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Call Updates

Dominion Res. - D - close: 77.20 chg: -1.04 stop: 74.75

D is both an electric utility and a natural gas producer so the stock was somewhat insulated from the sharp sell-off in oil and natural gas stocks today. The overall pattern remains bullish for D but traders may want to wait a bit on initiating new positions. It looks like the stock is going to pull back and retest support in the $76.00-76.50 region (we're watching the $76.40 mark). Look for signs of a bounce before considering calls. More conservative traders may want to wait for a move over the simple 50-dma (78.85) or even the $80 level before considering longs.

Picked on November 27 at $ 78.24
Change since picked: - 1.04
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 1.8 million

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Goldman Sachs - GS - close: 131.10 chg: -3.02 stop: 128.49*new*

Broker-dealer stocks were hit with profit taking today. Seems that investors rushed to lock in profits after the Thanksgiving peak. Shares of GS lost 2.25% and pulled back toward its simple 10-dma. Nothing moves in a straight line so the occasional pull back is okay with us but we're going to tighten the stop a bit in case this decline sees any follow through. We're raising the stop loss to $128.49 and more conservative traders may want to put it closer to $130. A bounce from the $130 level could be used as a new bullish entry point. In the news GS confirmed that it will report earnings on December 15th. We plan to exit the day before. We are targeting a move into the $139-140 range.

Picked on November 20 at $131.58
Change since picked: - 0.48
Earnings Date 12/15/05 (confirmed)
Average Daily Volume = 3.6 million

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Hovnanian - HOV - close: 49.37 change: -1.98 stop: 47.45

This morning the existing home sales report came out and the numbers were a bit under analysts' expectations. Investors used the report as an excuse to lock in profits on the housing stocks, where many have rebounded from their October and November lows. HOV is one such stock that lost 3.8% and fell back under the $50.00 mark. We do expect the decline to continue and we're watching HOV's 10-dma near $48.65 to offer the first line of support. Readers can watch for a bounce from the 10-dma or the $48 level as a new bullish entry point. Until then we would not begin new long positions.

Picked on November 21 at $ 49.25
Change since picked: + 0.12
Earnings Date 12/07/05 (unconfirmed)
Average Daily Volume = 1.5 million

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Intl. Bus. Mach. - IBM - cls: 89.11 chg: +0.31 stop: 84.85

IBM displayed some relative strength today by closing in the green amid a market-wide decline. The stock's upward trend is still intact and shares could hit our target in the $89.90-90.00 range at any time. At the same time IBM looks short-term overbought and we would not be surprised by a dip to its 10-dma (87.30). More conservative traders may want to think about exiting early right here for a profit. We are prepared to hold IBM through the end of the year.

Picked on November 15 at $ 85.25
Change since picked: + 3.86
Earnings Date 01/16/06 (unconfirmed)
Average Daily Volume = 5.6 million

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Novastar Fincl. - NFI - cls: 30.25 chg: -1.88 stop: 29.24

Ouch! NFI was not immune to Monday's market pull back. Shares under performed the market with a 5.85% decline. The stock may have been affected by the existing home sales report, which came in under Wall Street's estimates. If NFI can bounce back above the $30.50 level we would consider new bullish positions. More conservative traders may want to wait for a rebound back over the $31 level. NFI's next earnings report is not until February so we're going to target the 200-dma near $35 over the next eight weeks.

Picked on November 23 at $ 31.65
Change since picked: - 1.40
Earnings Date 02/06/06 (unconfirmed)
Average Daily Volume = 621 thousand

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NovAtel Inc. - NGPS - close: 30.11 chg: -1.40 stop: 27.75

NGPS has pulled back to broken resistance now new support at the $30.00 level, which is underpinned by its simple 10-dma. A bounce from here could be used as a new bullish entry point. If NGPS trades under the $29.50 level more conservative traders may want to exit early although traders should keep in mind that NGPS should also have support at the $28 level, which was the bottom of its previous trading range. Our target is the $35.00-36.00 range by year-end.

