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Call Updates

Apache - APA - close: 73.86 change: -1.88 stop: 72.49

A slow down in hurricane Rita on Friday and news that the storm would likely miss the Houston area prompted some more profit taking in crude oil and the oil-related stocks. Shares of APA lost 2.48% and filled the gap from September 19th. This dip is probably another bullish entry point. Oil production, natural gas production and refining is almost completely shut down across the gulf area. This is going to cause additional shortages and prices for crude and natural gas are likely to rebound, especially natural gas, which is one reason why we added APA due to its exposure in the natural gas markets. If you read the market wrap this weekend some are predicting high-teens to almost $20 for natural gas and this will push heating bills higher by +40% to +100% depending on where you live in the country. Here's our plan with APA. We would buy any bounce above $72.00. It is certainly possible that APA will dip toward stronger support at its 50-dma near $70.00. This would stop us out at $72.49 but we would strongly consider jumping back in on a rebound. The best-case scenario is that APA bounces from Friday's close now that it has filled the gap. Our target is the $79.00-80.00 range. We will not hold over APA's late October earnings report.

Suggested Options:
We are suggesting the November calls.

BUY CALL NOV 70.00 APA-KN OI= 467 current ask $6.50
BUY CALL NOV 75.00 APA-KO OI= 510 current ask $3.70

Picked on September 18 at $ 73.42
Change since picked: + 0.44
Earnings Date 10/27/05 (unconfirmed)
Average Daily Volume = 2.6 million

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Cameco Corp - CCJ - close: 52.22 chg: -0.51 stop: 49.49

Shares of CCJ continue to trade in sync with the energy markets. Remember that higher oil makes alternatives like nuclear energy look more attractive. When oil sell-offs it looks like investors use it as an excuse to sell CCJ too. The stock lost another percent on Friday and the recent profit taking is pushing the MACD indicator closer toward a new sell signal. This technical development and what looks like a breakdown of its short-term trendline of support would make us cautious here. CCJ should still have significant support near broken resistance at the $50.00 level. We are still bullish on the stock but would not suggest initiating new positions at this time. Instead we would wait to see a bounce from the $50 level and use that as a new bullish entry point. The P&F chart remains bullish and points to a $78 target. We are targeting a move into the $58-60 range before the company's earl November earnings report. We will not hold over the earnings report.

Suggested Options:
We're not suggesting new positions at this time but if CCJ bounces from the $50 level we like the November calls.

Picked on September 18 at $ 53.30
Change since picked: - 1.08
Earnings Date 11/01/05 (unconfirmed)
Average Daily Volume = 862 thousand

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Altria Group - MO - close: 71.91 change: +0.00 stop: 69.90

This past week has been pretty rough on the DJIA but shares of Dow component MO held in there relatively well. You'll remember that investors are feeling a bit more confident on the cigarette maker now that most of its legal woes appear to be in regression. Yet many investors are merely addicted to the stock's relative strength and its four percent dividend yield. We're going to remain bullish on the stock as long as shares stay above what should be support at the $70.00 level. Readers can choose to buy a bounce from $70 (or the recent lows near 70.85). Or readers can wait for a new move over $73.50-74.00. The P&F chart points to a $111 target but we are targeting a move into the $78-79 range. We will not hold over the October earnings report.

Suggested Options:
Readers can choose from the October, November, December, and January strikes but we like the October and November calls.

BUY CALL OCT 70.00 MO-JN OI=15571 current ask $3.50
BUY CALL OCT 75.00 MO-JO OI=34911 current ask $0.95

Picked on September 18 at $ 73.14
Change since picked: - 1.23
Earnings Date 10/19/05 (unconfirmed)
Average Daily Volume = 6.7 million

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Noble Energy - NBL - close: 45.83 chg: -0.68 stop: 43.24

NBL is another oil stock that was hit by profit taking on Friday following a downgrade for hurricane Rita and news that the storm was going to miss Houston. We believe this is temporary weakness and that NBL will rebound. However, shares of NBL may continue to dip and hit the $45.00 or $44.50 region first before rebounding. Therefore we would not suggest new bullish positions until we see the bounce begin. Our target is the $49.00-50.00 range. We will not hold over the early November earnings report.

