol. We want the March $60 call. Our entry would have been about $3.40. If you used the March $65 call then your entry would have been about $1.10.

Earlier Comments:
The Point & Figure chart for IMPV is bullish with a $77.00 target.

- Suggested Positions -

Long MAR $60 call (IMPV1422c60) entry $3.40*

02/22/14 new stop loss @ 58.65
*option entry price is an estimate since the option did not trade at the time our play was opened.
02/21/14 triggered @ 60.50

chart:

Entry on February 21 at $60.50
Average Daily Volume = 264 thousand
Listed on February 18, 2014


Monster Beverage - MNST - close: 74.79 change: +0.09

Stop Loss: 71.75
Target(s): 76.50
Current Option Gain/Loss: +47.6%
Time Frame: prepare to exit PRIOR to earnings on Feb. 27th
New Positions: see below

Comments:
02/22/14: We only have a few more days left on our MNST trade. Tonight I am adjusting our exit target down to $76.50 If MNST does not hit our exit target then we will plan on exiting this trade on Wednesday, March 26th, at the closing bell, to avoid holding over the earnings report on the 27th.

I am raising the stop to $71.75

Earlier Comments:
We want to keep our position size small to limit our risk.

*Small Positions * - Suggested Positions -

Long MAR $75 call (MNST1422C75) entry $2.10

02/22/14 adjust exit target to $76.50
02/22/14 new stop loss @ 71.75
prepare to exit on Wednesday, Feb. 26th
02/20/14 new stop loss @ 71.25,
exit PRIOR to earnings on February 27th
02/14/14 trade opened at $71.00

chart:

Entry on February 14 at $71.00
Average Daily Volume = 1.39 million
Listed on February 13, 2014


Constellation Brands Inc. - STZ - close: 80.35 change: -0.25

Stop Loss: 77.80
Target(s): 84.75
Current Option Gain/Loss: Mar$80c: + 5.8% & Apr$80c: + 3.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/22/14: STZ has extended its gains to four up weeks in a row. The stock is near resistance in the $81.00-81.50 area. If STZ fails here it will look like a potential bearish double top pattern. A breakout could signal the next leg higher.

Tonight we're adjusting the stop loss to $77.80. I am not suggesting new positions at this time.

Earlier Comments:
The prior highs near $81.50 could be overhead resistance but we're aiming for $84.75. STZ does not move super fast so you may want to buy the April calls instead of the March calls.

Trigger @ 79.00

- Suggested Positions -

Buy the MAR $80 call (STZ1422C80) entry $1.70

- or -

Buy the APR $80 call (STZ1419D80) entry $3.30

02/22/14 new stop loss @ 77.80
02/18/14 new stop loss @ 77.40
02/13/14 new stop loss @ 76.40
02/12/14 triggered @ 79.00

chart:

Entry on February 12 at $79.00
Average Daily Volume = 1.5 million
Listed on February 11, 2014




PUT Play Updates

Cigna Corp. - CI - close: 77.34 change: +0.24

Stop Loss: 79.25
Target(s): 70.50
Current Option Gain/Loss: -31.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/22/14: CI continues to consolidate sideways below technical resistance at its 200-dma. I would still consider new put positions here but more conservative traders may want to wait for a new relative low under $75.00 before initiating positions. Our target is $70.50.

FYI: The Point & Figure chart for CI is bearish with a $63 target.

- Suggested Positions -

Long MAR $75 put (CI1422o75) entry $1.50

02/20/14 trade opened with CI's gap higher at $76.76

chart:

Entry on February 20 at $76.76
Average Daily Volume = 2.6 million
Listed on February 19, 2014


Pepsico, Inc. - PEP - close: 78.22 change: +0.21

Stop Loss: 80.15
Target(s): 74.00
Current Option Gain/Loss: -18.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/22/14: PEP bounced again on Friday but for the second day in a row the rebound has failed under the $79.00 level. I would be tempted to buy puts now but readers may want to wait for a new drop below $77.75 as another entry point to buy puts.

- Suggested Positions -

Long APR $75 PUT (PEP1419P75) entry $0.95*

02/18/14 triggered @ 77.85
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on February 18 at $77.85
Average Daily Volume = 5.7 million
Listed on February 15, 2014



CLOSED BULLISH PLAYS

Starbucks Corp. - SBUX - close: 72.56 change: -0.99

Stop Loss: 73.95
Target(s): 79.00 & 81.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/22/14: SBUX is not cooperating. The stock's oversold bounce has failed at resistance near $75.00. Investors are starting to worry about the shocking rise in the price of coffee futures and how that might impact SBUX's margins.

Our trade did not open. We are removing SBUX as a candidate. Shares look like they are headed toward their February lows near $69.

Trade did not open.

02/22/14 removed from the newsletter. Trade did not open. Suggested entry trigger was $76.15

chart:

Entry on February -- at $---.--
Average Daily Volume = 8.1 million
Listed on February 15, 2014