Picked on November 21 at $ 30.45
Change since picked: - 0.34
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 292 thousand

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Phelps Dodge - PD - cls: 131.48 chg: -3.22 stop: 124.99

PD experienced the same profit taking most of the market did. Shares of the copper producer pulled back toward the $131 level. Readers can use a bounce from the $131 or $130 levels as a new bullish entry point. More conservative traders might want to consider tightening their stop losses. Our year-end target is the $139.90-140.00 range. More conservative traders may want to target the October high near $138.50.

Picked on November 18 at $131.25
Change since picked: + 0.23
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 2.7 million

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Polaris Ind. - PII - close: 49.15 change: -0.29 stop: 45.95

PII held up relatively well considering the market's weakness. If PII declines any further look for the $48 level to offer support. A bounce from $48 could be a new bullish entry point. Our year-end target is the $54-55 range under its simple 200-dma.

Picked on November 21 at $ 48.47
Change since picked: + 0.68
Earnings Date 01/12/06 (unconfirmed)
Average Daily Volume = 467 thousand

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Rockwell Autom. - ROK - cls: 56.15 chg: -0.70 stop: 54.80

There are no surprises here. We're expecting ROK to pull back and retest the $55 level, which should be support. We see no changes from our weekend update.

Picked on November 03 at $ 55.90
Change since picked: + 0.25
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 804 thousand

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Walter Inds. - WLT - close: 50.26 change: -1.40 stop: 45.95

WLT has pulled back to what should be support at the $50.00 level. A bounce from here can be used as a new bullish entry point. If the stock continues to fall the next level of support would be the $48 level. The P&F chart looks very bullish with a $67 target. We believe shares can run into the $57-58 range before year's end.

Picked on November 20 at $ 51.50
Change since picked: - 1.24
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 927 thousand
 

Put Updates

Invitrogen - IVGN - close: 62.36 chg: -0.70 stop: 66.05

So far so good. IVGN lost another 1.1% today on above average volume. The afternoon bounce began to fail, which is consistent with its trend of lower highs. The next challenge is potential support at the $60 level. We see no changes from our weekend update. We're going to aim for a decline into the $57.50-56.50 range. Our time frame is eight weeks. We do not plan on holding over IVGN's late January earnings report.

Picked on November 27 at $ 63.06
Change since picked: - 0.70
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 1.2 million
 

Strangle Updates

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

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AmerisourceBergen - ABC - cls: 79.31 chg: -0.08 stop: n/a

ABC weathered the market decline today pretty well. We see no changes from our weekend update. We are not suggesting new strangle positions at this time. Our current strangle involves the December $80 calls (ABC-LP) and the December $70 puts (ABC-XN). Our estimated cost was $2.80. Our current target is for a rise to $5.00 in the strangle.

Picked on October 16 at $ 74.81
Change since picked: + 4.55
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 900 thousand

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Amer. Eagle Out. - AEOS - cls: 23.12 chg: -0.99 stop: n/a

Retailers slid lower on Monday. Early cries that sales on "Black Friday" were better than expected were questioned by the market on Monday as more data became available. The RLX retail index lost 1.58%. Shares of AEOS lost 4.1% and is now testing support at its two-month trendline of higher lows. We are not suggesting new strangle positions at this time. The current strangle has an estimated cost of $2.35 with the January $27.50 calls (AQU-AY) and the January $22.50 puts (AQU-MX). We are targeting a rise to $4.70.

Picked on November 13 at $ 25.47
Change since picked: - 2.32
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 3.6 million

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Abercrombie&Fitch - ANF - close: 61.60 chg: -1.27 stop: n/a

Shares of ANF were also affected by the weakness in the retail sector on Monday. The stock is testing support at its 10-dma. We wouldn't be surprised to see a dip back toward support at broken resistance near $60.00. We are not suggesting new strangle positions at this time. The options in our strangle are the January $65 calls (ANF-AM) and the January $55 puts (ANF-MK). Our estimated cost was $5.15. We're looking for a rise to $8.50.

