Editor's Note:

Good evening. We closed our IWM and USG short positions today for nice gains of +5% and +6%, respectively. We also opened TIE as it traded down near our trigger. KWK and LEG were opened as well from the weekend's new plays.

I am expecting a relief rally in the market here to potentially close the gap lower from Thursday to Friday. This is about +20 S&P 500 points from today's close. In reality, I think we may be in a sideways consolidation mode for weeks or months which will eventually resolve itself to the downside. The S&P range I'm focused on is 1,115 to 1,170. However, I believe there is more downside risk than upside opportunity. I urge readers to take profits on positions when they can as getting chopped around is not fun. Stay on your toes.

Current Portfolio:

BULLISH Play Updates

Dr. Pepper Snapple Group - DPS - close 38.00 change +0.75 stop 32.49

Target(s): 36.80, 38.80
Key Support Areas: 35.75, 34.75, 32.70
Key Resistance Areas: 36.80, 37.45
Current Gain/Loss: N/A
Time Frame: Several weeks
New Positions: Waiting for trigger

DPS continues to show overall relative strength compared to the market but at some point it has to trade to its 20-day and 50-day SMA's which currently are near our trigger $35.00. For this reason I would like to leave this position open for a few more days to see if selling kicks in. So we will wait patiently for the pullback to our trigger near $35.00. If there is significant weakness in the market DPS should make it down here and I want to be ready to take advantage of it. If triggered our stop is $32.49. Please keep your position size small since the market has been so volatile.

Suggested Position: Long DPS stock if it trades near $35.00

Entry on: May xx
Earnings Date: More than 2 months (unconfirmed)
Average Daily Volume: 1.9 million
Listed on: May 8, 2010

Quicksilver Resources, Inc. - KWK - close 12.59 change -0.24 stop 11.75

Target(s): 14.25
Key Support Areas: 12.35, 12.00
Key Resistance Areas: 13.25, 14.00
Current Gain/Loss: -0.55%
Time Frame: Several weeks
New Positions: Yes

KWK sold off hard after the open but recovered nicely. A looking for a move up to the $14.25. My comments from the weekend remain the same. Natural gas has built a nice base over the last two months and I believe the commodity and natural gas stocks are due for a rally. KWK has exhibited great overall strength during the past week as the overall market has been under pressure. The stock has very strong support at $12.00 which was a prior resistance level dating back to October 2008. KWK has been trading in sideways channel between $12.00 and $16.00 for the past 9 months and now finds itself at the lower end of the channel. The stock broke an upward trend line from November 2009 a couple of weeks ago and I am looking for it to turn back higher and retest the back side of that trend line which is right where our target of $14.25 is. This price is about +11% higher than today's price. In addition, KWK made a double bottom from 11/2009 2 weeks ago and has responded nicely. I suggest readers initiate long positions at current levels to take advantage of the momentum. We are going to place a wide stop at $11.75 which is below the double bottom and sideways channel.

Current Position: Long KWK Stock at $12.70.

Entry on May 17, 2010
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 3.0 million
Listed on 5/15/10, 2010

Titanium Metals - TIE - close 16.84 change -0.57 stop 14.70

Target(s): 17.30, 18.00
Key Support Areas: 16.00, 15.50, 15.00
Key Resistance Areas: 16.00, 16.70, 17.25
Current Gain/Loss: +2.34%
Time Frame: Several weeks
New Positions: Yes

TIE traded down near our entry target at so we are long the stock $16.25. TIE traded as low as $16.08, then bounced and turned back to test the low but it didn't make it that far. When the stock made the higher low it was our queue to enter. TIE has support just above $16 which we need it hold for this trade to work. The 20-day SMA and 50-day SMA are just below as well and should act as good support. We are looking for TIE trade back up $17.30, which would garner a nice +6.5% gain. Our second more aggressive target is $18.00 which is near recent highs and highs from May 2008. Readers who haven't entered positions can do so on pullbacks. There is intraday support around $16.40 to $16.50 level. Tighter stops to could also be place at $15.70 and $15.20 for readers who want to limit risk.

Current Position: Long TIE Stock at $16.25

Entry on May 17, 201
Earnings Date 8/4/2010 (unconfirmed)
Average Daily Volume: 3.8 million
Listed on 5/10/10, 2010

BEARISH Play Updates

Baidu, Inc. ADR - BIDU - close 73.98 change -1.66 stop 79.10

Target(s): 71.50, 65.10
Key Support Areas: 71.40, 68.50, 65.00
Key Resistance Areas: 75.64, 78.50, 82.25
Current Gain/Loss: +3%
Time Frame: Several Weeks
New Positions: Yes

BIDU came very close to hitting our first target at $71.50 today. The stock traded down to $71.64 before buyers stepped in. I still think BIDU looks vulnerable from here but if there is a bounce in the overall market we may endure a little pain before its heads back down. We need BIDU to break below $71.50 to get moving towards our final target of $65.10. From a fundamental perspective BIDU trades at a PE ratio of about 100 which makes no sense when compared to its American counterpart GOOG which trades at a PE of about 23. Our stop is $79.10 which is above last Wednesday's high. This stock can be volatile and is prone to gaps so please be smart when considering position size.

