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Call Updates

Las Vegas Sands - LVS - close: 40.30 chg: -0.01 stop: 36.99

LVS is a new bullish candidate from our Thursday night newsletter. There is no change from our original play description which we are reposting below.

Adding a new bullish play with the major market averages poised for more profit taking seems rather risky in our book. We find it appropriate that this stock is a casino. Overall the casino stocks have been showing decent relative strength. It is relative strength that draws our attention to LVS. The stock has managed to push to new three-month highs on a day most of the market was trading lower. More importantly LVS has broken through round-number, psychological resistance at the $40.00 mark and technical resistance at its 100-dma and its exponential 200-dma. The P&F chart shows a fresh double-top breakout buy signal that points to a $49.00 target. We are going to suggest calls with LVS above the $40.00 level. Our target will be the $44.50-45.00 range but keep in mind our time frame is pretty short. LVS is due to report earnings on August 3rd and that doesn't give us a lot of time. Any lack of follow through on today's breakout may be a good signal to abandon bullish positions.

Suggested Options:
We are suggesting the August calls since we plan to exit before the August 3rd earnings.

BUY CALL AUG 40.00 LVS-HH OI=2725 current ask $1.80

Picked on July 21 at $ 40.31
Change since picked: - 0.01
Earnings Date 08/03/05 (confirmed)
Average Daily Volume = 934 thousand

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Pediatrix Med Group - PDX - cls: 77.91 chg: +0.66 stop: 74.25*new*

This past week has been a decent one for shares of PDX. The stock managed to avoid the sell-off in the healthcare sector. This may have been due to the positive earnings guidance PDX shared with the market on July 19th. We remain bullish on the stock and we continue to target the $80-82 range (FYI: the P&F chart still points to a $92 target). The challenge now is our time frame. We do not want to hold over PDX's earnings report on August 3rd. That gives us about a week and a half. We hesitate to suggest new long positions here but aggressive traders might watch for another dip toward the $76 level as another entry point. We are raising our stop loss to $74.25 near the simple 50-dma.

Suggested Options:
We are not suggesting new plays here. If you choose to buy a dip we like the August strikes since we plan to exit before PDX's early August earnings.

Picked on July 11 at $ 76.10
Change since picked: + 1.81
Earnings Date 08/03/05 (unconfirmed)
Average Daily Volume = 158 thousand

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Reynolds American - RAI - close: 83.92 chg: +0.93 stop: 79.99*new*

The rally continues for shares of RAI. The cigarette maker continues to climb and the stock came within one cent of our target on Friday. We will continue to target the $84.00-85.00 range but we strongly suggest that readers consider taking profits here. RAI is looking a little short-term overbought and due for a dip. We are raising our stop loss to $79.99 but more conservative traders may want to put theirs under the $81 level. We are not suggesting new plays at this time. Remember, we only have a couple of days before RAI is due to report earnings. If the stock does not hit our target by Tuesday we will close the play on Tuesday afternoon at the closing bell.

Suggested Options:
This close to our target we are not suggesting new plays.

Picked on July 10 at $ 78.83
Change since picked: + 5.09
Earnings Date 07/27/05 (confirmed)
Average Daily Volume = 664 thousand
 

Put Updates

Infosys Tech. - INFY - cls: 72.20 chg: +1.77 stop: 75.01

Hmm... our bearish play in Indian software company INFY may not be working out exactly as planned but so far the stock has not strayed from our expectations. On Thursday we warned readers that INFY might bounce into the $72.00-72.50 region and that's exactly what it did on Friday. The gain on Friday is not so much relative strength versus the software sector here in the states. Instead we see it as a reaction to the strong day for the Indian markets on Friday. The Indian stock market surged with a 1.6 percent rally to close at new all-time highs. The rally in the Indian markets may prove to be our biggest risk here with put positions on INFY. Looking at the daily chart for INFY we see the next level of resistance near $74.00, which would be the bottom of its gap down from July 12th. July 12th was when INFY reported earnings. Investors reacted negative as they worried about future growth rates for INFY. The move down two weeks ago helped produce a big double-top pattern with resistance in the $79-80 region. It also produced a reversal on its P&F chart, which now points to a $59 target. Traders can watch for a failed rally under $74 or under $75 as a new bearish entry point. Our target is the $62-60 range.

Suggested Options:
We are suggesting the September puts although the October puts would work well too.

