Option Investor

Daily Newsletter, Thursday, 08/17/2006

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Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Despite a Preponderance of Good News

Early this morning, a commentator crooned that despite a preponderance of good news, futures had moved nominally lower. It's sometimes a bad sign when futures don't respond positively to positive news, but momentum carried indices higher after an initial dip. However, from the open, some troubling signs existed.

Since Tuesday, the Nasdaq had been skipping along the one-minute 100/130-ema's. This morning's first dip to test those averages right after the open resulted in prices bounding higher again. Another touch about noon, and away the Nasdaq went again. It wasn't alone. Other tech-related indices or tech-heavy indices or ETF's such as the SMH and Russell 2000 were behaving the same way, soon pulling the SPX and other indices along, bouncing them from their one-minute 100/130-ema's, too.

Momentum ruled. Indices had 200-sma's, 200-ema's, gaps, round-number resistance levels and overhead trendlines to test, and traders seemed determined to drive prices high enough to test them. They had that momentum on their side. The SPX was headed toward 1300; the OEX, 600; the SOX a daily and weekly 200-ema, and the RUT, a 200-sma as well as a descending trendline.

Meanwhile, the volatility indices were signaling concerns for short-term bulls. Although these indices can't be termed good market-timing tools, the VIX dipped down to test levels it hadn't seen since May 11, about the time markets began sliding lower. (For newbies, a sometimes-quoted market axiom is that when the VIX is low, it's time to go, as in exit from equity positions, and when the VIX is high, it's time to buy, but don't use this as a market-timing rule.) The VXN's first plunge this morning was met by an immediate bounce, a steadying and then an afternoon push higher.


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This action in the volatility indices, coupled with the nearly parabolic rise in some equity indices, warned that it was time for short-term bulls to consider profit-protecting measures. The action of these volatility indices can be confusing because they could look like this for two reasons. They could be suggesting that indices are ready to rally out of their summertime ranges and begin a trending behavior, or, conversely, that it's time for a pullback. If one believes that markets are likely to remain mostly range-bound until the future Fed stance is better known and especially until the major players at big institutions return from their summer vacations after Labor Day, then one would lean toward the second interpretation. I lean that direction, although I'm not going to let a strong trend blow me over while I continue to lean the wrong direction.

The VXN's bounce seemed to confirm that second interpretation, at least ahead of Dell's after-the-close report. Equity indices did seem to stall after momentum had propelled them up to hit that resistance. Bond yields also bounced off the day's low. For alert bulls, plenty of indicators signaled that the early gains might not be sustained . . . despite a preponderance of good news.

Some sources blamed the afternoon's pullback on Dallas Fed President Fisher, who spoke in Shreveport. He said that the Fed has to stay on top of inflation. That's not a surprise, but it does feed into the caution about driving indices too high ahead of conclusive evidence that the FOMC is ready to extend its pause or perhaps stop its rate hikes altogether.

However, it's my belief that technicals were showing a likelihood that the rally would stall before Fisher spoke, with market pundits just looking for the so-called reason. I don't necessarily believe that stall is a death knell for the markets, either, as I just see range-bound markets with little decision made yet about final direction. The markets zoom up and they zoom down and all that's established is that they're caught in a typical range-bound summer trading pattern.

Let's see if the daily charts show anything any different.

Annotated Daily Chart of the SPX:

As of the close, the nested Keltner channels I watch suggested that resistance was firming from 1298.48-1299.16 on 15-minute closes, with that resistance, however, still turning higher. When that happens, prices sometimes rise to retest it. If the SPX should rise to test it, the outcome depends on how it accomplishes that rise. While a strong push can break through that resistance, it looks strong enough as of this writing to suggest that the SPX will likely then turn down toward 1294.41-1295.36 (as of today's close) again, barring that strong push. The SPX could also move straight down toward that support without ever rising. Depending on how Keltner channels line up after the early move tomorrow, a test of 1290 or a rise back toward 1298-1300 look about equally possible after a dip to test 1294.41-1295.36. Sometimes when Keltner channels line up in this way, there's at least a short period of consolidation or churning. That would fit in with expectations on an opex Friday, but don't let your pre-conceived notions of what should happen cloud your judgment if markets move differently. Use the possibility to decide whether you want to jump into a play early tomorrow, though.

