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Daily Newsletter, Monday, 07/14/2008

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Table of Contents

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

Market Wrap

Run on IndyMac Trumps European Gains

U.S. stocks jumped at the open after inflation data released at the manufacturing level in the United Kingdom came in below expectations, but IndyMac Bancorp's (NYSE:IMB) $0.12 -57.14% failure late Friday, which the FDCI took over, trumped early morning buying, with the major indices finishing at, or near their lows of the session.

The collapse of IndyMac is expected to cost the FDIC $4 billion to $8 billion, potentially wiping out more than 10% of its $53 billion deposit-insurance fund, and with industry analysts still warning that there may be more carnage yet to come among subprime mortgages, investors remained cautious.

Volumes at the NASDAQ were what I would consider to be "light" with just less than 2 billion shares changing hands.

Volumes at the big board remained "brisk" in a very active trade among financials.

Federal Home Loan Mortgage (NYSE:FRE) $7.11 -8.25%, affectionately called "Freddie Mac," churned 263 million shares and was atop today's list of most actives, while Fannie Mae (NYSE:FNM) $9.73 -5.07%, Washington Mutual (NYSE:WM) $3.23 -34.73%, Wachovia Bank (NYSE:WB) $9.84 -14.73% and Citigroup (NYSE:C) $15.22 -5.99% rounded out today's most actives at the NYSE.

Still up roughly 82% from Friday's intra-day low of $3.89, Freddie Mac's auction of $3 billion in short-term debt sold at better than expected prices after the Fed said Sunday that it granted the Federal Reserve Bank of New York authority to lend Freddie and Fannie (should such lending prove necessary) capital at 2.25%, the same rate given to commercial banks and large Wall Street Firms.

Washington Mutual (NYSE:WM) $3.23 -34.74% was sharply lower after Lehman Brothers said the bank could see $26 billion in losses from items on its balance sheet.

Ohio-based National City Corp. (NYSE:NCC) $3.20 -27.60% also came under pressure and were halted for trade just prior to 12:00 PM EDT at $3.21 with news pending. The banks spokeswoman said in a statement that it was still credit-worthy. When trading was resumed in the shares, buyers marked an intra-day low of $2.99.

In an attempt to protect some homebuyers from themselves and lenders, the Fed approved a final mortgage-lending rule by requiring creditors to verify borrowers' income and assets and to establish escrow accounts for all first-lien mortgages.

In essence, if a prospective borrower tells a lender that he/she/they have $100,000.00 in income, but in reality make $50,000.00, it'll probably be difficult to qualify for a $300,000.00 loan with no-money-down, let alone 125% loan-to-value!

Somehow, someway, somebody will figure out a way to circumvent the system. Not unlike death and taxes, this to is something you can count on.

With taxpayers on the hook for IndyMac's bailout, the U.S. Dollar Index (DXY) 72.01 -0.12% (from Friday's close) was off fractions, with the yen and pound as depicted by the Yen CurrencyShares (FXY) 95.08 +0.36% and British Pound CurrencyShares (FXB) $199.77 +0.36% showing gains, while the most heavily weighted euro depicted by the Euro CurrencyShares (FXY) $159.39 -0.03% edged lower.

Silver and gold as represented, viewed by some as a hedge against a weakening dollar, had the iShares Silver Trust (AMEX:SLV) $189.40 +1.61% (~$18.94 spot) and StreetTracks Gold (NYSE:GLD) $95.91 +0.78% (~$959.10 spot) posting gains.

Major Global Markets, Currencies, Oil and Gold

Asian markets finished Monday's session mixed-to-lower with Japan's Nikkei-225 ($NIKK) shedding 29 points, or 0.20% to finish at 13,010.

Later this evening, the Bank of Japan is slated to announce its overnight call rate, with many expecting no change at 0.50%.