Suggested Options:
We like the November calls.

BUY CALL NOV 42.50 NBL-KV OI=2051 current ask $4.80*
BUY CALL NOV 45.00 NBL-KI OI=1569 current ask $3.20*
BUY CALL NOV 47.50 NBL-KW OI=1442 current ask $1.60*
*these prices from the CBOE don't look accurate.
Confirm with your broker.

Picked on September 11 at $ 44.90 *post-split price
Change since picked: + 0.93
Earnings Date 11/02/05 (unconfirmed)
Average Daily Volume = 796 thousand
 

Put Updates

Adobe Sys. - ADBE - close: 28.08 chg: +0.20 stop: n/a

ADBE was showing some relative strength on Friday with a minor gain versus a loss for the GSO software index. We suspect that the stock is poised to run higher into the next couple of weeks. This was a strangle play on ADBE's 9/15 earnings report so we're not suggesting new positions. Our initial investment was approximately $1.55 with the October 27.50 call and October 25.00 put. Currently, if ADBE does turn higher, we're planning to exit near $30.00 and its 200-dma.

Suggested Options:
We are not suggesting new positions.

Picked on September 13 at $ 26.82
Change since picked: + 1.26
Earnings Date 09/15/05 (confirmed)
Average Daily Volume = 6.2 million

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Black & Decker - BDK - close: 83.07 chg: +0.13 stop: 85.05

BDK is a technical play based on its trend change from the July peak and its breakdown below multiple levels of support on September 14th. We predicted that the stock would bounce at the $80 level. Now we are watching for a failed rally under the $84 level or at its exponential 200-dma near 83.60. Readers can use a failed rally under $84 as a new entry point. Our target is the $78-77 range but we do not plan on holding over the late October earnings report. Currently the Point & Figure chart points to a $74 target but we see support on the P&F chart near $77.

Suggested Options:
We are suggesting the November puts.

BUY PUT NOV 85.00 BDK-WQ OI=705 current ask $4.05
BUY PUT NOV 80.00 BDK-WP OI=546 current ask $1.95

Picked on September 14 at $ 83.31
Change since picked: - 0.24
Earnings Date 10/25/05 (unconfirmed)
Average Daily Volume = 636 thousand

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Hovnanian - HOV - close: 51.23 chg: -0.09 stop: 55.01

Homebuilders have been hit pretty hard the last couple of weeks with many of the key players seeing their stocks breakdown under significant levels of support. HOV is one of them and shares are close to our target in the $50.25-50.00 range. The stock looks a bit oversold here so we're not suggesting new plays at this time. More conservative traders may want to exit early on any decline under the $51 level.

Suggested Options:
We are not suggesting new plays.

Picked on September 18 at $ 54.75
Change since picked: - 3.34
Earnings Date 09/07/05 (confirmed)
Average Daily Volume = 1.2 million

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Hershey Co. - HSY - close: 55.50 change: +0.00 stop: 58.01

HSY has produced what is arguably a bearish head-and-shoulders pattern from February 2005 through August 2005. The stock broke the neckline and support near $60.00 and its 200-dma in late August. Then after consolidating sideways under its exponential 200-dma for three weeks the stock continued lower. The $55.00 level is round-number support so we're not surprised to see the decline pause here. As a matter of fact HSY could easily bounce back and retest broken support near 57.50 as new resistance again. A move back toward $57.50 would also test resistance at the top of HSY's narrow descending channel. A failed rally under $57.50 could be used as a new bearish entry point. We're targeting a move into the $54.00-53.50 range because that lines up with the H&S pattern's projected target. We will not hold over the late October earnings report.

