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Call Updates

Cummins Inc. - CMI - close: 89.75 chg: -1.08 stop: 87.75

CMI is still struggling a bit to maintain its recent breakout over the $90 level. The stock's decline today helped the recent bearish turn in the technical indicators look a little more ominous. We would not be surprised to see a dip back toward late November support near $88.00. We would not initiate new positions with the stock under $90 unless CMI produced a strong bounce from the $88 region. The stall in momentum for the major averages is producing MACD sell signals for the DJIA, S&P 500 etc. Be careful entering new bullish plays.

Picked on December 01 at $ 91.32
Change since picked: - 1.57
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 611 thousand

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Centex Corp. - CTX - close: 72.97 chg: +0.05 stop: 71.39

One of our new readers just asked why we are suggesting bullish plays on CTX. We like CTX for multiple reasons. First of all on a broad basis the HGX housing index and the DJUSHB home construction index are both showing bullish buy signals on their point & figure charts - so the sector is pointing higher despite the bad news from Toll Brothers (TOL) weeks ago. CTX is one of the homebuilders that also has a bullish P&F chart. CTX's P&F chart shows a triple-top breakout buy signal that points to a $95 target. The daily chart on CTX shows the stock in a rising bullish channel. We suggested new entries two days ago when CTX was just beginning to rebound off the bottom of its rising channel. We're trying to limit our risk with a relatively tight stop under last week's low. It is true that CTX has not produced any follow through on last Friday's rebound and that's a concern. If you consider the technical picture for the broader market (DJIA, S&P 500, NASDAQ) all the major averages are seeing their momentum stall, which is producing bearish signals in the technical oscillators. In general we would hesitate to open new bullish positions anywhere but we have to remember that this is a market of stocks, not just a stock market. Individual equities can buck the trend but it's more dangerous to try and fight the broader market if it turns against us. More conservative traders looking at CTX might want to wait for a move over $74.00 before considering an entry.

Picked on December 04 at $ 73.86
Change since picked: - 0.89
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 2.6 million


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Dominion Res. - D - close: 76.53 chg: +0.00 stop: 74.75

Tuesday was essentially a throwaway day for shares of D. The stock traded inside a 50-cent range all session and closed unchanged. If the major averages turn lower than we expect D to retest support at its 200-dma near $75.00. We would hesitate to open new positions here. Conservative traders can watch for a breakout over the 50-dma. Our target is the $84.50-85.00 range.

Picked on November 27 at $ 78.24
Change since picked: - 1.71
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 1.8 million

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FMC Corp. - FMC - close: 54.62 chg: +0.50 stop: 51.95

We are a little surprised by FMC's strength today. Normally we would have thought as a chemical manufacturer that the stock would have turned lower as crude oil rises since oil is such a big component for chemicals. Chart readers will note that FMC's bounce today did stall at the $55.00 level and the stock remains under its simple 100-dma. We would not be surprised to see FMC dip back toward the simple 10-dma near $52.80-53.00 before rebounding higher. Traders may want to wait and see where FMC bounces before initiating new positions. Our six-week target is the $59.85-60.00 range.

Picked on December 01 at $ 55.04
Change since picked: - 0.42
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 270 thousand

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Hovnanian - HOV - close: 50.53 change: -0.18 stop: 49.49 *new*

Time is almost up for our HOV play. Our plan is to exit on Wednesday afternoon (tomorrow) before the closing bell. Readers may want to exit earlier if the markets show any weakness tomorrow. We do not want to hold over HOV's earnings report, which comes out on December 7th. We're going to raise our stop loss to $49.49.

Picked on November 21 at $ 49.25
Change since picked: + 1.28
Earnings Date 12/07/05 (unconfirmed)
Average Daily Volume = 1.5 million


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Kerr Mcgee - KMG - close: 91.33 chg: +0.90 stop: 84.99

Energy stocks were strong again after another rise in crude oil today. Shares of KMG bounced off the $90 level this morning but the rally was fading by the closing bell. KMG might see another dip toward $90 and/or its simple 10-dma. Prepare for it. Our mid January target is the $98.50-100 range.

Picked on December 02 at $ 90.26
Change since picked: + 1.07
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume = 1.8 million

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Kinder Morgan - KMI - close: 94.40 chg: +0.52 stop: 87.45

Natural gas posted another gain today as well and this lifted shares of KMI, which tested resistance at the $95 level today. We would watch for a dip before considering new bullish entries. Our target is the $98.50-100 range.

Picked on December 02 at $ 92.75
Change since picked: + 1.65
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 749 thousand

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Polaris Ind. - PII - close: 52.88 change: -0.02 stop: 48.49

PII is still within striking distance of our target in the $54.00-55.00 range. However, traders may want to exit early right here since the major averages are looking unstable. Otherwise you may need to prepare for a dip back toward support near $50.00 before PII can make another rally attempt. We are not suggesting new positions.