As of the close, the SPX was no longer skipping along above the one-minute 100/130-ema's, but trading back and forth across it, forming a rising regression channel that now spans from about 1297-1298.75. Watch for a break down from or up out of that channel as a first sign of next direction.

The SPX produced a small-bodied candle with long upper and lower shadows on its daily chart, with such candles being considered potentially bearish when they come at the top of a climb. The Dow produced a similar candle on the daily chart.

Annotated Daily Chart of the Dow:

With the Dow breaking above the summer's best-fit descending trendline, bears shouldn't be too hopeful yet for a deep pullback, if any pullback should occur. A sideways to sideways-down movement could bring the Dow back to retest that trendline, to see if it holds as support. Some intraday setups seem to suggest this as a possibility, but remember how quickly summertime trading patterns can turn.

As of today's close, the Dow's nested Keltner setup was similar to the SPX's, except that the Dow's firming resistance perhaps looked a little firmer. As of the close, that resistance was at 11359.89-11363.50 on 15-minute closes. First support is at 11319.68-11360.66 on 15-minute closes. Support looks a little weaker on the Dow, too, with next support at 11279.47. Unless the setup changes with early moves tomorrow morning, the Dow looks a little more fragile than the SPX, with slightly more likelihood that 11279.47 will be tested, rather than the equal-likelihood of support or resistance being tested on the SPX.

The reactions to HPQ and AMD's reports meant that techs led the way higher in the morning trade. Just as those reports probably induced some bears to cover, with short-covering helping to fuel the rise in the markets, fear of Dell's report may have caused some bulls to take profits, resulting in the Nasdaq's slightly different daily candle.

The Nasdaq's candle was different than those produced by the SPX and Dow, but the day's action did leave an upper shadow. If the current after-hours drop in Dell carries over until tomorrow, Dell will not be helping the Nasdaq tomorrow, with Dell currently printing a $22.12 price, down from the day's $22.80 close. Don't count on such after-hours action carrying through until the next day, especially since Dell was bouncing off its $21.30 post-close low, but the action at least gives us a peek into how investors perceived the report.

Dell met its lowered expectations of $0.22 a share on revenue of $14.09 billion. A year ago, Dell earned $0.41 on revenue of $13.43 billion. Dell also revealed an SEC accounting review and said that it would commence selling desktop PC's that use AMD's microprocessors. AMD did not benefit from the announcement, but also dropped in after-hours trading, currently at $23.50, down from its $24.20 close.

Annotated Daily Chart of the Nasdaq:

The Nasdaq's nested Keltner channel setup was less clear than that of the SPX and Dow. Resistance hadn't yet firmed in the same way. It was still in breakout mode on the 15-minute channels, with such a breakout mode maintained as long as it continued 15-minute closes above a Keltner line currently at 2148.08. It's maintaining a breakout mode on the 240-minute channel, too, with that breakout level at 2157.27 on 240-minute closes, as of the end of trading today. RSI indicates tentative bearish divergence, however, with the 240-minute chart showing RSI at a dangerously high 71.09 level. Unless the Nasdaq and RSI are going to begin a prolonged trending move, it may soon be time for a pullback or sideways consolidation movement, if one didn't begin this afternoon. The daily chart shows potential support now layered in stepwise fashion down to 2134.97, the 72-ema.

Before any pullback can test that resistance, the Nasdaq has to move back inside its nested Keltner channels and erase that breakout mode, something it hasn't yet done. Overnight, watch the reaction in Japan and watch Dell and NQ futures tomorrow morning to better gauge what's happening. The one-minute 100/130-ema's support has been reached, with the Nasdaq now trading back and forth across them. Neither the shape of the daily candle (with a slightly bearish upper shadow) nor the arrangement of the nested Keltner channels on the 15-minute chart give a strong presentiment, although RSI on the 240-minute suggests that profit-protecting measures should have been put into effect this afternoon, just in case.

With permission granted by Medved's QuoteTracker (www.quotetracker.com) to post their charts, I am able to include SOX charts again in my Wraps. If the chart isn't as legible as some others, that's my fault and not theirs, as I'm still experimenting with chart setups on this charting service.

