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Call Updates

Cooper Industries - CBE - close: 69.77 chg: +0.37 stop: 67.49

CBE is one of the 63 S&P 500 components that has raised its dividend this year. CBE raised their cash dividend from 35 cents to 37 cents a quarter with the next one payable on April 1st. While this is good news for shareholders we doubt it's going to move the stock price and it doesn't matter to option traders. Currently we remain defensive. The breakdown back under the $70 level this week and Friday's apparent failed rally to get back over it doesn't bode well. Technicals are mixed with the MACD indicator suggesting a new sell signal soon. There is still a strong possibility that CBE will pull back to support near $68 before bouncing again but we would hesitate to add new long positions until after we see that bounce.

Suggested Options:
We like the April 65 and 75 calls but wait for CBE to finish pulling back and then look for the bounce.


 

Picked on February 03 at $ 70.01
Change since picked: - 0.24
Earnings Date 01/25/05 (confirmed)
Average Daily Volume = 436 thousand

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eBay Inc - EBAY - close: 82.07 chg: +0.85 stop: 76.94

Our EBAY play is off to a decent start. Shares added another one percent on Friday following Thursday's bullish breakout over the $80 level. EBAY's P&F chart has also reversed from a bearish signal into a new bullish double-top breakout buy signal with a $93 target. Looking more closely at EBAY's intraday chart you can see that traders bought the early morning dip and again at the afternoon dip. Piper Jaffray came out on Friday to reiterate their "market perform" rating while issuing some cautious comments to go along with their lowered price target from $101 to $95. Our target remains the $87.50 region.

Suggested Options:
This is likely to be a short-term four-to-six-week play. We're suggesting the March calls.

BUY CALL MAR 75 XBA-CO OI= 6247 current ask $8.50
BUY CALL MAR 80 XBA-CP OI= 9144 current ask $5.00
BUY CALL MAR 85 XBA-CQ OI=14746 current ask $2.55


 

Picked on February 10 at $ 81.22
Change since picked: + 0.85
Earnings Date 01/19/05 (confirmed)
Average Daily Volume = 13.8 million

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Hartford Financial - HIG - cls: 73.76 chg: +2.28 stop: 69.00 *new*

The IUX insurance index has been very strong this week as a number of large insurers have reported strong earnings and/or raised their dividends. HIG, after three days of consolidating last week's breakout over major resistance, finally got in on the insurance sector's breakout act and added 3.18 percent on Friday to market new four-year highs. HIG looks very strong here but we still expect some minor profit taking. Readers can look for a dip back toward the $72 level as a potential entry point. Short-term traders may want to consider taking some early profits here. The March $65 calls have risen from $6.60 to $9.10 (+37.8%) and the March $70 calls have jumped from $2.30 to $4.40 (+91.3%). Our target is still in the $78-80 range and we're going to raise our stop loss to $69.00.

Suggested Options:
We are going to suggest the March options although June options are available.

BUY CALL MAR 65 HIG-CM OI=1615 current ask $9.10
BUY CALL MAR 70 HIG-CN OI=1963 current ask $4.40
BUY CALL MAR 75 HIG-CO OI= 295 current ask $0.95


 

Picked on February 06 at $ 71.17
Change since picked: + 2.59
Earnings Date 01/26/05 (confirmed)
Average Daily Volume = 1.2 million

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Invitrogen - IVGN - close: 72.21 chg: +0.56 stop: 69.95 *new*

It was a decent week for IVGN. The stock soared toward the top of its rising channel on February 8th following news that the company would buy privately held Dynal Biotech, which would boost IVGN's earnings results going forward. Unfortunately, Tuesday's rally fell short of our $75.00 target. Since then IVGN has pulled back in what can only be described as normal profit taking. We remain bullish but we're running out of time. IVGN is due to report earnings on Thursday, February 17th after the closing bell. Right now we're planning to close the play on Wednesday afternoon at the close to avoid IVGN's earnings report. Short-term traders may want to plan to exit now given the small gain in the stock. We are raising our stop loss to $69.95. We will also adjust our target to $74.80.

Suggested Options:
We are not suggesting new positions at this time.


 

Picked on January 27 at $ 70.05
Change since picked: + 2.16
Earnings Date 02/17/05 (confirmed)
Average Daily Volume = 800 thousand

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RD Donnelley - RHD - close: 60.50 change: +0.29 stop: 57.95

Readers need to be ready! Last week's bullish breakout over round-number, psychological resistance at the $60 level is fading. Now normally it's pretty common to see a stock pull back and retest broken resistance as support. That's okay with us. Yet if the market suddenly falters then RHD could actually breakdown below the bottom edge of its rising channel. If RHD trades under the $59 level we'd probably consider exiting even though our stop loss is lower under the simple 50-dma.

