Editor's Note: Good Evening. Stocks look vulnerable here. Tomorrow's open is going to be interesting. If we break down I urge traders exit long positions quick as the selling could easily intensify. I also suggest traders be smart with short positions and protect profits as things can reverse quickly. If I am wrong and the markets surge higher all of this needs to be considered in reverse. We have positions on both sides of the market so we should have opportunities to book profits as the week comes to an end. Stay nimble and please email me with any questions.

Current Portfolio:

CALL Play Updates

Direct TV - DTV - close 37.70 change +0.09 stop 35.70

Target(s): 38.20, 38.50, 39.50, 41.50
Key Support/Resistance Areas: 38.60, 37.00, 36.30
Current Gain/Loss: N/A
Time Frame: Several weeks
New Positions: Waiting to be triggered

My comments from last night remain the same. I am going to shift gears on this trade and lower our trigger to enter long positions to the rising 50-day SMA near $36.50. It feels like DTV wants to trade down there so lets limit our risk in the trade and pounce on the stock if it gets there. The 50-day SMA is currently $36.40 but is rising.

Suggested Position: Buy July $37.00 CALL if DTV trades down to its 50-day SMA currently near $36.50, current ask $1.91, estimated ask at entry $1.40

Entry on June xx
Earnings Date 8/5/10 (unconfirmed)
Average Daily Volume: 12.3 million
Listed on 6/5/10

Petroleo Brasileiro SA - PBR - close 37.56 change +0.46 stop 35.90 *NEW*

Target(s): 38.50, 39.25, 39.95
Key Support/Resistance Areas: 37.45, 36.25
Current Gain/Loss: +5%
Time Frame: 1 week
New Positions:

PBR gapped up just above our entry target at $37.52 and then pulled back into the $37.65 range which is where we initiated long call positions at $2.39. The stock proceeded to gain over $1 and our position was up +30% but PBR proceeded to give it all back late in the day. The candlestick pattern formed has me concerned and is considered a reversal pattern. I suggest conservative traders sell positions or use a tight stop to limit risk. However, if you believe the selling in oil stocks is overdone PBR gives you a great chance to capitalize on some gains. This is why. PBR remains above the ascending triangle resistance in the $37.25 to $37.50 area that should now act as support. In addition, the stock gained +1.24% on the day while the remainder of the market, including oil stocks, experienced losses. PBR has also been one of the best performers of the integrated oil companies recently. With all of this said we still must be prudent and capital so I would like to raise the stop a bit to $35.90 which will give us some leeway if there is a further pullback. I'm also listing a target to just below today's highs at $38.50 which is a good place to tighten stops. PBR could even trade back up to this level by the end of the week. Nonetheless tomorrow will be interesting.

Current Position: July $37.00 CALL, entry at $2.39

Entry on June xx
Earnings Date 8/13/10 (unconfirmed)
Average Daily Volume: 19.6 million
Listed on 6/8/10

Qualcomm Inc - QCOM - close 34.72 change -0.55 stop 34.20

Target(s): 20-day SMA, 36.45 (hit), $36.75, 38.00, 38.95
Key Support/Resistance Areas: 37.50, 37.00, 36.25, 35.25, 34.50
Current Gain/Loss: -32%
Time Frame: 1 to 2 weeks
New Positions: No

QCOM and large cap techs are not performing well. Yesterday's price action was encouraging but today's was not. $34.52 was the recent low and this is the line in sand for QCOM to turn it around. In hindsight we should have taken the profit on this position when our first target of $36.45 was hit on Thursday last week. If QCOM gains some strength it should be able to trade up to the 20-day SMA which is where we will be tightening stops. Our stop remains at $34.20 which is below the stock's recent lows.

Current Position: July $36.00 CALL, entry at $1.30

Entry on 6/1/2010
Earnings Date 7/21/2010 (unconfirmed)
Average Daily Volume: 26 million
Listed on 5/29/10

Quest Software - QSFT - close 18.58 change -0.20 stop 18.10

Target(s): 19.60, 20.00, 20.50, 21.00
Key Support/Resistance Areas: 18.40, 18.60, 19.36, 20-day SMA, 50-day SMA
Current Gain/Loss: -52%
Time Frame: Several weeks
New Positions: Yes

QSFT is not cooperating and has all of a sudden become an underperformer and technology stocks in general seem to have shifted gears. QSFT gapped up higher today and quickly sold off the remainder of the day. We chose out of the money calls to limit capital at risk for this very reason. We still have some time to see if QSFT turns around so let's stick with the set-up and see if the stock can get some legs here. The stock closed below the recent breakout of resistance at $18.70 which are highs from April, January, and October that I thought would act as support. I urge readers to be sellers into any strength as the week comes to an end by trailing and tightening stops if the QSFT rallies. Our stop remains at $18.10 which is just below its 50-day SMA. This may be a little to close to the 50-day SMA so the overall market strength or weakness should be considered if QSFT is trading down at this level. If there is a bar that closes below $18.10 I would suggest placing the stop below the low of that bar to see if the stock can reverse.

