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ACI None
DHI  
TIE  

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Arch Coal - ACI - close: 30.32 change: +2.14 stop: 27.99

Company Description:
St. Louis-based Arch Coal is the nation's second largest coal producer. The company's core business is providing U.S. power generators with clean- burning, low-sulfur coal for electric generation. Through its national network of mines, Arch supplies the fuel for approximately 6 percent of the electricity generated in the United States. (source: company press release or website)

Why We Like It:
Coal stocks have suffered a very punishing five or six months of steady selling that has seen most stocks in the group get cut in half. Finally, after a month of consolidating sideways, we may be witnessing a bottom in the sector. Shares of ACI look tempting as a bullish candidate given the stock's double-bottom near $26 over the past month and today's bullish breakout over resistance at the $30.00 level. Today's move is also a breakout over its trendline of resistance (see chart). Volume on today's move came in above average, which is also a bullish sign. We're setting the stop under today's low. Our target is the $34.00-35.00 range. We only have ten days since we want to avoid holding over ACI's earnings report. FYI: We would keep a careful eye on the simple 50-dma, which might be overhead resistance!

Picked on October 10 at $30.32
Change since picked: + 0.00
Earnings Date 10/20/06 (confirmed)
Average Daily Volume: 3.5 million

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D.R.Horton - DHI - close: 24.76 change: +0.92 stop: 22.99

Company Description:
D.R. Horton, Inc., America's Builder, is the largest homebuilder in the United States, delivering more than 50,000 homes in both fiscal years 2005 and 2006. Founded in 1978 in Fort Worth, Texas, D.R. Horton has expanded its presence to include 83 markets in 27 states in the Mid-Atlantic, Midwest, Southeast, Southwest and West regions of the United States. The Company is engaged in the construction and sale of high quality homes with sales prices ranging from $90,000 to over $900,000. D.R. Horton also provides mortgage financing and title services for homebuyers through its mortgage and title subsidiaries. (source: company press release or website)

Why We Like It:
Homebuilders were the best performing sector on Tuesday. The DJUSHB home construction index rose 2.8%. The move was fueled by investors shopping for a bargain assuming we've seen the bottom in housing stocks. It did not hurt that a J.P.Morgan analyst upgraded three builders in the sector this morning. Shares of DHI rebounded from the bottom of its recent trading range and the stock looks poised to breakout over resistance. We are actually a little surprised by the relative strength in DHI today. The company announced that net sales have fallen due to a rising cancellation rate yet the stock rallied anyway. More aggressive traders may want to go long right now. We're going to set a trigger over the September 27th high at $25.51. If triggered at $25.51 our target is the $29.00-30.00 range although more conservative traders may want to exit at the 200-dma currently near 28.55.

Picked on October xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/14/06 (confirmed)
Average Daily Volume: 4.1 million

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Titanium Metals - TIE - close: 26.45 change: +0.85 stop: 25.49

Company Description:
TIMET, headquartered in Dallas, Texas, is a leading worldwide producer of titanium metal products. (source: company press release or website)

Why We Like It:
Many of the metal producers have produced a turnaround in the last week or so. The group is trying to stage a real rally and if so they are poised to play catch up with the rest of the market. TIE looks like an attractive candidate. The stock appears to have produced a bullish double-bottom near $23 over the last few weeks. The stock has already cleared resistance near $25.50 and its 50-dma. Currently shares are flirting with a breakout over its 200-dma. We do note that the P&F chart is still bearish but TIE could rally toward the $29 region and still have a bearish P&F chart pattern. We're going to suggest a trigger to go long at $27.01. If triggered our short-term target is the $29.90-30.00 range. We don't want to hold over the October 23rd earnings report (still an unconfirmed date).

Picked on October xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/23/06 (unconfirmed)
Average Daily Volume: 4.3 million
 

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