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Call Updates

Amer. Intl Group - AIG - close: 55.09 chg: -0.46 stop: 53.95 *new*

The lack of follow through on Thursday's bounce from AIG's rising trend line of support is discouraging. The lack of direction in the DJIA doesn't help matters either. AIG's MACD indicator is showing a serious lack of momentum and looks ready to produce a new sell signal but this conflicts with AIG's bullish P&F chart, which currently points to a $69 target. We're going to play the trend, which remains bullish for now but we're going to turn cautious and try and protect ourselves by raising the stop loss to $53.95. Traders looking for new bullish positions can do so carefully. We really wouldn't suggest new bullish plays at this time but readers could watch for a bounce from the $54.50-54.75 region or wait for a push past the $56 mark before initiating new plays. 

Suggested options:
We're not suggesting new bullish plays at this time.

Picked on May 26 at $ 55.05
Change since picked: + 0.04
Earnings Date 02/09/05 (confirmed)
Average Daily Volume = 15.5 million 

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Caterpillar - CAT - close: 97.02 chg: -0.43 stop: 92.49 

CAT has produced a very strong week after raising its cash dividend and announcing a 2-for-1 stock split for July. We remain bullish but the stock is nearing our target in the $99.25-100.00 range. This close to our target we would not suggest new bullish positions. More conservative traders may want to exit now. If the Dow does show any weakness we would watch for CAT to find support in the $94.75-95.00 region. 

Suggested options:
We're not suggesting new bullish plays at this time.

Picked on May 18 at $ 92.35
Change since picked: + 4.67
Earnings Date 04/20/05 (confirmed)
Average Daily Volume = 2.8 million 

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Chubb Corp - CB - close: 85.61 change: +0.64 stop: 82.49

CB is a new bullish play we added to the newsletter on Thursday night. The stock hit our entry point (trigger) to go long/buy calls on Friday at $85.05. A reprint of Thursday's play description follows:

Insurance stocks have been a pocket of strength in the markets lately and CB has not been left behind. The stock has been consolidating its late April breakout over the last five weeks and now looks poised to breakout over resistance at the $85.00 level. The Point & Figure chart shows a bullish catapult breakout pattern that points to a $107 target. We're not that optimistic. Instead we suggest traders use a trigger at $85.05 to catch any breakout over resistance at the $85.00 level. Our short-term target will be the $89.50-90.00 range. We do not plan to hold over the stock's late July earnings report.

Suggested Options:
We are suggesting the July calls but that only gives us about five weeks. More conservative traders may want to consider the October calls.

BUY CALL JUL 80.00 CB-GP OI=1223 current ask $5.90
BUY CALL JUL 85.00 CB-GQ OI=1041 current ask $1.95
BUY CALL JUL 90.00 CB-GR OI= 267 current ask $0.30

Picked on June 10 at $ 85.05 
Change since picked: + 0.56
Earnings Date 07/25/05 (unconfirmed)
Average Daily Volume = 1.2 million 

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Rockwell Collins - COL - close: 48.25 chg: -0.32 stop: 44.95

We are still on the sidelines and remain untriggered in this play with COL. The stock has been consistently bouncing from its rising simple 100-dma for the last several months. We are suggesting that readers wait for COL to pull back toward the 100-dma again before initiating positions. Now that the 100-dma has climbed to the $46.40 level we're going to adjust our entry point to $46.50-45.75. You, the reader, may want to wait for COL to rebound from this range instead of buying the dip. 

Suggested options:
We're not suggesting new bullish plays at this time.

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/27/05 (confirmed)
Average Daily Volume = 800 thousand 

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Eagle Materials - EXP - close: 89.80 chg: -0.65 stop: 86.95

EXP is a new bullish candidate we added to the newsletter on Thursday night. We do not see any change after Friday's small decline. A reprint of the Thursday play follows.

A bear could easily argue that EXP is looking a bit overbought and extended here but as a bullish momentum play the stock is showing lots of strength. The company must be doing plenty of business given the current homebuilding boom. We like how EXP broke through resistance near the $87.00 level and then pulled back to retest broken resistance at $87 as new support. The fact that the stock and the options tend to have lower volume than we like makes this a bit more aggressive for us. Traders need to keep that in mind. The P&F chart looks very bullish as it points to a $124.00 price target. We're going to suggest buying calls at current levels and target a move in the stock toward the $97-99 range. 

Suggested Options:
We are suggesting the October calls although July strikes are available. 