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

Picked on September 14 at $ 57.90
Change since picked: - 2.40
Earnings Date 10/20/05 (unconfirmed)
Average Daily Volume = 760 thousand

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Itron - ITRI - close: 44.82 change: +0.58 stop: 46.51

ITRI is a new play from the Thursday night newsletter. The stock is a little short-term oversold so if the market bounces on Monday we would expect ITRI to bounce as well. To that end our stop loss might be too tight. We would not rush in to initiate new positions but wait and watch to see where any oversold bounce might roll over. Our original play description is here:

ITRI produced an amazing run higher through most of 2005 but now it seems the stock is finally hitting some profit taking. Shares produced a double-top pattern back in July-August. Then the oversold bounce from the September low failed near resistance under the $52 level. Now the stock is breaking support at the $45.00 mark and its simple 100-dma on volume well above its average. Technicals are bearish and its MACD has produced a new sell signal. The P&F chart is bearish and points to a $38 target. We see today's breakdown as a new bearish entry point to buy puts. Our target is the $40.00 region (40.25-40.00) but more aggressive traders might target the exponential 200-dma near 38.50. A failed rally under $45.00 or even $46 could offer an alternative entry point to buy puts. We will not hold over the early November earnings report.

Suggested Options:
We are suggesting the November puts.

BUY PUT NOV 45.00 IUP-WI OI=374 current ask $5.50* (last $3.20)
BUY PUT NOV 40.00 IUP-WH OI=225 current ask $4.80* (last $1.30)

*These current "ask" prices from the CBOE do not look accurate. Confirm with your broker.

Picked on September 22 at $ 44.24
Change since picked: + 0.58
Earnings Date 11/02/05 (unconfirmed)
Average Daily Volume = 435 thousand

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MBIA Inc. - MBI - close: 57.21 chg: +0.94 stop: 58.75*new*

We knew that September would be volatile but shares of MBI are all over the place. Thus far they remain in their descending channel but it makes for exciting times if you're an options trader. Friday's rebound was almost enough and might qualify as an effort to fill the gap down from Wednesday morning. If that is the case then we'd look for MBI to turn lower next week. If not then the stock may yet retest overhead resistance near the 200-dma again. At this time we are not suggesting new positions. Our target is the $54.25 mark. We are lowering the stop loss to $58.75.

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

Picked on September 13 at $ 57.75
Change since picked: - 0.54
Earnings Date 11/01/05 (unconfirmed)
Average Daily Volume = 1.2 million

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WellChoice - WC - close: 70.61 change: +1.07 stop: 71.65

WC produced a very volatile session on Friday. After Thursday's gap down and technical breakdown under support at its 50-dma and the $70.00 mark the future looked bearish. Friday morning saw WC gap down and traded to $67.75 before rebounding sharply. Yet the rally ran out of steam under the $71.50 level, which appears to be just enough to fill the gap down from Thursday. By Friday afternoon the stock was turning lower again. The whole session produced what looks like a potential bullish engulfing candlestick. If so then that is bad news for bears. Yet we're getting conflicting signals with WC turning lower after filling the gap. At this point we'd rather be cautious. The markets might produce a relief rally on Monday if the hurricane Rita damage is less than expected. We are not suggesting new plays at this time. More aggressive traders might want to watch for a new decline under $70 as a new entry point. If you're curious about our original play description we're reprinting it here:

We're adding WC to the play list as a speculative technical play. We can't find the catalyst for today's gap down and big volume but the stock has broken support at the $70.00 mark in addition to support at its simple 50-dma. Technicals are naturally bearish but its Point & Figure chart is still bullish. Meanwhile the HMO.X healthcare index, while still relatively near its highs has produced what looks like a possible double-top pattern with the July and September peaks. We're going to bet that WC consolidates lower and tests the 100-dma near $66.50. If WC does not confirm this breakdown tomorrow we may choose to exit early.

Suggested Options:
We are not suggesting new plays at the moment.

Picked on September 22 at $ 69.54
Change since picked: + 1.07
Earnings Date 10/27/05 (unconfirmed)
Average Daily Volume = 248 thousand
 

Dropped Calls

None
 

Dropped Puts

Noble Corp - NE - close: 68.63 change: -1.37 stop: 68.49

NE has been under performing the oil sector the last few days and is the main reason we turned cautious on it mid-week. We suspect that investors are concerned that NE may have too much exposure to hurricane Rita. The breakdown on Friday pushed NE below its trend of higher lows and below technical support at the simple 50-dma. We were stopped out at $68.49. The decline on Friday also reversed NE's P&F chart from a buy signal to a sell signal that now points to a $63 target.

Picked on August 31 at $ 71.30
Change since picked: - 2.67
Earnings Date 10/17/05 (unconfirmed)
Average Daily Volume = 1.8 million
 

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