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Call Updates

AmerisourceBergen - ABC - close: 68.17 change: +0.15 stop: 63.85

Shares of ABC managed to post their sixth gain in a row. The stock has been strong and with the bullish breakout in the DJIA and S&P on Friday ABC could keep marching higher. The stock is not that far away from our target in the $69.50-70.00 range. Of course it's also worth noting that ABC is due for a dip and with the Dow up seven sessions in a row odds of a market dip next week are pretty strong. We would watch ABC for a pull back toward the $66-67 range and buy a bounce there. Otherwise we would not suggest new bullish positions.

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

Picked on June 13 at $ 65.57
Change since picked: + 2.60
Earnings Date 07/21/05 (unconfirmed)
Average Daily Volume = 1.3 million

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Ashland Inc - ASH - close: 70.02 chg: -0.12 stop: 66.99

ASH is a technical breakout play on a stock with a steady long-term up trend. The company's five business divisions should be doing well given the current economy. The Point & Figure chart shows a triple-top breakout buy signal with an $83.00 target. We are suggesting bullish positions with the stock over resistance at the $70.00 level. If you prefer to buy a dip watch for a possible pull back toward the $69.00 level, which should be short-term support. Our target is the $74.75-75.25 range. We do not plan to hold over ASH's late July earnings report.

Suggested Options:
We are suggesting the July calls but we may end up holding the play past the July expiration so traders may want to consider the October strikes.

BUY CALL JUL 65.00 ASH-GM OI=2975 current ask $5.70
BUY CALL JUL 70.00 ASH-GN OI=3493 current ask $1.95
BUY CALL JUL 75.00 ASH-GO OI=2123 current ask $0.45

Picked on June 16 at $ 70.05
Change since picked: - 0.03
Earnings Date 07/25/05 (unconfirmed)
Average Daily Volume = 1.1 million

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Chubb Corp - CB - close: 84.80 change: -0.44 stop: 82.49

We are growing a little concerned here with CB. The stock did make a new multi-year high on Friday morning but it was unable to maintain its gains. CB is really struggling to hold on to any breakout over the $85.00 level. Volume on Friday's failed rally was above average, which is bearish. Overall the insurance sector looks bullish but this lack of follow through in CB's breakout makes us cautious. We would only consider bullish option positions with CB trading over $85.00. CB's P&F chart points to a $109.00 target. We're targeting the $89.50-90.00 range. Another stock in the same sector that might be a stronger play is Hartford (HIG). Shares of HIG just broke out to a new multi-year high.

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=1209 current ask $5.50
BUY CALL JUL 85.00 CB-GQ OI=1157 current ask $1.60
BUY CALL JUL 90.00 CB-GR OI= 347 current ask $0.20

Picked on June 10 at $ 85.05
Change since picked: - 0.25
Earnings Date 07/25/05 (unconfirmed)
Average Daily Volume = 1.2 million

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Rockwell Collins - COL - close: 48.23 chg: -0.23 stop: 44.95

The defense sector continues to be a strong spot in the market with the DFI index trading at all time highs. Thursday's rebound in COL had us a little concerned that the rebound may have started without us but we're not giving up on our buy the dip strategy just yet. Investors have been buying dips in COL near the simple 100-dma. Currently that technical support is near $46.75. We are going to maintain our strategy to buy a dip into the $46.75-46.00 range. If we are triggered we'll re-evaluate our suggested target. Currently the bullish P&F chart points to a $69.50 target. We will not hold over COL's late July earnings report.

Suggested Options:
We are not suggesting options at this time. If COL hits our entry point we'd probably choose the August strikes.

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/26/05 (unconfirmed)
Average Daily Volume = 800 thousand

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Eagle Materials - EXP - close: 95.00 chg: +0.30 stop: 89.49

The homebuilders are breaking out to new highs and the economy is improving and this has shares of construction materials company EXP hitting new highs as well. The stock has been up seven out of the last eight sessions. We're very encouraged by the stock's relative strength but EXP is starting to look a little overbought. Short-term traders may want to seriously consider taking some profits here. Our target is the $97-99 range but we would not suggest new positions unless EXP pulled back toward the $92-93 region.

Suggested Options:
We are not suggesting new positions at this time but if EXP pulls back we like the October strikes.

