Current Portfolio:

CALL Play Updates

First Solar Inc. - FSLR - close 145.55 change +0.48 stop 135.95

Target(s): 145.00, 147.50, 149.75
Key Support/Resistance Areas: 137.50, 140.00, 145.00, 147.50, 150.00
Current Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see entry point below

10/23: Not much has changed with FSLR. I expect FSLR to pullback to trend line support, its 50-day SMA, and prior resistance from July and April. (see grey oval). This is where I suggest launching bullish positions and then target a move back towards its recent highs. I've pushed out the suggested call position to the December $155's. FSLR reports earnings on Thursday after the bell. Holding positions over earnings is a higher risk play. Readers may want to consider selling a further out of the call to help better define risk. For example, buy the December $155 call and sell the December $160 or $165 call.

10/16: (James) Shares of FSLR have been marching higher after producing a huge (bullish) double bottom pattern with the lows in February and June. Now the stock has created a more bullish pattern of rally, consolidate, rally, consolidate. After two weeks of correcting traders are now buying the dip in FLSR near support in the $137-140 zone.

Aggressive traders could launch positions right now following Friday's bounce from $140. However, I suspect we'll see a better entry point on a minor dip this week. I'm suggesting we use a trigger at $142.50 to buy calls. If triggered we'll use a wide stop loss at $135.95 since FSLR can be so volatile (as an alternative more conservative traders could put their stop closer to $140). If triggered our first target is $145.00. Our second target is $147.50. Our final target is $149.75. More aggressive traders could aim for the $160 area. FYI: Investors should note that FSLR is due to report earnings on October 28th. Earnings reports can significantly raise our risk.

Suggested Position:

Trigger to buy calls @ $140.50.

BUY the December $155 calls.

Annotated chart:

Entry on October xxth at $ xx.xx
Earnings Date 10/28/10 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on October 16th, 2010

Genco Shipping - GNK - close 16.27 change +0.27 stop 15.50

Target(s): 16.10 (hit), 16.80, 17.50, 18.05
Key Support/Resistance Areas: 18.25, 17.75, 16.90, 16.25, 15.75
Current Option Gain/Loss: -50.0%
Time Frame: 1 to 3 weeks
New Positions: Yes

10/23: GNK is stuck between its 50-day SMA (below) and 20-day SMA (above). There is resistance at current levels but if GNK can break above today's highs we will have a good chance of reaching our next target. However, I am concerned about the overbought broader market conditions so I suggest readers use strength to consider exiting positions, or tightening stops. 10/20: GNK did manage a bounce up to $16.15 which is where the stock found resistance. The problem is we don't have a good reference point to tighten the stop. Let's see how much more we can get out of the position and keep looking for areas to move up the stop. $16.22 is resistance and then a gap fill near $16.40.

10/19: GNK fell apart today and we are close to being stopped out. GNK is involved in shipping commodities and the news out of China is affecting the entire space. It is too early to tell whether this is a one day event or a knee jerk reaction. Technically, the stock has closed below its moving averages and looks to be headed lower. If GNK can manage a bounce back up towards $16.10 I suggest closing positions or tightening stops to protect capital.

Current Position: Long November $17.00 CALL, entry was at $0.80

Note: Readers who want to give this more time to work may want to consider buying the JAN 2011 $17.50 CALLS

Annotated chart:

Entry on October 12, 2010
Earnings 11/1/2010 (unconfirmed)
Average Daily Volume: 1.2 million
Listed on October 11, 2010

Humana Inc. - HUM - close: 56.97 change: +0.70 stop: 49.75

Target(s): 57.50, 60.00
Key Support/Resistance Areas: 50.00, 51.00, 53.50, 55.00
Current Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see entry point below

10/23: HUM looks extremely bullish here and it is probably because money is rotating into this defensive sector. If HUM pulls back to $53.80 I suggest launching new positions. However, HUM reports earnings next Monday (11/1) so holding positions over the report is a higher risk situation. Readers may want to consider selling a further out of the call to help better define risk, similar to the suggestion in the FSLR play above. The play release from last weekend is below.

