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Call Updates

Cleveland Cliffs - CLF - cls: 76.06 chg: -0.14 stop: 71.00

CLF is a new bullish candidate from Thursday's newsletter. The stock did not change much during Friday's session and the strategy remains the same. A reprint of Thursday's original update follows:

Traders are buying the bounce in CLF. The rising costs of commodities don't hurt Wall Street's expectations for CLF's profits. The stock shows it too with a very strong run over the last several months. Traders have bought dips to CLF's simple 40 and 50-dma's before and they are doing it again. We also like how CLF's recent consolidation has already produced a new P&F buy signal. However, shares are long-term overbought and the major market indices are looking bearish. We're encouraged by CLF's relative strength today but this should be considered a higher-risk play. We will use a TRIGGER at $77.05, above current short-term resistance at $77.00. Our target will be the $85.00-87.50 range.

Suggested Options:
We are going to suggest April calls. Julys are also available if you feel you need extra time.

BUY CALL APR 70.00 CLF-DN OI=1744 current ask $8.50
BUY CALL APR 75.00 CLF-DO OI=1361 current ask $7.10
BUY CALL APR 80.00 CLF-DP OI=1004 current ask $2.50
BUY CALL APR 85.00 CLF-DQ OI= 595 current ask $1.85

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/16/05 (confirmed)
Average Daily Volume = 1.2 million

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Parker-Hannifin - PH - close: 68.12 change: +0.47 stop: 63.99

PH continues to hold above the $67.00 level and its 50-dma. This sideways consolidation could be considered bullish compared to the broader-market's pull back over the last couple of weeks. Now that the Industrials and the S&P look ready to bounce we could see PH breakout over the $70.00 level. We would consider a move over $68.75-69.00 as a new bullish entry point or if you're feeling conservative wait for PH to trade over the $70.00 mark. Our target remains the $73.00-75.00 range.

Suggested options:
We are suggesting the May calls although Aprils are available.

BUY CALL MAY 65.00 PH-EM OI=215 current ask $5.40
BUY CALL MAY 70.00 PH-EN OI=968 current ask $2.45

Picked on March 03 at $ 68.11
Change since picked: + 0.01
Earnings Date 01/18/05 (confirmed)
Average Daily Volume = 1.0 million

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Progressive - PGR - close: 90.21 change: +1.30 stop: 87.49

So far so good. PGR continues to climb inside its narrow rising channel. Traders bought the dip on Friday near the bottom of its channel, which just happened to coincide with the 21-dma and the 100-dma. Now that the Industrials and S&P look ready to bounce we could see PGR make some progress towards our $95 target. This looks like a new bullish entry point. Just remember that we do not plan to hold over PGR's late April earnings report.

Suggested Options:
We are going to suggest the April calls since we do not plan on holding over the April earnings report.

BUY CALL APR 85.00 PGR-DQ OI= 60 current ask $6.00
BUY CALL APR 90.00 PGR-DR OI=587 current ask $2.40

Picked on March 07 at $ 89.20
Change since picked: + 1.01
Earnings Date 04/21/05 (unconfirmed)
Average Daily Volume = 770 thousand


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Red Robin Burger - RRGB - cls: 49.20 chg: -0.90 stop: 44.99

RRGB was a relative strength play we added when shares broke through its two-month downtrend of resistance and all its significant moving averages. The stock continued to climb last week but finally hit some profit taking on Friday. We would watch for a possible dip towards the 47.50-48.00 level as a new entry point but look for the bounce first before initiating new positions. Our target remains the $54.00 region.

Suggested Options:
We are suggesting the June calls.

