Current Portfolio:

BULLISH Play Updates

Citigroup Inc - C - close 4.19 change +0.02 stop 3.88 *NEW*

Target(s): 4.60, 4.75, 4.90
Key Support/Resistance Areas: 4.40, 4.30, 4.00
Current Gain/Loss: -0.72%
Time Frame: 3 to 4 weeks
New Positions: Neutral

11/3: It will be interesting to see how the market reacts to the post FOMC QE announcement which will likely determine the furture direction of C. Equities have seen some sharp post FOMC sell-offs recently, however, this monetary policy announcement was loaded with billions of dollars of planned asset purchases. Will things be different this time? C has been trading in a tight range above its 20-day SMA for the past week and a half. I think giving this some room to work could payoff, however, we still need to manage risk. I've raised the stop to $3.88 which is below an uptrend line and all of the stock's moving averages. Readers may also want to consider a tighter target of $4.40 which represents a gap fill and prior resistance. The comments below remain valid.

11/2 (James): Moody's issued some bearish comments on the banks this morning, which pushed the financial sector lower. Shares of C dipped toward $4.10 before bouncing back and the stock churned sideways in a very narrow range for the rest of the session. The trend of higher lows in C is bullish but banks have been lagging the market for weeks. Personally I'm too cautious on the financials right now to launch new bullish positions. More cautious traders may want to consider upping their stops close to the $4.00 level.

Suggested Position: Long C stock, entry was at $4.16
Options Traders: Long December $4.00 CALL

Entry on October 27, 2010
Earnings Date More than two months (unconfirmed)
Average Daily Volume: 523 million
Listed on October 25, 2010

Hansen Natural Corp. - HANS - close: 51.29 change: +0.06 stop: 43.90

Target(s): 50.00, 52.50,
Key Support/Resistance Areas: 45.00, 47.50, 50.00, etc.
Current Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below for details

11/2 (James) & 11/3: There is no change from our prior comments. We're waiting for a correction! Don't forget that HANS is due to report earnings on November 4th, after the closing bell. With the stock at multi-year highs I think odds are good it could see some post-earnings profit taking.

10/30 (James) & 11/1: HANS is one of those stocks that has continued to run away from us. We don't want to chase it. The good news is that I'm expecting a market correction soon, following the FOMC announcement on Wednesday. The bad news is that HANS can be a volatile stock. While I agree that the $48.00 level should be support I suspect that HANS will fall further than $48. I'm adjusting our trigger to open positions to $45.50 (down from $48.25). We'll move our stop loss to $43.90. Hopefully we'll get triggered in the next week or two.

Suggested Position: BUY the stock at $45.50

- or -

BUY the December $50.00 calls (on a dip at $45.50).

Entry on October xx
Earnings Date 11/04/10 (unconfirmed)
Average Daily Volume: 4.5 million
Listed on October 16, 2010

BEARISH Play Updates

Cree Inc. - CREE - close: 51.44 change: +1.33 stop: 54.05

Target(s): 48.00, 42.50
Key Support/Resistance Areas: 54.00, 52.00, 50.00, 48.00, 46.00, 40.00
Current Gain/Loss: -0.58%
Time Frame: 4 to 6 weeks
New Positions: Yes

11/3: CREE bounced with the broader market after the FOMC announcement, but the bounce was stopped in its tracks below $52.00 again. CREE remains below its declining 20 and 50-day SMA's and downtrend line that began in July. This is solid resistance and a good entry point to consider bearish positions. There is also resistance at $53.00 if the stock bounces further from here.

11/2 (James): CREE managed to erase most of Monday's losses with a +2.6% bounce. The market-wide rally certainly didn't help us any. Fortunately, the rebound stalled under short-term resistance near $52.00. I would still consider new bearish positions here at current levels.

11/1: Short positions in CREE were opened this morning. The stock gapped higher at the open and them immediately turned lower. CREE closed about -3% lower from its opening high and looks to be headed lower. $48.00 is the immediate target which is where the stock found support in September and October. A break below $47.30 should send the stock to $46.00 with ease.

Current Position: Short CREE stock, entry was at $51.65
Options Traders: Long 2010 December $50 PUT (CREE1018X50) entry @ $2.83

Entry on November 1, 2010
Earnings Date more than two months (unconfirmed)
Average Daily Volume: 4.9 million
Listed on October 30, 2010

Leggett & Platt, Inc. - LEG - close 20.37 change +0.02 stop 21.75

Target(s): 19.80, 19.20
Key Support/Resistance Areas: 22.00, 21.70, 21.50, 21.30, 20.55, 19.70, 19.00
Current Gain/Loss: +0.59%
Time Frame: 1 to 3 weeks
New Positions: No

11/3: LEG managed to post a 2 cent gain today and continues to struggle near $20.50. Launching bearish positions with a tighter stop in the $20.75 to $21.05 range makes a lot of sense to me. However, we will need to see some broader market weakness to get a break down towards our targets.

