Current Portfolio:

CALL Play Updates

SPDR KBW Bank ETF - KBE - close 24.05 change -0.14 stop 23.25

Target(s): 24.85, 25.30, 26.00
Key Support/Resistance Areas: 26.00, 25.50, 24.85, 23.75, 23.35
Current Gain/Loss: +5.5%
Time Frame: 1 to 2 weeks
New Positions:

8/10: We are long KBE calls at the open at 90 cents and are looking for the bank ETF to bounce up towards its 100-day SMA which is above our first target of $25.30. A move up to this area should produce a +50% gain on this position. Readers may also want to consider an added target of $24.85 as an area to tighten stops or take profits. This will also produce a nice gain and is a resistance from late July/early August to consider.

8/9: KBE has strong support in the $23.50 to $24.00 area (see rectangle on the below chart) and has printed two bottoming tail candlesticks the past two trading sessions. The ETF has formed a bullish inverse head and shoulders pattern and has maintained an upward trend line off of its July 1 lows. KBE is also being supported by its 20-day, 50-day, and 200-day SMA's which could act as a springboard for a move higher. Tomorrow's FOMC announcement is a wildcard so traders may want to see the market's reaction (or close) prior to entering positions. We'll use a tight stop at $23.25 which is below the daily upward trend line.

Current Position: Long September $24.00 CALL, entry was at $0.90

Entry on August 10. 2010
Earnings Date N/A (unconfirmed)
Average Daily Volume: 3.5 million
Listed on August 9, 2010

Volatility Index - VIX - close: 22.37 change: +0.23 stop: 19.60 *NEW*

Target(s): 25.95, 27.30, 28.90, 31.50, 35.00
Key Support/Resistance Areas: 20.00, 22.00, 24.00, 26.00, 28.00
Current Gain/Loss: N/A
Time Frame: 2 to 3 weeks
New Positions: Unopened

8/10: VIX came within 1 penny of triggering our entry to buy calls. And it's a good thing we didn't get triggered because just after the FOMC announcement stocks took off and the VIX plummeted, so we caught a break on this one. Last night I mentioned aggressive traders may consider entering at current levels. But I just wasn't ready to officially make any changes to the play due to the FOMC announcement today. However, I'm suggesting we take advantage of any further weakness in the VIX which should happen if stocks rally from here. We may get a little further upside but the fact is we are in overbought conditions and the market is complacent, not to mention the seasonality. And it is not uncommon for stocks to reverse course from the initial FOMC reaction. In fact, on June 23rd the S&P 500 bounced hard intraday just like today, but then proceeded to sell off -80 points over the ensuing week. I realize the circumstances are completely different now but look at the daily S&P 500 chart. Currently we are just above the same levels as June 23rd and are also coming off of a strong rally. I suggest we enter positions now and look for a bounce up to its 50-day SMA which is above our first target of $25.95. We'll use a stop of $19.60 and if the market rolls over I suggest traders trail their stops. I've adjusted the targets.

8/7: If you are reading the market commentary then you know we don't trust this market rally and expect stocks to turn weak again as we head into fall. When stocks do roll over it should produce a rally in the VIX. I am suggesting a trigger to buy calls on the VIX if the index hits $24.25. We'll use a stop loss at $21.45. If triggered our first target to take profits is at $29.00. Our second targets is $32.00 and our third and final target is $35.00.

NOTE: September VIX options expire on Wednesday, Sept. 15th, not Friday

Suggested Position: Buy September $30 CALL, current ask $2.25

Entry on August XX
Earnings Date N/A
Average Daily Volume N/A
Listed on August 7, 2010

PUT Play Updates

SPDR DJIA ETF - DIA - close 106.66 change -0.46 stop 108.75

Target(s): 106.25 (hit), 105.40, 104.75, 103.65
Key Support/Resistance Areas: 108.00, 107.00, 105.90, 104.75, 104.20, 103.50
Current Gain/Loss: -15%
Time Frame: 1 week
New Positions: Yes

8/10: DIA keeps getting close to hitting our target but the market keeps getting saved. Today in early trading this position could have been closed for a +10% gain but stocks rallied. I suspect we may have a spike in the markets over the next day or two but I do believe we will get a meaningful correction that could happen at anytime within the next week, and it could happen fast. DIA is forming a bearish rising wedge pattern and if it lets go we should see a $2 or $3 drop relatively quick. This is what we are positioned for and should the drop happen I suggest readers begin to tighten stops as our targets approach to protect capital and against a reversal.