BUY PUT SEP 75.00 IUN-UO OI= 0 current ask $5.30
BUY PUT SEP 70.00 IUN-UN OI=37 current ask $2.80
BUY PUT SEP 65.00 IUN-UM OI=81 current ask $1.25

Picked on July 20 at $ 69.92
Change since picked: + 2.28
Earnings Date 07/12/05 (confirmed)
Average Daily Volume = 922 thousand

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Lehman Brothers - LEH - cls: 107.00 chg: +1.87 stop: 108.01

LEH is a new bearish candidate from the Thursday night newsletter. Friday's rebound is certainly a surprise considering the Tuesday-Thursday pattern looked like a bearish reversal. This is a very speculative play and our strategy remains the same so we're reprinting the original play description from Thursday here:

If the new call play in LVS isn't risky enough for you take a look at this put play in LEH. The stock has been a pillar of strength in the market and in its own industry group. Shares of LEH have produced a string of new all-time highs and helped lead the XBD broker-dealer index to its own series of new highs. So why buy puts on a stock that is looking so strong? We believe that LEH is way overdue for some profit taking. The rally in LEH is about nine-weeks old and nothing goes up in a straight line. We want to reiterate that this is a speculative play and carries a higher degree of risk. Our strategy is to try and catch the next bout of profit taking. With the major indices still overbought and looking poised for more weakness we feel odds are leaning toward a consolidation in LEH too. Plus, the action over the last three days looks like a potential bearish reversal pattern. We're basically betting that LEH will pull back toward the $100.00 region before the August $100 puts expire on August 19th. Our official target will be the $100.50-100.00 range. Any dip toward the $100 level should significantly raise the value of the AUG 100 puts currently trading in the $0.50-0.60 range. Our stop loss at $108.01 (above yesterday's high) is superficial. If LEH trades to a new high our puts will probably be close to worthless. More conservative traders may want to pass on this play or wait for LEH to trade under the $105 level first. The biggest challenge we see is the $102.50 level where we expect bulls to try and defend the stock and buy the dip.

Suggested Options:
This is a speculative play on the August 100 puts.

BUY PUT AUG 100.00 LES-TT OI=2220 current ask $0.40

Picked on July 21 at $105.13
Change since picked: + 1.87
Earnings Date 06/14/05 (confirmed)
Average Daily Volume = 2.7 million

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3M Co. - MMM - close: 74.71 change: +0.16 stop: 77.51

MMM continues to under perform the market and its peers in the DJIA. There appears to be no catalyst to buy the stock as investors worry over MMM's profit growth. Technically MMM has filled the gap from its late June drop. Plus, MMM continues to trade under the bottom edge of its April-June trading range. The Point & Figure chart is also bearish with a $63 price target. We will suggest put positions at current levels or under the $76 level. More conservative traders may want to wait for a decline under the $74 mark before buying puts. Our initial target is the $70.00-68.00 range.

Suggested Options:
We like the September puts although the October strikes would also work well.

BUY PUT SEP 80.00 MMM-UP OI= 45 current ask $5.90
BUY PUT SEP 75.00 MMM-UO OI=741 current ask $2.25
BUY PUT SEP 70.00 MMM-UN OI=318 current ask $0.55

Picked on July 19 at $ 74.29
Change since picked: + 0.42
Earnings Date 07/18/05 (confirmed)
Average Daily Volume = 3.4 million

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Children's Place - PLCE - cls: 46.34 chg: +1.32 stop: 47.51

We cannot know whether Friday's rally in PLCE was short-covering ahead of the weekend of bulls trying to buy a bounce from round-number support at the $45.00 level. PLCE continues to suffer under a five-week trendline of lower highs and we believe it still has new relative lows to set. Our plan is to wait for a breakdown under support at the $45.00 level. A decline under the $45.00 level would produce a new triple-bottom breakdown sell signal on its P&F chart. Our entry point to buy puts is at $44.90. Our target is the $40.50-40.00 range. Traders need to be aware that we plan to exit ahead of PLCE's August 11th (unconfirmed) earnings report.

Suggested Options:

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
 

Dropped Calls

Chubb Corp - CB - close: 86.99 change: +0.13 stop: 84.99

We have almost run out of time on this bullish play in CB. The company is due to report earnings on July 26th and we do not want to hold over the event. Per our previous guidelines we are closing the play as of Friday afternoon.

Picked on June 10 at $ 85.05
Change since picked: + 1.94
Earnings Date 07/26/05 (confirmed)
Average Daily Volume = 1.2 million
 

Dropped Puts

Ishares Global Energy - IXC - cls: 90.31 chg: +1.81 stop: 91.61

It was a volatile day for the IXC but the trend on Friday was pretty clear. Crude oil prices are bouncing and that helped produce a bullish engulfing candlestick pattern on the IXC. The breakout back above the $90.00 level is our cue to exit. Yes, the IXC still has additional resistance in the $91.50-91.60 range but we're not going to sit here and watch the oil sector hit new highs, especially when the oil services sector is surging sharply to new all-time highs. We're choosing to close the play early to minimize any losses.

Picked on July 14 at $ 89.15
Change since picked: + 1.16
Earnings Date 00/00/00
Average Daily Volume = 33 thousand

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