Picked on November 21 at $ 48.47
Change since picked: + 4.42
Earnings Date 01/12/06 (unconfirmed)
Average Daily Volume = 467 thousand

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Companhia Vale de Rio - RIO - close: 43.98 chg: -0.12 stop: 41.85

RIO is still consolidating but what looks worrisome is the above average volume today. The stock is still trading about support with its multi-week trendline of higher highs so we see no changes from yesterday's update. More conservative traders may want to ratchet up their stops toward $43, which is near the multi-week trend of higher lows. The company announced it will hold, and broadcast, its analyst day on Thursday, December 8th. More conservative traders might wait for a new move over $45 before initiating new positions.

Picked on December 02 at $ 45.45
Change since picked: - 1.47
Earnings Date 03/14/06 (unconfirmed)
Average Daily Volume = 2.7 million

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Rockwell Autom. - ROK - cls: 59.47 chg: +0.08 stop: 55.75

ROK didn't make much progress today and remains under round-number resistance at the $60 level. Our target is the $61-62 range but more conservative traders may want to exit near $60. We would not suggest new positions here.

Picked on November 03 at $ 55.90
Change since picked: + 3.57
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 804 thousand

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Sunoco Inc. - SUN - close: 82.85 chg: -0.90 stop: 76.45

SUN experienced some profit taking on Tuesday despite another gain for crude oil. A pull back to the $80-81 region can be used as a new bullish entry point. Our target is the $89.90-90.00 range.

Picked on December 02 at $ 81.75
Change since picked: + 1.10
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 2.8 million

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Tractor Supply - TSCO - cls: 56.71 chg: +1.19 stop: 52.75 *new*

TSCO continues to show outstanding relative strength and posted another strong gain today. The stock came within 6 cents of our $57.00-58.00 target range. More conservative traders may just want to exit right here! We are not suggesting new positions. We are raising our stop loss to $52.75.

Picked on November 30 at $ 52.75
Change since picked: + 3.96
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 428 thousand

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Walter Inds. - WLT - close: 50.98 change: -0.41 stop: 45.95

WLT is seeing a slow down in its upward momentum just like the major averages. The technical oscillators on WLT are starting to turn toward bearish signals. We believe the stock will pull back again and test support near $50.00. The question is whether or not support will hold up again. That probably depends on how strong any profit taking in the major averages will be. Overall the larger pattern on WLT remains bullish. Another bounce from $50 could be used as a new entry point but enter carefully.

Picked on November 20 at $ 51.50
Change since picked: - 0.52
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 927 thousand
 

Put Updates

Magna Int. - MGA - close: 66.75 chg: -0.72 stop: 70.31

Interesting... MGA has broken down under short-term support at the $67 level. That's good news for the bears. The next test is the October lows near $66.00. We would look for a bounce there before MGA continues lower. Weakness in the broader averages should work to our favor here. Our target is the $63-62 range.

Picked on December 04 at $ 68.14
Change since picked: - 1.39
Earnings Date 02/07/06 (unconfirmed)
Average Daily Volume = 318 thousand

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Netflix - NFLX - close: 27.75 chg: +0.05 stop: 28.55

There is almost no change in NFLX and we see no change from our previous update. The stock continues to consolidate sideways along the bottom of its rising channel. This heavily shorted stock could see some strong selling if it broke down under this support. Alternatively traders may want to consider buying calls if NFLX trades over $29.50 or $30.00. More aggressive traders may even want to get bullish on a move over $29.00 in an attempt to catch the next short squeeze. Our strategy involves a trigger to buy puts at $25.99. If triggered we'll target a drop to the $22.50 mark.

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 1.4 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: -0.50 stop: n/a

We see no change from our previous update on ABC. We are not suggesting new positions. Our estimated cost for our strangle is $2.80. Our current target is $5.00 but we have less than two weeks before December options expire.

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: 20.00 chg: -0.57 stop: n/a

Good news! AEOS continues to show relative weakness despite positive comments from TGT and SHLD today. AEOS has broken down and closed under its September lows. We would not be surprised by an oversold bounce from the $20 level since it is round-number, psychological support but the overall trend certainly looks bearish for the stock. We're not suggesting new plays. 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. FYI: currently the January $22.50 puts are trading at $2.90bid/$3.00ask.

Picked on November 13 at $ 25.47
Change since picked: - 5.47
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 3.6 million


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Abercrombie&Fitch - ANF - close: 61.61 chg: +0.19 stop: n/a

ANF seems like it would like to rally from the $60 level but the action in the retail sector is mixed and not inspiring much confidence in traders. We have about seven weeks to go before January options expire. 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: + 1.94
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 2.7 million


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Blue Coat Sys. - BCSI - cls: 45.30 chg: -0.47 stop: n/a

BCSI is still trading inside its $44-46 trading range and our suggested entry window to launch new strangles. We're suggesting the January $50 call and the January $40 put. Our estimated cost is $3.25. We're aiming for a rise to $5.50.

