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Call Updates

Apache - APA - close: 70.96 change: +0.51 stop: 67.99

A minor rebound in crude oil prices helped lift the oil sector on Wednesday but the gain wasn't very convincing. APA's rebound back over the $70.00 level looks like a new bullish entry point but we would enter new positions very cautiously.

Picked on December 08 at $ 70.98
Change since picked: - 0.02
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 3.6 million

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Femsa Fomento - FMX - close: 72.08 chg: +1.67 stop: 67.75

FMX is showing lots of relative strength today. The Mexican markets were mostly flat on Wednesday but FMX rallied to a 2.3% gain on above average volume. Our target is the $74.75-75.00 range.

Picked on December 19 at $ 70.65
Change since picked: + 1.43
Earnings Date 02/23/06 (unconfirmed)
Average Daily Volume = 308 thousand

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Garmin ltd - GRMN - close: 62.79 change: +1.41 stop: 58.90 *new*

After GRMN's fourth dip toward the $60.00-60.50 region in the last four days the stock finally found the strength to rebound. This could be used as a new bullish entry point but you might want to tighten your stops. We're going to raise our stop loss to $58.90. Our mid-January target is the $69.00-70.00 range. We do not want to hold over the January earnings report.

Picked on December 13 at $ 63.54
Change since picked: - 0.75
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume = 1.1 million

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Kerr Mcgee - KMG - close: 92.99 chg: +0.10 stop: 88.99

Like many in the oil sector today shares of KMG only managed a minor gain. We remain cautious and hesitant to suggest new long positions here. Our mid January target is the $98.50-100 range.

Picked on December 02 at $ 90.26
Change since picked: + 2.73
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume = 1.8 million

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Kinder Morgan - KMI - close: 93.07 chg: +0.17 stop: 91.90

KMI didn't fair much better than KMG. The stock added a very minor gain and remains under resistance at the $95.00 level. We are not suggesting new positions here.

Picked on December 02 at $ 92.75
Change since picked: + 0.32
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 749 thousand

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Ryland Group - RYL - close: 73.22 change: -1.03 stop: 71.85

The homebuilders still aren't showing much strength despite the bullish economic news this week. RYL fell 1.38% but remains above its trendline of rising support. We'd probably wait for a move over $74.50 before considering new bullish positions.

Picked on December 13 at $ 73.96
Change since picked: - 0.74
Earnings Date 01/17/06 (unconfirmed)
Average Daily Volume = 1.3 million

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Questar Corp - STR - close: 78.55 chg: -2.10 stop: 77.45

Okay, now we're starting to get concerned. Over the weekend we pointed out the bearish reversal pattern and so far STR has followed through with a decline and now a breakdown below the $80.00 level and its 10-dma. There was a very minor bounce late this afternoon from the $78 level. If the $78 level fails the next level of support is the 50-dma near $77.75. We are not suggesting new positions at this time unless STR can rebound back above the $80 mark and even then we might wait a day or two. FYI: STR is also a current strangle play on the newsletter's play list.

Picked on December 13 at $ 80.85
Change since picked: - 2.30
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 752 thousand

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Total S.A. - TOT - close: 127.00 change: -0.28 stop: 126.49

TOT tried to rally this morning but its early strength failed and shares remain just above support near the 50-dma. We don't see any changes from our previous updates. We are not suggesting new positions at this time.

Picked on December 13 at $130.25
Change since picked: - 3.25
Earnings Date 02/15/06 (unconfirmed)
Average Daily Volume = 936 thousand

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Tractor Supply - TSCO - cls: 54.70 chg: +0.17 stop: 51.95

TSCO displayed a little bit of strength today with a minor breakout over its two-week trend of lower highs. We are not suggesting new plays at this time. Our target is the $57.00-58.00 range.

Picked on November 30 at $ 52.75
Change since picked: + 1.95
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 428 thousand

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Valero Energy - VLO - close: 52.92 chg: +1.70 stop: 49.74

Refining stocks turned in a very bullish session. Shares of VLO added 3.3% after testing support on Tuesday. This could be used as a new bullish entry point but consider using a tight stop loss. Our post-split target is $58.50. FYI: VLO is also a current strangle play in the strangle section.

