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Call Updates

Apache - APA - close: 75.22 change: -1.44 stop: 72.49

Energy stocks were the laggard on Friday as investors did some profit taking before the end of the third quarter. The OIX oil index lost 1.4% and the OSX oil services index lost 1.5%. Shares of APA fell 1.87% and the decline has given a bearish tilt to some of its short-term technical oscillators. In spite of Friday's decline we remain bullish. APA produces both crude oil and natural gas. Plus, the company does not have a lot of exposure to the Gulf of Mexico. Natural gas supplies are already running tight and Wall Street is worried about a shortage, which is why natural gas prices have risen so sharply. If we experience a cold winter some are predicting natural gas contracts to rise toward $20/bcf. As of Friday natural gas hit a record high above $15/bcf. We would watch APA for a bounce from potential support at $74.00 or the $73.50 levels. A rebound there could be used as a new bullish entry point. However, keep in mind that we do not want to hold over APA's earnings report due out in late October. Our target is the $79-80 range. FYI: the Point & Figure chart points to a $101 target.

Suggested Options:
We're not suggesting new positions at this time. Look for a bounce from support. If APA does offer another entry point readers can choose from the October or November calls.

Picked on September 18 at $ 73.42
Change since picked: + 1.80
Earnings Date 10/27/05 (unconfirmed)
Average Daily Volume = 2.6 million

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Broadcom - BRCM - close: 46.92 chg: +1.16 stop: 43.49*new*

A surprisingly positive earnings report from Micron (MU) helped inspire a strong 1.9% rally in the SOX semiconductor index. This also helped fuel a 2.5% rally in shares of BRCM. Technically shares of BRCM are looking pretty good. Shares just broke out over short-term resistance near the $46 level. Now its short-term technical oscillators are bullish and its MACD indicator is nearing a new buy signal. The Point & Figure chart is bullish and points to an $86 price target. Currently BRCM is testing resistance at the $47 level and looks poised to breakout. BRCM might be able to hit our target in the $49.00-50.00 range before the SOX runs into resistance near the 485 region. We are going to raise the stop loss to $43.49.

Suggested Options:
We are not going to suggest new positions here but if BRCM dips back toward $46.00 readers might want to consider buying some October or November calls. Remember, there are too many unknown variables when dealing with a company's earnings report so we plan to exit ahead of BRCM's late October earnings announcement.

Picked on September 25 at $ 45.05
Change since picked: + 1.87
Earnings Date 10/21/05 (unconfirmed)
Average Daily Volume = 7.0 million

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Cardinal Health - CAH - close: 63.44 chg: +0.28 stop: 59.85

The breakout play on CAH is doing okay. The stock is still struggling a bit with resistance near $63.50 but we do expect shares to push past this level. The breakout on September 15th pushed CAH above significant resistance near $61.00. Shares pulled back to retest this level as new support, which is a common occurrence. Now we're seeing shares begin the next leg higher. The Point & Figure chart supports this with a bullish breakout through resistance as well. Plus, the P&F chart points to a $75 price target (which also happens to be long-term resistance). We are suggesting positions here but if we get the chance a dip back toward $62.00 or $61.50 would also work as a bullish entry point. We will plan to exit ahead of CAH's early November earnings report. Our target is the $66-67 range.

Suggested Options:
We are suggesting the October and November calls.

BUY CALL OCT 60.00 CAH-JL OI=2682 current ask $3.90
BUY CALL OCT 65.00 CAH-JM OI=3928 current ask $0.70

BUY CALL NOV 60.00 CAH-KL OI= 287 current ask $4.50
BUY CALL NOV 65.00 CAH-KM OI=1579 current ask $1.50

Picked on September 25 at $ 61.95
Change since picked: + 1.55
Earnings Date 11/04/05 (unconfirmed)
Average Daily Volume = 2.0 million

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Cameco Corp - CCJ - close: 53.50 chg: -0.28 stop: 49.49

Our bullish play in CCJ is struggling to produce any sort of upward momentum. The stock broke through major resistance at the $50 level at the end of August. There was a quick run to $55 and then CCJ faded lower to retest the $50 level as new support. Since then CCJ has been stuck in a trading range between $50-55. We like how the Point & Figure chart is bullish and points to a $78 target. However at the moment we would probably not suggest new positions. We do believe that CCJ will garner more and more investor attention as an alternative to rising oil costs and thus might make an interesting long-term options play using LEAPs. Readers can choose to buy another bounce from the $50.00 level or a breakout over the $55.50 region. Our target is the $58-60 range.