Annotated Daily Chart of the SOX:

AMD's gains helped propel the SOX up to retest this former supporting trendline seen on the daily chart, but the weekly close will tell the tale as to whether this trendline has now been converted to resistance. Weekly RSI stands at 53.74, a neutral level.

My best guess for the SOX is that it might move back and forth across that trendline for a while, consolidating before it decides next direction, but the SOX does sometimes fall just as quickly as it rises. On a 15-minute nested Keltner chart (not shown, but also courtesy of QuoteTracker), the SOX has erased its breakout status. Resistance is firming from 448.09-449.70, but not sufficiently to say conclusively that it's going to hold. As of the close, it looked about equally likely that the SOX would rise to retest that resistance as it would to fall toward 443-444. Unless it zooms one direction or the other, the closing setup looked as if it could spend part of tomorrow bouncing around between support and resistance, an action in keeping with typical opex Friday action.

The RUT was more similar to the Nasdaq, still clinging to the Keltner support that maintained its breakout status on the 15-minute nested Keltner channels. That support was at 708.99 as of the close, on 15-minute closes. Resistance could be seen on the daily chart, however.

Annotated Daily Chart of the RUT:

Resistance is clear here, and it held today. Bulls need to see a daily close above this resistance before they can say that the RUT is doing anything but churning around within a trading range, and even then, they need a higher high above one of these summertime peaks. It's possible to draw a best-fit horizontal trendline across the summer's lows, and that turns this triangle into a bearish right triangle, so don't make assumptions about the direction of the breakout yet. Take a look at the early June and early July charges up to that trendline and remember how bullish those charges seemed at the time before you bet too much on an upside breakout. If you're often trading the RUT, be willing to entertain the possibility of an upside breakout, but make sure you're protecting bullish profits. Be equally willing to entertain the idea of a rollover, but make sure you're protecting bearish profits in that case.

I would expect sideways or a slightly pullback, at least. I wouldn't be surprised to see the RUT churn between today's high (or perhaps slightly higher) and 703 or perhaps 705, at least for a day or so.

Some of the good news heard this morning was a decline in weekly jobless claims for the week ending August 12, with that number falling to 312,000. Standing alongside that good-news headline, however, was the notation the previous week's initial claims had been revised higher and that the four-week moving average rose. In addition, continuing claims climbed to a six-month high of 2.51 million, and its four-week moving average also rose. Initial claims are about the same as their year-ago level, while continuing claims are below their 2.59 million year-ago level.

A decline in jobless claims can impact the market both ways, however, with some fearing that any upward wage pressure will force the FOMC's hand and bring them off the bench. If the decline in weekly jobless claims might have worried some who think that an overheated job market will promote a more hawkish stance by FOMC members, however, the continuing claims number might have calmed those worries, so the weekly claims number seemed to produce a draw.

In addition, the Index of Leading Economic Indicators for July fell 0.1 percent, surprising analysts who had expected an increase of 0.1 percent. The Conference Board reported a 138.1 number, with a spokesperson saying that the housing-sector slowdown is beginning to slow the rest of the economy, too. That spokesperson still predicts a soft landing for the economy.

With these numbers calming Fed-hike worries, bond yields dropped at the open of the bond session. A further pullback in crude prices after yesterday's inventories numbers also helped some equities while it hampered the OIX and XOI from contributing to the upward momentum. Crude closed at $70.00 a barrel, down $1.89.

Other economic news came later in the morning when the Philly Fed report showed factory activity for August rising to 18.5, the fourteenth straight month of increases. The number was quite a bit hotter than expected, with August's gain expected to be to 7.8. The benchmark number for this index is zero, with anything over that number showing that most firms included in the survey have grown. Components showed new orders rising to 15.7 from July's 10.1 and shipments climbing to 22.3 from July's 10.2. For a moment near the release, indices seemed to hesitate, with investors perhaps frightened by the hotter-than-expected headline number, but other components showed the prices-paid component falling to 45.3 from July's 50.3 and the prices-received component staying steady. Employment dropped to 8.2 against July's 12.8. Surveyed companies aren't so sure about the future, either, with August's future-activity component falling to 7.4 from July's 15.4. Again, with signs of strength balanced by signs of weakness, this number produced a draw.

