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Call Updates

Dominion Res. - D - close: 77.09 chg: -0.11 stop: 74.75

Another down day for oil and a lackluster day for natural gas did not foster much buying in shares of D. Of course D is also an electric utility stock but the Utility index saw its early gains fade. Bad news from already troubled Calpine (CPN -56%) didn't help the sector. 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 (78.75) or even the $80 level before considering longs.

Picked on November 27 at $ 78.24
Change since picked: - 1.15
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 1.8 million

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Goldman Sachs - GS - close: 130.45 chg: -0.65 stop: 128.49

The broker stocks continued to see profit taking on Tuesday. Shares of GS broke down under the $130.00 level on an intraday basis and its short-term technicals do not look that healthy. A bounce from the $130 level could be used as a new bullish entry point but we'd be careful examining new entries and would probably wait for a bounce from $130 to cross the $131.50 mark again before going long calls. We plan to exit the day before its earnings report. We are targeting a move into the $139-140 range.

Picked on November 20 at $131.58
Change since picked: - 1.13
Earnings Date 12/15/05 (confirmed)
Average Daily Volume = 3.6 million

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Hovnanian - HOV - close: 49.31 change: -0.06 stop: 47.45

The new home sales report came in better than expected this morning. This news lifted the housing sector but only temporarily. Shares of HOV quickly pulled back from its highs of the session and are nearing short-term support at its 10-dma. 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: + 0.06
Earnings Date 12/07/05 (unconfirmed)
Average Daily Volume = 1.5 million

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NovAtel Inc. - NGPS - close: 30.46 chg: +0.35 stop: 27.75

Tuesday was a quiet session for NGPS. The stock traded in a narrow 60-cent range all day. More importantly the stock held support at the $30.00 level. The pull back in the major indices may not be over yet so we hesitate to suggest new long positions here in NGPS. However, a bounce from here could be used as a new entry point. If NGPS breaks down any further the $28 level is the next level of significant support. Our target is the $35.00-36.00 range by year-end.

Picked on November 21 at $ 30.45
Change since picked: + 0.01
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 292 thousand

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Phelps Dodge - PD - cls: 133.44 chg: +1.96 stop: 124.99

PD drifted higher today after some positive analyst comments on the metals sector. We don't see any changes from our previous updates on PD. 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: + 2.19
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 2.7 million

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Polaris Ind. - PII - close: 48.54 change: -0.61 stop: 45.95

PII pulled back to its first line of support near the 10-dma today. A bounce from here could be used as a new bullish entry point. Further declines under the $48 level would suggest PII is headed toward the 50-dma. Our year-end target is the $54-55 range under its simple 200-dma.

Picked on November 21 at $ 48.47
Change since picked: + 0.07
Earnings Date 01/12/06 (unconfirmed)
Average Daily Volume = 467 thousand

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Rockwell Autom. - ROK - cls: 56.15 chg: -0.00 stop: 54.80

There is no change in shares of ROK today and no change from our previous updates. We're expecting ROK to pull back and retest the $55 level, which should be support.

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: +0.00 stop: 45.95

If you're the optimistic type then we can probably label WLT's lack of movement today a show of strength. It's noteworthy that WLT is holding above broken resistance, now new support, at the $50.00 level. A bounce from here can be used as a new bullish entry point but we'd probably look for a move over $51.00-51.25 before initiating new longs. 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: 64.50 chg: +2.14 stop: 66.05

Positive broker comments on IVGN this morning sparked a rally that was fueled by volume almost twice the normal. The sudden show of volume on the bounce could be bad news for the bears and put holders! The big risk now is that IVGN will announce some sort of positive earnings news at its analyst day on December 14th. If you're a conservative trader this deviation from our plan and sudden show of volume is a good excuse to exit early right here! We're going to keep the play alive since IVGN is still under resistance at the $66.00 level. We would not suggest new positions at the moment.

Picked on November 27 at $ 63.06
Change since picked: + 1.44
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: 80.50 chg: +1.19 stop: n/a

Good news! ABC broke through resistance at the $80.00 mark to close at a new all-time high. That puts the calls in our strangle in a much better position. 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: + 5.74
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 900 thousand

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Amer. Eagle Out. - AEOS - cls: 22.35 chg: -0.77 stop: n/a

Retail stocks continued to slide and AEOS was one of the worst performers with a 3.3% decline on very strong volume. The move today broke down below its two-month trend 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: - 3.09
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 3.6 million

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Abercrombie&Fitch - ANF - close: 60.62 chg: -0.98 stop: n/a

ANF continues to drift back toward the $60.00 level, which should be support. 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: + 1.82
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 2.7 million

