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Call Updates

Centex - CTX - close: 69.63 chg: +1.99 stop: 64.99*new*

Homebuilding stocks soared on Friday. A renewed speculation that the sector will benefit in the rebuilding process over hurricane Katrina and some positive analyst comments over the Las Vegas housing market seemed to do the trick. Shares of CTX added almost three percent on above average volume to breakout over resistance near $69.00. The stock does still have round-number resistance at $70.00 and technical resistance at the 50-dma overhead but the short-term trend looks strong following the late August bounce near its rising 200-dma. Our target is the $73.00-75 range. We are raising the stop loss to $64.99.

Suggested Options:
We are suggesting the October calls.

BUY CALL OCT 65.00 CTX-JM OI=2181 current ask $6.10
BUY CALL OCT 70.00 CTX-JN OI=8888 current ask $3.00
BUY CALL OCT 75.00 CTX-JO OI=2006 current ask $1.10

Picked on September 01 at $ 68.25
Change since picked: + 1.38
Earnings Date 10/25/05 (unconfirmed)
Average Daily Volume = 1.6 million

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KB Home - KBH - close: 76.22 chg: +1.53 stop: 71.50

KBH also performed well on Friday following the gains in the homebuilding sector. Much like shares of CTX, KBH benefits from the belief that the builders will see big business from the Katrina rebuilding efforts. Plus, an analyst with JMP reaffirmed their "strong buy" rating on KBH while upgrading a couple of more stocks in the industry. We're encouraged to see KBH breakout over resistance at the $76.00 level and hit new five-week highs. The stock does still have some technical resistance at the 50-dma and more conservative traders may want to wait for KBH to push through that moving average first before initiating positions. Our target is the $80.00-82 range. FYI: the P&F chart target has risen to $89.

Suggested Options:
We are suggesting the October calls even through we plan to exit before its earnings report on September 22nd.

BUY CALL OCT 70.00 KBH-JN OI=1784 current ask $8.30
BUY CALL OCT 75.00 KBH-JO OI=2471 current ask $4.90
BUY CALL OCT 80.00 KBH-JP OI-4181 current ask $2.45

Picked on September 07 at $ 75.89
Change since picked: + 0.33
Earnings Date 09/22/05 (confirmed)
Average Daily Volume = 2.5 million

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Lehman Brothers - LEH - cls: 110.97 chg: +0.37 stop: 104.99

We remain on the sidelines with LEH. Our plan was to catch a dip back toward support following the September 1st breakout over resistance and ride LEH toward the $112.00 region on any pre-earnings momentum. Unfortunately, LEH has not cooperated and there has been no hint at a dip over the last few days. Actually shares of LEH are now up about eight days in a row. Experienced traders know that stocks tend to move in cycles and LEH is definitely short-term overbought. We're not going to give up yet now that LEH is overdue for a pull back. Our strategy is to buy calls on a dip into the $107.75-106.75 range, which is an adjustment from our previous entry range. If triggered we'll target the $112.00-112.50 region. If triggered we'll use a stop loss at $104.99.

Suggested Options:
We are not suggesting new plays at this time. Look for a dip into our suggested entry range. We do plan on exiting before LEH's late September earnings report.

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 09/20/05 (unconfirmed)
Average Daily Volume = 1.9 million

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MDC Holdings - MDC - close: 80.14 change: +3.54 stop: 74.45*new*

MDC really soared on Friday (+4.6%) out performing the market and its peers in the homebuilding sector. The group got a boost on positive expectations that the industry will benefit from the Katrina rebuilding efforts. Plus, an analyst at JMP reiterated their "strong buy" rating on shares of MDC. The stock vaulted higher on above average volume and broke through resistance at the $78.00 level and the $80.00 mark. We are raising our stop loss to $74.45. We're not suggesting new plays right here as Friday's gain will have inflated the option premiums. If you're looking for a new entry point consider waiting for a dip back toward $78.00. Our target is the $83-85 range.

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

Picked on September 01 at $ 77.01
Change since picked: + 3.13
Earnings Date 10/13/05 (unconfirmed)
Average Daily Volume = 489 thousand

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Noble Corp - NE - close: 71.65 change: +1.45 stop: 67.25

The oil sector including the OIX and OSX indices have managed to hit new highs despite a pull back in crude oil prices. Repair work following hurricane Katrina should keep the oil services companies pretty busy for months to come. Technically shares of NE are inching closer to the top of its recent trading range and Friday's push past the $71.00 level looks like a new bullish entry point. The MACD indicator has produced a new buy signal and NE's Point & Figure chart points to a $94 target. We are suggesting bullish positions here with a $78.00-80.00 target range but more conservative traders might want to wait for a new high above $72.50 before considering new plays.

Suggested Options:
We are suggesting the October calls.

BUY CALL OCT 70.00 NE-JN OI=762 current ask $4.20
BUY CALL OCT 75.00 NE-JO OI=449 current ask $1.80

Picked on August 31 at $ 71.30
Change since picked: + 0.35
Earnings Date 10/17/05 (unconfirmed)
Average Daily Volume = 1.8 million

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Potlatch - PCH - close: 54.03 chg: +0.21 stop: 51.99

We are not seeing a lot of follow through on PCH's recent buy signal. That has a feeling cautious. If we do not see PCH push past the simple 50-dma in the next two or three days we're going to close the play early.

