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Cephalon - CEPH - close: 75.21 change: +1.09 stop: 69.99

Company Description:
Founded in 1987, Cephalon, Inc. is an international biopharmaceutical company dedicated to the discovery, development and marketing of innovative products in four core therapeutic areas: central nervous system, pain, oncology and addiction. Cephalon currently employs approximately 3,000 people in the United States and Europe. U.S. sites include the company's headquarters in Frazer, Pennsylvania, and offices, laboratories or manufacturing facilities in West Chester, Pennsylvania, Salt Lake City, Utah, and suburban Minneapolis, Minnesota. Cephalon's European headquarters are located in Maisons-Alfort, France. (source: company press release or website)

Why We Like It:
The BTK biotech index is in breakout mode. The index closed at new five-year highs today and the sector looks prepared to keep the bullish run going for a while. We're going to try and play the upward momentum in the sector with a bullish play on CEPH. The stock has already been a big winner over the last few months and now after several weeks of consolidating sideways it looks like CEPH is ready to breakout to new highs of its own. We are going to suggest a trigger to buy calls at $76.65. If triggered we'll target a run into the $82.00-82.50 zone. More conservative traders may want to exit near $80.00 since it might be round-number resistance. Traders should remember that any time you're trading a biotech stock there is an elevated status of risk. You never know when an unexpected announcement about a drug in development or even from a competitor can send the stock you're trading gapping higher or lower in an instant.

Suggested Options:
We are suggesting the March calls. If you want more time the next month available is Mays.

BUY CALL MAR 75 CQE-CO open interest=1810 current ask $3.30
BUY CALL MAR 80 CQE-CP open interest= 505 current ask $1.30

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/14/06 (confirmed)
Average Daily Volume = 2.5 million

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Google Inc. - GOOG - close: 366.46 chg: +24.08 stop: 344.48

Company Description:
Google is a public and profitable company focused on search services. Named for the mathematical term "googol," Google operates web sites at many international domains, with the most trafficked being www.google.com. Google is widely recognized as the "world's best search engine" because it is fast, accurate and easy to use. The company also serves corporate clients, including advertisers, content publishers and site managers with cost-effective advertising and a wide range of revenue generating search services. Google's breakthrough technology and continued innovation serve the company's mission of "organizing the world's information and making it universally accessible and useful." (source: company press release or website)

Why We Like It:
This is a very aggressive speculation play. The reaction to GOOG's latest earnings report at the end of January was pretty drastic. The stock sank from $432 to less than $340 as of yesterday. The stock was very oversold and due for a bounce. That bounce came today after shares tested support near its simple 200-dma and the top of its October gap. Today's move was powerful enough to push shares above the top of its February 13th gap down and its simple 10-dma. We suspect that the bounce is not over yet. The next test of overhead resistance will probably be near the $380 level. However, we believe that GOOG can probably bounce back into the $394.00-400.00 range, which will be our target. The risk reward isn't great but we're putting the initial stop loss under today's low. We repeat this is very speculative and traders should only consider it if they're willing to risk a total loss. If you would prefer to buy a dip then watch for a pull back toward $360 or $355.

Suggested Options:
We are suggesting the March calls as the bounce will probably be a short-term affair. You, the individual trader, should pick which strike best suits your risk profile.

BUY CALL MAR 350 GGD-CJ open interest=6998 current ask $28.00
BUY CALL MAR 360 GGD-CL open interest=5566 current ask $21.30
BUY CALL MAR 370 GGD-CN open interest=8087 current ask $16.30
BUY CALL MAR 380 GOP-CP open interest=8117 current ask $12.00
BUY CALL MAR 390 GOP-CR open interest=8436 current ask $8.50

Picked on February 16 at $366.46
Change since picked: + 0.00
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 12.4 million

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Total - TOT - close: 127.61 change: +1.11 stop: 124.95

Company Description:
Total is a leading multinational energy company with 111, 401 employees* and operations in more than 130 countries. Together with its subsidiaries and affiliates, Total is the fourth largest publicly-traded oil and gas integrated company in the world**. Its businesses cover the entire oil and gas chain, from crude oil and natural gas exploration and production to the gas downstream (including power generation), transportation, refining, petroleum product marketing, and international crude oil and product trading. Total is also a world-class chemicals manufacturer. (source: company press release or website)

Why We Like It:
TOT's recent earnings report was not that impressive but that isn't stopping the stock from bouncing at the simple 200-dma. Actually the stock has a habit of rebounding from the simple 200-dma. Given today's rebound across the board in the oil stocks this looked like a tempting entry point to buy calls in TOT. However, keep in mind that the stock's short-term bearish trend has not yet been broken. While we would buy calls here more conservative traders may want to wait for a move over $130 or its 50-dma before initiating positions. Our target is the $137.00-140.00 range.

Suggested Options:
We are suggesting the March calls. You'd better double-check those current prices since it looks like an error.

BUY CALL MAR 125 TOT-CE open interest= 1 current ask $7.20
BUY CALL MAR 130 TOT-CF open interest= 25 current ask $2.25
BUY CALL MAR 135 TOT-CG open interest=773 current ask $2.25

Picked on February 16 at $127.61
Change since picked: + 0.00
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 836 thousand
 

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