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Call Updates

Biogen Idec - BIIB - close: 46.74 change: 1.46 stop: 43.95

The biotech sector was showing relative strength today. The group was turning higher long before the rest of the market suddenly went bullish following the minutes to the last FOMC meeting. Shares of BIIB added 3.2% on above average volume and closed at a new relative high. This looks like a new bullish entry point to buy call options. We would suggest the February strikes but plan to exit ahead of the late January earnings report. Our target is the $49.85-50.00 range.

Picked on December 27 at $ 46.11
Change since picked: 0.63
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume = 3.2 million

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Cytec Ind. - CYT - close: 48.40 chg: 0.77 stop: 45.95

CYT was also showing relative strength this morning with a rally in progress before the afternoon market surge higher. Today's move is a bullish breakout over the $48.00 level. Readers could use it as a new bullish entry point. Volume came in above its average. Keep in mind that our target is only the $49.85-50.00 range. More aggressive traders may want to aim higher. The P&F chart points to a $65 target. The biggest challenge to initiating new positions now is the time frame. We do not want to hold positions over the Jan. 19th earnings report (which is currently an unconfirmed date).

Picked on December 22 at $ 47.01
Change since picked: 1.39
Earnings Date 01/19/06 (unconfirmed)
Average Daily Volume = 333 thousand

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Foster Wheeler - FWLT - close: 36.27 chg: -0.51 stop: 35.49

The action in FWLT was very interesting today. The stock was weak almost from the start and failed to rally with the rest of the market later this afternoon. The company even had positive news with the awarding of a new engineering, procurement, and construction contract by AES Deepwater. We remain on the sidelines. Our trigger to buy calls is at $38.05. If triggered we'll target a run into the $42.00-42.50 range. Currently the P&F chart is very bullish with a $73 target.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: 0.00
Earnings Date 03/15/06 (unconfirmed)
Average Daily Volume = 598 thousand

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Gilead Sciences - GILD - close: 54.70 chg: 2.13 stop: 49.99

Today's rally in GILD helped erase the last week of declines. The biotech sector was showing strength before the broader market rally late this afternoon. Volume came in at normal following the last couple of weeks of holiday (low) volume. The P&F chart points to a $66 target. Our target is the $59.00-60.00 range. We do not want to hold over GILD's mid January earnings report.

Picked on December 22 at $ 54.51
Change since picked: 0.19
Earnings Date 01/17/06 (unconfirmed)
Average Daily Volume = 4.3 million

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Ipsco Inc. - IPS - close: 85.70 change: 2.72 stop: 79.99

Now that's more like it! IPS was very strong today. The stock gapped higher and rallied for most of the session. Today's move is a new high and its MACD indicator is nearing a new buy signal. Our target is the $89.00-90.00 range. We do not want to hold over the January earnings report.

Picked on December 30 at $ 83.55
Change since picked: 2.15
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 396 thousand

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United States Steel - X - close: 49.44 chg: 1.37 stop: 44.99

X is another metal/steel stock that enjoyed a strong gain today. Shares rallied off the $48 level and are now challenging resistance near the $50 mark. Its MACD indicator is nearing a new buy signal. Our late January target is the $52.00-52.50 range. The Point & Figure chart for X points to an $86 target. We do not want to hold over the January earnings report.

Picked on December 23 at $ 47.05
Change since picked: 2.39
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 3.8 million
 

Put Updates

Netease.com - NTES - close: 56.58 chg: 0.42 stop: 58.01

The action in NTES today is notable. There was an early rally that quickly failed. The stock then slowly climbed higher throughout the rest of the session only to see shares plummet again near the closing bell. NTES did post a gain but it looks like a failed rally/bearish reversal type pattern. We remain on the sidelines. Our trigger to buy puts is at $54.95. More aggressive traders may want to initiate put positions on a decline under the $56 level. If triggered we'll target a decline into the $50.25-50.00 range. We do not want to hold positions over the February earnings report.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: 0.00
Earnings Date 02/21/06 (unconfirmed)
Average Daily Volume = 4.2 million

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PACCAR Inc. - PCAR - close: 70.26 change: 1.03 stop: 72.51

The afternoon market rally pushed PCAR right back to its four-week trendline of resistance, which coincidentally is near the 50-dma and its 21-dma. Volume did come in above average but the stock was already paring its gains by the closing bell. We would not suggest new positions right here. Wait for a move under $69 to be safe. More conservative traders may want to tighten their stops and wait for a new relative low before considering new positions (under $68.27 or $68.00). Our target is the $65.25-65.00 range. Technical traders should note that we are betting against a bullish P&F chart but PCAR can dip toward $65 and still not reverse its current P&F buy signal. We do not want to hold over the late January earnings report.

