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Call Updates

Biogen Idec - BIIB - close: 47.06 change: -0.47 stop: 44.45

Biotech stocks continued to see some profit taking today and the BTK index lost 1.5% after hitting new multi-year highs earlier this week. Shares of BIIB dipped to its 10-dma and held its ground. The low today was $46.69 and yesterday we suggested that readers look for a dip to $46.65. A bounce from here could be used as a new bullish entry point. However, the major averages have been overbought and are just starting to correct so we don't believe the pull back is over yet. We are not suggesting new plays at this time. Our target for BIIB is the $49.85-50.00 range.

Picked on December 27 at $ 46.11
Change since picked: + 0.95
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 3.2 million

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Caterpillar - CAT - close: 62.21 change: +0.88 stop: 56.95

CAT was the best performing Dow-component today. Some bullish analyst comments from CSFB on the company's upcoming fourth quarter earnings pushed shares of CAT to a new all-time high. We see no change from our previous updates. Our target is the $64.75-65.00 range. We do not want to hold over the late January earnings report so we have just less than three weeks.

Picked on January 08 at $ 60.45
Change since picked: + 1.76
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 4.0 million

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Gilead Sciences - GILD - close: 58.44 chg: +1.51 stop: 54.51

GILD displayed some great relative strength today out performing its peers and the broader market with a 2.65% gain. The stock's strength was fueled by a new analyst upgrade this morning. We are not suggesting new positions right here. We do not want to hold over GILD's mid January earnings report. Our target is the $59.00-60.00 range.

Picked on December 22 at $ 54.51
Change since picked: + 3.93
Earnings Date 01/17/06 (unconfirmed)
Average Daily Volume = 4.3 million

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Goldman Sachs - GS - close: 132.25 chg: +0.28 stop: 127.45

The broker-dealer sector did not escape the market pull back today but shares of GS displayed some relative strength. We would still expect some profit taking so watch for a dip toward the $130 level, which should be short-term support. Our target is the $134.80-135.00 range. More aggressive traders might want to aim higher.

Picked on January 09 at $130.05
Change since picked: + 2.20
Earnings Date 03/16/06 (unconfirmed)
Average Daily Volume = 3.6 million

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Holly Corp. - HOC - close: 63.09 chg: -0.83 stop: 59.95

There was talk today about how Iran's ongoing development of its nuclear aspirations was driving the rally in energy stocks. Unfortunately, it didn't hold up stock prices. The OIX oil and OSX oil services indices closed in the red. Shares of HOC lost 1.29% and look poised to dip back to the $60 level. We do not see any change from our original play description. Our strategy involves a trigger to buy calls at $65.65, which would be a breakout to a new high and a new P&F buy signal (over $65.00). If triggered we'll target a quick rally into the $69.75-70.00 range before the company's early February earnings report. We do not want to hold over the earnings report.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/06/06 (unconfirmed)
Average Daily Volume = 303 thousand

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Lehman Brothers - LEH - close: 135.83 chg: +1.18 stop: 127.90

LEH continues to show great relative strength. The stock added another 0.8% and closed at another new high. Volume continued to come in above the daily average, which is bullish. We remain bullish but shares look a little short-term overbought. More conservative traders may want to consider exiting early for a gain right here. We are going to maintain our target in the $138.50-140.00 range.

Picked on January 09 at $131.05
Change since picked: + 4.78
Earnings Date 03/14/06 (unconfirmed)
Average Daily Volume = 2.3 million

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Ipsco Inc. - IPS - close: 83.82 change: +0.10 stop: 81.45

We remain on the defensive here with IPS. The stock showed some strength today but steel and metal stocks were generally weak on the session. The short-term trend in IPS is one of consolidation and we're not suggesting new plays. More conservative traders may just want to exit early. We do not want to hold over the earnings report. Our target is the $89.00-90.00 range.

