Editor's Note: Good Evening. Three of our long positions hit targets today for nice gains. We now only have 2 short positions opened and are waiting to be triggered on CSCO. Today's price action was bearish as the SPX formed a bearish engulfing candlestick pattern and also turned down at its 50% retracement from the April highs to May lows at 1,130. The 61.8% retracement is at 1,150 and there is also the 50-day, 100-day, and 20-week SMA's all in the 1,130 to 1,140 area. I still anticipate all of these levels holding as resistance if there are any bounces higher from here. Our model portfolio is now firmly biased to the short side. We still need to stay nimble and protect profits on short positions as there appears to be no immediate end in sight for decreased volatility. Please email me with any questions.

Current Portfolio:

BULLISH Play Updates

Cisco Systems - CSCO - close 23.34 change -0.15 stop 22.20

Target(s): 23.65, 24.20
Key Support/Resistance Areas: 23.65, 22.55
Time Frame: 1 to 2 weeks

My comments from the weekend remain the same except I am adjusting the position to August $22.00 calls as opposed to July. I think we will see our trigger to enter long positions this week so I'll wait for $22.85. If there is a pullback in the market this is a stock I feel comfortable owning and will be looking for a bounce. Hopefully we can get filled this week so let's see what the market gives us. The stock hit a low of $23.05 on Thursday which was another entry for more aggressive traders. CSCO remains in the base it has built for the past 3 to 4 weeks and is trading in a $1 range (4.5%) between $22.55 and $23.55. $22.50 is key pivot level for the stock dating back to 2006. If the stock trades up to $23.80 and breaks higher out of the base that could also be used a trigger to enter for aggressive traders, but until that happens we are playing for a pullback. The remainder of my comments remain the same from the play release. CSCO looks stable here with a lot of support and I suggest we take advantage of the reliable price pattern that is being built. I would like to use $22.85 as a trigger to enter long positions. If triggered readers should be able to purchase August $22.00 calls for about $1.63 (current ask is $1.98). If CSCO then proceeds to rally to the top of its base at $23.65 we should make about 55 cents on the position for a +35% gain. If CSCO breaks out it could rally to fill a gap which is up near our more aggressive 2nd target of $24.20 and below the stock's 200-day SMA. Another entry could be considered at $23.05. Our stop will be $22.20. NOTE: I view this trade as potentially being quick once it is opening.

Suggested Position: Long CSCO stock if it trades down near $22.85

Option Traders:
Suggested Position: Buy August $22.00 CALL, current ask $1.98, estimated ask at entry $1.63

Entry on June xx
Earnings Date 8/5/10 (unconfirmed)
Average Daily Volume: 69 million
Listed on 6/16/10

BEARISH Play Updates

International Game Technology - IGT - close 18.11 change -0.24 stop 19.10 *NEW*

Target(s): 17.80, 17.30, 16.80
Key Support/Resistance Areas: 19.00, 18.75, 18.09, 17.55, 17.25, 16.60
Current Gain/Loss: +2.74%
Time Frame: 1 week
New Positions: Yes

IGT opened at $18.62 which was near our trigger of $18.50 to enter short positions. The stock proceeded to make a new low and closing low and sits at it lowest closing price since late March. I've adjusted our first target up to $17.80 (+10 cents) which is near the early March closing prices that provided resistance. For options traders, the July $19 puts should be worth $1.35 if this target is hit which would give readers a +42% gain. This is definitely a place to consider taking profits or tightening stops to protect profits. I'm going to move the stop down to $19.10 which is above the 20-day SMA and the 6/16 high. My comments from the play release remain mostly the same. IGT is in a solid downtrend and I expect it to continue. The stock is making lower highs and lower lows. The stock is below all its SMA's and a downtrend line that it recently touched on Tuesday 6/15 before a big gap down. All of this should provide plenty of resistance and if the overall market reverses lower anytime in the coming days IGT will be one of the first stocks to go. Ideally I would like to see IGT test $18.75 before initiating short positions which is Friday's highs and within the prior three day's trading range. But I'm not so sure we will see a bounce this high. I suggest we use a trigger of $18.50 to initiate short positions. I've provided three targets which are good places to tighten stops if IGT continues lower from our entry.