In last Monday's market wrap, I quickly updated you on the $NIKK point and figure chart, where since Monday, we have seen further selling (-2.62%) take the $NIKK below its bullish support trend. First sign of strength now would be a double top buy signal with trade at 13,200. A trade there could bring in some meaningful near-term short-covering after a pattern of lower highs at 13,400, then 13,250 and now 13,150.

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Mainland China's Shanghai Composite ($SSEC) gained 21 points, or +0.76% and continues to rise from a very "oversold" 0-14% bullish percent (4% on chart), having now reached a more "overbought" 68-72% at this evening's update (See Monday's Wrap and Global Bullish %) of 68%.

Let's call the Hang Seng's ($HSI) trade since last Monday's update as "unchanged" even though it is up 0.46% from last Monday's close.

As China's Shanghai bullish % has quickly reversed course, let's quickly review today's economic data out of the UK, the FTSE-100's point and figure chart, as well as the London Bullish % from Dorsey/Wright, as we observe some "similarity" of internal strength presenting itself.

FTSE-100 ($FTSE) - 50-point box

On a 2008-YTD basis, I'd have to say, based on observation, that the FTSE-100 is perhaps the "stronger" of the major European bourses covered in my Monday market wraps.

Today's economic data out of the UK showed the country's Producer Price Index (PPI) Inputs rising a hefty 2.1% (M/M) in June as sharp increases in prices of oil, gas and electricity, as well as imported food kept inflation hawks at the ready. While the 2.1% rise offered some cushion to economists' forecast for a larger 2.5% increase after a 3.9% (M/M) surge in May, producers were able to pass along some of their costs with PPI Outputs rising 0.9% (M/M) after a 1.9% increase in May (M/M). While greater focus is given to the INPUTS side of the equation, the output increase was also below economists' forecast for a 1.2% increase.

With the FTSE-100 ($FTSE) challenging its Jan'08 lows, there are few bullish profits at this point, but a recent reversal back up in Dorsey/Wright's Bullish % for London (BPLN) to "bull alert" suggests at a minimum that not unlike Shanghai, we may be seeing some short-covering start to take hold on a more meaningful basis.

London Bullish % (BPLN) - 2% box chart

Bears will likely want to make the tie with "bull alert" status signaling just that. Being on the alert for strength as the BPLN reverses up from BELOW 30%.

Off the various "Europe" based bullish % covered by the institutionally followed Dorsey/Wright & Associates, the London Bullish % is the only bullish % to currently show a reversal higher.

That's enough for this technician to have subscribers on early alert for strength in Europe.

As I type, another closely watched economic report is being released out of the UK, with its Royal Institution of Chartered Surveyors (RICS) House Price Balance coming in at a weak, but stronger-than-forecasted reading of -88.00% in June. Economists were looking for a reading of -93.8% after May's -92.2%. The RICS suggests that 88% of surveyors reporting housing prices fell in June, a modest improvement from 92.2% having reported falling housing prices in May.

Analysts mentioned a "glimmer of optimism" in that demand may be starting to pick up with a balance of -35 reporting a rise in new-buyer enquiries, compared to -51 in May.

With many of the "same problems" found in Europe and the UK as found here in the U.S. I think it worthy of tracking some of the foreign markets economic data, and market participant reactions to the data.

Closing U.S. Market Watch -

Again, financials as grouped with the BIX.X, BKX.X, XBD.X were notably weak again today.

My only comment here is to trade OPTIONS and do NOT over leverage.

I have not been PROFILING any bullish, or LONG CALL option trades among the banks, but traders have been having success with "small" OUT-THE-MONEY put option positions in Lehman Bros. (NYSE:LEH) $12.40 -14.06% and Bank of America (NYSE:BAC) $20.15 -7.01%.

If/when a trader gets a double, or 100% gain, which can be a day or two, don't shun those types of gains.

Oil prices were rather "steady" today, but supply concerns in Iran, Nigeria and now Brazil keep bulls steady and short on edge.

