Current Portfolio:

PUT Play Updates

Children's Place - PLCE - close 42.41 change -1.16 stop 48.10

Target(s): 43.40, 41.70, 40.70, 40.05
Key Support/Resistance Areas: 46.40, 47.00, 46.00, 44.50, 43.40, 41.50
Current Gain/Loss: +2.5%
Time Frame: 1 to 2 weeks
New Positions: No

7/6: PLCE gapped higher this morning and sold off the remainder of the day. I'm concerned that this stock may bounce higher along with the market from here so I am suggesting we close this position at the open tomorrow. We didn't get the entry that I hoped for and I do not want this position to turn into a loser. We will either have a small loss or small gain depending on how the market opens tomorrow.

7/3: PLCE printed a bearish engulfing candlestick on its daily chart. However, there is also a bullish inverse head and shoulders pattern forming on the intraday charts. This could be good for a bounce early next week but I believe there is enough overhead resistance to keep any bounces under control. If PLCE breaks down first without bouncing I suggest readers be quick to take profits at $41.70. Otherwise we'll monitor any bounces and adjust as things develop. I'm going to keep a wide stop for now due to the volatility.

7/1: The follow through to the downside in PLCE just didn't happen today. In hindsight I should not have listed our lower trigger to enter, especially with the oversold market conditions. My thought process was PLCE would hit our $41.70 target relatively quick on a breakdown, but things reversed. And I didn't think we would snap right back up after breaking down. The good news is PLCE is testing the backside of its broken downtrend line and remains below its declining 20-day and 50-day SMA's. There is a lot of congestion overhead which I think will keep bounces under control. A tighter stop could be placed at $47.05 which is above both of the aforementioned SMA's. We may need to exhibit some patience with this trade but I think the sellers will show up.

Current Position: August $45.00 PUTS, entry was at $4.00

Entry on July 1, 2010
Earnings 8/19/2010 (unconfirmed)
Average Daily Volume: 700,000
Listed on June 30, 2010

Deere & Co. - DE - close 54.63 change +0.13 stop 60.05

Target(s): 53.25, 51.75, 50.25, 49.05
Key Support/Resistance Areas: 60.00, 57.50, 56.50, 56.00, 54.00, 52.70, 51.50
Current Gain/Loss: +15%
Time Frame: 1 to 2 weeks
New Positions: Yes, on bounces

7/6: DE traded up to $56.06 this morning which triggered our entry to buy August $45.00 PUTS. The stock sold off the remainder the day and has peeked its head below the 200-day SMA for three consecutive sessions but has yet to close below it. If it does we should hit our first target of $53.25 relatively quick. If DE breaks down prior to bouncing I suggest readers be quick to take profits at the first target or tighten stops to protect against a hard reversal.

7/3: Last week DE broke below its 20-day, 50-day, and 100-day SMA's and a trend line that began in August of 2009. The stock traded all the way down to its 200-day SMA on Thursday and Friday where I expect it bounce. I suggest readers enter short positions on strength in the stock. I've chosen $55.75 as an entry trigger. Depending on the strength of any bounces readers may also consider waiting until the $56.50 to $57.50 area prior to initiating short positions (see rectangle on chart). This area is below the 20-day and 50-day SMA's which should be the extent of any bounces in the stock. I'm just not sure DE will bounce that high which is why I have chosen $55.75. We'll use a wide stop at $60.05 and will adjust it after we are in the position. Our primary target is $51.75 but I have offered several other targets readers can us as a guide to tighten stops or simply take profits if things move in our direction.

Current Position: August $55.00 PUTS, entry was at $3.00

Entry on July 6, 2010
Earnings 8/18/2010 (unconfirmed)
Average Daily Volume: 5.4 million
Listed on July 3, 2010

Lululemon Athletica Inc. - LULU - close 36.05 change -0.27 stop 43.10

Target(s): 35.25, 34.05, 33.00
Key Support/Resistance Areas: 42.25, 39.75, 37.00, 35.16, 32.75
Time Frame: 1 week

7/6: LULU came within 15 cents of hitting our trigger to enter short positions today, and then reversed down. The stock has faced a barrage of selling recently and is coming into a prior support/resistance area near our first target of $35.25. If the stock keeps testing this area the support should eventually break. I only wish LULU and the market were not so oversold. I am expecting this stock to bounce, maybe even up to its 50-day SMA which is near $40.00. Considering the conditions I would like to raise our entry back to $39.25 (below the 50-day SMA). If we are patient and get a good short entry it should pay off.

7/3: This is an example of a stock not letting shorts in for swing trade. It may be wishful thinking to expect LULU to bounce all the way up to $39.25 after the selling pressure on Friday. It would be ideal to see LULU make a run up towards its declining 50-day SMA which would be the first time testing it from below since it was broken on 6/28. But I doubt that will happen so I suggest we lower our trigger to enter to $38.40 which is just below Thursday's high. In the end, I think LULU trades down to its 200-day SMA but if it keeps declining prior to bouncing we may lose our chance. For readers who trade intraday LULU provides some good opportunities and if things are moving fast (up or down) this is a good stock to consider trading.

7/1: LULU has been whipsawing in a wide $10 range for past 3 months and I think it is ready to let go to the downside. When it happens it should let go fast. LULU is maintaining one last trend line from its 7/09 lows to its 2/10 lows. But I'm not too concerned about this trend line holding in today's market conditions. The retail sector is weak and LULU trades at a high P/E. The stock is below its declining 20-day and 50-day SMA's and there is a lot of congestion to keep any bounces under control. I suggest initiating short positions into strength. $39.25 provides an ideal entry point which we will use a trigger to enter short positions. I will also add that more conservative traders may want to wait until LULU tests its 50-day SMA from below which also corresponds with the back side of its most recent trend line that broken this week. We'll place an initial wide stop at $43.10 to account for volatility and will adjust it once we are in the position.

Suggested Position: Buy August $35.00 PUTS if LULU trades to $39.25, current ask $2.80, estimated ask at entry 1.60

Entry on July xx
Earnings 8/19/2010 (unconfirmed)
Average Daily Volume: 700,000
Listed on July 1, 2010

Starbucks Corp. - SBUX - close 23.61 change -0.73 stop 26.31

Target(s): 23.70, 22.55, 21.30
Key Support/Resistance Areas: 26.50, 26.00, 25.25, 24.80, 24.00, 23.60, 22.50
Time Frame: 1 to 2 weeks

Why We Like It:
7/6: SBUX came within 6 cents of our trigger to enter short positions and then proceeded to close down -3.04%. I'm expecting SBUX to bounce with the broader market so I suggest being patient and ready to short the stock if it trades to our trigger of $24.75.

7/3: Last week SBUX broke below a trend line that began in October 2009 and collapsed below it 20-day, 50-day, and 100-day SMA's. These SMA's (in particular the 100-day SMA) have been key areas where the stock has bounced during its rally over the past year. And now that the stock is below them it has probably seen its best days, at least for awhile. I would like to use a trigger of $24.75 to enter short positions which is below the stock's 100-day SMA, the underside of the broken trend line, and the recent steep downtrend line, all of which are converging (see oval on chart). The $25.00 area could also be considered an entry point but I chosen $24.75 because it is near Friday's highs which could possibly form a double top on the intraday charts. Our primary target is $22.55 but I have also listed $23.70 as area to consider tightening stops. It is above the 200-day SMA which SBUX has not touched in over a year.

Suggested Position: August $25.00 PUTS, current ask $2.20, estimated ask at entry $1.50

Entry on June xx
Earnings 7/21/2010 (unconfirmed)
Average Daily Volume: 10 million
Listed on July 3, 2010