8/9: On Friday DIA came within 6 cents of hitting our 2nd target so I have raised it by 15 cents. Friday's late day rally looked like classic short covering to me but, nonetheless, it is a support level to be aware of for potential exits or an area to tighten stops to protect capital. If DIA breaks Friday's low it should continue lower to our more aggressive targets. Now we await tomorrow's reaction to the FOMC announcement. This most likely means a volatile afternoon session and may present some opportunities to exit positions. It could happen fast just like Friday but this time it might keep going.

Current Position: Long September $106.00 PUTS, entry was at $2.70

Entry on August 3, 2010
Earnings: N/A (unconfirmed)
Average Daily Volume: 14 million
Listed on August 2, 2010

Occidental Petrol. - OXY - close: 77.81 change: +0.86 stop: 76.25

Target(s): 70.50, 66.00
Key Support/Resistance Areas: 75-74.00, 70.00, 65.00
Current Gain/Loss: N/A
Time Frame: Three or Four Weeks
New Positions: Yes, trigger at $73.90

8/10: OXY doesn't seem ready to break down just yet as the stock gained +1.12% today on a weak tape. The stock is approaching all of its major SMA's from below and a down trend line near the $80 level. This sets up a good short entry as opposed to waiting for a break down. I'm assessing this option and may change the trigger in the coming days.

8/7: Shares of OXY have been underperforming their peers in the oil sector for weeks. The sell-off appears to be picking up steam and this time I think it will breakdown under key support near $75.00-74.00. Most of the lows over the past several months have been near $74.25. I am suggesting a trigger to buy puts at $73.90. If triggered I'm suggesting a stop loss at $76.25. Our first target is $70.50. Our second target is $66.00.

Suggested Position: 2010 Sept. $70.00 puts (OXY1018U70) current ask $1.09

Entry on August XX
Earnings Date 10/21/10 (unconfirmed)
Average Daily Volume = 4.4 million
Listed on August 7th, 2010

Procter & Gamble - PG - close: 60.78 change: +0.40 stop: varies

Target(s): 59.30, 58.05, 57.25
Key Support/Resistance Areas: 59.00, 61.00
Current Gain/Loss: -5%
Time Frame: 2 to 3 weeks
New Positions: Yes

8/10: PG triggered our higher target to enter positions at $60.69. We are long $57.50 PUTS at 36 cents. This is a cheap out of the money option that shouldn't move too much with underlying price of PG. But if we get PG to retest its recent lows, which are below our first target of $59.00, we should easily make 25 cents on the position. This would represent a +69% gain. As such, I've removed the $55.00 target and added three closer targets that are very easily achievable.

8/7: PG reported earnings last week. The company missed estimates and guided lower. Shares gapped down but the selling stalled near support around $59.00. You might think that a consumer products company like PG would be see as a strong, safe-haven play. Yet the stock has been building a topping pattern over the last several months. Now shares look ready to begin a new leg lower. I am suggesting two different triggers to buy puts. PG might fill the gap created this past week. If the stock does see a bounce I am suggesting we buy puts at $61.00 with a stop loss at $63.26. On the other hand if PG rolls over from here we want to buy puts if PG hits $58.80 and use a stop loss at $61.05. Our bearish target is $54.00 and our time frame is approximately four weeks.

Current Position: Long September $57.50 PUT, entry was at $0.36

Entry on August 10, 2010
Earnings Date 10/28/10 (unconfirmed)
Average Daily Volume 2.5 million
Listed on August 7th, 2010


ProShares UltraShort 20 YR Treasury - TBT - close 35.87 change -0.14 stop 35.55

Target(s): 36.90 (hit), 37.50 (hit), 38.00, 39.25, 40.50
Key Support/Resistance Areas: 42.00, 41,00, 39.70, 38.25, 37.55, 34.65
Final Gain/Loss: -43% < br> Time Frame: Several Weeks
New Positions: Closed

8/10: We were stopped out of TBT right around the FOMC announcement this afternoon. There was a knee jerk reaction and TBT sold off in a 15 minute period before recovering all of the day's losses and closing near its highs. We had two opportunities to take profits on this trade which was obviously the right thing to do at the time. Today's selling may have hit several stops which could have caused a capitulation type event so if readers still have positions I would use a stop below today's low and see how far TBT can take you. I still like the play and think longer term holders could be handsomely rewarded.

8/9: We are hanging in here with TBT and any breakout in equities should get this ETF moving in our direction in earnest. I believe bond prices are close to or at a top and could experience a steep decline in the near term (bullish for TBT). Regardless of whether or not that happens I suggest being prepared to exit positions or tighten stops at the any of the above targets as they approach. All are still valid.

Closed Position: Long September $37.00 CALL at $0.70, entry was at $1.23

Annotated chart:

Entry on July 26, 2010
Earnings N/A (unconfirmed)
Average Daily Volume: 3.8 million
Listed on July 24, 2010