Current Position: Short IGT at $18.62

Option Traders: Buy July $19.00 PUTS

Entry on June 21
Earnings 7/22/2010 (unconfirmed)
Average Daily Volume: 4.8 million
Listed on June 19, 2010

Mohawk Industries - MHK - close 51.88 change -0.45 stop 58.05

Target(s): 52.05 (hit), 51.50, 50.40, 49.10
Key Support/Resistance Areas: 55.00, 52.00, 50.00
Current Gain/Loss: +2.72%
Time Frame: 1 to 2 weeks
New Positions: Yes

My comments remain the same from the weekend updates. We are looking for MHK to fill the gap below its current price which is just above the 200-day SMA. If there is any weakness in the market this should happen relatively quick. Since the lower end of the gap corresponds with its 200-day SMA this is a logical place for the stock to bounce. I suggest taking profits at this level or at least tightening stops to protect them. Our first target of $52.05 has been hit and I've listed another target just above Thursday's lows at $51.50 which is also a good area to tighten stops. I've moved the stop to $56.15 which is still wide to account for volatility. MHK has made a series of lower highs on the intraday charts and still looks vulnerable. MHK rallied +14% from its 6/8 lows and finds itself in a resistance and congestion area between $53.00 and $55.00. The stock has also hit its 100-day and 20-day SMA's and has been stopped. I believe it is time for the stock to turn back down from here and fill the gap higher between 6/11 and 6/14. MHK is a residential and commercial manufacturer of floor products in the US and Europe. The construction industry is struggling on both continents and consumer spending is weak. Any bad news about the industry or lowered guidance warnings could send the stock tumbling. Fundamentally, the company trades at about 28 times trailing earnings which I think is too high. NOTE: This stock is volatile so please use proper position size to limit risk.

Current Position: Short MHK stock at $53.33

Option Traders:
Suggested Position: Buy August $50.00 PUT

Entry on June 17, 2010
Earnings 7/20/2010 (unconfirmed)
Average Daily Volume: 975,000
Listed on July 29, 2010


GMX Resources Inc. - GMXR - close 7.72 change -0.28 stop 7.15 *NEW*

Target(s): 8.12 (hit), 8.40, 8.85, 9.40
Key Support/Resistance Areas: 7.52, 8.20, 8.50, 9.00, 9.50
Current Gain/Loss: +8.87%
Time Frame: Several weeks
New Positions: Closed

GMXR opened at $8.22 so we are flat the position for +8.87% gain. The stock spent the entire morning above $8.12 which was our adjusted target and then things took a turn for the worse just after noon. For traders who have the ability to trade intraday there were a couple of different areas to place protective stops which should have protected your profits. Look at a 15 minute chart and email me with any questions. I'll leave my comments from the weekend as they are still valid. GMXR traded down to $7.51 in early trading, triggering our entry to buy the stock. This was almost to the penny of Wednesday's lows and is a great example of the powerful double bottom pattern. I chose the entry trigger of $7.55 because it was near various intraday highs in May and June, as well as Wednesday's low after GMX broke out of the most recent downward trend line. So far we have been rewarded with more than +5% bounce off of those lows. Now that we are in the position at the lower trigger price I would like to offer two additional targets of $8.12 (below Wednesday's high) and $8.40 (near mid-April lows). These are areas where readers can also tighten stops to protect profits. Hitting these targets would constitute +7.5% and +11.2% gains, respectively. I would also like to move up our stop to $7.15 to limit risk in case there is a reversal. A tighter stop could even be placed in the $7.60 area or just below the double bottom in the $7.30 to $7.40 area, and if you get stopped out you can always re-enter at a better price when the stock finds its footing. I would rather protect profits than hang on and see a winner turn into a loser. I believe this play has a lot of upside potential but I also believe there is risk of a hard reversal in the overall market. GMXR has broken three longer term downward trend lines (starting on 10/16, 2/2, and 3/12) and appears to be ready to break out of recent resistance at $8.20. The stock has made a series of higher lows on the daily chart and is forming an ascending triangle. GMXR has closed above its 50-day SMA the past four days and may also be forming a bull flag. Volume has been noticeably higher in recent weeks, especially on days when the stock is advancing as opposed to pulling back. This signals that institutional money may be acquiring the stock which is a bullish indicator. NOTE: The options have a wide spread so I am going to refrain from officially suggesting an option position. The August $5 calls which are DITM look fine but trading the stock is suggested.