10/16: (James) Check out the HMO healthcare index. Investor sentiment for the healthcare sector has changed. Fears about the healthcare reform seem to have faded and now the sector is breaking out to new three-year highs. HUM is helping lead the way. Shares have been very strong this past week with a rally toward the top of its bullish channel. We want to hop on board but wait for a better entry point.

I am suggesting readers use a trigger to buy calls at $52.50. More cautious traders could look for a dip closer $51.00 but I don't think we'll see HUM pullback that low. If we are triggered at $52.50 I'm suggesting a stop loss at $49.75. Our first target is $54.90. Our second target is $57.25. Our third, longer-term target is $59.00. Time frame is six to eight weeks. Technical traders will note that the P&F chart is bullish with a $66 target. FYI: HUM is due to report earnings on November 1st. We normally want to avoid holding over earnings but I would make an exception for HUM.

Suggested Position:

Trigger to buy calls at $53.80

BUY the 2011 January $55 calls.

Annotated chart:

Entry on October xxth at $ xx.xx
Earnings Date 11/01/10 (confirmed)
Average Daily Volume = 2.1 million
Listed on October 16th, 2010

Jeffries Group, Inc - JEF - close 23.83 change -0.32 stop 22.75

Target(s): 25.10, 25.75
Key Support/Resistance Areas: 25.85, 25.25, 24.25, 23.50, 23.00
Current Gain/Loss: +5%
Time Frame: 3 to 4 weeks
New Positions: Yes

10/23: JEF printed a bearish engulfing candlestick on Friday and I doubt the stock will be able to swim against the current of a broader market correction, should a correction happen. The stock gapped higher on Thursday and then Friday it retraced the gain and closed the gap. The 50-day SMA and prior resistance is just below near $23.50. The stock and price action look good to me but we are likely going to need the market to continue its march higher. For now, I continue to view dips as buying opportunities.

10/21: JEF gapped higher at the open near our trigger to launch bullish positions so we are long December $24 calls. The stock surged higher but closed well off of its highs. I like the price action in JEF and expect further upside if the broader market cooperates. I would view dips as buying opportunities.

10/19: Investment Banks are beginning to trade well, especially those that have little risk exposure to mortgage backed securities like many of the money center banks. JEF should do well in this era of corporate advisory services and M&A activity. JEF could even be a takeover candidate themselves. I like JEF to trade higher as long as the stock breaks out above today's highs. Technically, The volume patterns look good and JEF has closed above short term resistance from the past couple of weeks at $23.50 for two consecutive days. I suggest we enter long positions if the stock trades to $23.91 which is above today's highs. Our stop will be $22.75 and our targets are near the September and August highs, which are +5% and +7.5% from our trigger.

Suggested Position: Long December $24.00 CALL, entry was at $1.10

Annotated chart:

Entry on October xx
Earnings Date 1/20/11 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on October 19, 2010

Sears Holdings Corp - SHLD - close 76.32 change +0.31 stop 71.50

Target(s): 81.50, 85.00, 88.00
Key Support/Resistance Areas: 90.00, 85.00, 82.00, 76.00, 73.00
Current Gain/Loss: -16%
Time Frame: 3 to 4 weeks
New Positions: Yes

10/23: Not much has changed from my comments below. Readers may want to keep an eye on $78.90 as a potential exit target. This is near highs from Thursday and should produce a +15% gain. Consider tightening stops if we get up there. Friday was the highest closing price the stock has seen since 6/17 so momentum is on our side, but we are going to need help from the broader market and retail sector, which has been performing extremely well lately.