Suggested Options:
We are not suggesting new bullish positions at the moment. Traders looking for new positions can play the October, November or December calls. Just remember that we plan to exit ahead of CCJ's early November earnings report.

Picked on September 18 at $ 53.30
Change since picked: + 0.20
Earnings Date 11/01/05 (unconfirmed)
Average Daily Volume = 862 thousand

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Cigna - CI - close: 117.86 change: +0.42 stop: 111.49

The HMO.X healthcare index did see some profit taking on Thursday but remains near its all-time highs. Helping lead the healthcare sector higher are shares of Cigna (CI). The health insurer has a long-term bullish trend and just broke out of a seven-week trading range. Technical oscillators are bullish and its MACD produced a new buy signal a couple of days ago. Friday's gain represents a new all-time high over the early August peak. We would initiate new positions here but some readers may want to wait and hope for a dip back toward the $116.00-116.50 region, which as broken resistance should now act as support. The $120 level is probably round-number resistance but we expect shares to eventually push through it and hit our target at the $124.00 level. We plan to exit ahead of CI's early November earnings report.

Suggested Options:
We are suggesting the November calls.

BUY CALL NOV 115.00 CI-KC OI= 113 current ask $6.30
BUY CALL NOV 120.00 CI-KD OI= 203 current ask $3.50
BUY CALL NOV 125.00 CI-KE OI= 148 current ask $1.70

Picked on September 29 at $116.51
Change since picked: + 1.35
Earnings Date 11/02/05 (unconfirmed)
Average Daily Volume = 991 thousand

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Intuitive Surg. - ISRG - close: 73.29 chg: -2.13 stop: 70.99 *new*

Uh-oh! ISRG hit some profit taking on Friday and shares lost 2.8%. Volume was pretty low, which might suggest a lack of conviction. The drop back below resistance at the $75 level is also discouraging. Friday's decline has produced some bearish hooks in the RSI and stochastic oscillators. Currently the MACD and the P&F chart remain bullish. We very rarely do it but we feel the need to adjust our stop loss backwards. ISRG has minor support at $73 and again near $72 but we feel like our stop at $71.99 is just too close and we could get stopped out on an intraday spike lower. We're going to adjust the stop loss to $70.99. More aggressive traders may want to put their stops under the 50-dma (70.85) or the $70.00 level, which should both act as stronger support. More conservative players may not want to move their stop at all. We are not suggesting new plays at this time. We'll wait to see if and where ISRG bounces. Our target is the $79.50-80.00 range.

Suggested Options:
We are not suggesting new plays at this time. Remember that we plan to exit ahead of ISRG's late October earnings report.

Picked on September 28 at $ 75.11
Change since picked: - 1.82
Earnings Date 10/24/05 (unconfirmed)
Average Daily Volume = 962 thousand

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Altria Group - MO - close: 73.71 change: +0.06 stop: 69.90

Our defensive momentum play in MO is still moving higher. The stock did gap down on Friday morning in response to the news out of Canada. On Thursday night we reported that the Canadian Supreme court upheld the right for Canadian provinces to sue tobacco companies for the health care costs of smoking. Yet shares of MO rallied from its lows on Friday and now looks poised to breakout over resistance at the $74.00 level. The question now is whether or not that was real buying on Friday or was it just window dressing for the end of the quarter. MO has certainly been a strong performer over the last quarter so it would do well for funds to dress up their portfolio with this stock trading near all-time highs. Readers can choose to enter new positions on a bounce from the $72.50 region or a breakout over $74.00. Our target is the $78-79 range. Remember, that we plan to exit ahead of MO's mid-October earnings report. FYI: the P&F chart points to an $111 target.

Suggested Options:
Readers can choose to play the October or November calls. Just remember we plan to exit ahead of the October 19th earnings report.