Picked on June 09 at $ 90.45
Change since picked: + 4.55
Earnings Date 08/03/05 (unconfirmed)
Average Daily Volume = 134 thousand

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Netease.com - NTES - close: 58.04 chg: -0.86 stop: 53.95

Hmm... Chinese Internet stock NTES managed to tag another new relative high on Friday morning before drifting lower. We wonder if bulls suddenly got spooked after IIJI, a Japanese Internet-related stock, lost 33 percent on Friday. We remain positive on the stock but want to remind readers that this is a more aggressive, higher risk momentum play. A pull back toward support near $55.00 or even technical support near the 10-dma in the $56.00 region could be used as a new bullish entry point. Our target is the $62.00-63.00 range. We do not plan to hold over NTES' late July earnings report.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 50.00 NQG-GJ OI=1164 current ask $8.40
BUY CALL JUL 55.00 NQG-GK OI=3310 current ask $4.10
BUY CALL JUL 60.00 NQG-GL OI=2910 current ask $1.60

Picked on June 13 at $ 57.29
Change since picked: + 0.75
Earnings Date 07/26/05 (unconfirmed)
Average Daily Volume = 752 thousand

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Teekay Shipping - TK - close: 44.73 chg: +0.91 stop: 42.45

The surge in crude oil and the oil-related sector indices may finally start rubbing off on the oil tanker stocks like TK. TK has rebounded from Thursday's intraday low and is on the verge of breaking out over resistance. Unfortunately, that resistance has been a tough challenge over the last few weeks. TK needs to push through its simple 200-dma, its simple 100-dma and the $45.00 level. That's why our suggested entry point/trigger is at $45.05. On Wednesday we were close to calling it quits for this play. As of Friday's close and the recent sign of strength we'll give TK a couple of more days to breakout or we'll probably drop it.

Suggested Options:
We are suggesting the October strikes but we do not plan to hold over TK's July earnings report.

BUY CALL OCT 40.00 TK-JH OI=1278 current ask $6.70
BUY CALL OCT 45.00 TK-JI OI=1177 current ask $3.50
BUY CALL OCT-50.00 TK-JJ OI=1155 current ask $0.80

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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United Technologies - UTX - cls: 53.14 chg: +0.61 stop: 51.80 *new*

We were on the verge of giving up on UTX as a bullish candidate but Friday's market rally has renewed our interest for a couple more days. The Dow's breakout over resistance at the 10,600 level is good news and if the Dow continues to climb we expect UTX to pace the move and push through its own resistance in the $54.00 level. However, we are not suggesting new bullish positions at this time. Instead we are raising our stop loss to $51.80 to reduce our risk. Our target remains the $57.00-57.50 range. We do not plan to hold over UTX's July earnings report.

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

Picked on May 23 at $ 53.12
Change since picked: + 0.02
Earnings Date 07/20/05 (unconfirmed)
Average Daily Volume = 4.0 million

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Wellpoint Inc - WLP - close: 69.64 chg: +0.95 stop: 65.90 *new*

Health insurance stocks continue to be market leaders and WLP is trading very close to its all-time highs set earlier this week. We remain bullish and would consider new bullish positions with WLP above the $69.00 level although more conservative traders may want to see a new high over $70.40 before going long any calls. Our target remains the $74.00-75.00 range compared to the P&F chart, which points to an $87 target. We are raising the stop loss to $65.90 since the $66.00 level has held as support for the last four weeks.

Suggested Options:
We are suggesting the July calls. Keep in mind that the play's time horizon may exceed the July expiration depending on WLP's earnings date.

BUY CALL JUL 65.00 WLP-GM OI= 814 current ask $5.40
BUY CALL JUL 70.00 WLP-GN OI=1134 current ask $1.70

Picked on June 05 at $ 68.40
Change since picked: + 1.24
Earnings Date 07/27/05 (unconfirmed)
Average Daily Volume = 3.5 million
 

Put Updates

Quality Systems - QSII - cls: 48.02 chg: -1.00 stop: 51.51

We have good news to report on for QSII. The stock failed to participate in any sort of market bounce on Friday. Instead the recent drift lower has picked up speed and shares closed near their low for the day. We continue to suggest that readers looking for new bearish positions wait for QSII to trade under $47.75 again but more aggressive players may want to consider put positions here. Our only concern at this point would be the very low volume for Friday's decline suggesting that there isn't much conviction here and only a temporary lack of buyers. Our target remains the $41.00-40.00 range, just above its exponential 200-dma. The P&F chart points to a $39.00 target.

Suggested Options:
We are going to suggest the July puts but keep in mind there is about four weeks to expiration.

BUY PUT JUL 50.00 QCR-SJ OI=203 current ask $4.30
BUY PUT JUL 45.00 QCR-SI OI=102 current ask $1.60

Picked on June 15 at $ 47.75
Change since picked: + 0.27
Earnings Date 06/13/05 (confirmed)
Average Daily Volume = 330 thousand

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Semiconductor Holders - SMH - cls: 34.44 chg: -0.01 stop: 35.05

Tech stocks did not participate in the rally on Friday and the SMH semiconductor holders barely budged. That's good news for any semiconductor bears. Thus far initiating bearish positions near the top of its channel seems like a sound plan but there are risks. If the DJIA and S&P continue to climb they could easily drag the NASDAQ along. If the NASDAQ breaks through the 2100 level then we'd probably expect the SMH to break through resistance in the 35.00-35.50 region at the to of its channel. Therefore, we do not suggest new bearish positions in SMH at this time. We would only consider new put positions if the SMH traded back under the $34.00 level. Our target is the $32.25-31.75 range.

