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Call Updates

Chubb Corp - CB - close: 86.97 change: +0.22 stop: 84.40*new*

Time is growing short for CB. The company is due to report earnings on July 26th and we do not want to hold over the announcement. That only gives us six more trading days. Considering the slow down in CB's upward momentum and the fact that the major stock averages are short-term overbought and extended and poised for some profit taking, we would not suggest new bullish positions here. Instead more conservative traders may actually want to do some profit taking of their own. We'll keep our target in the $89.50-90.00 range but we're raising our stop to $84.40, just under the simple 50-dma.

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

Picked on June 10 at $ 85.05
Change since picked: + 1.92
Earnings Date 07/26/05 (confirmed)
Average Daily Volume = 1.2 million

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Coventry Hlth Care - CVH - cls: 71.41 chg: +0.57 stop: 69.49

We remain cautiously bullish here on CVH. The stock has pulled back toward support near $70.00 and its simple 50-dma. Shares have been showing relative weakness all week long and we suspect that if the major indices pull back that CVH could break down under support and stop us out at $69.49. We are not suggesting new bullish plays here although more aggressive traders may want to reconsider new positions if CVH can trade back above the $72.50 level. The P&F chart is still bullish (for now) and points to an $89 target.

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

Picked on July 05 at $ 72.75
Change since picked: - 1.34
Earnings Date 08/02/05 (unconfirmed)
Average Daily Volume = 1.0 million

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Fortune Brands - FO - close: 93.33 chg: -0.75 stop: 90.51*new*

Time is running low on our FO play. FO is due to report earnings on Friday, July 22nd. We do not want to hold over the report. Currently the stock has been struggling with resistance at the $94.50 level. We suspect that any dip in the major averages will give traders an excuse to sell FO and the stock could pull back toward the $91-90 region. Conservative traders may want to seriously consider taking some profits here. We're going to hold on for a couple of more days and we're raising our stop loss to break even at $90.51. Our target remains the $95-96 range although another bounce toward 94.50 sounds like an attractive exit.

Suggested Options:
This close to earnings we are not suggesting new bullish positions.

Picked on July 03 at $ 90.51
Change since picked: + 2.85
Earnings Date 07/22/05 (confirmed)
Average Daily Volume = 648 thousand

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Lowes Corp. - LOW - close: 63.65 chg: +0.75 stop: 59.90 *new*

LOW continues to show great relative strength. The stock added another 1.19 percent on Friday to mark its sixth gain in the last seven sessions. The stock looks pretty short-term overbought and due for a pull back. Traders, not just conservative ones, may want to seriously consider taking some profits here. We suspect the next move for LOW is lower thus we are not suggesting new bullish positions at this time. Instead we are raising the stop loss to $59.90. Our target remains the $64.50-65.00 range.

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

Picked on July 11 at $ 60.73
Change since picked: + 2.92
Earnings Date 08/15/05 (unconfirmed)
Average Daily Volume = 3.4 million

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Quanex - NX - close: 56.45 change: +0.51 stop: 52.99

So far so good. NX broke through major resistance at the $55.00 level on July 7th. This move produced a new quadruple-top breakout buy signal on its Point & Figure chart, which now points to a $74 price target. We believe shares can climb toward our target range of $59.50-60.00. Friday's bounce from the simple 10-dma may be a new bullish entry point. However, we hesitate to consider new longs here because the major stock indices (DJIA, S&P 500, NASDAQ) all look overbought.

Suggested Options:
We like the August calls.

Picked on July 07 at $ 55.10
Change since picked: + 1.35
Earnings Date 08/25/05 (unconfirmed)
Average Daily Volume = 337 thousand

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Pediatrix Med Group - PDX - cls: 76.50 chg: -0.32 stop: 72.34

Unfortunately, we do not have much new to report on for PDX. The early May breakout over major resistance at the $70.00 level pushed the stock to new all-time highs. PDX spent the next eight weeks consolidating sideways in a trading range 72.35-76.00. Last week's breakout over the $76 level produced another triple-top breakout buy signal on its already bullish P&F chart. Thus far the pattern remains a bullish one but PDX has not been able to produce any sort of follow through on last week's breakout to new highs above the $76 level. The lack of follow through makes us cautious especially with the major averages looking overdue for a pull back. We hesitate to suggest new bullish plays here. Our target is the $80.00-82.00 range.