Picked on December 08 at $ 53.28 (split adjusted)
Change since picked: - 0.36
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 9.8 million
 

Put Updates

Magna Int. - MGA - close: 69.38 chg: +0.42 stop: 70.31

MGA is still showing way too much strength for our liking. The stock broke out over resistance at the $70.00 mark and its 200-dma on an intraday basis today. Thankfully the rally failed but we remain cautious. Normally, a failed rally near resistance like this could be a great place to consider new bearish positions. We would wait for a move under $68 before considering new positions. More conservative traders may just want to exit early right here since MGA is not cooperating. We'll give the stock through the end of this week assuming we don't get stopped out.

Picked on December 04 at $ 68.14
Change since picked: + 1.24
Earnings Date 02/07/06 (unconfirmed)
Average Daily Volume = 318 thousand

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PACCAR Inc. - PCAR - close: 69.72 change: +0.97 stop: 72.51

We cannot find any news or catalyst to explain PCAR's sudden show of strength today. The stock spiked to $70.51, above technical resistance at its 200-dma, before sliding lower again. Maybe this was just an oversold bounce. We would be very careful about initiating new positions here. Our target is the $65.25-65.00 range.

Picked on December 20 at $ 69.49
Change since picked: + 0.23
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 838 thousand
 

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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Amer. Eagle Out. - AEOS - cls: 21.02 chg: -0.45 stop: n/a

AEOS is under performing its peers in the retail sector with today's 2.1% decline. We don't see any change from our weekend update for AEOS. 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 $1.80bid/$1.95ask.

Picked on November 13 at $ 25.47
Change since picked: - 4.37
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 3.6 million

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Abercrombie&Fitch - ANF - close: 63.76 chg: +0.29 stop: n/a

We don't see any change from our weekend update for ANF. 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: + 4.09
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 2.7 million

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Blue Coat Sys. - BCSI - cls: 42.59 chg: +0.11 stop: n/a

The stock tried to bounce a bit this morning but the early strength failed. The stock looks poised to breakdown under support at the $42.00 level and its 100-dma. At this time we're not suggesting new plays. Our current play involves the January $50 call and the January $40 put. Our estimated cost is $3.25. We're aiming for a rise to $5.50. Remember we have about five weeks left before January options expire.

Picked on December 04 at $ 45.43
Change since picked: - 2.84
Earnings Date 02/14/06 (unconfirmed)
Average Daily Volume = 416 thousand

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Building Materials - BMHC - cls: 81.80 chg: +1.82 stop: n/a

We don't see any change to our previous update on BMHC. The stock is still oscillating around the $80.00 level. We initiated this play over the weekend with a suggested $81.50-79.00 entry window. The closer to $80.00 the better the entry point. The options we are suggesting are the March $90 calls (BGU-CR) and the March $70 puts (BGU-ON). Our estimated cost is $8.20. Our target is $12.50 by March expiration.

Picked on December 18 at $ 80.95
Change since picked: + 0.85
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 527 thousand

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Chicago Merc. Exchg. - CME - cls: 374.05 chg: +2.34 stop: n/a

We do not see any change from yesterday's update on CME. Thus far this play in CME is not working out. It's been one month since we started this strangle at $375.90. Since then CME has rallied to $396.90 and fell to $344.00. Unfortunately, this sideways trading we're seeing right now over the past week is the worst thing that can happen to us with a strangle. More conservative traders may want to seriously think about exiting early before the options premiums deteriorate any more. 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: - 1.85
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 879 thousand

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D.R.Horton - DHI - close: 36.64 chg: +0.24 stop: n/a

DHI is bouncing from the $36.00 level but it's not very convincing. The homebuilders remain sluggish despite the positive economic data out this week. We are not suggesting new strangles in DHI 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. FYI: the DHI-AG calls are currently trading at $2.40bid/$2.50ask.

Picked on November 13 at $ 32.56
Change since picked: + 4.08
Earnings Date 02/15/06 (unconfirmed)
Average Daily Volume = 3.2 million

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Four Seasons - FS - close: 49.50 chg: +0.93 stop: n/a

FS is trying to rally and the stock added 1.9% today. The rally did fail near the $50.00 level but shares are so oversold all the technical indicators have turned positive again. If FS breaks out over the $50 level or the 50-dma (your choice) more conservative traders may want to think about exiting early. We still have less than five weeks left before January options expire. 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 $1.70bid/$1.75ask.

