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Call Updates

Kerr Mcgee - KMG - close: 86.02 chg: -0.48 stop: 81.99

News out on Friday from the weather service suggesting that hurricane Katrina will miss most of the oil infrastructure in the gulf helped spark some profit taking in the oil sector. Crude oil posted its first drop in seven sessions. This lead to KMG's minor decline on Friday and its fourth failed rally at the $88.00 level in the last two weeks. Given the sell-off in crude on Friday we could turn defensive here but the latest reports over the weekend suggest that Katrina is now headed for the oil infrastructure. This could send oil higher again on Monday. Of course we're talking about the weather and nothing is a guarantee when you're dealing with forecasts. We would keep a close eye on KMG and the $85.00 level or its 21-dma near $84.40. A breakdown below either could be a sign that KMG is going to produce a deeper consolidation although chart readers will notice on the intraday chart that KMG also has some support near $84.00 and again near $82.00. We're not suggesting new plays at this time.

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

Picked on August 21 at $ 85.99
Change since picked: + 0.03
Earnings Date 07/27/05 (confirmed)
Average Daily Volume = 2.4 million
 

Put Updates

Carnival Corp - CCL - close: 49.74 chg: -0.55 stop: 52.01*new*

We don't have any complaints with CCL. The stock appears to be channeling lower and the recent failed rally under $52 did prove to be a new entry point for bearish positions. Technicals are naturally bearish and its P&F chart points to a $39.00 target. Our only concern is the trendline of support on CCL's weekly chart. Our target is the $47.75-47.00 range. We are lowering the stop loss to $52.01.

Suggested Options:
We're not suggesting new plays at this time but interested traders could look to the September puts. We plan to exit ahead of CCL's mid September earnings report.

Picked on August 10 at $ 51.79
Change since picked: - 2.05
Earnings Date 09/15/05 (unconfirmed)
Average Daily Volume = 2.5 million

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Federated Dept. Stores - FD - cls: 70.50 chg: -0.49 stop: 75.01*new

A lower than expected consumer sentiment number on Friday really undermined the retail sector and a 10% drop in shares of Saks Inc (SKS) didn't help the bulls either. Shares of SKS turned lower after announcing it would plan to sell-off the various pieces of the company as there did not appear to be enough interest in buying the whole company outright. Shares of Federated (FD) turned lower again and look poised to breakdown under support at the $70.00 mark and its simple 100-dma. We're lowering the stop loss to $75.01 but more conservative types can probably get away with a stop closer toward $74. Should FD surprise us with a bounce look for resistance in the $72.00-72.50 region. Our target is the $67-65 range.

Suggested Options:
We are going to suggest the September puts for now but the November puts would also work well.

BUY PUT SEP 75.00 FD-UO OI=1001 current ask $4.90
BUY PUT SEP 70.00 FD-UN OI=3564 current ask $1.50

Picked on August 22 at $ 71.99
Change since picked: - 1.49
Earnings Date 08/10/05 (confirmed)
Average Daily Volume = 2.2 million

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Fedex Corp - FDX - close: 81.68 chg: -0.77 stop: 86.01

Shares of FDX hit new monthly lows on Friday despite a pull back in crude oil prices. The overall bearish trend in FDX appears to be asserting itself. We do expect a bounce at round-number support near $80.00 but the bottom of FDX's channel is a lot lower. We're targeting a move into the $76-75 range. Readers can choose to enter positions now or wait for possible bounce from $80.00 to fail and then enter positions. FYI: the Point & Figure chart for FDX is bearish and points to a $71.00 target.

Suggested Options:
We are suggesting the October puts.

BUY PUT OCT 85.00 FDX-VQ OI=2328 current ask $4.40
BUY PUT OCT 80.00 FDX-VP OI=3569 current ask $1.65

Picked on August 23 at $ 82.99
Change since picked: - 1.31
Earnings Date 09/22/05 (unconfirmed)
Average Daily Volume = 2.0 million

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Google - GOOG - close: 283.58 chg: +0.99 stop: 290.51

Unfortunately we have little news to report on for GOOG. The stock tried to breakout over the $285 level on Friday but failed to generate enough momentum. Yet neither did the stock turn lower with the rest of the market. The five-week trend of lower highs and lower lows is still in play and that puts GOOG near resistance. Readers might want to consider new bearish positions here. Keep in mind that our biggest risk (and it's a big one) is that the S&P could announce that GOOG is being added to the S&P 500 index at any time. We are targeting the rising 100-dma and have been adjusting our suggested exit range on a daily basis. We're setting the exit at $267.00-265.00 now that the 100-dma is at $265.00. FYI: the Point & Figure chart is bearish and points to a $232.00 target. Plus, if you're following this play there's been a big increase in puts at the 280 and 270 strikes.