Picked on December 30 at $ 83.55
Change since picked: + 0.27
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 396 thousand

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Lennar Corp. - LEN - close: 65.23 chg: -0.72 stop: 59.99

Homebuilders were weak today after BZH was downgraded to a "market perform". The DJUSHB index lost 2.6%. Shares of LEN fell just over 1% but held on to the $65 level. If there is any more profit taking we'd watch for the $64.00-64.50 region to act as support. Our target now is the $69.50-70.00 range before February options expire.

Picked on January 09 at $ 64.01
Change since picked: + 1.22
Earnings Date 03/16/06 (unconfirmed)
Average Daily Volume = 2.6 million
 

Put Updates

Progressive Corp - PGR - cls: 115.45 chg: -2.61 stop: 119.15

Good news. The market weakness today has turned the bounce around in shares of PGR. The stock lost 2.2% and the move could be used as a new bearish entry point. Just keep in mind that our target is the 100-dma. That means we need to adjust our target from $111.50-111.00 to 112.25-111.75.

Picked on December 30 at $117.45
Change since picked: - 2.00
Earnings Date 01/18/06 (confirmed)
Average Daily Volume = 836 thousand

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Scotts Miracle grow - SMG - cls: 46.55 che: -0.20 stop: 47.05

SMG displayed a little too much strength for our liking today. Shares did close in the red but we would have expected more selling with the market in a widespread decline. We are not suggesting new positions. More conservative traders may want to exit early to avoid further losses.

Picked on January 01 at $ 45.24
Change since picked: + 1.31
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 354 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: 25.22 chg: -0.33 stop: n/a

We do not see any changes from our previous update. For this strangle play to have a chance at exiting at breakeven or better then AEOS needs to trade above $29.50 or under $20.00. We are 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 have changed our target to breakeven at $2.35.

Picked on November 13 at $ 25.47
Change since picked: - 0.25
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 3.6 million

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Abercrombie&Fitch - ANF - close: 66.13 chg: -1.37 stop: n/a

We do not see any change from our weekend update. Time is running out. We have two weeks left before January options expire. Currently ANF is trading over the $65 strike but not by much. We need to see the stock make a run for the $70 level if we want to exit near breakeven. We are not suggesting new plays at this time. The options in our strangle are the January $65 calls (ANF-AM) and the January $55 puts (ANF-MK). Our target has been adjusted to breakeven at $5.15.

Picked on November 13 at $ 59.67
Change since picked: + 6.46
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 2.7 million

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Blue Coat Sys. - BCSI - cls: 42.22 chg: -0.08 stop: n/a

BCSI needs to trade under $39 or well over $50 if we are going to have a chance at exiting near breakeven. Last week we adjusted our target to breakeven at $3.25. We are not suggesting new plays. Our current play involves the January $50 call and the January $40 put.

Picked on December 04 at $ 45.43
Change since picked: - 3.21
Earnings Date 02/14/06 (unconfirmed)
Average Daily Volume = 416 thousand

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Building Materials - BMHC - cls: 77.68 chg: -1.31 stop: n/a

We don't see any change from our previous updates. BMHC's rally has stalled under its three-month trendline of resistance. 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: - 3.37
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 527 thousand

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Chicago Merc. Exchg. - CME - cls: 380.15 chg: -5.85 stop: n/a

We are running out of time. There are less than two weeks left before January options expire. At the moment if we have any hope of exiting near breakeven we need to see CME trade under $340 or above $410 and do it pretty quickly. Odds of that happening don't seem very high at the moment. We are not suggesting new plays. Our current play involves the January $400 calls (CMJ-AK) and the January $350 puts (CMJ-MA).

Picked on November 20 at $375.90
Change since picked: + 4.25
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 879 thousand

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Encana Corp. - ECA - close: 45.61 chg: +0.21 stop: n/a

ECA offered another great entry point today with a dip back to the $45.00 level. We're suggesting opening strangle positions in the $44.00-46.00 range. We would prefer to open new positions in the $45.25-44.75 region. We are using the April $50 calls and the April $40 puts. Our estimated cost is $3.45. At current prices that means we're betting that ECA will be trading under $36.50 or over $53.50 by April option expiration.

