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Long Play Updates

Advance Auto Parts - AAP - cls: 32.48 chg: +0.49 stop: 31.69

A better than expected earnings report from rival AZO helped lift shares of AZO by more than 4.8% and shares of AAP added 1.5% in sympathy. The trading in AAP was somewhat volatile today. The stock spiked higher at the open on the AZO news, then plunged back toward support near $32.00 and then bounced again to completely erase yesterday's decline. In spite of this volatility in AAP the volume came in at average levels. The bounce from $32 looks like a new entry point to go long but we noticed that today's session also produced the second failed rally in the last two weeks in the $33.20-33.25 region. This is a new concern. More conservative traders may want to tighten their stops even closer to the $32.00 level. Tomorrow may bring more volatility as investors react to the FOMC meeting and their decision on interest rates. Our target remains the $35.80-36.00 range. We do not want to hold over the early November earnings report for AAP.

Picked on September 12 at $32.93
Change since picked: - 0.45
Earnings Date 11/02/06 (unconfirmed)
Average Daily Volume: 1.4 million

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Elk Corp. - ELK - close: 28.45 change: -0.57 stop: 27.95

It looks like traders decided to do a little profit taking in ELK (-1.9%) ahead of tomorrow's FOMC meeting. The stock is looking a little short-term overbought given the rally from its July lows. Shares dipped toward short-term support near $28.00 and the bottom of its narrow, rising channel. We are not suggesting new positions at this time and we continue to suggest that our own readers do some profit taking. Our target is the $29.60-30.00 range.

Picked on August 22 at $27.10
Change since picked: + 1.35
Earnings Date 08/17/06 (confirmed)
Average Daily Volume: 245 thousand

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Hovnanian - HOV - close: 28.88 change: -0.42 stop: 27.74

It was a tough day for the homebuilders but it could have been worse. Last night after the closing bell MTH issued an earnings warning. This morning the Commerce Department said new home construction fell 6%, which was worse than expected. The DJUSHB home construction index slipped 1.69% and shares of HOV fell 1.4%. Yet chart readers will notice that traders bought the dip in HOV above $28 and its rising 10-dma. We are still on the sidelines awaiting a breakout over $30.00. Our suggested entry point is a trigger at $30.11. If we're triggered at $30.11 our target is the $34-35 range. Our time frame is six to eight weeks. FYI: Even though our market outlook is less than bullish the homebuilders are so beat up we suspect they will be able to continue the bounce higher.

Picked on September xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 09/06/06 (confirmed)
Average Daily Volume: 1.6 million

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Intl. Game Tech. - IGT - close: 39.28 chg: -0.12 stop: 38.24

Nothing happened for IGT traders today. The stock churned sideways in a pretty tight trading range probably due to investors not wanting to place any bets ahead of tomorrow's FOMC meeting. We would consider a bounce from $39 and/or its 10-dma as a potential entry point but more conservative traders may still want to wait for a move over $40.32 before considering positions. Our target is the $44.00-45.00 range. We do not want to hold over the early November earnings report. Bear in mind that we're worried the market is near a top so traders need to monitor their stop loss and risk pretty closely! FYI: The P&F chart is bullish with a $57 target.

Picked on September 17 at $40.26
Change since picked: - 0.98
Earnings Date 11/02/06 (unconfirmed)
Average Daily Volume: 2.2 million

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Regal Beloite - RBC - close: 44.16 change: -0.20 stop: 42.49

Tuesday proved to be an interesting session for RBC. The stock fell throughout the first half of the day. Shortly after 12-noon the stock began to bounce around the $42.90 region and then about an hour later shares shot higher again. This intraday reversal higher is bullish and more aggressive traders may want to use it as a new entry point to go long. We would suggest that traders wait for a new move over $45.25 before considering new positions. Our target on RBC is the $49.00-50.00 range.

Picked on September 15 at $45.11
Change since picked: - 0.95
Earnings Date 10/26/06 (unconfirmed)
Average Daily Volume: 291 thousand

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United Tech. - UTX - close: 64.15 chg: +0.08 stop: 61.99

UTX gapped down at the open this morning but reversed course after shares filled the gap from Friday morning. Overall the rebound higher this afternoon looks bullish but we would hesitate to open new long positions ahead of the FOMC decision tomorrow afternoon. More conservative traders might want to tighten their stops. Our target is the $66.00 level.

Picked on September 10 at $63.34
Change since picked: + 0.81
Earnings Date 10/17/06 (unconfirmed)
Average Daily Volume: 3.5 million

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WebEx Comm. - WEBX - close: 38.72 chg: -0.30 stop: 35.74

Anything remotely Internet-related (like WEBX) hit some selling late this morning after Yahoo (YHOO) issued an earnings warning around 11:30 today. You can see it pretty clearly on WEBX's chart with the spike down intraday. Fortunately, shares managed to recoup most of their losses. We would wait for the FOMC meeting's decision before opening new plays. Our target remains the $42.50-44.00 range. The P&F chart is very positive with a bullish triangle breakout buy signal.