11/2 (James): Stocks continue to weaken but LEG managed an oversold bounce from round-number support near $20.00 and shares gained +1.8%. I don't see any changes from our prior comments.

11/1: LEG lost nearly -2% today and came within 9 cents of reaching our first target. If the broader market corrects we should be able to take profits this week. Readers may want to consider a tighter stop near $20.75.

Current Position: Short LEG stock, entry was at 20.49
Options Traders: Long December $20.00 PUT

Entry on October 25, 2010
Earnings Date: More than two months (unconfirmed)
Average Daily Volume: 1.5 million
Listed on October 23, 2010

Mechel OAO - MTL - close 23.59 change -0.31 stop 24.60

Target(s): 22.30, 21.25, 20.25
Key Support/Resistance Areas: 24.25, 24.00, 23.60
Current Gain/Loss: -1.24%
Time Frame: 1 to 3 weeks
New Positions: Yes

11/3: The bounce in MTL looks like it has failed at its 20-day SMA as the stock lost -1.30% today. However, MTL found support at its 200-day SMA, which is also near the top of a prior congestion level from last week. If MTL breaks below today's low of $23.31 I anticipate a retest of the 10/22 lows.

11/2 (James): We need to be nimble here. The $23.50-24.25 zone should be overhead resistance for MTL. The stock has managed to rally past $23.50 and its 200-dma and today saw shares challenge its 50-dma and $24.25 area. This could be a new bearish entry point but I'd like to see the stock roll over first!

Current Position: Short MTL stock, entry was at $23.30
Options Traders: Long December $23.00 PUT (entry @ $1.30)

Entry on October 29, 2010
Earnings Date: More than two months (unconfirmed)
Average Daily Volume: 2.1 million
Listed on October 27, 2010

SPDR S&P Retail ETF - XRT - close: 43.79 change: +0.04 stop: 44.55

Target(s): 41.40, 40.60
Key Support/Resistance Areas: 44.30, 42.50, 41.20, 40.40, 50-day SMA
Current Gain/Loss: -0.55%
Time Frame: 1 to 2 weeks
New Positions: Yes

11/3: XRT manage a measly 4 cent gain today and is consolidating between $43.00 and $44.00. We are anticipating a break lower towards the 50-day SMA, however, we have a tight stop overhead if it doesn't happen.

11/2 (James): I agree with Scott's assessment on Monday. This retail ETF does have a lot of potential to correct lower although more conservative traders may want to look for a move under $43.00 to initiate positions.

11/3: Weak personal income and spending data released today, along with weak consumer sentiment that was released on Friday, could be hinting at another slow holiday shopping season. Throw in an overbought market and retailers are ripe for some profit taking. I suggest readers initiate short positions in XRT at current levels. XRT has support at $42.50 so conservative traders may want to wait for this level to break prior to entering positions. However, we also have a good reference point just above the recent highs to place a tight protective stop if XRT decides to move higher first. Our targets are -4% and -6% lower than current levels.

Current Position: Short XRT @ 43.55 Options Traders: Long December $43.00 PUT, entry @ $1.55

Entry on November 2nd @ 43.55
Earnings Date N/A (unconfirmed)
Average Daily Volume: 10 million
Listed on November 1, 2010


Boyd Gaming - BYD - close 9.13 change +0.57 stop 7.80

Target(s): 8.55 (hit), 8.70 (hit), 8.90 (hit)
Key Support/Resistance Areas: 9.60, 9.25, 8.75, 8.00, 7.40
Final Gain/Loss: +8.54%
Time Frame: 1 to 2 weeks
New Positions: Neutral

11/3: BYD surged higher today after MGM's favorable earnings report made its rounds through the sector. All of our targets were hit and we closed the position for a +8.5% gain. BYD closed at $9.13 which represents more than a +11% gain from our entry. The stock paused just below its 200-day SMA and is essentially near its highs from July. I would be surprised to see BYD bust through these levels without a pullback first so I urge readers to protect profits. There is support in the $8.50 to $8.75 area and resistance is at current levels.

11/2 (James): BYD continues to inch higher and the market-wide rally today helped BYD post a +2.6% gain. Shares hit our first target at $8.55 again. The trend of higher lows is bullish but we're not seeing any volume behind the move. I believe we're not seeing any volume because investors are waiting on the election results and the FOMC announcement tomorrow. I'm not suggesting new bullish positions at this time. More conservative traders may want to consider raising their stop loss toward $8.00 or even $8.10.