BUY CALL OCT 85.00 EXP-JQ OI= 65 current ask $8.60
BUY CALL OCT 90.00 EXP-JR OI=252 current ask $5.50
BUY CALL OCT 95.00 EXP-JS OI= 20 current ask $3.90

Picked on June 09 at $ 90.45
Change since picked: - 0.65
Earnings Date 08/03/05 (unconfirmed)
Average Daily Volume = 134 thousand 

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Occidental Petrol. - OXY - close: 76.01 chg: +0.50 stop: 71.95

OXY is a new bullish candidate we added to the newsletter on Thursday night. We see no change from our previous update. A reprint follows:

We like how the oil sectors have pushed through resistance at the top of their descending channels and the group could be set for another leg higher just as the summer driving season is upon us. With that in mind we are drawn to OXY who is a relative strength leader in the sector. Shares are trading very close to new all-time highs here over resistance at the $75.00 level. Again, bears could argue that OXY looks overbought but given the stock's history and current out performance we're willing to buy the breakout with a stop loss under the recent low. The P&F chart shows a double-top breakout buy signal that points to a $98 target. We would go long here at current levels with a short-term target in the $79.75-80.50 range. Depending on your risk profile traders can watch OXY for a pull back into the $73-74 range as a new entry point or wait for shares to trade back over the $76.00 level before initiating new positions. 

Suggested Options:
We are going to suggest the August calls although July strikes are available.

BUY CALL AUG 70.00 OXY-HN OI=7387 current ask $7.70
BUY CALL AUG 75.00 OXY-HO OI=4962 current ask $4.30
BUY CALL AUG 80.00 OXY-HP OI=6810 current ask $2.00

Picked on June 09 at $ 75.51
Change since picked: + 0.50
Earnings Date 07/26/05 (unconfirmed)
Average Daily Volume = 2.7 million 

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Teekay Shipping - TK - close: 44.56 chg: +0.07 stop: 42.45

We remain untriggered in this play with TK. The stock has struggled to produce any follow through following its early June breakout. Bulls have been unable to push TK through resistance at its 100-dma near the $45.00 level. If and when TK does breakout over the $45.00 level we'll be ready to catch the next leg higher. Our strategy is to buy calls on TK if the stock trades at $45.05. Our target is the $49.50-50.00 range. 

Suggested Options:
We are going to suggest the July calls although October strikes are available.

BUY CALL JUL 40.00 TK-GH OI=2405 current ask $5.20
BUY CALL JUL 45.00 TK-GI OI=6471 current ask $1.65
BUY CALL JUL 50.00 TK-GJ OI=3558 current ask $0.30

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/20/05 (unconfirmed)
Average Daily Volume = 681 thousand 

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Total S.A. - TOT - close: 113.69 chg: -0.31 stop: 110.95

TOT is a new bullish candidate we added to the newsletter on Thursday night. We see no change from our previous update. A reprint follows:

If you like the oil sector but you don't feel like chasing a new high in the case of our new OXY play then consider TOT as a potential bullish candidate. Like the oil-related sector indices shares of TOT have broken through resistance at the top of its descending channel. The stock has also broken through technical resistance at its 50-dma and 100-dma. We also like its bullish P&F chart, which currently points to a $139.00 target. We are willing to initiate bullish option positions at current levels but traders have a choice. You could look for a possible dip back toward the $112.00 level and buy a bounce. Or you could wait for TOT to clear what looks like minor resistance in the $114.50 to 115.00 range. Our target is the $119.50-120.00 region.

Suggested Options:
We are suggesting the August calls. 

BUY CALL AUG 110.00 TOT-HB OI=113 current ask $6.40
BUY CALL AUG 115.00 TOT-HC OI=144 current ask $3.10
BUY CALL AUG 120.00 TOT-HD OI=206 current ask $1.35

Picked on June 09 at $114.00
Change since picked: - 0.31
Earnings Date 08/04/05 (unconfirmed)
Average Daily Volume = 857 thousand 

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United Technologies - UTX - cls: 104.93 chg: -1.01 stop: 102.45

UTX experienced some profit taking on Friday with a dip to $103.74. The low was near its simple 40-dma and close to support near the $104 level from mid-May. An intraday chart shows a surge of volume as buyers stepped in to buy the dip on Friday afternoon. We've been discussing a potential dip in UTX for days now and now that it's occurred it's time to see the rebound. Readers may want to initiating new plays at current levels - or - wait for UTX to trade back above the $106 level ($53 post split) just to confirm the bounce. Traders should also keep in mind that UTX is due to split 2-for-1 on Monday. That means your options symbols are going to change as will the number of contracts you own and their value. We'll reclassify support near the $52 level and overhead resistance at $108 will become $54. Our target will change from $114.00-115.00 to $57-57.50.