Natural-gas inventories also provided good news. The Energy Department reported that inventories climbed by 37 billion cubic feet for the week that ended August 11, above the expected rise of 31-35 billion. They're up 292 billion cubic feet from the year-ago level. Natural gas closed at $6.695, down $0.07.

Sears Holding Corp.'s (SHLD) second-quarter report provided an upside surprise in net income. The company reported net income that increased to $294 million or $1.88 a share. Excluding a one-time gain due to a settlement of antitrust litigation, the company earned $272 million or $1.74 per share. Analysts had predicted $1.67 per share with sales of $12.51 billion. Although total revenue fell, the $12.8 billion also beat expectations. The company touted improved margins at Kmart and domestic Sears stores for beating expectations. The report noted, however, that Sears' same-store sales were down, with an increase in the number of stores in operation at least partially offsetting the decline that might otherwise have been seen. The total number of Kmart stores in operation declined, however, and Kmart revenue fell by $100 million.

A number of upgrades also contributed to that preponderance of good news. Citigroup upgraded Advanced Micro Devices (AMD) to a buy rating, up from its former hold rating. The firm approves of the company's partnership with Dell (DELL) and believes that the PC market will improve over the near term. Susquehanna upgraded Forest Laboratories (FRX) to a positive rating, with the previous rating a neutral one. Yesterday, Morgan Stanley had initiated the company with an equal-weight rating, but investors focused on today's upbeat report.

However, not all upgrades or news could have been termed good news. Today, J.P. Morgan downgraded General Motors (GM) to a neutral rating, scaling the rating back from the firm's former overweight rating. The firmed cited valuation reasons, saying that it expected the stock's price to remain range bound until 18-24 months from now, when it expected it to step up again if GM can win significant concessions in next year's labor contract.

In addition, a New Orleans jury ruled against Merck (MRK) in a Vioxx-related federal trial, the second time that MRK has lost a trial related to Vioxx. This case involved a retired FBI agent who had a heart attack after taking Vioxx for more than two years. The jury concluded that MRK had "knowingly misrepresented or failed to disclose" information about Vioxx to the agent's doctors, an AP article noted. The award totaled $51 million, $50 of that in compensatory damages and $1 million in punitive damages. Investors also learned of another blow to Merck. A state judge in New Jersey set aside a November verdict that had been in the company's favor. Merck said it disagreed with the judge's decision and was considering its legal options.

Today, Standard's & Poors announced changes in its SmallCap 600, MidCap 400 indices and S&P REIT Composite Indices. The changes in the SmallCap 600 will take effect after the close August 22. Those changes include the addition of Mid-America Apartment Communities (MAA) and Senior Housing Properties Trust (SNH), with those to replace ESS Technology Inc. (ESST) and Shurgard Storage Centers (SHU). Shugard will also be replaced in the S&P REIT Composite Index after the August 22 close. After the close August 23, Coldwater Creek (CWTR) will be added to the MidCap 400, replacing Western Gas Resources Inc. (WGR), which is being acquired by Anadarko Petroleum (APC).

Tomorrow's economic releases will be light. At 9:45-9:50, the August preliminary Michigan Sentiment number will be released. Expectations are for a number of 82.5-84.0, depending on the source, with the entire range of expected values below the prior 84.7. The ECRI Weekly Leading Index will be released at 10:30.

Earnings on tomorrow's option-expiration Friday will be light, too, with retailers ANN and FL joining a smattering of other reporting companies. DELL's after-the-close earnings may impact markets more than that smattering of companies tomorrow.

It's time for a best guess of what might happen tomorrow. It's my personal opinion that until markets are sure that the threat of higher interest rates has passed and until the important types return to the investment firms in early September, markets may zoom a day or two, but won't be allowed to break out too far. Today some indices hit expected resistance and that resistance mostly held. The SPX has effected a breakout over a summertime descending trendline, but its daily candle was not bullish, and indicated a need for consolidation or a pullback.

In many cases, daily candles predicted a possible consolidation or an actual pullback. Short-term nested Keltner charts favored consolidation early tomorrow, barring a Dell-induced strong move one direction or the other. After that early setup, however, or if a zoom does appear and scatter the Keltner channels, little is predicted.