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

Picked on September 07 at $ 54.45
Change since picked: - 0.42
Earnings Date 10/17/05 (unconfirmed)
Average Daily Volume = 229 thousand
 

Put Updates

Carnival Corp - CCL - close: 49.70 chg: +0.28 stop: 50.26*new*

Traders need to be careful here and double-check their stop losses. Shares of CCL are trading just under resistance at the $50.00 mark and its 21-dma, which has been consistent resistance over the past several weeks marking the descending trendline of lower highs. CCL is oversold so a breakout over $50.00 could spark some short covering. We are not suggesting new plays. Instead we are tightening our stop loss to $50.26. Our target is the $47.75-47.00 range.

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

Picked on August 10 at $ 51.79
Change since picked: - 2.09
Earnings Date 09/15/05 (unconfirmed)
Average Daily Volume = 2.5 million

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Electronic Arts - ERTS - close: 56.12 change: -0.73 stop: 60.01

Video game titan ERTS continues to under perform the market. The stock lost 1.28% on Friday with volume coming in well above average and that suggests more weakness ahead. Not only is ERTS in a bearish pattern of lower highs and lower lows but rival Take Two Interactive (TTWO) just recently issued an earnings warning and that's weighing on the sector as well. Looking closer at shares of ERTS we do see a bounce from Friday's low so there could be another rebound on Monday but we'd expect that to fizzle in the $57.50-58.00 range. The P&F chart looks very bearish with $50 target. We are targeting a move into the $51.00-50.00 range.

Suggested Options:
We are suggesting the October puts.

BUY PUT OCT 60.00 EZQ-VL OI=1300 current ask $5.20
BUY PUT OCT 55.00 EZQ-VK OI=3068 current ask $2.05
BUY PUT OCT 50.00 EZQ-VJ OI=1349 current ask $0.65

Picked on August 30 at $ 56.41
Change since picked: - 0.29
Earnings Date 10/25/05 (unconfirmed)
Average Daily Volume = 3.7 million

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Fedex Corp - FDX - close: 79.76 chg: -0.54 stop: 83.51 *new*

FDX under performed the broader market on Friday and joined its peers in the transportation sector with another decline. On a technical basis FDX has broken round-number support at the $80.00 mark on above average volume. Investors are cautious on FDX and UPS since both stand to lose a lot of transactions with so many businesses shut down along the gulf coast following hurricane Katrina. It's true. Jim mentioned in his wrap this weekend that the delivery companies should see a big up tick in business once the rebuilding has begun but the actual affect on earnings is yet to be determined. We see the decline under $80.00 as a new bearish entry point but FDX is oversold and a bounce back toward $81.00 and its 10-dma could occur before the stock hits new relative lows. We are lowering our stop loss to $83.51, just above the simple 50-dma. Our target is the $76-75 range.

Suggested Options:
We are suggesting October options but do plan to exit ahead of FDX's late September earnings report.

BUY PUT OCT 80.00 FDX-VP OI=7288 current ask $2.40
BUY PUT OCT 75.00 FDX-VO OI=1323 current ask $0.80

Picked on August 23 at $ 82.99
Change since picked: - 3.23
Earnings Date 09/22/05 (unconfirmed)
Average Daily Volume = 2.0 million

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United Parcel Svc - UPS - cls: 68.50 chg: -0.33 stop: 72.01*new*

UPS is almost there! The stock tried to rally at the open on Friday but failed under the $69.00 level. Now shares of UPS look poised to hit our target in the $68.00-67.00 range on Monday. We are not suggesting new plays. More conservative traders may want to consider exiting early to lock in profits. We are lowering our stop loss to $72.01.

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

Picked on August 17 at $ 71.99
Change since picked: - 3.49
Earnings Date 07/21/05 (confirmed)
Average Daily Volume = 2.6 million
 

Dropped Calls

Aetna - AET - close: 84.75 change: +1.00 stop: 78.95

Another strong day for healthcare-related stocks helped shares of AET add another 1.19%. More importantly AET traded to $84.96, which is inside our target range of $84.75-85.25. We are closing the play per our game plan. Readers can keep an eye on AET to watch and see if the stock pushes past overhead resistance in the $86.00-86.50 region.

Picked on September 06 at $ 80.25
Change since picked: + 4.50
Earnings Date 10/27/05 (unconfirmed)
Average Daily Volume = 2.0 million
 

Dropped Puts

KOS Pharma - KOSP - close: 69.45 chg: -0.06 stop: 70.51

While we have not been stopped out yet and KOSP still has overhead resistance at the $70.00 level and its simple 50-dma - we are choosing to exit early. The intraday action on Friday suggests that KOSP is poised to rally next week. We'd rather cut our losses early.

Picked on August 22 at $ 68.25
Change since picked: + 1.20
Earnings Date 08/04/05 (confirmed)
Average Daily Volume = 642 thousand
 

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