Picked on December 20 at $ 69.49
Change since picked: 0.77
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 838 thousand

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Progressive Corp - PGR - cls: 115.52 chg: -1.26 stop: 120.05*new*

PGR displayed relative weakness today sinking under the $115 level intraday and failing to rebound back into positive territory during the market's rally during the last two hours of trading. Volume came in very strong today at almost twice the daily average. We do not see any change from our weekend update. Our target is the $110.50-110.00 range but we only have 16 days if the current earnings date is correct. We do not want to hold over the earnings report. If you're looking for a new entry point watch for an oversold bounce and failed rally near $118 and possibly $120, which is overhead resistance. We are lowering the stop loss to $120.05.

Picked on December 30 at $117.45
Change since picked: - 1.93
Earnings Date 01/19/06 (unconfirmed)
Average Daily Volume = 836 thousand

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Scotts Miracle grow - SMG - cls: 46.63 change: 1.39 stop: 47.55

Heads up! We may need to abandon this play. SMG was bouncing this morning but then the market's joyful reaction to the FOMC minutes helped push shares of SMG back above the $46 level and its 50-dma. The rally did stall near the bottom of its gap down, which is technical resistance. This may have just been some short covering given the market's big rally so we're not willing to exit early just yet but we are not suggesting new put positions right here either. A failed rally here or under $47.00 would be welcome news. We would wait for a decline back under $46.00 and maybe lower (if you're more conservative) before considering new bearish positions.

Picked on January 01 at $ 45.24
Change since picked: 1.39
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 354 thousand

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Stryker Corp. - SYK - close: 44.60 chg: 0.17 stop: 46.51

SYK produced a bounce from its lows much like most of the market today. The session produced a bullish "hammer" candlestick, which might be seen as a bullish reversal. Expect shares to rally toward the $45.50-46.00 region before turning lower again. We would not suggest new bearish positions right here. Wait for a failed rally to occur before considering new entries. The Point & Figure chart points to a $23.00 target. Our target is the $40.25-40.00 range, near its October lows. We do not want to hold over the January earnings report. That gives us about three weeks, maybe less.

Picked on December 30 at $ 44.29
Change since picked: 0.31
Earnings Date 01/17/06 (unconfirmed)
Average Daily Volume = 2.1 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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Amer. Eagle Out. - AEOS - cls: 23.31 chg: 0.33 stop: n/a

AEOS added 1.4% in spite of its morning weakness. A disappointing same-store sales guidance from Wal-Mart (WMT) and a strong day for crude oil failed to undermine the rally in retailers. We see no change from our weekend update on AEOS. We only have three weeks left before January options expire. 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.

Picked on November 13 at $ 25.47
Change since picked: - 2.16
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 3.6 million

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Abercrombie&Fitch - ANF - close: 65.72 chg: 0.54 stop: n/a

ANF continues to churn sideways between $65 and $66.60. The only notable action today was the volume, which came in above average. We see no change from our weekend update. We are adjusting our target to breakeven at $5.15. 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.

Picked on November 13 at $ 59.67
Change since picked: 6.05
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 2.7 million

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Blue Coat Sys. - BCSI - cls: 40.13 chg: -5.59 stop: n/a

BCSI turned in a very bearish day. Investors responded negatively to news that BCSI had agreed to buy Permeo Technologies for $60.8 million paid with $13.4 million in cash and $47.4 million in stock. The deal would negatively impact Q1 earnings per share performance. The move really gave a big boost to the January $40 puts ( 1.50 to $1.40big/$1.65ask). There is no guarantee that BCSI will continue to trade lower and the stock was already beginning to bounce after testing its November lows today. More conservative traders may want to exit early right here to reduce their losses. We only have three weeks left before January options expire. We're adjusting our target to breakeven at $3.25. Our current play involves the January $50 call and the January $40 put. Our estimated cost is $3.25.

Picked on December 04 at $ 45.43
Change since picked: - 5.30
Earnings Date 02/14/06 (unconfirmed)
Average Daily Volume = 416 thousand

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Building Materials - BMHC - cls: 72.79 chg: 4.58 stop: n/a

BMHC produced a sharp oversold bounce today. The stock was definitely due for a bounce after last week's big sell-off. It might be noteworthy that the rally failed this afternoon under the $75.00 level. We are not suggesting new strangle positions at this time. The options in our strangle play 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: - 8.16
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 527 thousand

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Chicago Merc. Exchg. - CME - cls: 363.03 chg: -4.46 stop: n/a

CME displayed some relative weakness today. Shares failed to rally with the rest of the market after one analyst lowered their earnings estimates following weaker than expected trading volumes for December. The MACD has produced a new sell signal. There are only three weeks left before January options expire. We are adjusting our target to breakeven at $26.70. That means CME needs to trade well above $400 or under $350 if we're going to hit our new target. We are not suggesting new positions. Our current play involves the January $400 calls (CMJ-AK) and the January $350 puts (CMJ-MA). Our estimated cost was $26.70.