Current Position: July $20.00 CALL, entry at $0.85

Entry on June 7, 2010
Earnings Date 8/10/10 (unconfirmed)
Average Daily Volume: 1.9 million
Listed on 6/2/10

PUT Play Updates

Apple Inc - AAPL - close 243.20 change -6.13 stop 255.00 *NEW*

Target(s): 246.00 (hit), 239.00, 234.00
Key Support/Resistance Areas: 265, 260, 258, 254, 250, 243, 237, 232
Current Gain/Loss: +55%
Time Frame: 1 to 2 weeks
New Positions: Yes, but only on bounces

AAPL hit our first target today and appears ready to hit our second target at $240 (raised from $239). We are up +55% in the trade so I urge readers to protect profits and against a hard reversal. We can not let a hard market reversal evaporate all of our profits. I think there is more downside to come but this is a good position to trail stops down to protect profits. I could easily see AAPL trading down to its 20-week SMA which is near a long term upward trend line and just below our final target of $234 (raised $1 from $233). AAPL is now also firmly below its 20-day and 50-day SMA and remains in a solid downward channel on its hourly chart. I have lowered our stop to $255 but if the market reverses we will be quick to close the position.

Current Position: July $250.00 PUT, entry at $10.70.

Entry on June 7, 2010
Earnings 7/20/2010 (unconfirmed)
Average Daily Volume: 29 million
Listed on June 5, 2010

Aeropostale, Inc. - ARO - close 28.75 change +0.81 stop 29.55

Target(s): 27.30, 27.00, 26.35, 25.25
Key Support/Resistance Areas: 29.35, 28.50, 27.50, 27.00, 26.30, 25,00
Current Gain/Loss: -11%
Time Frame: 1 to 2 weeks
New Positions: Yes

Retailers were strong today but that will change in a hurry if the market is weak tomorrow. Technically ARO retraced 61.8% of the down move from its highs on 6/3 to its lows on 6/8 and then reversed. It also has printed a reversal bar with a topping tail off of its 50-day SMA. All of this bodes well for our position and I am expecting ARO to test its 200-day SMA in the coming days, which is near our $26.35 target. I've also listed a target at $27.30 which is just above yesterday's lows as a possible target to exit positions or tighten stops. Even after the big move today our options are only down -11%. If we go lower from here we will have a nice profit so please protect profits if ARO melts down. Our stop is $29.55 which is above the recent congestion area and above the 50-day SMA.

Current Position: Buy July $27.00 PUT, entry was at $1.35

Entry on June 8, 2010
Earnings 8/19/2010 (unconfirmed)
Average Daily Volume: 3.3 million
Listed on June 7, 2010

Arch Coal - ACI - close 20.51 change -0.70 stop 22.05 *NEW*

Target(s): 19.50, 18.80, 18.00
Key Support/Resistance Areas: 22.00, 21.75, 21.40, 21.00, 20.40, 19.25
Current Gain/Loss: +8%
Time Frame: 1 to 2 weeks
New Positions:

ACI double topped with Monday's high and that's all she wrote. The stock proceeded to print the lowest price since 5/26 and it is close to a walking off of a cliff. All we need is the market to cooperate lower tomorrow and ACI should be at $19.50 in short order. I have raised the first target to $19.50 from $19.30. The stock has strong support at $19.30 and I think it is prudent to tighten stops and use $19.50 as a target. I also listed a higher second target at $18.80.

Current Position: July $20.00 PUT, entry at $1.10

Entry on June 8, 2010
Earnings 7/22/2010 (unconfirmed)
Average Daily Volume: 6.4 million
Listed on June 7, 2010

Toronto Dominion Bank - TD - close 66.09 change -0.41 stop 69.90

Target(s): 64.50, 62.20, 60.50
Key Support/Resistance Areas: 69.15, 68.00, 66.50, 65.60, 64.50, 63.00
Current Gain/Loss: +31.5%
Time Frame: 1 to 2 weeks
New Positions: Yes, but preferably on bounces

TD gapped higher this morning near our entry price and when the stock broke below its opening 15 minute bar short positions were initiated. I was also looking at the price of the July $65.00 PUTS and they were 20 cents less than our estimated entry. As such, the position was opened at $1.90. TD never made it above its opening range and pretty much tanked the remainder of the day. One thing to keep an eye on is that TD may be forming an inverse head and shoulders pattern on its hourly chart with the right shoulder at $65.60. TD could get a bounce here or near its 200-day SMA. I do expect more downside but I also urge readers to protect profits. My comments from the play release remain the same. TD is in a downtrend and I am looking for the stock to bounce up near its secondary downtrend line to make a lower high in the coming days. The stock is also forming a descending triangle with the base near $64.50, which is also a prior resistance area from the fall of 2009. Buyers have stepped in to support the stock, but I believe they will wane and this level will break. The stock has barely been hanging on to its 200-day SMA and I expect TD to eventually break that too and trade down to new lows. Our stop is $69.90 which is above the highest closing price since May 14th. Readers may also consider initiating short positions at current levels but this is a decision to be made intraday depending on market conditions.

Current Position: July $65.00 PUT, entry was at $1.90

Entry on June 9, 2010
Earnings 9/2/2010 (unconfirmed)
Average Daily Volume: 1.4 million
Listed on June 8, 2010