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SEPR None None
UBB    

New Calls

Sepracor - SEPR - close: 50.20 chg: +0.65 stop: 47.95

Company Description:
Sepracor Inc. is a research-based pharmaceutical company dedicated to treating and preventing human disease by discovering, developing and commercializing innovative pharmaceutical products that are directed toward serving unmet medical needs. Sepracor's drug development program has yielded a portfolio of pharmaceutical products and candidates with a focus on respiratory and central nervous system disorders. (source: company press release or website)

Why We Like It:
SEPR caught our attention on Friday with its move over technical resistance at its simple 200-dma. The move was only an intraday spike but shares still managed to close over round-number resistance at the $50.00 level. Volume on the session came in pretty strong too, which is normally bullish. Currently the Point & Figure chart is still bearish but if you study the daily chart it looks like SEPR has built a base or bottoming pattern over the last couple of months. The rally on Friday reversed at the $51.00 level, which was where the rally failed in early August. We're going to suggest a trigger to buy calls at $51.25 in an effort to catch any breakout above this resistance level. If triggered we'll target a run into the $55.50-56.00 range but we plan to exit ahead of SEPR's late October earnings report. That only gives us about 12 to 13 trading days. We'll re-evaluate our stop loss placement once we see a close over the 200-dma. FYI: The latest (September) data put short interest at more than 13% of SEPR's 108 million-share float. That's a relatively high amount of short interest and a move over $51.00 might spark some short covering.

Suggested Options:
We are suggesting the November calls but we plan to exit ahead of the October earnings report. Our trigger is at $51.25.

BUY CALL NOV 47.50 ERU-KW open interest=4782 current ask $5.80
BUY CALL NOV 50.00 ERU-KJ open interest=6898 current ask $4.30
BUY CALL NOV 52.50 ERU-KX open interest=4388 current ask $3.20
BUY CALL NOV 55.00 ERU-KK open interest=1031 current ask $2.20

Picked on October xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/24/06 (unconfirmed)
Average Daily Volume = 2.3 million

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Unibanco - UBB - close: 79.12 change: +0.83 stop: 74.95

Company Description:
Unibanco is the third-largest Brazilian private bank, with more than 80 years of history and activity in the market. The Bank is present in every segment of the financial market, offering a broad and complete range of services to a diversified customer base. (source: company press release or website)

Why We Like It:
Financial stocks have been a big part of the market's strength so we've decided to add a banking stock to the list. UBB looks like an attractive call candidate given the recent breakout through resistance near $77.00 and its seven-month trendline of resistance (see chart). The daily and weekly chart technicals are bullish and the P&F chart points to a $100 target. We are suggesting call positions right here but traders have a choice. You could wait for a dip back toward what should now be support near $77.00 (77.00-77.50) or wait for a breakout past the $80.00 mark. Our target is the $85.00-86.00 range. We do not want to hold over the early November earnings report.

Suggested Options:
We are suggesting the November calls but we plan to exit ahead of the October earnings report. At this time we do not see a November $85 strike price available.

BUY CALL NOV 75.00 UBB-KO open interest= 80 current ask $6.50
BUY CALL NOV 80.00 UBB-LP open interest=162 current ask $3.60
or
BUY CALL JAN 85.00 UBB-AQ open interest=135 current ask $4.30

Picked on October 08 at $ 79.12
Change since picked: + 0.00
Earnings Date 11/09/06 (unconfirmed)
Average Daily Volume = 796 thousand
 

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