Suggested Options:
This is a short-term momentum play and we plan to be out before the end of February. However, we do not see much volume in the March calls so we're going to suggest the May strikes.

BUY CALL MAY 55 RHD-EK OI= 338 current ask $6.90
BUY CALL MAY 60 RHD-EL OI= 498 current ask $3.40
BUY CALL MAY 65 RHD-EM OI= 127 current ask $1.25


 

Picked on February 03 at $ 60.76
Change since picked: - 0.26
Earnings Date 02/27/05 (unconfirmed)
Average Daily Volume = 186 thousand

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Texas Industries - TXI - cls: 63.85 chg: +0.35 stop: 61.50 *new*

TXI continues to flirt with resistance at the $65.00 level. Fortunately for the bulls the stock is building a consistent pattern of higher lows, which is being bolstered by its rising 50-dma. This pattern should produce a bullish breakout over the $65 level but nothing is a guarantee. One thing is sure - the tighter TXI coils the sooner we'll see a breakout one way or the other. At this point in the game we are raising our stop loss to $61.50 and readers looking for new positions will probably want to wait until TXI trades over $65.50 before initiating plays. The P&F chart currently points to $74 but if TXI can trade over the $66 mark it will produce a new spread triple-top breakout buy signal.

Suggested Options:
February and March calls are available but we are suggesting the April strikes.

BUY CALL APR 60 TXI-DL OI= 80 current ask $5.80
BUY CALL APR 65 TXI-DM OI=135 current ask $2.90
BUY CALL APR 70 TXI-DN OI=112 current ask $1.25


 

Picked on January 09 at $ 60.18
Change since picked: + 3.69
Earnings Date 12/16/04 (confirmed)
Average Daily Volume = 238 thousand

Put Updates

Apollo Group - APOL - close: 76.43 chg: +2.41 stop: 80.11

Argh! APOL was performing wonderfully until Friday. The stock was under performing the broader indices and breaking down through support levels on Wednesday-Thursday this week. Then Friday morning Bear Stearns comes out with positive comments suggesting the recent weakness is a buying opportunity. APOL rallied 3.25 percent to erase Thursday's losses. The question is whether or not there will be any follow through to Friday's bounce. The stock still has resistance at the $80 level so we can watch for another failed rally as a new entry point.

Suggested Options:
Wait to see where APOL begins to roll over again before considering new positions. We like the March or May puts.


 

Picked on January 23 at $ 77.61
Change since picked: - 1.18
Earnings Date 12/16/04 (confirmed)
Average Daily Volume = 2.4 million

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Nike Inc - NKE - close: 84.65 chg: +0.69 stop: 87.01

It's been somewhat of a volatile week for NKE. Shares gapped down under support at the $85 level and its 100-dma on Tuesday after Merrill Lynch downgraded the stock. Since then NKE has consolidated sideways and as of Friday is testing the $85 level and its 100-dma as resistance. It's possible that NKE could rally toward the $86 level to "fill the gap". If this does occur then readers can short a failed rally at $86.00. Of course we'd prefer to see NKE roll over under the $85 level. Technicals are mixed but the two-month trend is bearish. The P&F chart has produced a high-pole (bearish reversal) warning but it will take a drop under $82 to create a new sell signal. Our target is the $80 region.

Suggested Options:
We are suggesting the March or April puts.
 

BUY PUT MAR 85 NKE-OQ OI=624 current ask $2.40
BUY PUT MAR 80 NKE-OP OI=576 current ask $0.75

BUY PUT APR 85 NKE-PQ OI=1110 current ask $2.90
BUY PUT APR 80 NKE-PP OI=1138 current ask $1.10


 

Picked on February 08 at $ 84.55
Change since picked: + 0.10
Earnings Date 12/16/04 (confirmed)
Average Daily Volume = 1.1 million

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Phelps Dodge - PD - close: 93.64 chg: +1.59 stop: 92.01

Metal and mining stocks have done pretty well the last few days and shares of PD have bounced with them the latter half of the week. Short-term technicals have turned bullish but we don't mind since we're still spectators. Our trigger to buy puts is at $89.90 to catch a breakdown under support at the $90 level. If PD closes above the $95 level we will drop this candidate from the put list.

Suggested Options:
We are not suggesting bearish positions at this time. Our trigger is a drop under $89.90.


 

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: - 0.00
Earnings Date 01/27/05 (confirmed)
Average Daily Volume = 2.2 millionNone today.

Drops

None today.

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