BUY CALL JUN 45.00 QZR-FI OI= 49 current ask $6.20
BUY CALL JUN 50.00 QZR-FJ OI= 67 current ask $3.30
BUY CALL JUN 55.00 QZR-FK OI= 69 current ask $1.50

Picked on March 10 at $ 48.00
Change since picked: + 1.20
Earnings Date 02/14/05 (confirmed)
Average Daily Volume = 199 thousand
 

Put Updates

Allergan - AGN - close: 71.71 chg: +0.01 stop: 76.05

AGN continues to look weak but it is very noteworthy that shares have held near support at the February low of 71.26. All of AGN's technicals are bearish and its P&F chart points to a $61.00 target. The bad news is we expect AGN to bounce early next week. The DRG drug index, which has been sinking the past couple of weeks just produced a bullish reversal from the 310 level near its 200-dma. The DRG is short-term oversold and we expect it to produce a short-term bounce next week. That means we can look for AGN to rebound back towards the $74.00 level, which should be resistance. Actually the $75-76 level is tougher resistance but we suspect AGN will struggle near the $74 area. We do not suggest new bearish plays until we see where AGN's bounce begins to fail.

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

Picked on March 13 at $ 73.09
Change since picked: - 1.38
Earnings Date 04/29/05 (unconfirmed)
Average Daily Volume = 777 thousand

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Apollo Group - APOL - close: 74.59 chg: -0.25 stop: 76.75 *new*

It has been somewhat of a volatile week for APOL. The stock bounced sharply after investors responded to positive comments from CECO in regards to the government investigation nearing a close. Fortunately for APOL bears the bounce failed at its descending trendline of resistance. The stock looks poised to continue drifting lower next week. We are still planning an exit at the $72.00 level but APOL has to break support in the $72.75-73.00 range. We are lowering the stop loss to $76.75.

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

Picked on January 23 at $ 77.61
Change since picked: - 3.02
Earnings Date 12/16/04 (confirmed)
Average Daily Volume = 2.4 million

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Beazer Homes - BZH - close: 154.91 chg: +0.61 stop: 162.01

BZH is a new bearish candidate from Thursday's newsletter. There was little change in the stock and our strategy remains the same. However, if the Industrials do bounce early next week, and they look like they will, readers may want to sit back and watch how the homebuilders and BZH respond to a market rebound before considering new bearish plays. A reprint of the original play description follows:

The five-and-a-half month rising channel in the DJUSHB home construction index appears to be breaking down. The DJUSHB lost 1.79 percent on Thursday to close under its rising, simple 50-dma. Technicals are bearish on the sector index and the picture looks very similar on shares of BZH. BZH pulled back from its highs a week ago and have been consolidating near support at its own 50-dma near the $155 level. Today's decline is a breakdown of support at both the 50-dma and the $155.00 level. The P&F chart looks very bearish with a $134 price target. We're not sure investors will let BZH trade to $134. There are still a lot of bulls in the homebuilding sector and some of them would like a pull back to use as a new entry point. We would certainly consider doing the same especially with the spring and summer home selling season just around the corner! However, BZH and the sector are long-term overbought and due for a more significant correction. Today's decline looks like the beginning of the next leg lower. We are going to target the $140-144 region, which is where we expect BZH to find new support. More conservative traders might wait for BZH to confirm this breakdown with a drop under $152 before initiating positions. Readers should also know that BZH has an upcoming 3-for-1 stock split next week on March 23rd. Normally we would view a stock split as positive influence on shares but this time we believe the prevailing influence of a breakdown in the sector index (and the markets in general) will pull BZH lower.

Suggested Options:
We are going to suggest the April puts.

BUY PUT APR 160.00 BZH-PL OI=1115 current ask $10.70
BUY PUT APR 155.00 BZH-PK OI=1080 current ask $ 8.00
BUY PUT APR 150.00 BZH-PJ OI=1342 current ask $ 5.90
BUY PUT APR 145.00 BZH-PI OI= 498 current ask $ 4.30

Picked on March 17 at $154.30
Change since picked: + 0.61
Earnings Date 01/27/05 (confirmed)
Average Daily Volume = 742 thousand

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Google Inc - GOOG - close: 180.04 chg: +0.75 stop: 185.01

GOOG broke down through major support several days ago but has spent the last few sessions consolidating sideways mostly under the $180.00 level. We're a little surprised that positive comments this Friday from JP Morgan on the Internet stocks didn't do more to send GOOG higher. We remain bearish, especially with the P&F chart pointing to a $148 price target. However, it would not surprise us to see GOOG bounce back toward the $182.50 level before continuing lower. Our target remains the $165.00 region. Remember that this is a high-risk aggressive play and we expect lots of volatility.