Brazil's Petroleo Brasileiro (NYSE:PBR) $62.36 +1.05% said earlier this morning that a strike by 2,500 workers in the Campos Basin (80% of Brazil's oil output) might have cut production by 300,000 barrels/day, but later in the afternoon said it looked as if 136,000 barrels per day of production was negatively impacted. Brazil produces roughly 1.8 million barrels per day of oil and gas equivalents.

Short interest data on the US Oil Fund (USO) $117.48 +0.07% has been released. As of 06/30/08, short interest has grown to a record 20.02 million shares. On June 30th, the USO closed at $113.77.

While it is "never too late" for the U.S. to try and ease its dependency on foreign oil, President Bush lifted an executive ban on U.S. offshore oil drilling today, but until Congress lifts its own ban, the moratorium will continue.

Into next Tuesday's expiration, Nymex August Crude Oil futures (cl08q) settled up $0.10, or +0.07% at $145.18, while the September futures contract (cl08u) settled up $0.12 at $145.78.

One internal indicator I like to have traders and investors keep an eye on in the major U.S. benchmarks is the narrow NASDAQ-100 Bullish % (BPNDX) from Dorsey/Wright, and StockCharts.com's ($BPNDX).

On Tuesday, July 8th, this narrower bullish % did reverse back up to "bear correction" status at 40%, but on Thursday, reversed right back down to "bear confirmed" status at 33.00%.

It would now take a reversing higher measure of 40.00% on the below chart to once again achieve "bear correction" status, and a stronger demand measure of 42.00% to reach "bull confirmed" status, the STRONGEST of market conditions.

NASDAQ-100 Bullish % (BPNDX) - 2% box chart

My analysis would have to suggest that the recent spat of buying in among NDX components was largely short-covering related. Maybe some "bargain hunting" bulls, but a quick look at the NDX itself gives us a good observation that a trade at 1,880 is needed to signal demand returning on a more meaningful basis, and a re-test of the March lows still in play.

NASDAQ-100 Index (NDX) - 20-point box

Traders and investors can probably make the tie between the recent UPWARD reversal in the BPNDX to 40.00% and the recent reversal up to 1,860 in the NDX itself, then the 3-box reversals back lower.

For me, it would currently take a trade at 1,880 to signal strength here.

One sector that looks compelling from the BULLISH side would be BIOMed, where its sector bullish % has been gaining buy signals and remains in "bull alert" status at 30.50% (has been 32.00% on sector bullish %) having fallen to as low as 14% in early March.

The U.S. Market Watch would show the Biotechnology Index (BTK.X) 759.70 -0.46% up 2.87% since June 24th, and representing some RELATIVE STRENGTH.

Hmmmm... the Pharmaceutical Index (DRG.X) 300.15 -0.34% also showing some strength since then.

One earnings report this evening had shares of Genentech (NYSE:DNA) $75.39 -3.03% edging higher at $76.45 after the world's second-largest biotechnology company posted net income of $782 million, or $0.73/share (including one-time charges of $0.09/share) on revenue of $3.24 billion. Wall Street was looking for the company to earn $0.86/share on revenue of $3.23 billion.

Late this afternoon, after the market closed, the Semiconductor Equipment and Materials International, known as SEMI, echoed last week's cautious forecast from research firm Gartner Inc., saying it has revised LOWER its 2008 forecast for chip equipment sales.

SEMI said sales are likely to fall 20% this year, which is much more pessimistic than the group's previously projected 1.4% decline seen in January. Last week, Gartner said it saw semiconductor capital spending dropping by 22% as chipmakers are expected to delay spending due to migration to the advanced 12-inch, or 300-millimeter, wafer-fabrication lines, which industry analysts see as boosting output at lower manufacturing costs.

Chipmaker behemoth Intel (NASDAQ:INTC) $20.47 -0.82% may shed some light on its cap-ex spending when it reports earnings tomorrow after the closing bell.