Suggested Options:
We are suggesting the August calls.

BUY CALL AUG 75.00 PDX-HO OI=183 current ask $3.60
BUY CALL AUG 80.00 PDX-HP OI=186 current ask $1.20

Picked on July 11 at $ 76.10
Change since picked: + 0.40
Earnings Date 08/03/05 (unconfirmed)
Average Daily Volume = 158 thousand

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Reynolds American - RAI - close: 81.78 chg: -0.10 stop: 76.49

This past week has been a strong one for RAI. Shares rallied from the bottom of their wide trading range near $76.50. Now RAI has rebounded back above round-number resistance at the $80.00 level and technical resistance at its 40, 50, and 100-dma's. The next hurdle for the bulls appears to be the $82.00 level. Traders looking for a new entry point to buy calls might watch for a dip toward the $80.50 region. Our target is the $84-85 range. Keep in mind that one of the biggest risks for RAI this week is the earnings report from larger rival Altria Group (MO) due out on July 20th before the opening bell. Investor reaction to MO's results could easily be mirrored in RAI.

Suggested Options:
We're not suggesting new bullish positions at this time. If a new entry point presents itself we like the August calls. We do plan to exit this play ahead of RAI's August 1st earnings report.

Picked on July 10 at $ 78.83
Change since picked: + 2.95
Earnings Date 08/01/05 (unconfirmed)
Average Daily Volume = 664 thousand

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Rio Tinto - RTP - close: 125.18 chg: -1.21 stop: 123.33

Traders did some profit taking in RTP over the last couple of sessions. Now the stock has pulled back to its rising trendline of support over the last eight weeks. We are not suggesting new plays at this time although readers may want to watch for a bounce from the $124 or even $123 level. It would not take much for RTP to dip towards our stop loss at $123.33. Traders should double-check their stop loss placement.

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

Picked on June 27 at $123.33
Change since picked: + 1.85
Earnings Date 08/03/05 (unconfirmed)
Average Daily Volume = 160 thousand

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Toll Brothers - TOL - close: 55.97 chg: +2.17 stop: 49.90

Friday proved to be another strong session for the homebuilders. The DJUSHB home construction index added 2.2 percent to close near its all-time highs. Shares of TOL out paced its peers with a four-percent rally to a new all-time high of its own. The move was fueled by positive comments from Merrill. Merrill Lynch raised its price target on TOL from $52 to $86, which coincidentally happens to be the same price target projected by TOL's Point & Figure chart. Our target is the $57.50-60.00 range but traders may want to seriously consider taking some profits here.

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

Picked on July 10 at $ 51.98
Change since picked: + 3.99
Earnings Date 08/22/05 (unconfirmed)
Average Daily Volume = 2.4 million
 

Put Updates

Ishares Global Energy - IXC - cls: 88.57 chg: -0.58 stop: 91.61

IXC is a new bearish candidate we listed on Thursday night. We don't see any changes from our original play description so we're reposting it below with an update on the option values:

Oil and oil stocks have been big winners over the last several weeks and they are overdue for a consolidation lower. Nothing goes straight up so it looks like it may be time for some profit taking here. News that hurricane Emily may not threaten the U.S. oil infrastructure in the Gulf of Mexico is contributing to the decline in oil today. However, probably the bigger news was the unexpected decline in China's oil consumption. We are longer-term bullish on oil but that doesn't mean we can't try and scalp some points on the pull backs. This is a very speculative, high-risk play. The IXC does not trade the normal amount of volume we suggest for an underlying equity and the option volumes are also very, very low. Trade with high-risk capital only! We are going to try and keep our risk low with a tight stop at $91.61 just above all-time highs. Our target is the $85.25-85.00 region or the 50-dma (84.03), whichever the IXC hits first. FYI: a 38.2 percent Fibonacci retracement of the May to July run up would be near $85.40.