Picked on September 18 at $ 73.14
Change since picked: + 0.57
Earnings Date 10/19/05 (unconfirmed)
Average Daily Volume = 6.7 million

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Noble Energy - NBL - close: 46.90 chg: -0.62 stop: 44.49

If you read the market wrap this weekend then you already know that the vast majority of oil and gas production in the Gulf of Mexico is still offline. This is going to keep the cost of energy high and energy companies will reap the benefit. We like the momentum in shares of NBL but we would not suggest new positions right here. Watch for a dip to $46.00 (worse case maybe $45) as the next bullish entry point. Our target remains the $49.00-50.00 range. We plan to exit ahead of NBL's early November earnings report.

Suggested Options:
We're not suggesting new positions right here but if NBL dips then we like the November calls.

BUY CALL NOV 45.00 NBL-KI OI=1687 current ask $3.50
BUY CALL NOV 47.50 NBL-KW OI=1689 current ask $2.00
BUY CALL NOV 50.00 NBL-KJ OI= 48 current ask $1.05

Picked on September 11 at $ 44.90
Change since picked: + 2.00
Earnings Date 11/02/05 (unconfirmed)
Average Daily Volume = 796 thousand

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Total S.A. - TOT - close: 135.82 chg: -1.68 stop: 131.99

TOT was also hit by the end of quarter profit taking in the oil sector. Shares gapped down, then traded to a new all-time high, and then turned lower. We remain bullish on the stock and the oil sector. However, TOT may see more profit taking before it turns higher again. We would wait and watch for a dip to and bounce from the $134.00 level, which is the next level of support for TOT. Worse case the stock may fall all the way to the bottom of its recent trading range near $132.00. Our six-week target is the $144-145 range.

Suggested Options:
We are suggesting the November calls.

BUY CALL NOV 130.00 TOT-KF OI= 427 current ask $8.00
BUY CALL NOV 135.00 TOT-KG OI=1068 current ask $4.70
BUY CALL NOV 140.00 TOT-KH OI=1435 current ask $2.35
*the 140s are the highest strike available today.

Picked on September 28 at $137.23
Change since picked: - 1.41
Earnings Date 08/05/05 (confirmed)
Average Daily Volume = 872 thousand
 

Put Updates

Black & Decker - BDK - close: 82.09 chg: +0.30 stop: 85.05

The next move in BDK could be painful for us. The stock is losing some of its downward momentum. Thus far shares have traded according to our script. We expected a bounce at round-number resistance at the $80.00 mark. We also expected the exponential 200-dma near 83.50 to act as resistance. Unfortunately, this sideways consolidation is allowing many of BDK's oversold technical indicators to revert back toward a bullish bias. The stock may be able to bounce back toward resistance near $84.00 or even the $85.00 level (and its simple 200-dma) before turning lower again. This would be bad news for us because the put option values will shrink relatively quickly and we are already facing a time crunch with BDK's earnings due out in late October. We are not suggesting new plays at this time. Our target is the $78-77 range. The P&F chart points to a $74 target.

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

Picked on September 14 at $ 83.31
Change since picked: - 1.22
Earnings Date 10/25/05 (unconfirmed)
Average Daily Volume = 636 thousand

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Hershey Co. - HSY - close: 56.31 change: -0.16 stop: 58.01

Our bearish play in HSY has lately been a game of patience. The stock bounced at the $55 level like we expected it too. Thus far shares continue to trade within its eight-week bearish trend. If there is any sort of bounce next week we would look for the $57.00 and 57.50 levels to act as overhead resistance. Our target remains the $54.00-53.50 range. Meanwhile the P&F chart points to a $45.00 target.

Suggested Options:
We are not suggesting new plays at this time but a failed rally under $57.50 could be used as a new entry point. Don't forget that we plan to exit ahead of the October 20th earnings report.

Picked on September 14 at $ 57.90
Change since picked: - 1.59
Earnings Date 10/20/05 (unconfirmed)
Average Daily Volume = 760 thousand
 

Dropped Calls

Apollo Group - APOL - close: 66.39 chg: -0.32 stop: 64.99

There is still a decent chance that APOL will produce an oversold bounce from the $65-66 region. Unfortunately, the stock is showing too much relative weakness for our liking. We like to see a stock bounce higher with more conviction. We're going to exit early (per our comments on Thursday) and look for new bullish candidates elsewhere.

Picked on September 25 at $ 66.09
Change since picked: + 0.30
Earnings Date 10/04/05 (confirmed)
Average Daily Volume = 1.8 million
 

Dropped Puts

None
 

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