I've noted some levels to watch early tomorrow. My best guess is that markets will get reined in if they get too far ahead of themselves, and I think they're approaching levels where they're just that, given the unknowns still in the marketplace. This is summertime, however, when lighter volume can allow prices to be pushed around, and tomorrow is opex Friday, so that those volatility indices may not be as reliable as they sometimes are. Be prepared for anything.

New Plays

New Option Plays

Call Options Plays
Put Options Plays
Strangle Options Plays
None None None

New Calls

None today.

New Puts

None today.

New Strangles

None today.

Play Updates

In Play Updates and Reviews

Call Updates

Bucyrus - BUCY - close: 52.98 chg: +1.11 stop: 47.69

BUCY continued to rally higher on Thursday following yesterday's bullish breakout. Volume came in strong again, which is a good sign for the bulls. We remain positive and would consider new positions here. Yesterday we said a dip to $51 or $50 would be a good entry point and BUCY dipped to $51.03 this afternoon before bouncing higher. There is still a chance that another dip is in BUCY's future since the major averages are looking a little short-term overbought. BUCY appears to have some resistance near $58.00 and again near $60.00. We're going to target a run up into the $57.50-60.00 range.

Picked on August 16 at $ 51.87
Change since picked: + 1.11
Earnings Date 10/19/06 (unconfirmed)
Average Daily Volume = 697 thousand


Goldman Sachs - GS - close: 154.45 chg: -0.54 stop: 149.40

Broker-dealer stocks were generally higher today. The XBD index added 1.4%. Unfortunately, the early rally in GS reversed midday and the stock closed near its lows. The move today looks like a short-term failed rally/bearish reversal. We would expect a drip towards $153-152 soon. Look for a dip and bounce combo as a new entry point to buy calls. Our conservative target is $160.00. Our secondary target is the $164.50 level. Consider selling half your position at $160 and the rest at $164.50. We do not want to hold over the late September earnings report. FYI: The P&F chart points to a $190 target.

Picked on August 16 at $154.99
Change since picked: - 0.54
Earnings Date 09/21/06 (unconfirmed)
Average Daily Volume = 5.3 million


MicroStrategy - MSTR - close: 91.30 chg: +1.22 stop: 85.99

We did not have to wait very long for MSTR to hit our trigger and open the play. Shares continued to rally and a midday spike over $92.00 and its 200-dma hit our trigger at $92.05. Unfortunately, MSTR failed to hold on to these gains and the stock closed back under the 200-dma. This late day weakness is a concern. We would wait for another move over $92.00 or today's high (92.74) before considering new call positions. Now that the play is open our target is the $98.75-99.00 range.

Picked on August 16 at $ 92.05
Change since picked: - 0.75
Earnings Date 10/27/06 (unconfirmed)
Average Daily Volume = 431 thousand

Put Updates

Autozone Inc. - AZO - close: 88.19 chg: +0.07 stop: 90.05

There is no real change from our previous updates on AZO. The stock remains in a bearish pattern (descending channel) and under technical resistance at its 50-dma. However, we're getting a lot of mixed signals. The MACD on the weekly chart is nearing a bullish signal versus a the MACD on the daily nearing a sell signal. Other technical oscillators are mixed. AZO is poised for a breakout one way or the other with its short-term pattern of lower highs and higher lows (a pennant). We are not suggesting new put positions at this time. Our target is the $82.50-80.00 range.

Picked on August 08 at $ 87.73
Change since picked: + 0.46
Earnings Date 09/21/06 (unconfirmed)
Average Daily Volume = 700 thousand


Boeing - BA - close: 78.59 change: -0.24 stop: 80.45

The rebound in BA stalled and the stock remains in its bearish pattern of lower highs. Meanwhile in the news BA announced it might shut down production of its C17 military cargo planes after the last one is built in 2008. The company also announced it was closing its in-air high-speed Internet service. We are not suggesting new positions.

Picked on August 10 at $ 75.75
Change since picked: + 2.84
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 4.2 million


Burlington Nor.SantaFe - BNI - cls: 68.88 chg: -0.11 stop: 70.25

The bounce in the transports and in shares of BNI also took a breather today. BNI rallied to resistance near $70 and the top of its bearish channel before reversing direction. This looks like a new entry point to buy puts although traders might want to wait for a move under today's low (67.76) before initiating new put plays.