Picked on November 13 at $ 59.67
Change since picked: + 2.80
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 2.7 million

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Chicago Merc. Exchg. - CME - cls: 371.30 chg: -25.60 stop: n/a

Amazing! We said that CME was volatile and the stock has certainly shown us why over the past few days. Last week's rally has been reversed by today's sharp sell-off. Today's move was fueled by a downgrade this morning based on valuation concerns. Volume today was well above normal. We are not suggesting new strangle positions at this time. Our current play involves the January $400 calls (CMJ-AK) and the January $350 puts (CMJ-MA). Our estimated cost was $26.70. We're aiming for a rise to $40.00 in the strangle before January options expire.

Picked on November 20 at $375.90
Change since picked: - 4.60
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 879 thousand

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D.R.Horton - DHI - close: 35.57 chg: -1.05 stop: n/a

DHI is another homebuilder that experienced some profit taking following this morning's existing home sales data. The stock could pull back even further before reasserting its current up trend. We are not suggesting new strangles at this time. Our current play involves the January $35 calls (DHI-AG) and the January $30 puts (DHI-MF). Our estimated cost was $3.15. We're aiming for a rise to $6.00.

Picked on November 13 at $ 32.56
Change since picked: + 3.01
Earnings Date 11/16/05 (confirmed)
Average Daily Volume = 3.2 million

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Four Seasons - FS - close: 50.01 chg: -0.30 stop: n/a

FS failed to truly participate in today's market decline. If we don't see a move in the next several days we may need to start thinking about an early exit to try and salvage the play. We are not suggesting new strangles at this time. The options in our strangle were the January $60 calls (FS-AL) and the January $50 puts (FS-MJ). Our estimated cost was about $2.60. We're aiming for a rise to $5.00 or more.

Picked on November 08 at $ 55.37
Change since picked: - 4.64
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 319 thousand

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Hutchinson Tech. - HTCH - cls: 26.85 chg: -0.00 stop: n/a

One could argue that HTCH's close at "unchanged" is bullish. Short-term it looks like HTCH could turn lower, especially if the NASDAQ continues today's consolidation. We are not suggesting new strangles at this time. The options in our strangle were the January $30 calls (UTQ-AF) and the January $20 puts (UTQ-MD). Our estimated cost was $1.65. We have adjusted our initial target from $3.00 to breakeven at $1.65 since the post-earnings reaction was not as big as expected.

Picked on October 26 at $ 24.89
Change since picked: + 1.96
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 666 thousand

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Lear Corp - LEA - close: 27.93 chg: +0.05 stop: n/a

The consolidation in LEA is narrowing so we can expect a move, either direction, pretty soon. Odds are the prevailing, bearish trend will continue. We are no longer suggesting new strangle positions. The options in our strangle are the January $35 calls (LEA-AG) and the January $25 puts (LEA-ME). We are targeting a rise to $3.20 or more.

Picked on November 06 at $ 30.24
Change since picked: - 2.31
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 1.8 million

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Loews - LTR - close: 97.38 change: -0.42 close: n/a

The action in LTR was a bit of a surprise. The stock's momentum has stalled and shares looked ripe for some profit taking back toward the $95 level. Instead LTR closed with a minor loss. Short-term technicals remain bearish. We're not suggesting new plays. The options in our strategy are the December $95 calls (LTR-LS) and the December $85 puts (LTR-XQ). Our estimated cost is about $3.05. We plan to exit if our strangle rises to $5.00 or if shares of LTR hit 99.90.

Picked on October 23 at $ 89.94
Change since picked: + 7.44
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 602 thousand

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Verifone Holdings - PAY - cls: 22.85 chg: -0.31 stop: n/a

PAY still looks poised for a dip toward the $22 level. PAY is expected to report earnings on December 1st. Wall Street's estimates are for profits of 19-cents a share. Our current strangle involves the January $22.50 calls (PAY-AX) and the January $17.50 puts (PAY-MW). Our estimated cost was $2.60 and we're aiming for a rise to $4.50 or more.

Picked on October 12 at $ 19.98
Change since picked: + 2.87
Earnings Date 12/01/05 (confirmed)
Average Daily Volume = 259 thousand

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Protein Design Labs - PDLI - cls: 27.80 chg: -0.89 stop: n/a

We expected a dip toward $27.50 and that's what we got today. Shares of PDLI were already beginning to rebound into the afternoon. We see no changes from our weekend update. We are not suggesting new strangle positions. The options in our strangle are the December $30 calls (PQI-LF) and the December $25 puts (PQI-XE). Our estimated cost was at $1.80. We'll plan to sell if either side rises to $3.25.