Suggested Options:
We are suggesting the September options.

BUY PUT SEP 290.00 GGD-UR OI= 6552 current ask $10.60
BUY PUT SEP 280.00 GGD-UP OI=14188 current ask $ 5.20
BUY PUT SEP 270.00 GOU-UN OI=22043 current ask $ 2.25

Picked on August 11 at $284.50
Change since picked: - 0.92
Earnings Date 07/21/05 (confirmed)
Average Daily Volume = 13.6 million

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Ingersoll Rand - IR - close: 77.33 chg: -0.01 stop: 80.01*new*

Time is running out for our play in IR. We have four more trading sessions to see how low IR will slip before we plan to exit. The stock is splitting 2-for-1 on Friday, September 2nd and we do not want to hold over the split. We are going to lower the stop loss to $80.01. The next level of support appears to be the $76 mark near its exponential 200-dma.

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

Picked on August 24 at $ 77.49
Change since picked: - 0.16
Earnings Date 07/21/05 (confirmed)
Average Daily Volume = 1.1 million

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Illinois Tool Works - ITW - cls: 83.79 chg: -0.35 stop: 87.35

Our plan to trade the descending channel ITW is working. However, it looks like ITW is a little short-term oversold and could be due for a bounce. We would watch for a bounce toward the $84.50-85.00 region as a new bearish entry point. Our target is the $80.25-80.00 range although more aggressive traders might want to target the bottom of its channel.

Suggested Options:
We are suggesting the October puts.

BUY PUT OCT 90.00 ITW-VR OI= 53 current ask $6.60
BUY PUT OCT 85.00 ITW-VQ OI=124 current ask $2.85
BUY PUT OCT 80.00 ITW-VP OI=228 current ask $0.95

Picked on August 23 at $ 85.05
Change since picked: - 1.26
Earnings Date 07/21/05 (confirmed)
Average Daily Volume = 1.2 million

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KOS Pharma - KOSP - close: 68.84 chg: -0.92 stop: 72.51

It's no shock that the action in KOSP is mirroring the BTK biotech index. Some have said that up to eight percent of a stock's move is based on movement in the broader indices and/or the sector specific index. That bodes well for us as short-term bears on KOSP. Both the stock and the BTK index are showing a double-top pattern with peaks in July and August. Plus, both KOSP and the BTK are consolidating lower with a three-week trend of lower highs. We like KOSP because the stock has broken through round-number support at the $70.00 level and technical support at its 50-dma. The P&F chart for KOSP is currently bearish and points to a $62 target. We have been targeting the $62 region but we're going to adjust our target to account for the rising 100-dma. Our new target range is the $63-62 area and we'll adjust this as needed as the 100-dma moves.

Suggested Options:
We are suggesting the September puts although Novembers are also available.

BUY PUT SEP 70.00 KQW-UN OI=552 current ask $2.85
BUY PUT SEP 65.00 KQW-UM OI=606 current ask $0.85

Picked on August 22 at $ 68.25
Change since picked: + 0.59
Earnings Date 08/04/05 (confirmed)
Average Daily Volume = 642 thousand

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3M Co. - MMM - close: 70.99 change: -0.31 stop: 73.01 *new*

It should be just a matter of time now. MMM continues to drift lower and is within one dollar of our target at the $70.00 level. Actually we've been suggesting that more conservative traders exit in the $70.50-70.00 range since the $70 level could act as round-number support. Longer-term MMM doesn't look that healthy now that its weekly chart shows a breakdown below the 200-week moving average and its P&F chart points to a $63 target. We are lowering the stop loss to $73.01.

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

Picked on July 19 at $ 74.29
Change since picked: - 3.30
Earnings Date 07/18/05 (confirmed)
Average Daily Volume = 3.4 million

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Simon Prpty Grp - SPG - close: 74.62 chg: -1.13 stop: 77.01*new*

Buckle those seat belts it looks like SPG is finally read to move lower. The stock has been consolidating sideways the past couple of weeks after shares produced an oversold bounce from its early August sell-off. The sell-off broke SPG's April-August up trend and now the stock has clear resistance near the $77 level. We can probably thank Greenspan's comments about real estate for the final push lower in SPG. This is a new entry point to buy puts. Our target is the $71.50-70.50 range near its 100-dma. We are lowering the stop loss to $77.01.