Bullish caution advised for Applied Materials (NASDAQ:AMAT) $17.77 -0.78%, KLA-Tencor (NASDAQ:KLAC) $37.33 -1.21%. Novellus (NASDAQ:NVLS) $19.49 +1.72% found some buyers today, but has been spending some time under its late-April lows of $20.00.

Not unlike the Biotech's, which show some relative strength near-term, the small caps of the Russell 2000 Index ($RUT.X) manage to hold a 0.95% gain since Monday, and a fractional gain since Wednesday.

A "traingle" or pennant pattern looks like it is forming and there's probably some pressure building here.

Russell 2000 Index (RUT) - 4-point box

The RUT.X jumped higher this morning, traded a HIGH of 680.72, and in "BLUE ?" I've envisioned how the RUT finished the session.

This would be my "index chart of the WEEK" as we've at least got some UP (X) and DOWN (O) action that gives us the sense of pressure building between supply/sellers (O) and demand (X) buyers.

Bears steady as long as the RUT.X does NOT trade 688. Bulls can play, but I STRONGLY suggest small CALL OPTION positions, where DOWNSIDE risk is LIMITED to the price of the CALL option.
 


New Plays

New Option Plays

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

New Calls

None today.
 

New Puts

iShares Rus.2000 - IWM - cls: 66.16 chg: -1.11 stop: 68.60

Company Description:
The iShares Russell 2000 Index (IWM) is an exchange traded fund (ETF) that mimics the performance of the Russell 2000 small cap index.

Why We Like It:
I suspect that the IWM is going to breakdown from its current five-day consolidation pattern. Today's bearish engulfing candlestick could be the signal that launches the next leg lower. This is a higher-risk play since the market is so oversold and due for a bounce. On the other hand what we're doing is essentially playing the trend. We're suggesting put positions now although you could wait for a new low under $65.60 or $65.00 if you want to see a little more momentum first. Our target is the $61.00 mark.

FYI: If you prefer a more neutral strategy see the IWM strangle we just listed.

Suggested Options:
We are suggesting the August or September puts. It is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY PUT AUG 65.00 DIW-TM open interest=153,077 current ask $2.06
BUY PUT AUG 61.00 DIW-TI open interest= 46,549 current ask $0.93

BUY PUT SEP 65.00 IQQ-UM open interest= 42004 current ask $3.30
BUY PUT SEP 61.00 IQX-UI open interest= 1232 current ask $1.97

Picked on July 14 at $ 66.16
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 90 million
 

New Strangles

iShares Rus.2000 - IWM - cls: 66.16 chg: -1.11 stop: n/a

Company Description:
The iShares Russell 2000 Index (IWM) is an exchange traded fund (ETF) that mimics the performance of the Russell 2000 small cap index.

Why We Like It:
If you don't feel like picking a direction on the market then consider another strangle, this time on the small cap index ETF. The IWM has been consolidating sideways for the last five days and it's forming a pennant pattern. Normally these are neutral patterns and the stock could go either way. However, I suspect the move will be lower, which is why we listed the put play above. Not everyone is going to feel comfortable with a directional trade in this market so we're listing this strangle instead. This way we don't care what direction the Russell 2000 moves.

Suggested Options:
A strangle involves buying both an out-of-the-money call and an out-of-the-money put. We don't care what direction the stock goes as long as it moves one direction. If the stock moves far enough one side of our trade will rise in value and pay for the entire trade and make a profit.

We are suggesting the August options below. Our estimated cost is $1.84. We want to sell if either option hits $2.75. More aggressive traders may want to aim for more.

