Editor's Note:

Good evening. Our positions moved in the right direction today, but now we need follow through to the upside. We are positioned for a continued bounce possibly into next week. And I plan to have more short candidates soon. I am also listing several targets and support/resistance levels in our trades to help readers better manage positions. My goal is to help readers protect profits at critical levels which is essential considering the current market volatility.

Current Portfolio:

BULLISH Play Updates

Cypress Semiconductor - CY - close 11.43 change +0.32 stop 10.85 *NEW*

Target(s): 11.70, 11.95, 12.25, 12.95
Key Support/Resistance Areas: 12.40, 12.00, 11.75, 11.40, 11.00, 10.75
Current Gain/Loss: +2.05% Time Frame: 1 to 2 weeks
New Positions: Yes

CY double bottomed with yesterday's lows and then surged higher. The stock also broke its intraday downtrend line and then back tested it. All of thiws is bullish and I am expecting follow through from here. I've raised our stop to $10.85 which is just below CY's 200-day SMA. This will protect our capital in case there is a reversal. I've also listed another target at $11.70 which is just below a resistance area listed above. This is a prudent place to consider tightening stops or taking profits.

Current Position: Long CY stock at $11.20

Option Traders:
Suggested Position: Buy July $11.00 CALL

Entry on 6/1/2010
Earnings Date 7/22/10 (unconfirmed)
Average Daily Volume: 4.7 million
Listed on 5/29/10

Diana Shipping, Inc - DSX - close 13.66 change +0.35 stop 12.90

Target(s): 14.00, 14.35, 14.75
Key Support/Resistance Areas: 15.00, 14.40, 14.15, 13.50, 13.25, 13.00
Current Gain/Loss: +1.19%
Time Frame: 1 to 2 weeks
New Positions: Yes

DSX closed right on its 20-day SMA today and if it can break through I expect this trade to produce nice returns. Ultimately, $14.35 is our original target which is just below the stock's 50, 100, and 200-day SMA's. This is the area I will be looking to take profits. The stock also has resistance at $14.15 which is why I have also listed $14.00 as a lower target. I would expect some resistance here and is also a good place to tighten stops.

Current Position: Long DSX stock at $13.50

Option Traders:
Suggested Position: Buy July $12.50 CALL

Entry on 5/28/10
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 1.4 million
Listed on 5/27/10, 2010

K12 Inc - LRN - close 25.15 change +0.12 stop 23.65 *NEW*

Target(s): $27.35, 28.25
Key Support/Resistance Areas: 25.35, 24.40, 24.00
Time Frame: 1 to 2 weeks

LRN remains strong and we are patiently waiting to be triggered. My comments from last night remain the same. We moved up the lower trigger to enter to $24.70 and move up the stop to $23.65 to protect capital. The new lower trigger is 1 penny above Tuesday's lows. LRN is a relative strength play that continues to make higher lows despite the recent weakness in the market. I am looking for LRN to break out above its recent highs and then test its prior highs from 2007 and 2008, which are near our targets of $27.25 and $28.25. The stock's volume has been increasing in recent weeks as the price has been increasing which signals accumulation and may indicate institutional money is being put to work in LRN. This is normally a bullish indicator. We'll use one of two triggers to enter long positions. If LRN trades down near $24.70 or if it trades up to $25.50 which would be the highest print of the past 52 weeks. Our stop will be $23.65 which is below the LRN's 20 and 50-day SMA's. *NOTE: LRN's average volume is about 200,000 shares. Therefore I consider this an aggressive trade so please use proper position size to manage risk.*

Suggested Position: Long LRN stock if it trades down near $24.70 or up to $25.50, whichever occurs first.

Entry on June xx
Earnings Date 9/9/10 (unconfirmed)
Average Daily Volume: 200,000
Listed on 5/29/10

Rino International - RINO - close 12.61 change +0.69 stop 11.70

Target(s): 13.25, 13.65, 14.00, 14.50, 15.95, 16.90
Key Support/Resistance Areas: 15.00, 14.50, 13.75, 12.75, 11.75
Current Gain/Loss: -0.71%
Time Frame: Several weeks
New Positions: Yes, with a tight stop

RINO seems to have found its footing and I expect the stock to follow through higher from here. There are several targets listed above readers can use as a guide to exit positions or tighten stops. I'm eyeing $13.65 as a potential stall point for RINO but if the broader market continues higher we could see a nice rally in RINO. $13.65 is a logical place to at least tighten stops or take some profits off of the table. Fundamentally, RINO trades at a low PE ratio of about 5 and I think there is a lot of room to for this stock to run.

Current Position: Long RINO stock at $12.70

Option Traders:
Suggested Position: July $12.50 CALL

Entry on May 27, 2010
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 926,000
Listed on 5/25/10, 2010

BEARISH Play Updates



Smith International, Inc - SII - close 37.70 change +3.25 stop 35.75

Target(s): 34.55 (hit), 33.60, 32.15
Key Support/Resistance Areas: 42.00, 40.90, 39.00, 37.00, 34.00
Current Gain/Loss: -0.70%
Time Frame: 1 to 2 weeks
New Positions: Closed

No harm no foul is about all I can say about this trade. A lesson to be learned is to honor our targets and stops. After hitting our first target yesterday afternoon SII reversed hard this morning. We kept the trade open trying to squeeze more out of it, but it wasn't meant to be. It was very apparent in early trading this morning that honoring our stop and stepping aside was the right thing to do. So we are out of the trade for small loss. *NOTE: I view this trade as aggressive so please use proper position size to manage risk.

Closed Position: Short SII stock at $35.95, entry was $35.70; For options traders: Long July $37.00 PUT at $3.35, entry at $3.30

Annotated Chart:

Entry on 6/1/2010
Earnings 7/28/10 (unconfirmed)
Average Daily Volume: 7.6 million
Listed on May 29, 2010