10/21: SHLD hit our trigger to enter long positions and surged $1.80 higher. Unfortunately, the breakout did not last and the stock plummeted to its lows of the day. Our options expire in December so time is on our side for now, however, I am concerned with the price action not only in SHLD, but also the broader market. There is a lot of indecision and it is being confirmed by the intraday volatility (up and down). There is high short interest in the stock so this may spark further gains if the broader market continues higher. I suggest being ready to take profits or tighten stops to protect them if SHLD moves higher. I've moved the stop up slightly.

Suggested Position: Long December $80.00 CALL, entry was at $3.40

Annotated chart:

Entry on October 21, 2010
Earnings Date 11/18/10 (unconfirmed)
Average Daily Volume = 831,000
Listed on October 16th, 2010

PUT Play Updates

Alliant Techsystems - ATK - close 76.09 change +0.07 stop 76.33 *NEW*

Target(s): 74.90, 72.80
Key Support/Resistance Areas: 76.00, 74.00, 72.00, 71.25, 70.00
Current Gain/Loss: -65%
Time Frame: 1 to 2 weeks
New Positions: Yes, with tight stops

10/23: There is really nothing more to report on ATK as the stock traded in a tight range near its highs from Thursday. We need an immediate turn lower this week. I've adjusted the targets and suggest readers use weakness as an opportunity to close positions or tighten stops to protect capital. Our stop is just overhead.

10/21: ATK has broken out and our set-up has failed. The stock surged +2.7% today which may have been due to a favorable earnings report from one of its peers. ATK came within 1 penny of hitting our stop today so we are on the verge of being taken out. Let's raise the stop by 8 cents to $76.33 just in case ATK flashes a higher price tomorrow. Otherwise we will step aside and take the loss. ATK will eventually trade to its 50-day SMA but it just may not do it now as we have been anticipating.

10/20: There are not many changes to the comments below. We are getting whipsawed in a fairly tight range and ATK refuses to break lower as we have anticipated, which is when we want to be closing positions or tightening stops. I see no reason why ATK won't trade down to its 50-day SMA.

10/19: ATK lost -1.6% today and the stock looks vulnerable here. The stock broke a short term upward trend line, closed below the 20-day SMA, and closed at its lowest level since 10/4. The selling in this stock should continue in the coming days which readers should use as an opportunity to exit positions or tighten stops. I adjusted the targets slightly to account for the rising 50-day SMA.

Current Position: Long November $70.00 PUT, entry was at $1.45

Annotated chart:

Entry on October 4, 2010
Earnings: 11/4/2010 (unconfirmed)
Average Daily Volume: 310,000
Listed on October 2, 2010

Fastenal Co. - FAST - close: 52.90 change: +0.00 stop: 54.25

Target(s): 51.20, 50.10, 48.25, maybe lower
Key Support/Resistance Areas: 55.00, 52.00, 50.00, 48,00,
Current Gain/Loss: -50%
Time Frame: 3 to 4 weeks
New Positions: Yes

10/23: FAST gapped higher on Friday and it was immediately sold into. The stock has yet to trade above its highs from the past two weeks and closed below its 20-day SMA which is starting roll over. If we get a more meaningful broader market correction FAST should quickly head towards our targets which is when we want to be exiting positions or tightening stops.

10/21: Fast has bounced up to its 20-day SMA from below and has yet to take out highs from the past two weeks. We are most likely going to need a more meaningful healthy broader market correction for the position to get back into positive territory.

10/20: FAST rolled over after their earnings report and has made a series of lower lows and lower highs over the past 8 trading sessions. What has me concerned is this may be forming a bearish descending wedge pattern. The bottom line is we are most likely going to need a more severe broader market correction for this trade to turn into a profitable one. A move the 50-day SMA should give us +35% gain. All of my comments below remain the same.