BUY CALL AUG 70.00 DIW-HR open interest=135255 current ask $0.91
-and-
BUY PUT AUG 61.00 DIW-TI open interest= 46549 current ask $0.93

Picked on July 14 at $ 66.16
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 90 million
 


Play Updates

In Play Updates and Reviews

Call Updates

CurrencyShares Euro - FXE - cls: 159.44 chg: +1.45 stop: 156.75

The U.S. dollar tried to bounce today but closed around unchanged on the session. This sent the FXE to an intraday low of $158.81 before bouncing higher. We don't see any changes from our weekend comments. We are suggesting two different entry points to get long calls on the FXE. Our first entry point is a breakout to new highs at $160.55. Our second entry point would be a pull back to $158.00. Our stop loss is at $156.75. If we get filled at $160.55 we'll adjust the stop higher. Our five-week target is $164.50. Our ten-week target is $169.50. We are suggesting the August and September calls. Strikes are available at $1.00 increments.

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 909 thousand

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Gold ETF - GLD - cls: 95.91 chg: +0.75 stop: 91.50 *new*

Investor fears continue to edge higher, especially with news of a major bank failure and the potential for more on the horizon. Gold rallied and the GLD added 0.8%. The intraday high was $96.20. Our target is the $97.00 level. More aggressive traders may want to aim for the $99.50-100.00 zone instead. We are raising our stop loss to $91.50.

Picked on July 09 at $ 91.50
Change since picked: + 4.41
Earnings Date 00/00/00
Average Daily Volume = 9.8 million

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Hess Corp. - HES - close: 111.25 chg: -0.51 stop: 107.24

We are starting to grow more concerned with HES. The stock continues to trade in its trading range and remains above technical support at its 100-dma. Unfortunately the technical picture seems to be getting worse. We're not suggesting new positions at this time! More conservative traders may want to raise their stop loss toward $109.25. We have two targets. Our first target is $119.75. Our second target, if HES can breakthrough resistance near $120.00, is the $124.50 mark. We do not want to hold over the late July earnings report.

Picked on July 10 at $112.98
Change since picked: - 1.73
Earnings Date 07/30/08 (confirmed)
Average Daily Volume = 4.3 million

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Mosaic - MOS - cls: 145.69 chg: +3.88 stop: 135.75 *new*

First target exceeded. MOS and many of the fertilizer stocks out performed the market today. Shares of MOS rallied to $146.92. Our first target was the $144.00 mark. We strongly suggest that readers take some money off the table now. We're not suggesting new positions at this time but a dip or a bounce near $140 might be a new entry point just use a tighter stop loss. Speaking of stops we're raising ours to $135.75. FYI: More aggressive traders may want to aim for the top of the bullish channel in the $175-180 region. Remember, we do not want to hold over the July 28th earnings report.

Picked on July 08 at $133.57 *1st target hit $144.00
Change since picked: +12.12
Earnings Date 07/28/08 (confirmed)
Average Daily Volume = 6.0 million

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CBOE Volatility Index - VIX - close: 28.48 chg: +0.99 stop:

The VIX is still inching higher but hasn't quite hit our first target at $29.50. Readers may still want to consider taking some money off the table here. We were suggesting the August options. We were listing two targets. One target is 29.50 and a second one at 34.00.

Picked on June 30 at $ 23.95
Change since picked: + 4.53
Earnings Date 00/00/00
Average Daily Volume = n/a million
 

Put Updates

Apple Inc. - AAPL - close: 173.88 chg: +1.30 stop: 181.01

It was a rocky day for AAPL. The company announced that they had sold more than one million of the new 3G iPhones in just three days but that failed to truly boost the share price. Yes, the stock did gain 0.7% but it failed under $180 again with the intraday high at $179.30. This is a bearish move and looks like a new entry point for traders to buy puts. Today that 200-dma is at 164.49. Our target is the $165.00 mark. If AAPL does trade lower we'll be considering bullish trading ideas in the $164-160 zone.

Picked on July 09 at $174.25
Change since picked: - 0.37
Earnings Date 07/21/08 (confirmed)
Average Daily Volume = 31.4 million

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Amazon.com - AMZN - close: 66.28 chg: -2.26 stop: 72.65

AMZN sinks again. The stock lost another 3.3% and closed near its lows for the day. More conservative traders may want to think about an early exit near $65.00. Our target is $62.50.