Suggested Options:
We expect this to be a short-term play so we're suggesting the August puts.

BUY PUT AUG 90.00 IXC-TR OI= 0 current ask $2.85
BUY PUT AUG 85.00 IXC-TG OI= 0 current ask $1.00

Picked on July 14 at $ 89.15
Change since picked: - 0.58
Earnings Date 00/00/00
Average Daily Volume = 33 thousand

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Children's Place - PLCE - cls: 47.25 chg: +1.45 stop: 47.51

PLCE is a new bearish candidate we listed on Thursday night. The stock showed some unusual strength on Friday but it looks like a bounce from the 100-dma. We remain on the sidelines. Our strategy is to use a trigger under support at $45.00. A reprint of the original play follows:

The action in PLCE has been trending lower under a pattern of lower highs for the past four weeks. Today's decline of 4.2 percent came on above average volume and pushed the stock to a new six-week low. PLCE still has technical support at the 100-dma (45.29) and round-number support at the $45.00 mark. However, if PLCE can drop below the $45.00 level it will produce a new triple-bottom breakdown sell signal on its Point & Figure chart. We are suggesting that traders use a trigger under the $45.00 mark to catch any breakdown. Our suggested entry point will be $44.90. Our target is the $40.00 region and/or the simple 200-dma. We'll use a range of $40.50-40.00. We do not plan on holding past PLCE's August earnings report.

Suggested Options:
We are suggesting the August puts although September strikes are available.

BUY PUT AUG 50.00 TUY-TJ OI= 25 current ask $4.00
BUY PUT AUG 45.00 TUY-TI OI=242 current ask $1.35
BUY PUT AUG 40.00 TUY-TH OI= 30 current ask $0.40

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/11/05 (unconfirmed)
Average Daily Volume = 775 thousand

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Wellchoice - WC - close: 68.50 chg: -0.96 stop: 72.51

WC is a new bearish candidate we presented on Thursday night. The stock has continued to decline following Thursday's breakdown. We don't see any changes from our previous update so we're reposting the play description below with updated option prices:

Are you ready to roll the dice. That's normally how we feel when trying to pick a top on such a strong stock. WC has been a huge winner the past six weeks. The major stock averages look overbought and extended and due for a pull back. Shares of WC are also overbought, extended and due for a pull back. What we are doing here is speculation that the recent weakness in WC and its drop back below the $70.00 mark and its simple 10-dma, which has been support for the past month, is the beginning of a short-term consolidation. Looking at the daily chart the next level of support looks like the $65.00 level or the 50-dma near $63. We're going to aim for the $65.50-65.00 range. To be honest some traders would equate this to gambling. We certainly don't suggest traders trying to call the top on such a strong stock. The last time WC broke down under its 10-dma after a big run up shares went sideways, not lower. However, if you're a technical trader it's hard not to see the big MACD sell signal and the bearish tint to the RSI and stochastics.

Suggested Options:
We are suggesting the August puts since we expect this to be a short-term play.

BUY PUT AUG 70.00 WC-TN OI= 32 current ask $3.10
BUY PUT AUG 65.00 WC-TM OI= 5 current ask $0.75

Picked on July 14 at $ 69.46
Change since picked: - 0.96
Earnings Date 08/03/05 (confirmed)
Average Daily Volume = 268 thousand
 

Dropped Calls

Intuit - INTU - close: 48.99 chg: +0.13 stop: 44.90

Target achieved. INTU managed an early morning spike higher on Friday and traded to $49.58. That was enough to hit our target range of $49.50-50.00. Shares look pretty overbought and extended here so we would not want to hold longs with INTU under round-number resistance at $50.00 and the major averages overbought.

Picked on July 07 at $ 46.51
Change since picked: + 2.48
Earnings Date 08/17/05 (unconfirmed)
Average Daily Volume = 1.7 million
 

Dropped Puts

None
 

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