Current Position: Long November $50.00 PUT, entry was at $1.00

Annotated chart:

Entry on October 18, 2010
Earnings Date 10/12/10
Average Daily Volume = 1.0 million
Listed on October 16, 2010

Hartford Fin. Serv. Group - HIG - close 23.95 change -0.25 stop 24.70

Target(s): 22.45, 22.05
Key Support/Resistance Areas: 24.60, 23.70, 22.85, 22.25, 21.85
Time Frame: 1 to 2 weeks

10/23: HIG printed a bearish engulfing candlestick on Friday as the stock failed at it 200-day SMA again. Our trigger remains at $23.32 which is a break down below last week's and also a break of trend line support.

10/21: This morning UBS reiterated their buy rating for HIG and the stock gapped higher at the open and surged up to its 200-day SMA. And that is when the selling began which pressured prices back to their lows of the day. We are waiting to be triggered on a break down below the prior two days lows which will also be a break of trend line support. However, more nimble traders may want to try a short position at current levels with a tighter stop overhead.

10/20: We are adding a short candidate to the portfolio to balance our positions a bit. The rally in HIG off of the August lows has failed at the 200-day SMA and I believe there is more downside to come. The stock is finding support at its 20-day SMA and I suggest we initiate short positions at $23.32 which is below Tuesday's low. Our first target is almost $1 lower near the 50-day SMA and our second target is near the swing low on 9/23. Our initial stop is above the 200-day SMA at $24.70 but it will be adjusted as the trade develops. This has the potential to be a quick trade so have your orders ready or be prepared to protect profits if HIG breaks lower.

Suggested Position: Buy December $22.50 PUT if HIG trades to $23.32, current ask $1.05

Annotated chart:

Entry on October xx
Earnings: 11/2/2010 (unconfirmed)
Average Daily Volume: 7 million
Listed on October 20, 2010

PNC Financial - PNC - close 54.72 change +1.16 stop NONE *NEW*

Target(s): 51.05 (hit), 50.35, 49.50, 48.75
Key Support/Resistance Areas: 54.50, 53.50, 50.50, 49.50, 48.75, 47.00
Current Gain/Loss: -84%
Time Frame: 1 to 2 weeks
New Positions: Yes

10/23: PNC just keeps going like the energizer bunny. We have gotten destroyed on this play and our option premium has almost evaporated. Keeping a stop in place now doesn't make a lot of sense to me. I would rather hold the position and ride it lower if the market corrects between now and expiration, which is three full trading weeks. Our opportunity to close positions was late last week when PNC was at the $51.00 level. Let's see what happens in the coming days and we'll continue to monitor the developments.

10/21: PNC's "adjusted" earnings beat estimates but their revenues missed. The CEO made cautious comments but it didn't matter, investors gobbled up the stock and PNC closed +1.5% on the day. It is a tough call with earnings and considering the reaction to many reports I thought holding the position was the right call. Obviously it was the wrong call. If the broader market continues its path higher we will likely get stopped out, possibly tomorrow. We're not out of the position yet though and PNC could easily turn lower here. Our stop is in place.

10/19 & 10/20: Something is holding PNC up and I can not figure out why, other than it may be due to upcoming earnings. The stock is set to report earnings on Thursday before the bell so if you are not comfortable holding positions you need to exit tomorrow before the bell. Holding positions is an aggressive strategy that may or may not work. Lightening up on positions is also another option. The news out of the banking sector today has me inclined to hold positions, however, I still advocate using weakness to exit positions and preserve capital. Our stop is overhead.

10/18: After reaching our first target on Thursday and coming close to our second target on Friday, PNC had a snap back rally today and gained more than +3% as banks were the strongest performing sector. PNC remains below its 50-day SMA and primary downtrend line so the bearish case remains in tact. Launching new positions at these levels makes a lot of sense for a quick trade lower, but the broader market needs to correct along side PNC for it to be successful. Readers with current positions should use weakness to close positions. $50.35 and $49.50 are my primary targets.

Current Position: Long November $48.00 PUT, entry was at $1.26

Annotated chart:

Entry on September 30, 2010
Earnings: 10/21/2010 (unconfirmed)
Average Daily Volume: 5 million
Listed on September 29, 2010