Picked on September 12 at $38.49
Change since picked: + 0.23
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume: 625 thousand
 

Short Play Updates

Charlotte Russe - CHIC - close: 26.55 chg: -0.24 stop: 27.05

There is no change from our weekend new play description on CHIC. The stock dipped toward its 50-dma near $26.00 this morning and bounced for the second day in a row. We are waiting for a breakdown and our suggested entry point to short the stock is at $25.65. If triggered our target is the $22.10-22.00 range, which is just above rising technical support at the 200-dma. FYI: The latest (August) data puts short interest at 6.9% of CHIC's 22.2 million-share float.

Picked on September xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/19/06 (unconfirmed)
Average Daily Volume: 497 thousand

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Commercial Metals - CMC - close: 20.48 chg: -0.52 stop: 21.55

Lack of follow through on yesterday's bounce in the metals sector is good news for the bears. We're still waiting for a breakdown under support at the $20.00 mark. Our suggested entry point for shorts is at $19.90. If triggered our target is the $17.50-17.00 range. We do not want to hold over the late October earnings report.

Picked on September xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/24/06 (unconfirmed)
Average Daily Volume: 1.5 million

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Hormel Foods - HRL - close: 35.67 chg: -0.05 stop: 36.65

Shares of HRL dipped to a new low for the month (35.20) but managed to bounce back almost unchanged by the closing bell. There was some news today as HRL announced its current CFO was retiring at the end of the year. We are not suggesting new positions at this time. Our target remains the $35.00-34.50 range.

Picked on August 31 at $36.65
Change since picked: - 0.98
Earnings Date 11/23/06 (unconfirmed)
Average Daily Volume: 331 thousand

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Precision Castparts - PCP - cls: 58.43 chg: -1.46 stop: 58.05

More aggressive traders may want to take another look at PCP today. The stock has produced a bearish reversal with today's failed rally over the $60 level. The move today has also produced what looks like a "dark cloud cover" candlestick pattern. Aggressive traders could use this as a new entry point for shorts. We are still waiting for a breakdown under $55.00. Our trigger to open bearish plays is at $54.95.

Picked on September xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/17/06 (unconfirmed)
Average Daily Volume: 978 thousand

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Tessera Tech. - TSRA - close: 31.25 chg: -0.23 stop: 33.01

Our play in TSRA is now open. The stock broke down under support at its 50-dma and the $31.00 level on an intraday basis. Our trigger to short TSRA was at $30.95. It is unfortunate that TSRA failed to close under support at the $31.00 level and that puts us (the bears) in danger that this move could be a bear trap. We would not suggest new positions with TSRA above the $31 level. It would be a good idea to keep an eye on the SOX semiconductor index. The SOX lost 2.2% in what looks like a potential bearish reversal but the SOX did bounce from potential support in the 450 region. More conservative traders, if you did open positions in TSRA This morning, may want to tighten their stops toward $32.00-32.25. Now that the play is open our target is the $26.00-25.00 range. We do not want to hold over the late October earnings report. FYI: Readers should note that the latest (August) data puts short interest at 11.7% of the stock's 42.8 million-share float. That is a relatively high amount of short interest and makes this a higher-risk play.

Picked on September 19 at $30.95
Change since picked: + 0.30
Earnings Date 10/31/06 (unconfirmed)
Average Daily Volume: 634 thousand
 

Closed Long Plays

Brookfield Asset Mgt. - BAM - cls: 43.33 chg: -1.11 stop: 43.45

We have been stopped out of BAM at $43.45. Today's decline
(-2.49%) has broken the eight-week trendline of rising support. This shouldn't be too surprising as our updates have grown increasingly cautious on BAM and its waning momentum.

Picked on August 22 at $44.82
Change since picked: - 1.49
Earnings Date 08/03/06 (confirmed)
Average Daily Volume: 393 thousand

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SafeNet Inc. - SFNT - close: 17.90 chg: -0.49 stop: 18.15

The trading in SFNT was bearish on Tuesday. If you are optimistic then the intraday bounce from $17.17, which was relatively close to its 50-dma and 100-dma, might seem encouraging. We see today's 2.6% decline and close under the $18.00 level as a potential sell signal. The stock has broken support at its six-week trendline of higher lows and what now appears to be the neckline of a slanting (bearish) head-and-shoulders pattern that happens to have two right shoulders, which is not uncommon. It was our plan to go long on a breakout over resistance near $19.50 with our suggested entry point to open plays at $19.60. SFNT never hit our trigger so we're dropping it as a candidate unopened.

Picked on September xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/26/06 (unconfirmed)
Average Daily Volume: 300 thousand
 

Closed Short Plays

Patterson-UTI - PTEN - cls: 23.00 change: -0.71 stop: 26.05

Target achieved. Yesterday's bounce in oil and the oil stocks was reversed today. Crude oil plunged over 3.3% to hit new lows for the year. Shares of PTEN followed with a 2.99% loss. The intraday low was $22.73 and our target was the $22.75-22.50 range.

Picked on September 10 at $25.28
Change since picked: - 2.28
Earnings Date 11/02/06 (unconfirmed)
Average Daily Volume: 2.8 million
 

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