Picked on November 08 at $ 55.37
Change since picked: - 5.87
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 319 thousand

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Lear Corp - LEA - close: 27.64 chg: +0.11 stop: n/a

LEA tried to rally this morning but significantly pared its gains by the closing bell. We do not see any change from our weekend update on LEA. 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.

Picked on November 06 at $ 30.24
Change since picked: - 2.60
Earnings Date 01/25/06 (confirmed)
Average Daily Volume = 1.8 million

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Verifone Holdings - PAY - cls: 23.00 chg: -0.33 stop: n/a

The relative weakness in PAY these last couple of days is not a good sign and today's 1.4% drop put the stock under its rising 50-dma. Volume came in way above the average and that's not a positive sign either. We have less than five weeks before January options expire. More conservative traders may want to cut their losses right here. 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 $1.30bid/$1.55ask.

Picked on October 12 at $ 19.98
Change since picked: + 3.02
Earnings Date 12/01/05 (confirmed)
Average Daily Volume = 259 thousand

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Questar Corp. - STR - close: 78.55 chg: -2.10 stop: n/a

Volume was very heavy on STR's decline under the $80.00 level today. That doesn't bode well for the bulls. If STR breaks down under the 50-dma near $77.75 the stock might be headed for the $70 level and its 200-dma. 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: + 2.30
Earnings Date 01/26/05 (unconfirmed)
Average Daily Volume = 716 thousand

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Texas Ind. - TXI - close: 51.00 chg: +1.42 stop: n/a

We see no change from our weekend 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.

Picked on November 27 at $ 49.57
Change since picked: + 1.43
Earnings Date 12/15/05 (unconfirmed)
Average Daily Volume = 354 thousand

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Valero Energy - VLO - close: 52.92 chg: +1.70 stop: n/a

Refining stocks turned in a very strong session on Wednesday. VLO added 3.3% after testing support near its 50-dma on Tuesday. We are not suggesting new strangle plays. Our current play involves the January $110 calls (VLO-AB) and the January $90 puts (VLO-MR). Our adjusted cost is $2.93. Our adjusted target is $4.75.

Picked on November 21 at $ 50.50
Change since picked: + 2.42
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 10.7 million
 

Dropped Calls

Dominion Res. - D - close: 79.36 chg: -1.46 stop: 74.75

We are choosing to exit early in D. The utility sector was the worst performing group today and the UTY index produced a bearish engulfing candlestick pattern. Shares of D followed suit with a big bearish engulfing candlestick pattern. These patterns are usually seen as one-day bearish reversal patterns. Today's drop in D also took it below round-number support at $80.00 and technical support at the 10-dma. A bounce from $78.00 might be used as a new bullish entry point.

Picked on November 27 at $ 78.24
Change since picked: + 1.12
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 1.8 million

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Zimmer Holdings - ZMH - close: 69.30 chg: +1.05 stop: 67.75

We have been stopped out. ZMH continued to sink following yesterday's sell-off. The stock gapped lower to open at $67.56, which was below our stop loss at $67.75. We have adjusted our exit price to the opening price today. Unfortunately, ZMH produced a very sharp rebound and it looks like a one-day bullish reversal. Keep an eye on ZMH for a move over $70 or its 100-dma as a potential bullish entry point.

Picked on December 11 at $ 68.62
Change since picked: + 0.68
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume = 2.6 million
 

Dropped Puts

Netflix - NFLX - close: 27.39 chg: +2.28 stop: 27.45

We have been undone by an analyst upgrade. Citigroup started coverage on NFLX with a "buy" this morning and a $39 price target. The positive analyst rating pushed NFLX to gap open at $26.43 and soar to $27.56 above technical resistance at its 50-dma. Naturally, this heavily shorted stock saw some short covering on the news. We have been stopped out at $27.45. It's easy to be frustrated since NFLX came within four cents of our target on the December 14th low.

Picked on December 09 at $ 25.99
Change since picked: + 1.40
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 1.4 million
 

Dropped Strangles

None
 

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