Picked on July 10 at $ 69.75 *triggered
Change since picked: - 3.47
Earnings Date 07/23/08 (unconfirmed)
Average Daily Volume = 7.2 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.)

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Alpha Nat. Res. - ANR - close: 98.72 chg: + 1.92 stop: n/a

ANR continues to rebound but it needs to move faster for us. We have four days left for July options. We're not suggesting new strangle positions at this time. This is a higher-risk strangle play with the options so expensive. The options we suggested were the July $105 calls (ANR-GA) and the July $85 puts (ANR-SQ). Our estimated cost was $9.40. We've adjusted our target to breakeven at $9.40.

Picked on June 15 at $ 94.25
Change since picked: + 4.47
Earnings Date 08/05/08 (unconfirmed)
Average Daily Volume = 3.7 million

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Chevron - CVX - close: 92.80 chg: +0.55 stop: n/a

CVX delivered a minor bounce after Friday's test of the 200-dma. We are not suggesting new strangle positions at this time. The options we suggested were the August $110 calls (CVX-HB) and the August $90 puts (CVX-TR). Our estimated cost is $2.20 (based on June 30th prices we needed 2 calls per 1 put). We want to sell if the puts $3.85 or if the calls hit $1.90. More aggressive traders may want to aim higher.

Picked on June 30 at $ 99.13
Change since picked: - 6.33
Earnings Date 08/01/08 (confirmed)
Average Daily Volume = 13.3 million

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DIAMONDS - DIA - close: 110.50 chg: -0.50 stop: n/a

The early morning bounce in the markets failed and the DIA has produced another bearish candlestick. We are not suggesting new strangle positions on the DIA at this time. The options we suggested were the August $115 calls (DIA-HK) and the August $109 puts (DIA-TE). Our estimated cost is $4.35. We want to sell if either option hits $6.90 or more.

Picked on July 07 at $112.21
Change since picked: - 1.71
Earnings Date 00/00/00
Average Daily Volume = 15.5 million

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Eaton - ETN - close: 79.89 change: -1.04 stop: n/a

Today was a good day for us. ETN's drop and afternoon rebound gave us multiple chances to open strangle positions close to the $80.00 mark. We are no longer suggesting new positions. Tomorrow is the big day when ETN reports earnings before the opening bell. Wall Street expects the company to report a profit of $1.94 a share. We listed two different strangles. One was a very aggressive strangle with July options. The other was a strangle
with August options.

The options we suggested for the aggressive July strangle, with just four days left before options expire, were the July $85 calls (ETN-GQ) and the July $75 puts (ETN-SO). Our estimated cost is $1.35. We want to sell if either option hits $2.50.

The options we suggested for the August strangle were the August $85 calls (ETN-HQ) and the August $75 puts (ETN-TO). Estimated cost with August options is $4.45. We want to sell if either option hits $7.75.

Picked on July 13 at $ 80.93
Change since picked: - 1.04
Earnings Date 07/15/08 (confirmed)
Average Daily Volume = 2.2 million

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iShares Brazil - EWZ - cls: 82.58 chg: +0.94 stop: n/a

It's been a bumpy few days for the EWZ but overall we haven't seen any real movement. Today shares bounced up to their 200-dma. We are not suggesting new strangle positions. The options we suggested were the August $90 calls (EWZ-HR) and the August $75 puts (EWQ-TO). Our estimated cost is $3.95. We want to sell if either option hits $5.90.

Picked on July 03 at $ 83.06
Change since picked: - 0.48
Earnings Date 00/00/00
Average Daily Volume = 13.6 million

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Corning Inc. - GLW - close: 19.82 chg: -0.46 stop: n/a

Negative analyst comments from Citigroup helped send GLW to a 2.2% loss. The stock painted another bearish candle with a failed rally and a close under $20.00 for the first time in over a year. Earnings are late July and we do plan on holding over the report unless the options hit our target first. Try and open strangle positions as close to $20.00 as possible but we would use the $20.25-19.75 zone. The options we suggested were the August $22.50 calls (GLW-HX) and the August $17.50 puts (GLW-TW). Our estimated cost is $0.75. We want to sell if either option hits $1.50. Try and keep your investment balanced on both sides of the trade.