Picked on October 30 at $ 27.70
Change since picked: + 0.10
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 1.8 million

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Spectrum Brands - SPC - close: 18.16 change: -0.26 stop: n/a

SPC drifted lower again today and we see no changes from our weekend update. We are not suggesting new strangle positions at this time. Our estimated cost for this strangle was $1.25. The options in our suggested strangle are the December $22.50 calls (SPC-LX) and the December $17.50 puts (SPC-XW). We are aiming for a rise to $2.50 or more.

Picked on November 08 at $ 20.63
Change since picked: - 2.28
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 576 thousand

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Questar Corp. - STR - close: 74.31 chg: -3.78 stop: n/a

Hope that this winter may be warmer than expected pushed natural gas prices lower. This move in the commodity helped force STR through the bottom of its recent trading range. We are no longer suggesting strangle positions in the stock. Our strangle involves the January $80 calls (STR-AP) and the January $70 puts (STR-MN). Our estimated cost was $5.10 and we're aiming for a rise to $9.50 or more.

Picked on November 20 at $ 76.25
Change since picked: + 1.94
Earnings Date 01/26/05 (unconfirmed)
Average Daily Volume = 716 thousand

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Texas Ind. - TXI - close: 49.40 chg: -0.17 stop: n/a

TXI is still offering an entry point to launch new strangles. The stock is stuck in a sideways trading range as we approach its December earnings report. Our suggested entry window is the $49.00-51.00 range although the closer to $50.00 the better! The options in our strangle are the January $55 calls (TXI-AK) and the January $45 puts (TXI-MI). Our estimated cost is $2.70. We're looking for a rise to $5.00 or more.

Picked on November 27 at $ 49.57
Change since picked: - 0.17
Earnings Date 12/15/05 (unconfirmed)
Average Daily Volume = 354 thousand

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Valero Energy - VLO - close: 95.27 chg: -6.01 stop: n/a

A sharp drop in oil prices under $57 a barrel pushed shares of VLO to a 5.9% decline. Today's decline in VLO also pushed the stock out of its narrowing consolidation pattern and under technical support at its simple 100-dma. We are not suggesting new strangle plays any longer. Our current play involves the January $110 calls (VLO-AB) and the January $90 puts (VLO-MR). Our estimated cost was $5.85 and we're aiming for a rise to $9.50. VLO is due to split 2-for-1 on December 16th so our post-split target will be a rise to $4.75.

Picked on November 21 at $101.00
Change since picked: - 5.73
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 10.7 million
 

Dropped Calls

Amerada Hess - AHC - close: 122.71 chg: -8.52 stop: 124.49

The move in crude oil and oil stocks today looks like an overreaction. Crude oil slipped more than two-percent to under $57 a barrel and natural gas dipped toward $11.00/mbtu's as traders speculated that the warm weekend in the northeast may be a sign of a warm winter. The reaction in oil stocks was sharp. The OIX oil index lost 3.56% and the OSX oil services index lost 3.89%. Shares of AHC were harder hit with a 6.49% drop, which pushed shares through multiple levels of short-term support at its 10-dma, 50-dma, 100-dma and its multi-week trendline of higher lows. We have been stopped out at $124.49.

Picked on November 16 at $128.49
Change since picked: - 5.78
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume = 1.9 million

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Apache Corp. - APA - close: 66.23 chg: -3.27 stop: 64.95

We're going to exit early in APA. Shares of APA fell for the same reasons shares of AHC did. Traders produced a knee-jerk reaction in oil and natural gas prices on what some believe are hopes that we'll see a mild, warmer winter this year. The sell-off in the oil group was relatively sharp and APA lost 4.7% while falling through short-term support at its 50-dma. There is still potential support near $65 and its 200-dma for APA and we'll keep an eye on the stock for a rebound there. Yet in the meantime we're going to exit early to avoid further losses.

Picked on November 22 at $ 69.05
Change since picked: - 2.82
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 3.7 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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