Suggested Options:
We are not suggesting new positions at this time but would choose the August strikes if the SMH declined under the $34 level.

Picked on June 15 at $ 33.95
Change since picked: + 0.49
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 26.3 million
 

Dropped Calls

Amer. Intl Group - AIG - close: 55.55 chg: +0.32 stop: 54.49

We are cutting AIG loose. We expected that if the DJIA could breakout over the 10,600 level that Dow-component AIG could push past the $56.00 level. This was not the case on Friday. We're choosing to close the AIG play early. Some of our readers may want to reconsider and keep their long positions open. AIG's bullish six-week trend is still in play but on the verge of being broken. The current three-week consolidation is narrowing so traders can expect a breakout one way or the other sooner rather than later.

Picked on May 26 at $ 55.05
Change since picked: + 0.50
Earnings Date 02/09/05 (confirmed)
Average Daily Volume = 15.5 million

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Caterpillar - CAT - close: 100.20 chg: +1.89 stop: 95.85

Target achieved. Positive broker comments and news of strong sales for the month of May helped push CAT up another 1.9 percent to breakout over round-number technical resistance at the $100.00 mark. Our target was the $99.00-100.00 range. Volume was above average on the breakout so that's bullish but traders who do not exit should consider tightening their stop losses.

Picked on May 18 at $ 92.35
Change since picked: + 7.85
Earnings Date 04/20/05 (confirmed)
Average Daily Volume = 2.8 million

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Occidental Petrol. - OXY - close: 80.13 chg: +1.01 stop: 74.50

Target achieved. Another strong day for crude oil continued to push shares of the oil stocks higher. OXY actually gapped higher to open at $80.30, which is toward the upper end of our $79.75-80.50 target range. We are closing the play per our game plan. The stock is looking a bit overbought and extended here but we'll keep an eye on it for a pull back. A dip toward $76 could be an attractive entry point for a new bullish position.

Picked on June 09 at $ 75.51
Change since picked: + 4.62
Earnings Date 07/26/05 (unconfirmed)
Average Daily Volume = 2.7 million

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Pulte Homes - PHM - close: 86.00 chg: +3.75 stop: 76.95

Target achieved and surpassed. A strong earnings report from homebuilder KB Homes (KBH), who beat by 28 cents, and a PHM upgrade by Smith Barney put investors in a bullish, homebuilder buying mood today. Shares of PHM gapped higher to open at $86.50 and traded to an intraday high of $87.70 before pulling back. The opening price at $86.50 is above our target range of $84.75-85.00 so we would have immediately been taken out. The volatile surge higher has certainly been good for the calls. Our suggested strikes have risen from +90 percent to +333 percent depending on which strike price. The entire group is very bullish but the homebuilders are also looking extended. We'll watch for another bullish entry point on a pull back.

Picked on June 15 at $ 80.25
Change since picked: + 5.75
Earnings Date 07/25/05 (unconfirmed)
Average Daily Volume = 1.7 million

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Total S.A. - TOT - close: 119.80 chg: +3.55 stop: 111.95

Target achieved. European markets saw oil stocks surge on Friday and that prompted TOT to gap open when trading began in New York. Shares of TOT opened at $118.32 and climbed through out the session to close at the high of the day of $119.80. This was enough to hit our target range of $119.50-120.00. We're closing the play per our game plan but we'll be sure to keep an eye on the sector for additional bullish candidates.

Picked on June 09 at $114.00
Change since picked: + 5.80
Earnings Date 08/04/05 (unconfirmed)
Average Daily Volume = 857 thousand
 

Dropped Puts

ITT Industries - ITT - close: 97.84 chg: +2.68 stop: 96.01

No surprises here. ITT did exactly what we expected it to. In our previous updates we discussed our concern that if the DJIA managed to breakout over resistance at the 10,600 level we expected ITT to breakout over resistance at the $96.00 level. The stock did exactly that and powered through resistance on big volume. Aggressive traders may actually want to keep an eye on ITT as potential bullish candidate here. We have been stopped out at $96.01.

Picked on June 08 at $ 93.85
Change since picked: + 3.99
Earnings Date 07/22/05 (unconfirmed)
Average Daily Volume = 581 thousand
 

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