Suggested Options:
We are suggesting the October puts.

BUY PUT OCT 80.00 SPG-VP OI= 95 current ask $5.80
BUY PUT OCT 75.00 SPG-VO OI=499 current ask $2.45
BUY PUT OCT 70.00 SPG-VN OI=692 current ask $0.80

Picked on August 18 at $ 75.24
Change since picked: - 0.62
Earnings Date 07/28/05 (confirmed)
Average Daily Volume = 946 thousand

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United Parcel Svc - UPS - cls: 71.33 chg: -0.58 stop: 74.21

The slow drift lower in UPS just might be picking up speed. Transport stocks are feeling the pinch as investors ponder the affect of record high oil and fuel prices. Wednesday's failed rally under the exponential 200-dma was a new entry point to buy puts but Friday's decline under the simple 50-dma doesn't look like a bad spot to consider new positions either. We're essentially playing the wide trading range in UPS although it's worth noting that there is a definite bearish tilt to the upper boundary. The P&F chart currently points to a $56 target but we are targeting the $68-67 range.

Suggested Options:
We are suggesting the October puts.

BUY PUT OCT 75.00 UPS-VO OI= 3333 current ask $4.00
BUY PUT OCT 70.00 UPS-VN OI=10542 current ask $1.30

Picked on August 17 at $ 71.99
Change since picked: - 0.66
Earnings Date 07/21/05 (confirmed)
Average Daily Volume = 2.6 million

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Wynn Resorts - WYNN - close: 48.01 chg: -0.55 stop: 52.01 *new*

Lack of follow through on Thursday's bounce is good news for the bears in WYNN. Yet we believe that traders should prepare themselves for a probable oversold bounce back toward the $50.00 level and/or its simple 10-dma (49.66). A failed rally in that area could be used as a new bearish entry point to buy puts. Daily and weekly technicals point lower for WYNN and its P&F chart points to a $37 target. We are targeting the $45.25-45.0 range. We're going to lower our stop loss to $52.01.

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

BUY PUT SEP 55.00 UWY-UK OI=2368 current ask $7.10
BUY PUT SEP 50.00 UWY-UJ OI=3049 current ask $2.75
BUY PUT SEP 45.00 UWY-UI OI=3713 current ask $0.60

Picked on August 19 at $ 49.95
Change since picked: - 1.84
Earnings Date 08/01/05 (confirmed)
Average Daily Volume = 2.0 million
 

Dropped Calls

Sierra Health Svs. - SIE - cls: 67.05 chg: +0.16 stop: 66.95

We are going to drop SIE as a bullish candidate. Our strategy was to catch a breakout over resistance at $70.00 and its simple 50-dma with a trigger to buy calls at $70.11. On Thursday SIE moved the opposite direction and broke down under technical support at its 100-dma. We're going to drop this play unopened and look elsewhere. Readers can keep an eye on SIE for a bounce from the $65 level or its 200-dma near $62.50 and its July low.

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/25/05 (confirmed)
Average Daily Volume = 426 thousand
 

Dropped Puts

F5 Networks - FFIV - close: 40.65 chg: +0.79 stop: 40.01

The unexplained rebound continues in shares of FFIV. Its peers in the networking sector are breaking down to new relative lows but someone is buying up FFIV. Volume has been above average on two of its biggest gains this past week. It's easy to feel frustrated here since FFIV came within 35 cents of our target at $35.00 back on the 16th of August. We're closing this play with a loss at $40.01.

Picked on August 03 at $ 38.76
Change since picked: + 1.89
Earnings Date 07/20/05 (confirmed)
Average Daily Volume = 1.4 million

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Precision Castparts - PCP - cls: 96.75 chg: +6.73 stop: 92.01

Normally when a company announces it's making an acquisition the acquiring company's stock goes down and the company to be acquired stock goes up. Occasionally when Wall Street really likes the deal the company making the purchase will see its stock go up. That's what happened on Friday with PCP when they announced plans to buy Special Metals Corp for $303 million plus debt ($540 million total). Our plan had been to trade the consolidation with PCP starting to fade from the top of its longer-term channel. Friday's rally definitely throws a monkey wrench in that plan. The stock has now broken through the top of its rising channel. Fortunately, we were still on the sidelines waiting for PCP to hit our trigger to buy puts at $89.49. We are going to drop PCP as a bearish candidate for now but we'll keep an eye on it. The $100 level is likely to be round-number, psychological resistance.

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/19/05 (confirmed)
Average Daily Volume = 415 thousand
 

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