Picked on August 08 at $ 68.06
Change since picked: + 0.82
Earnings Date 10/24/06 (unconfirmed)
Average Daily Volume = 2.7 million


Chipotle Mex Grill - CMG - close: 53.08 chg: -0.42 stop: 54.01

The rally also stalled in shares of CMG and the stock came close to but failed to breakout over the $54.00 level. We're not suggesting new bearish plays at this time. More aggressive traders may want to put their stop loss above $55.00 and/or its 50-dma.

Picked on August 09 at $ 50.28
Change since picked: + 2.80
Earnings Date 10/30/06 (unconfirmed)
Average Daily Volume = 414 thousand


Intuitive Surgical - ISRG - cls: 97.00 chg: +0.05 stop: 101.55

The daily chart for ISRG shows a MACD indicator that's nearing a new buy signal but the stock really isn't seeing a lot of buying pressure right now. We are not suggesting new plays at this time. ISRG is still a volatile stock and any market rally could send shares soaring past the $100 level.

Picked on August 10 at $ 94.90
Change since picked: + 2.07
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 1.1 million


NII Holdings - NIHD - close: 51.80 chg: +0.40 stop: 52.51

It was a close call but NIHD's rally today stalled at $52.49 before the stock pared its gains. Our stop loss is at $52.51. The move did produce a MACD buy signal on the daily chart but it looks like NIHD could go either direction from here. We are not suggesting new positions at this time but a drop back under the $50 level would look like a new entry point.

Picked on August 07 at $ 49.90
Change since picked: + 1.90
Earnings Date 07/27/06 (confirmed)
Average Daily Volume = 2.2 million


Transocean Inc. - RIG - cls: 67.08 chg: -0.72 stop: 70.25

Another strong decline in crude oil futures sent the oil stocks lower. RIG's oversold bounce stalled and shares lost just over 1% today. We're not suggesting new positions at this time. The stock has already hit our conservative target at $65.25. Our secondary, aggressive target is the $61 level.

Picked on August 07 at $ 69.49
Change since picked: - 2.41
Earnings Date 08/03/06 (confirmed)
Average Daily Volume = 6.4 million

Strangle Updates

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)


Bausch Lomb - BOL - close: 46.74 change: +0.61 stop: n/a

We only have one day left before the August options expire on this strangle. Our estimated cost on the strangle was $2.15. The options in our suggested strangle are the August $50 call (BOL-HJ) and the August $45 put (BOL-TI).

Picked on July 23 at $ 47.40
Change since picked: - 0.66
Earnings Date 00/00/06 (unconfirmed)
Average Daily Volume = 2.2 million


3M Co. - MMM - close: 71.20 change: +0.41 stop: n/a

Tomorrow is the last day before August options expire on this strangle. Our estimated cost for our August strangle was $0.75. The options in our strangle are the August 65 put (MMM-TM) and the August 75 call (MMM-HO).

Picked on July 23 at $ 70.72
Change since picked: + 0.48
Earnings Date 07/25/06 (confirmed)
Average Daily Volume = 3.7 million

Dropped Calls


Dropped Puts

Lam Research - LRCX - close: 41.19 change: -0.75 stop: 42.01

We have been stopped out of LRCX at $42.01. There was an unexpected spike higher around 10:00 a.m. this morning that quickly reversed but it was enough to tap our stop loss. Overall the move today looks like a failed rally/reversal and a potential entry point to buy puts again. We're going to keep an eye on LRCX for a breakdown under $40 again.

Picked on August 13 at $ 39.04
Change since picked: + 2.15
Earnings Date 10/18/06 (unconfirmed)
Average Daily Volume = 3.0 million


MDC Holdings - MDC - close: 44.86 change: +0.14 stop: 45.15

We've been stopped out of MDC at $45.15. The homebuilders spiked higher this morning before paring their gains and shares of MDC hit a high of $45.43. The stock remains in a long-term bearish trend but short-term indicators are looking more bullish with this week's oversold bounce.

Picked on August 14 at $ 42.25
Change since picked: + 2.61
Earnings Date 10/19/06 (unconfirmed)
Average Daily Volume = 991 thousand

Dropped Strangles



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