Suggested Options:
We're going to suggest the April puts but the June puts would also work well if you can afford them.

BUY PUT APR 185 GOU-PQ OI=2514 current ask $12.20
BUY PUT APR 180 GOU-PP OI=3798 current ask $ 8.00
BUY PUT APR 175 GOU-PO OI=5145 current ask $ 5.00
BUY PUT APR 170 GOQ-PW OI=3696 current ask $ 3.10 *symbol change*

Picked on March 10 at $179.49
Change since picked: + 0.55
Earnings Date 02/01/05 (confirmed)
Average Daily Volume = 10.9 million

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Cheniere Energy - LNG - close: 70.75 chg: -0.91 stop: 75.01

LNG has not produced the kind of follow through we expected it to with the breakdown on March 10th. Yet the bounce two days later didn't see any follow through either. Shares continue to look extremely overbought and way overdue for some consolidation. News that the company announced a 2-for-1 stock split this past week did not inspire much buying, which is good news for the bears. The P&F chart remains very bearish with a $59.00 target. Our target remains the $62.00-60.00 range but we would look for a new relative low under $70.00 or better yet under $69.00 before considering new positions.

Suggested Options:
We are suggesting the April puts.

BUY PUT APR 75.00 LNG-PO OI=122 current ask $6.60
BUY PUT APR 70.00 LNG-PN OI=224 current ask $3.80
BUY PUT APR 65.00 LNG-PM OI=833 current ask $1.85

Picked on March 11 at $ 69.49
Change since picked: + 1.26
Earnings Date 03/10/05 (confirmed)
Average Daily Volume = 517 thousand


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Intl Bus. Mach. - IBM - close: 89.28 chg: -0.58 stop 92.15

Good news! IBM's decline on Friday helped confirm the recent breakdown and solidify its drop below support at the $90.00 level and its 200-dma. It's also noteworthy that it helps confirm the breakdown below IBM's longer-term rising trendline of support dating back to the 2002 low. Plus, IBM's Friday drop came on volume well above the average suggesting more weakness ahead. Traders do need to be on the alert though. The major indices (minus the NASDAQ) look poised for an oversold bounce early next week. We would look for IBM to bounce back toward the $90-91 range before turning lower again. Use any such bounce as a new bearish entry point. Our target remains the $85.00 region.

Suggested Options:
We are going to suggest the April puts.

BUY PUT APR 95.00 IBM-PS OI=26545 current ask $6.00
BUY PUT APR 90.00 IBM-PR OI=28108 current ask $1.95
BUY PUT APR 85.00 IBM-PQ OI=11259 current ask $0.40

Picked on March 17 at $ 89.86
Change since picked: - 0.58
Earnings Date 04/14/05 (unconfirmed)
Average Daily Volume = 4.8 million


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Mcgraw Hill Cos - MHP - close: 88.70 chg: -0.28 stop: 90.21

An oversold bounce from the big March 9-10th breakdown was to be expected but so far the $90.00 level and its 100-dma are holding up as overhead resistance. The P&F chart is bearish and points to a $75.00 target. We are looking for a continuation of the new down trend toward the $84.00-85.00 range, near its exponential 200-dma. Confirm direction before considering new positions.

Suggested Options:
We are suggesting the May puts but we do not plan to hold over the late April earnings report.

BUY PUT MAY 90 MHP-QR OI= 239 current ask $3.40
BUY PUT MAY 85 MHP-QQ OI= 352 current ask $1.35

Picked on March 15 at $ 88.40
Change since picked: + 0.30
Earnings Date 04/26/05 (unconfirmed)
Average Daily Volume = 751 thousand


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Millipore - MIL - close: 43.87 chg: -0.02 stop: 46.05

Almost everything on MIL looks bearish. The multi-month trend points lower. The failed rally after filling the gap from four days ago is a bearish reversal. Plus, the stock painted what looks like a bear flag pattern. Technical oscillators are bearish and its MACD is in a new sell signal. Readers can choose buy puts at current levels, look for a new relative low under $43.50 or look for another failed rally this time near 44.25-44.50 as a new entry point. Our target remains the $40.00 level.