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Chicago Merc. Exchg. - CME - cls: 370.10 chg: -1.20 stop: n/a

Yet another volatile day for shares of CME. The stock dipped towards $358 twice today before rebounding back to the $370 level. Volume was pretty heavy at more than twice the norm. 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: - 5.80
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 879 thousand

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D.R.Horton - DHI - close: 35.50 chg: -0.07 stop: n/a

A better than expected new home sales report helped lift the housing sector early this morning but the group failed to hold any of its gains. DHI didn't move much and continues to tread just above its simple 10-dma. Meanwhile in the news DHI announced a $500 million stock buy back program, which should be longer-term bullish for the stock. 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: + 2.94
Earnings Date 11/16/05 (confirmed)
Average Daily Volume = 3.2 million

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Four Seasons - FS - close: 49.90 chg: -0.11 stop: n/a

Interesting... FS closed under the $50.00 level for the first time since its post-earnings sell-off. Are shares finally ready to begin the next leg down? 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: - 4.75
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 319 thousand

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Hutchinson Tech. - HTCH - cls: 27.46 chg: +0.62 stop: n/a

The relative strength in shares of HTCH today is good news! The stock bounced from its intraday low and posted gains with volume coming in above average. This tends to confirm the nascent up trend. 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: + 2.58
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 666 thousand

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Lear Corp - LEA - close: 27.99 chg: +0.06 stop: n/a

There is virtually no change in LEA and we see no change from our previous update on the stock. 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: - 2.25
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 1.8 million

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Loews - LTR - close: 97.26 change: +0.03 close: n/a

Technicals suggest that LTR is poised to turn lower but the stock is stubbornly holding on to its November gains as it churns sideways under the $98 level. More conservative traders may want to exit here to salvage their position. If LTR does turn lower we won't have a lot of time for the stock to rebound before December options expire! 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: + 7.47
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 602 thousand

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Verifone Holdings - PAY - cls: 22.67 chg: -0.18 stop: n/a

We don't see a lot of change in PAY. We've been expecting shares to pull back toward support near the $22 level and that's what it is doing. The company is due to report earnings on December 1st and that should spark some new volatility into our January strangle. We're not suggesting new positions here although it might pay off to consider a new strangle with the $20 puts and $25 calls but you'd need to open any new plays before PAY reports earnings. 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: + 2.69
Earnings Date 12/01/05 (confirmed)
Average Daily Volume = 259 thousand

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Protein Design Labs - PDLI - cls: 27.87 chg: +0.07 stop: n/a

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: + 0.17
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 1.8 million

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Spectrum Brands - SPC - close: 17.82 change: -0.34 stop: n/a

So far so good. SPC continues to drift lower. 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: - 2.62
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 576 thousand

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Questar Corp. - STR - close: 74.40 chg: +0.09 stop: n/a

Natural gas prices rallied somewhat despite more talk of warmer weather this winter. The bounce in natural gas seemed to stall STR's decline. 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: - 1.85
Earnings Date 01/26/05 (unconfirmed)
Average Daily Volume = 716 thousand

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Texas Ind. - TXI - close: 49.88 chg: +0.48 stop: n/a

TXI rallied back to the top of its short-term trading range today and then failed at its simple 50-dma. The stock is still trading in our suggested entry window of $49.00-51.00 and 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: + 0.31
Earnings Date 12/15/05 (unconfirmed)
Average Daily Volume = 354 thousand

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Valero Energy - VLO - close: 95.40 chg: +0.13 stop: n/a

We see no change from our previous update on VLO. 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: - 5.60
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 10.7 million
 

Dropped Calls

Intl. Bus. Mach. - IBM - cls: 89.10 chg: -0.01 stop: 84.85

Target achieved. Early strength in shares of IBM pushed the stock to $89.94 this morning before pulling back. Our target was the $89.90-90.00 range. The stock looks short-term overbought and now that it has reached round-number resistance at the $90.00 level we'd expect some profit taking. We'll watch for a bounce from the $85 level as a potential new entry point.

Picked on November 15 at $ 85.25
Change since picked: + 3.85
Earnings Date 01/16/06 (unconfirmed)
Average Daily Volume = 5.6 million

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Novastar Fincl. - NFI - cls: 28.81 chg: -1.44 stop: 29.24

The stronger than expected new home sales report this morning had a negative affect on interest-sensitive stocks like NFI. Interest rates spiked higher and shares of NFI fell sharply through support at the $30.00 level on strong volume. We were stopped out at $29.24.

Picked on November 23 at $ 31.65
Change since picked: - 2.84
Earnings Date 02/06/06 (unconfirmed)
Average Daily Volume = 621 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

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