Current Position: Short BIDU stock at $74.25.

Option Traders:
Suggested Position: Buy JUNE $73.00 PUT

Entry on May 14, 2010
Earnings July 15, 2010 (unconfirmed)
Average Daily Volume: 68 million
Listed on May 13, 2010

Leggett & Platt, Inc. - LEG - close 24.18 change +0.10 stop 25.35

Target(s): 22.25
Key Support Areas: 23.75, 23.00
Key Resistance Areas: 24.75, 25.15
Current Gain/Loss: -3%
Time Frame: Several Weeks
New Positions: Yes

LEG traded as low as $23.42 at about noon today and our short position was rocking, however, buyers stepped in and the stock closed +3.2% off of its lows. This has created a huge bottom wick on its daily candlestick chart. We are still well below the highs from 4/30 and 5/13 which is the recent downward trend line. Today's price action has me a little concerned but I want to give this some room to develop. I'll leave my comments from the play release over the weekend. LEG is making a lower high on its daily chart and appears overextended at these levels. The stock has upward trend line support below but this support is about -8% lower from current levels. Resistance just overhead includes downward trend line resistance and recent highs at $24.75 and $25.15. I am looking for LEG to trade lower from here to about the $22.25 area which is our target. I suggest readers take advantage of this by initiating short positions in the stock. The overall market looks vulnerable here and LEG probably won't be spared. Our stop is $25.35.

Current Position: Short LEG stock at $24.00

Option Traders:
Suggested Position: Buy JUNE $25.00 PUT

Sina Corporation - SINA - close 34.85 change -0.26 stop $37.05

Target(s): 33.25 (hit), $33.50, 32.50, 30.50
Key Support Areas: $33.40 32.50, 30.50
Key Resistance Areas: 35.40, 36.00, 36.80
Current Gain/Loss: +0.29%
Time Frame: 1 week
New Positions: Aggressive traders only

SINA reported earnings after the bell that were better than expected but their Q2 revenue forecast was lower than consensus estimates. The after hours reaction is fairly muted but it is well off its highs. I'm a little concerned that China's market sold off on hard Monday (-5%) but SINA hung in there relatively well. So if the overall market gets a relief bounce, including Chinese markets, SINA could go against us here. The stock opened at $34 and was immediately bought up to $34.34 which was near our anticipated resistance of $35.40. The stock sold off quickly but was bought up again at the close. I'd like to see how the stock reacts tomorrow and may be looking for a quick exit of SINA trades higher from here.

Current Position: Short SINA stock at $34.95

Option Traders:
Suggested Position: JUNE $35.00 PUT

Entry on May 4,2010 at $34.95
Earnings Date May 17, 2010 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on May 1, 2010


iShares Russell 2000 - IWM - close 69.56 change -1.37 stop 73.10

Target(s): 69.05 (hit), 68.05 (hit), 67.05
Key Support Areas: 68.60, 67.75, 66.75
Key Resistance Areas: 70.50, 72.10, 72.60
Current Gain/Loss: +5.16%
Time Frame: About 2 weeks
New Positions: Closed

IWM plunged down to our $68.05 target so we are flat the position for +5.16% gain. worked out beautifully this week and our first target of $69.05 was hit twice on Friday. After the stock hit our target it traded down to $67.75 and then spent about the next hour hovering just above $68.00, but then the bounce started pushed IWM to about breakeven on the day. For readers who still have positions I would be careful of a further bounce from here. There is intraday resistance near $70.50 which you could use as a tighter protective stop. $70.75 is probably where I would place the stop. But I'm concerned IWM could blow right through this level.

Closed Position: Short IWM stock at $68.05, entry was at $71.75

Option Traders:
Suggested Position: Buy JUNE $72.00 PUT

Annotated Chart:

Entry on May 13
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 79 million
Listed on May 12, 2010

USG Corp. - USG - close 20.53 change -0.42 stop 23.25

Target(s): 20.50 (hit), 19.25, 18.25
Key Support Areas: 20.85, 20.25, 19.25.
Key Resistance Areas: 21.70, 22.50
Current Gain/Loss: +6.39%
Time Frame: About 2 weeks
New Positions: Closed

USG had another big down day closing -2.00% lower. USG hit our target of $20.50 so we are flat the position for a +6.39% gain. USG traded as low as $19.58 and if readers closed positions at this level it would have been over a +9% gain. But I'm not complaining about a healthy gain. If USG rallies from here we may consider reloading for another short. For readers who still have positions I urge you to protect profits and not let USG reverse higher. I see intraday resistance at current levels and at about $21.25.

Closed Position: Short USG stock at $19.50, entry was at $21.90

Option Traders:
Suggested Position: Buy JUNE $20.00 PUT

Annotated Chart:

Entry on May 12, 2010
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 7.5 million
Listed on May 11, 2010