Suggested options:
We're not listing options to buy at this time as the symbols will change by Monday. We would probably consider the $50.00 or $55.00 strikes.

Picked on May 23 at $106.25
Change since picked: - 1.24
Earnings Date 04/20/05 (confirmed)
Average Daily Volume = 2.0 million 

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Wellpoint Inc - WLP - close: 67.80 chg: -1.25 stop: 64.90

Friday's session was a little disappointing as WLP failed to produce any follow through on Thursday's rally and bounce from support at the $66.00 level. Granted volume was pretty low on Friday's decline but it leaves WLP in a narrow $3 trading range. We would watch for WLP to dip back toward the $66 region again and buy any bounce. Should the market's surprise us with a stronger decline then WLP will probably retest the $65 level as support. Our target is the $74.00-75.00 range.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 65.00 WLP-GM OI=543 current ask $4.00
BUY CALL JUL 70.00 WLP-GN OI=628 current ask $1.15

Picked on June 05 at $ 68.40
Change since picked: - 0.60
Earnings Date 07/27/05 (unconfirmed)
Average Daily Volume = 3.5 million

Put Updates

ITT Industries - ITT - close: 94.45 chg: -0.28 stop: 96.01

Good news. ITT did not produce much of a follow through on Thursday's bullish reversal. Shares remain stuck between $93.00 and $96.00 with the stock overbought and near resistance. If you missed the original play description this bearish play on ITT is a somewhat aggressive short the top of ITT's rising channel. Longer-term ITT has a nice bullish trend but shares look extended and have been struggling with resistance near the top of the channel for the last three to four weeks. We were triggered on a drop to $93.85. We would probably suggest new bearish positions if ITT traded back below the $93.50 level. Our target is the $90.00-87.50 range. 

Suggested options:
Until ITT trades back under $93.50 we would not suggest new positions. If this occurs then we like the July puts.

Picked on June 08 at $ 93.85
Change since picked: + 0.60
Earnings Date 07/22/05 (unconfirmed)
Average Daily Volume = 581 thousand 

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MedcoHealth Sol. - MHS - close: 49.75 change: -0.85 stop: 52.21

We have good news to report on for MHS. The stock produced another failed rally near the $51.50-52.00 region and proceeded to drop through the $50.00 level. This looks like a new bearish entry point to buy puts. However, in previous updates we suggested that readers wait for MHS to trade below $49.50 before initiating new positions. We still suggest waiting for the decline below $49.50. More aggressive players might want to consider new positions at current levels. Our target is the $45.50-45.00 region but we are concerned about possible support at the 100-dma currently near $48.00. 

Suggested options:
We are suggesting the July puts.

BUY PUT JUL 55.00 MHS-SK OI= 230 current ask $5.70
BUY PUT JUL 50.00 MHS-SJ OI=3244 current ask $2.10
BUY PUT JUL 45.00 MHS-SI OI=1659 current ask $0.50

Picked on June 01 at $ 49.90
Change since picked: - 0.15
Earnings Date 07/26/05 (unconfirmed)
Average Daily Volume = 2.0 million 

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Whole Foods - WFMI - close: 113.54 chg: -4.43 stop: 118.51*new*

So far so good. Friday was a good day for WFMI bears as the stock lost 3.75 percent on volume well above the average. The breakdown below its 21-dma and the $115.00 level was sparked by a broker downgrade. UBS reduced their outlook from a "neutral" to the equivalent of a "sell" based on valuation concerns and put their price target at $100. The move has produced a pretty big jump in the July puts that we were suggesting. Now that WFMI is nearing our target in the $111.00-110.00 range we're not willing to suggest new plays. However, readers can watch for a potential bounce-failed rally near $116-117 as new bearish entry point. We are lowering the stop loss to $118.51.

Suggested Options:
We're not suggesting new plays at this time but see the update above for alternative entries. 

Picked on June 08 at $117.40
Change since picked: - 3.86
Earnings Date 08/03/05 (unconfirmed)
Average Daily Volume = 859 thousand

Dropped Calls

Reynolds American - RAI - cls: 84.59 chg: +0.14 stop: 79.99 

Target achieved. Another decent day for some of the tobacco-related stocks and shares of RAI traded into our target range of $85.00-86.00. We are closing the play per our game plan. Readers may want to keep an eye on RAI and some of the other tobacco stocks (like MO and LTR) as potential bullish candidates in the future. 

Picked on May 16 at $ 81.31
Change since picked: + 3.28 
Earnings Date 04/27/05 (confirmed)
Average Daily Volume = 866 thousand 

Dropped Puts

None

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