Picked on July 10 at $ 20.16
Change since picked: - 0.34
Earnings Date 07/30/08 (confirmed)
Average Daily Volume = 15.9 million

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Garmin Ltd. - GRMN - close: 42.05 chg: -0.61 stop: n/a

At this point we don't have much hope for GRMN. We warned readers days ago to consider exiting early to try and salvage any capital. GRMN is stuck in its trading range and with options expiration this week odds are pretty good it will stay stuck in this range the rest of the week. If it did "break" from the range it would probably get pinned to $45.00 or $40.00 on Friday. The options we listed were the July $50 calls (GQR-GJ) and the July $40 puts (GQR-SH). Our estimated cost was $2.55 and we have adjusted our exit to breakeven at $2.55.

Picked on June 15 at $ 44.91
Change since picked: - 2.86
Earnings Date 07/30/08 (unconfirmed)
Average Daily Volume = 4.1 million

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Internet Holders - HHH - cls: 49.13 change: -1.50 stop: n/a

Declines across the Internet sector, especially in ETFC and MFE, led the HHH to a 2.9% loss. We had been suggesting strangle positions in the $50.50-49.50 zone. The options we suggested were the August $55 calls (HHH-HK) and the August $45 puts (HHH-TI). Our estimated cost is $1.65. We want to sell if either option hits $2.45.

Picked on July 03 at $ 50.50
Change since picked: - 1.37
Earnings Date 00/00/00
Average Daily Volume = 132 thousand

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KLA-Tencor - KLAC - close: 37.33 chg: -0.46 stop: n/a

KLAC just barely tagged a new relative low today. We're almost out of time with these July options. Please note that we recently adjusted our exit targets. For strangle #1 we're moved the exit target from $3.00 to $2.25. For strangle #2 we're moved the target from $1.50 to $1.15. More conservative traders may want to move their targets to breakeven. We are not suggesting new positions at this time. We listed two different strangles on KLAC.

Suggested Options:
KLAC Strangle #1) The options we listed were the July $42.50 calls (KCQ-GV) and the July $37.50 puts (KCQ-SU). Our estimated cost is $1.65 We want to sell if either option hits $2.25

KLAC Strangle #2) The options we listed were the July $45.00 calls (KCQ-GI) and the July $35.00 puts (KCQ-SG). Our estimated cost is $0.70. We want to sell if either option hits $1.15.

Picked on June 22 at $ 40.07
Change since picked: - 2.74
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 3.7 million

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MarketVectors Agribusiness- MOO - close: 58.29 chg: +0.64 stop: n/a

Many of the agribusiness stocks managed to bounce today. The MOO added 1.1% by the closing bell. We were suggesting readers open strangle positions in the $57.00-58.00 zone. The options we suggested were the August $62 calls (MYV-HJ) and the August $50 puts (MOO-TX). Our estimated cost is $2.10. We want to sell if either option hits $3.15.

Picked on July 03 at $ 57.25
Change since picked: + 1.04
Earnings Date 00/00/00
Average Daily Volume = 745 thousand

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PowerShares QQQ - QQQQ - cls: 44.23 chg: -0.33 stop: n/a

The market's early morning rally failed and stocks look poised to move lower. We're not suggesting new positions at this time. The options we suggested were the August $47 calls (QQQ-HU) and the August $43 puts (QQQ-TQ). Our estimated cost is $1.80. We want to sell if either option hits $2.75 or more.

