Current Portfolio:

BULLISH Play Updates

Citigroup Inc - C - close 4.33 change +0.14 stop 3.88

Target(s): 4.60, 4.75, 4.90
Key Support/Resistance Areas: 4.40, 4.30, 4.00
Current Gain/Loss: +4.09%
Time Frame: 3 to 4 weeks
New Positions: Yes, on dips

11/4: C has closed above $4.30 resistance for the first time since May 3rd. On May 10th (the Monday following the flash crash) C made a high of $4.35 which could be a resistance point. So far so good with long positions but I would caution readers to expect some dips, of which I would view as buying opportunities.

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: 51.12 change: -0.17 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

11/4: HANS reported Q3 earnings after the bell of $0.72 vs $0.71e with revenues coming in at $382M vs $361Me. Gross margins were 51.9% vs 53.6% y/y. There is little reaction in the after hours at the time of this writing. I agree with James that there is likely to be some post earnings profit taking. Our trigger remains at $45.50, however, $48.25 should offer support as it is a prior resistance area and just above the rising 50-day SMA.

11/2 (James): 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): 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

Kroger Co. - KR - close 23.21 change +0.46 stop 21.50

Target(s): 23.15, 23.60
Key Support/Resistance Areas: 23.75, 23.25, 22.80, 22.30, 20-day SMA
Current Gain/Loss: Unopened
Time Frame: 2 to 4 weeks
New Positions: Yes, see trigger

11/4: We were hoping for a dip to launch bullish positions in KR, but the stock gapped higher today along with the broader market. KR actually closed near our first target and chasing it at these levels is a higher risk play. At a minimum KR should fill today's gap at $22.75, but I think it trades to the $22.50 level before going too much higher. Let's remain patient and we'll reassess conditions after this week's close.

11/3: KR has broken out of of an ascending triangle with prior resistance at $22.30 which should now act as support. We are looking for KR to pullback to $22.30 which is the trigger I suggest readers use to launch bullish positions. The rising 20-day SMA should act as support on dips. Our intitial stop is $21.50 and we are targeting a +4% to +6% move higher.

Suggested Position: Long KR stock at $22.30

Entry on November XX
Earnings Date 12/8/2010 (unconfirmed)
Average Daily Volume: 6 million
Listed on November 3, 2010

BEARISH Play Updates

Leggett & Platt, Inc. - LEG - close 20.58 change +0.21 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: -0.44%
Time Frame: 1 to 3 weeks
New Positions: No

11/4: My comments from below haven't changed too much. LEG still looks bearish and the fact that the stock could not trade above its highs since 10/26 confirms the bearish thesis. Launching bearish positions with a tighter stop in the $20.75 to $21.05 range is a good set-up. However, if the broader market continues higher without a correction LEG is likely to follow eventually.

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.

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


Cree Inc. - CREE - close: 54.79 change: +2.84 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
Final Gain/Loss: -4.65%
Time Frame: 4 to 6 weeks
New Positions: Closed

11/4: Today's strength was too much for our short positions in CREE as the stock broke through its declining 20 and 50-day SMA's and downtrend line that began in July. Our stop was hit so we are flat the position for a disappointing loss. The next level of resistance is in the $56 to $57 area.

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.

Closed Position: Short CREE stock at $54.05, entry was at $51.65

Annotated chart:

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

Mechel OAO - MTL - close 25.27 change +1.68 stop 24.60

Target(s): 22.30, 21.25, 20.25
Key Support/Resistance Areas: 24.25, 24.00, 23.60
Final Gain/Loss: -5.58%
Time Frame: 1 to 3 weeks
New Positions: Closed

11/4: Yesterday's failed rally at MTL's 20 and 50-day SMA's proved to be a head fake. The stock ripped +7% higher today and through our stop so we are flat the position for a loss. There is resistance at $25.50 and if MTL breaks through this level it could easily run another $1 higher.

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!

Closed Position: Short MTL stock at $24.60, entry was at $23.30

Annotated chart:

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: 44.93 change: +1.14 stop: 44.55

Target(s): 41.40, 40.60
Key Support/Resistance Areas: 44.30, 42.50, 41.20, 40.40, 50-day SMA
Final Gain/Loss: -2.30%
Time Frame: 1 to 2 weeks
New Positions: Closed

11/4: XRT broke higher today and hit our stop for a small loss. We were anticipating a break lower but the market reacted opposite of our thesis, which is why we use stops. Next resistance is April's highs near $45.60.

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 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.

Closed Position: Short XRT at $44.55, entry was at 43.55

Annotated chart:

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