Suggested Options:
We are going to suggest the April puts.

BUY PUT APR 45 MIL-PI OI=272 current ask $1.95
BUY PUT APR 40 MIL-PH OI=186 current ask $0.30

Picked on March 16 at $ 43.95
Change since picked: - 0.08
Earnings Date 04/19/05 (unconfirmed)
Average Daily Volume = 358 thousand


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Toll Brothers - TOL - close: 77.13 chg: +0.32 stop: 81.50

TOL is a new bearish candidate from Thursday's newsletter. There was little change in the stock and our strategy remains the same. However, if the Industrials do bounce early next week, and they look like they will, readers may want to sit back and watch how the homebuilders and TOL respond to a market rebound before considering new bearish plays. A reprint of the original play description follows:

Our play in TOL is based on the same strategy in BZH, except this time we don't have to worry about any upcoming stock split and the breakdown looks more dramatic. TOL has been a real winner for the homebuilders for months but the stock pulled back toward the bottom of its rising channel and support near $80.00 and its 50-dma a few days ago. Today's drop in the DJUSHB index under its 50-dma helped spur the breakdown in TOL on volume that was over twice the average. We are targeting a drop toward the $70.00 level.

Suggested Options:
We are suggesting the April puts.

BUY PUT APR 80.00 TOL-PP OI=3638 current ask $5.50
BUY PUT APR 75.00 TOL-PO OI=4728 current ask $3.10
BUY PUT APR 70.00 TOL-PN OI=5723 current ask $1.75


Picked on March 17 at $ 76.81
Change since picked: + 0.32
Earnings Date 02/23/05 (confirmed)
Average Daily Volume = 2.1 million
 

Dropped Calls

Hartford Financial - HIG - cls: 70.19 chg: -0.46 stop: 69.95

Another sharp drop in insurance giant AIG produced a similar move in the IUX insurance index and both put pressure on HIG. Shares of HIG dipped under support at the $70.00 level and its 50-dma on an intraday basis and traded through our stop loss at $69.95. Of course all three (AIG, HIG and the IUX) all bounced back into the close and look ready to rebound into next week.

Picked on February 06 at $ 71.17
Change since picked: - 0.98
Earnings Date 01/26/05 (confirmed)
Average Daily Volume = 1.2 million


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Texas Industries - TXI - cls: 66.29 chg: +0.29 stop: 63.49

Time has run out. Coal-producer TXI hit our initial target weeks ago and we've been trying to play the stock for a second rally higher into the 69.00-70.00 range. Unfortunately the momentum appears to be slowing and the company is due to report earnings next week. We'll be sure to keep an eye on TXI for another opportunity after its earnings report.

Picked on January 09 at $ 60.18
Change since picked: + 6.11
Earnings Date 12/16/04 (confirmed)
Average Daily Volume = 238 thousand
 

Dropped Puts

Ishares Dow Jones US Energy - IYE - cls 77.48 chg: +1.17 stop: 80.01

Caution may be the better part of valor here so we're closing this play on the IYE now that the ishares have broken through the top of its short-term consolidation. We will keep an eye on it to see how shares react with the $80.00 level, which should be resistance.

Picked on March 09 at $ 76.25
Change since picked: + 1.23
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 124 thousand

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Oil Service Holders - OIH - close: 95.40 chg: +0.61 stop: 100.01

The OIH holders haven't quite shown the same strength that the IYE ishares have but we're going to play it safe and exit early, especially given the strength in the price of crude and the OIX oil index. Traders still interested in bearish plays on the OIH can watch for a breakdown below its 40 or 50-dma.

Picked on March 09 at $ 96.10
Change since picked: - 0.70
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 3.1 million
 

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