Picked on July 07 at $ 44.90
Change since picked: - 0.67
Earnings Date 00/00/00
Average Daily Volume = 148 million

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UBS Ag - UBS - close: 18.64 change: -0.85 stop: 20.75

Shares of UBS spiked open to $19.87 and then faded. The move produced yet another failed rally under its 10-dma. More aggressive traders might be tempted to just buy puts and use a tight stop above $20.00. We had suggested a strangle with a $21.00-19.00 entry range. We listed two different strangles.

UBS Strangle #1) This uses the August $22.50 calls (UBS-HX) and $17.50 puts (UBS-TW). Our estimated cost was $1.90. We want to sell if either option hits $3.00.

UBS Strangle #2) This uses the August $25.00 calls (UBS-HE) and $15.00 puts (UBS-TC). Our estimated cost was $0.90. We want to sell if either option hits $1.90.

Picked on July 13 at $19.49
Change since picked: - 0.85
Earnings Date 08/12/08 (unconfirmed)
Average Daily Volume: 7.3 million

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United States Oil - USO - cls: 117.48 chg: +0.09 stop: n/a

Oil didn't move much today. That's not good news for this strangle play. We're down to our last four days before July options expire. We're adjusting our exit for USO strangle #1 to $9.00. We're adjusting our exit for USO strangle #2 to breakeven at $4.10. We are not suggesting new positions at this time. We suggested two different strangles. The strangle with the wider strikes costs less but has higher risk.

USO Strangle #1) The options we listed were the July $115 calls (IYS-GK) and the July $105 puts (IYS-SA). Our estimated cost is $7.10 We want to sell if either option hits $9.00.

USO Strangle #2) The options we listed were the July $120 calls (QSO-GP) and the July $100 puts (IYS-SV). Our estimated cost is $4.10. We want to sell if either option hits $4.10.

Picked on June 22 at $109.14
Change since picked: + 8.34
Earnings Date 00/00/00
Average Daily Volume = 12.5 million

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FinancialSector SPDR - XLF - cls: 17.72 chg: -0.96 stop: n/a

Surprise! Instead of gapping lower the XLF actually gapped higher thanks to news headlines over the weekend. Unfortunately the strength quickly faded. We had suggested readers open positions on the gap down or wait five minutes after the open and then open positions. Well, we didn't get the gap down so if you waited five minutes then our entry price is around $19.12. Our strategy also said to adjust the options based on our entry. With an entry price near $19.00 the options in our strangle should be the August $21.00 calls (XLF-HU) and the August $17.00 puts (XJZ-TQ). Our estimated cost was $1.22. We want to sell if either option hits $2.85.

Picked on July 14 at $ 19.12
Change since picked: - 1.40
Earnings Date 00/00/00
Average Daily Volume = 128 million
 

Dropped Calls

CF Inds. - CF - close: 165.09 chg: +6.04 stop: 147.45

Target exceeded - again! CF displayed plenty of relative strength on Monday with a 3.8% gain. The stock rallied to an intraday high of $166.21. Our secondary target was the $164.50 mark. The stock hit our primary target at $159.00 last week. As we suggested earlier, more aggressive traders may want to aim for the $170 region or the top of the bullish channel in the $180 area.

Picked on July 08 at $145.06 *gap open entry/2nd target hit
Change since picked: +20.03
Earnings Date 07/28/08 (unconfirmed)
Average Daily Volume = 2.7 million

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Fording Candn.Trust - FDG - cls: 83.24 chg: +1.86 stop: 74.45

Target exceeded. Shares of FDG surged to $84.25 this morning. Our target was the $84.00 mark. Volume has been declining on the sell-off which suggests the bounce may not last very long. We're watching the $85-86 zone to be potential resistance.

Picked on July 08 at $ 75.35 /target hit $84.00
Change since picked: + 7.89
Earnings Date 07/23/08 (confirmed)
Average Daily Volume = 2.4 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

Today's Newsletter Notes: Market Wrap by Jeff Bailey and all other plays and content by the Option Investor staff.

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