11/1: Make that 5 days BYD has consolidated between support at $8.10 and resistance at $8.50 to $8.75. All of the comments below remain valid. Use strength to take profits or tighten stops to protect them. I've narrowed the targets slightly and our stop is just below to control losses if the stock breaks lower.

Closed Position: Long BYD stock at $8.90, entry was at $8.20

Annotated chart:

Entry on October 14, 2010
Earnings 10/27/10 (unconfirmed)
Average Daily Volume: 1.8 million
Listed on October 9, 2010

TJX Companies - TJX - close 46.82 change +0.48 stop 44.75

Target(s): 46.70 (hit), 47.20, 47.95
Key Support/Resistance Areas: 48.50, 47.00, 45.40, 43.50
Final Gain/Loss: +2.59%
Time Frame: 2 to 4 weeks
New Positions: No

Comments :
11/3: We have been advocating using strength to take profits in TJX and that is what we did today for small +2.59% gain. There is no doubt TJX continues to look bullish, however, the stock has reistance at current levels and has obstacles up to the $48.50 level. The rising 20-day SMA (currently $45.32) may offer support on pullbacks as long as the broader market holds up.

11/2 (James): TJX continues to inch higher and shares closed near four-month highs. Bigger picture TJX looks poised to move higher but its direction probably depends on how investors choose to react to the FOMC announcement tomorrow.

11/1: TJX closed relatively flat on the day. I do not see many changes from the comments below and believe this is the best strategy. We have a tight stop below if TJX doesn't head higher from here. I would use strength as an opportunity to take profits or tighten stops to protect them.

10/30 (James): I am urging caution in TJX. The bullish breakout on October 25th lasted about four days. The action in just the last couple of days looks like a short-term bearish reversal. I would look for a pull back toward the $45.40 level again. I'm adjusting our stop loss even higher to $44.75. FYI: Earnings are due out around Nov. 16th.

Closed Position: Long TJX stock at $46.70, entry was at $45.52

Annotated chart:

Entry on October 25, 2010
Earnings Date 11/16/10 (unconfirmed)
Average Daily Volume: 3 million
Listed on October 18, 2010

iPath S&P500 Short-Term VIX ETF - VXX - close: 12.07 change: -0.79 stop: 11.99

Target(s): 15.00, 17.50
Key Support/Resistance Areas: 12.00, 14.00, 15.00, 17.50. 20.00
Final Gain/Loss: -8.47%
Time Frame: 1 to 2 weeks
New Positions: Yes

11/3: Ouch! After a quick spike higher following the QE announcement by the FOMC, volatility collapsed and our stop was hit in VXX almost to the penny. We are flat for a disappointing loss. In my opinion, today's price action looks like it could have been a capitulation event in volatility. If readers still have positions you may want to consider keeping a stop below today's low and then trailing it higher if VXX continues to bounce. Otherwise, I would get out of the way and look for a lower entry to catch a bounce. The first major resistance is $12.75 then $13.25.

11/2 (James): Tomorrow is the big event. If you want to take a chance on volatility surging on the FOMC announcement then you need to initiate positions ahead of the 2:00 p.m. (probably 2:15) announcement. I consider this an aggressive, higher-risk trade. Hopefully we'll be in and out in just a few days. The reverse split is approaching quickly.

11/1: Volatility started to climb after the initial gap higher and early strength in the S&P 500. However, the early strength failed after the first 45 minutes of trading. We are long VXX per the play release below and are looking for a quick move higher.

10/30: I want you to look at a two-year chart of the VXX. That's what happens when volatility contracts from record levels. Plus, this ETN has been sabotaged by contango issues. Contango happens when future contracts are more expensive than spot (short-term) contracts. This VIX ETN lost money every time they had to replace expiring contracts with higher price ones. With that in mind we do NOT want to hold this ETN for very long.

This is a very short-term bet that volatility is going to spike significantly come this Wednesday after the FOMC announcement regarding any QE program. You can launch positions on Monday morning (with the newsletter) or you can wait until Wednesday. The key is to have bullish positions open ahead of the FOMC announcement. I'm only expecting to hold this position for a week maybe a little longer. I'm suggesting a stop loss at $11.99. Our first target is $15.00. Our second target is $17.50. More aggressive traders could aim higher.

FYI: You need to know that Barclays is planning a 1-for-4 reverse split for this ETN scheduled for November 9th, 2010. Hypothetically, if the VXX was trading at $13.00 on November 8th and you had 40 shares. On November 9th you would have 10 shares worth $52 each. It is possible we will be in and out of this trade before the reverse split occurs.

Closed Position: Long VXX (ETN) at $11.99, entry was $13.10

Annotated chart:

Entry on November 1, 2010
Earnings Date N/A (unconfirmed)
Average Daily Volume:
Listed on October 30, 2010