Picked on December 04 at $ 45.43
Change since picked: - 0.13
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 416 thousand

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Chicago Merc. Exchg. - CME - cls: 359.70 chg: -2.30 stop: n/a

This could be bad news for the bulls. CME has closed under the $360 level. Of course bulls will point out that CME is still trading above technical support at its 50-dma. We have about seven weeks left before January options expire. 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: -16.20
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 879 thousand

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D.R.Horton - DHI - close: 36.40 chg: +0.08 stop: n/a

DHI is still consolidating sideways and we don't see any change from our previous update. 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: + 3.84
Earnings Date 02/15/06 (unconfirmed)
Average Daily Volume = 3.2 million


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Four Seasons - FS - close: 48.14 chg: -0.59 stop: n/a

FS sinks to another new low today. We see no changes from our previous update. 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. FYI: the FS-MJ puts are trading at $2.80bid/$3.10ask.

Picked on November 08 at $ 55.37
Change since picked: - 5.97
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 319 thousand


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Lear Corp - LEA - close: 27.36 chg: +0.18 stop: n/a

LEA managed a minor bounce but remains stuck in its descending pattern. We see no changes from our previous update on LEA. We have about seven weeks left and by keeping the play open we're betting that LEA will trade near $24-23 before the options expire. 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). Our estimated cost was $1.60. We are targeting a rise to $3.20 or more. FYI: the LEA-ME puts are trading at $0.90bid/$0.95ask.

Picked on November 06 at $ 30.24
Change since picked: - 2.88
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 1.8 million

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Loews - LTR - close: 96.12 change: -0.84 close: n/a

Hmm... tomorrow could be challenging for the LTR bulls. Something happened in the last hour of trading. For no reason we can discern shares of LTR just fell off a cliff. Odds are good that LTR will test the $95 level soon. If our strangle has a hope of being profitable we need to see a bounce from the $95 level before December options expire. If you don't want to take that chance you might want to exit early! 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. Currently the LTR-LS calls are trading at $1.80bid/$2.00ask.

Picked on October 23 at $ 89.94
Change since picked: + 6.21
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 602 thousand

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Verifone Holdings - PAY - cls: 23.69 chg: +0.39 stop: n/a

PAY is bouncing after yesterday's fill-the-gap decline. We have about seven weeks left before January options expire. We're not suggesting new positions. 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. Currently the PAY-AX calls are trading at $2.05bid/$2.20ask.

Picked on October 12 at $ 19.98
Change since picked: + 3.71
Earnings Date 12/01/05 (confirmed)
Average Daily Volume = 259 thousand

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Protein Design Labs - PDLI - cls: 27.60 chg: -0.20 stop: n/a

We see no change from our previous update on PDLI. This is shaping up to be a losing position. 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 have adjusted our target to breakeven at $1.80.

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: 18.04 change: -0.26 stop: n/a

It looks like SPC's recent sideways consolidation may be coming to an end. Short-term technicals are suggesting another turn lower soon. We have less than two weeks left before December options expire. To make this play a winner we need to see SPC trade under the $16 level in the next couple of weeks. More conservative traders may want to plan an exit near breakeven. 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. Currently the SPC-XW puts are trading at $0.30bid/0.35ask.

Picked on November 08 at $ 20.63
Change since picked: - 2.40
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 576 thousand

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Questar Corp. - STR - close: 78.25 chg: +1.66 stop: n/a

STR is starting to rally on above average volume. The stock is now challenging resistance at its simple 50-dma. STR is on the verge of a bullish breakout. There are seven weeks left before January options expire. 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: + 2.00
Earnings Date 01/26/05 (unconfirmed)
Average Daily Volume = 716 thousand

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Texas Ind. - TXI - close: 52.04 chg: -0.18 stop: n/a

We don't see any change from our previous update on TXI. We are not suggesting new strangle positions. 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. TXI is due to report earnings around December 15th.

Picked on November 27 at $ 49.57
Change since picked: + 2.47
Earnings Date 12/15/05 (unconfirmed)
Average Daily Volume = 354 thousand

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Valero Energy - VLO - close: 104.26 chg: -0.23 stop: n/a

The rally in VLO stalled despite a rise in crude oil again. The stock is under resistance at its two-month trendline of lower highs. 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: + 3.26
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 10.7 million
 

Dropped Calls

NovAtel Inc. - NGPS - close: 27.10 chg: -1.63 stop: 27.95

The sell-off in NGPS is picking up speed. The stock lost 5.6% on no news with volume coming in well above average, which would suggest more weakness ahead. We've been cautious on NGPS for a few days now and today's decline stopped us out at $27.95.

Picked on November 21 at $ 30.45
Change since picked: - 3.35
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 292 thousand
 

Dropped Puts

None Today.

Dropped Strangles

None Today.

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