Picked on November 20 at $375.90
Change since picked: -12.87
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 879 thousand

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Four Seasons - FS - close: 51.77 chg: 2.02 stop: n/a

Danger! The move today in FS is bad news for our strangle position. The stock has broken out over its simple 50-dma and is challenging its multi-month trendline of resistance. If the broader market continues to rally then FS may be able to build on this bullish breakout. We have less than three full weeks before January options expire. FS needs to trade under $47.50 if we have a chance of recouping our expenses here. 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 are adjusting our target to breakeven at $2.60.

Picked on November 08 at $ 55.37
Change since picked: - 3.55
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 319 thousand

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Lear Corp - LEA - close: 28.31 chg: -0.15 stop: n/a

We see no change from our weekend update on LEA. There are only three weeks left before January options expire. For this play to succeed or even breakeven we need to see LEA trade over $35 (not likely) or under $25 (a dwindling prospect). We might be able to recoup the cost of this play by buying calls on LEA if the stock can breakout over the $29.00 level. 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 lowering our target to $1.60.

Picked on November 06 at $ 30.24
Change since picked: - 1.93
Earnings Date 01/25/06 (confirmed)
Average Daily Volume = 1.8 million

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Verifone Holdings - PAY - cls: 25.58 chg: 0.28 stop: n/a

We see no change from our weekend update on PAY. Our cost for the January strangle was about $2.60. Currently the PAY-AX Jan. $22.50 calls are trading at $3.10bid/$3.50 ask. Our target is for a rise to $4.50. We only have three weeks left before January options expire.

Picked on October 12 at $ 19.98
Change since picked: 5.60
Earnings Date 12/01/05 (confirmed)
Average Daily Volume = 259 thousand

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Questar Corp. - STR - close: 78.63 chg: 2.93 stop: n/a

STR rebounded sharply today, up 3.8%. The disagreement between Russia and the Ukraine over natural gas prices and the temporary shutdown of gas to the Ukraine sparked a rally in oil and oddly a decline in natural gas. One line of thinking is that if there is further trouble people will switch from using natural gas to other forms of energy (in the Ukraine), which would drive up demand for oil. This fueled a strong move in energy stocks today and STR benefited with a move back over its 50-dma. We only have three weeks left before January options expire and to see this play even breakeven we'd need to see a rally towards $85 or a decline towards $65. We are adjusting our target to breakeven. Our strangle involves the January $80 calls (STR-AP) and the January $70 puts (STR-MN). Our estimated cost was $5.10.

Picked on November 20 at $ 76.25
Change since picked: 2.38
Earnings Date 01/26/05 (unconfirmed)
Average Daily Volume = 716 thousand

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Texas Ind. - TXI - close: 49.66 chg: -0.18 stop: n/a

We are still in a wait and see mode with TXI. The company is due to report earnings on Thursday, January 5th. The earnings report is pretty much our only chance to try and score (and/or breakeven) with this strangle play. If the news fails to jolt TXI out of its three-month trading range then our strangle is in deep trouble. We are not suggesting new plays but aggressive traders might consider a new position using February strikes. 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.

Picked on November 27 at $ 49.57
Change since picked: 0.09
Earnings Date 01/05/06 (confirmed)
Average Daily Volume = 354 thousand

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Valero Energy - VLO - close: 54.36 chg: 2.76 stop: n/a

VLO enjoyed a strong day with a 5.3% gain fueled by strength in crude oil and the energy sector. Today's move is a breakout of VLO's two-week trend of lower highs but shares still have some resistance under $56. January options are set to expire in three weeks. If this play is going to score we need to see VLO trade well over $55 or under $45 before expiration. Our target is set to breakeven at $2.93.

Picked on November 21 at $ 50.50
Change since picked: 3.86
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 10.7 million
 

Dropped Calls

Femsa Fomento - FMX - close: 74.56 chg: 2.05 stop: 67.75

Target achieved. Shares of FMX were very strong right after the opening bell today. The stock spiked to a high of $75.78 before paring its gains. Our target was the $74.75-75.00 range. While we are closing the play more aggressive players might want to consider holding a position a little while longer. The stock was starting to bounce higher again late this afternoon. Volume came in above average.

Picked on December 19 at $ 70.65
Change since picked: 3.91
Earnings Date 02/23/06 (unconfirmed)
Average Daily Volume = 308 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

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