Closed Position: Long GMXR stock at $8.22, entry was at $7.55

Annotated Chart:

Entry on June 18, 2010
Earnings Date 8/3/10 (unconfirmed)
Average Daily Volume: 1.6 million
Listed on 6/17/10

Northern Oil & Gas - NOG - close 14.15 change +0.08 stop 13.42

Target(s): 14.75 (hit), 14.90
Key Support/Resistance Areas: 15.00, 14.35, 13.60, 13.15
Current Gain/Loss: +5.28% Time Frame: 1 to 2 weeks
New Positions: Closed

NOG hit our target of $14.75 three times today and retreated each time. We got the bounce we were looking for and our flat the position for a +5.28% gain. My biggest concern with NOG is there hasn't been any follow through to the upside and the rallies in the stock keep getting sold into. And with the market falling apart today I urge readers to protect whatever profits you have left. There is a bullish case to be made as my comments below from the weekend are still valid but protecting profits is paramount with the current volatility. NOG is still holding the upward trend line that has formed with the lows from 5/25, 6/8, and 6/18 and the stock's 20-day SMA (currently $13.87) is below and turning up. The stock also has solid support at $13.80 and $13.60 which are prior resistance areas from earlier this year which should now act as support. We are counting on all of this to hold as support and provide a bounce in NOG. Ideally, I would like to see the stock make a trip up to its 50-day SMA in the coming days, which is also near the June 3 and 15 highs. Our targets are $14.75 and $14.90 (adjusted) which are below the aforementioned highs and the 50-day SMA. If the trade plays out how we expect the gain will be about 5% to 6%. NOTE: I consider this a volatile stock and industry so please use proper position size to limit risk.

Closed Position: Long NOG stock at $14.75, entry was at $14.01

Annotated Chart:

Entry on June 18, 2010
Earnings Date 8/13/10 (unconfirmed)
Average Daily Volume: 670,000
Listed on 6/8/10

Ormat Technologies - ORA - close 29.54 change -0.13 stop 27.25

Target(s): 30.37 (hit), 30.95, 31.80
Key Support/Resistance Areas: 32.00, 30.60, 29.00, 27.50
Current Gain/Loss: +3.83%
Time Frame: Several weeks
New Positions: Closed

ORA rallied up to our lowered target of $30.37 this morning so we are flat the position for a +3.83% gain. The stock remains above its 50-day SMA but retreated from its 100-day SMA this morning which was our lowered target $30.37. ORA remains in a bull flag and I am still bullish on the stock. But if it fails it could go down to retest its 20-day SMA just above $28.00. Today's price action is yet another example of how protecting capital is paramount in this volatile market. For readers with options, I'm disappointed with the pricing as it did not give us the gains we anticipated. It appears that the volatility has been sucked out of the premium we paid. If readers still have option positions I suggest one of two things: 1) placing a GTC sell limit order and try to unwind your positions on any strength in the stock (if there is any bounce in the stock from here you should be able to get $0.90 to $1.00), or 2) if you remain bullish on the stock consider rolling the option position to a later month so that time decay does not eat away at your premium. Regardless, if the market heads lower ORA probably will as well so be careful hanging on to option positions hoping the stock will rally higher because time decay is going to start to affect premium soon. I'll leave my comments from the weekend. I am looking for a move to $30.37 (adjusted first target) this week which is just below the 100-day SMA. This is an area where I suggest tightening stops to see if we can get more out of the stock, or simply taking profits. We should be able to get about $1.30 for the CALLS at this level. If it breaks through the 100-day SMA there is little resistance until our next two targets. Ultimately, I think ORA can make it up to the $31.80 area but it may take some time depending on the overall strength or weakness in the broader market. I suggest readers take advantage of any spikes and take profits on the trade. A strategy to consider would be placing a GTC sell limit order on your option at $1.25, for example, and see if you get filled. ORA has been stubborn to pullback so I wouldn't be surprised to see some sort of retracement before proceeding higher. We are keeping a wide stop to account for volatility and will adjust it this week. If readers want to keep a tighter leash on the trade a stop could be placed below the 20-day SMA or just below our entry price if you want it really tight.

Closed Position: Long ORA stock at $30.37, entry was at $29.25

Annotated Chart:

Entry on June 16, 2010
Earnings Date 8/4/10 (unconfirmed)
Average Daily Volume: 345,000
Listed on 6/15/10