Picked on January 10 at $ 45.56
Change since picked: + 0.05
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume = 4.4 million

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Four Seasons - FS - close: 55.18 chg: -0.20 stop: n/a

We have nothing new to report on for FS. Last week's breakout over its 50-dma and its multi-month trendline of resistance and lower highs has all but killed this strangle play. We have two weeks left before January options expire. The options in our strangle were the January $60 calls (FS-AL) and the January $50 puts (FS-MJ). We have adjusted our target to breakeven at $2.60.

Picked on November 08 at $ 55.37
Change since picked: - 0.19
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 319 thousand

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Lear Corp - LEA - close: 24.58 chg: -1.13 stop: n/a

LEA continued to sink today and lost another 4.39% on big volume. The breakdown under the $25.00 mark is good news and gives us a chance at exiting near breakeven. We have less than two weeks left before January options expire. The options in our strangle are the January $35 calls (LEA-AG) and the January $25 puts (LEA-ME). We have lowered our target to breakeven at $1.60. More conservative traders may want to consider exiting early. Currently the LEA-ME puts are trading at $1.10bid/$1.15ask and LEA looks poised to continue lower tomorrow. More aggressive traders may want to keep the play active into next week to see if LEA will sink even lower offering a potential to exit with a gain. Bear in mind that with only five days left before options expiration the risks increase sharply.

Picked on November 06 at $ 30.24
Change since picked: - 5.66
Earnings Date 01/25/06 (confirmed)
Average Daily Volume = 1.8 million

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Questar Corp. - STR - close: 80.77 chg: +0.52 stop: n/a

We are surprised that STR is showing any strength at all considering the action in natural gas, which fell more than three percent today. Time is quickly running out. We have adjusted our target to breakeven at $5.10. Our strangle involves the January $80 calls (STR-AP) and the January $70 puts (STR-MN).

Picked on November 20 at $ 76.25
Change since picked: + 4.52
Earnings Date 01/26/05 (unconfirmed)
Average Daily Volume = 716 thousand

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Texas Ind. - TXI - close: 52.81 chg: -1.15 stop: n/a

TXI is selling off with the rest of the market and shares remain stuck in its trading range. We don't see any change from our previous updates. We are not suggesting new plays. The options in our strangle are the January $55 calls (TXI-AK) and the January $45 puts (TXI-MI). Our target has been reduced to breakeven at $2.70. A move into the $57-58 range might be enough to get our strangle there.

Picked on November 27 at $ 49.57
Change since picked: + 3.24
Earnings Date 01/05/06 (confirmed)
Average Daily Volume = 354 thousand
 

Dropped Calls

Apollo Group - APOL - close: 57.49 change: -4.66 stop: 59.95

Shares of APOL were blindsided by some new analyst downgrades today. One was a new downgrade to "neutral" while another was a reiteration of a "reduce" rating and a new lower price target ($50). Shares of APOL gapped lower to open at $57.86, which was under our stop loss at $59.95 so we would have been immediately stopped out. Nimble traders may have been lucky enough to exit near $60 during a brief oversold bounce this morning. Volume was extremely high at more than five times the daily average.

Picked on January 08 at $ 62.40
Change since picked: - 4.91
Earnings Date 03/16/06 (unconfirmed)
Average Daily Volume = 1.9 million

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Mohawk Ind. - MHK - close: 87.45 change: -1.06 stop: 86.90

MHK produced yet another failed rally today this time under the $90 level. We suspect that the weakness in the market could just be the beginning of a multi-day pull back. Therefore we're choosing to exit early in MHK. More aggressive traders may want to let the play stand and use the stop loss under $87 or under stronger support near $86 and its 50-dma.

Picked on January 04 at $ 90.25
Change since picked: - 2.80
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 355 thousand

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Petrochina Co - PTR - close: 87.83 change: -1.22 stop: 83.50

Target achieved. Shares of PTR gapped open higher this morning and opened at $89.90. The stock spent the first half of the day trading between $89.45 and $89.90. Our target to exit was the $89.50-90.00 range. If you did not exit we suggest you use caution. Today's candlestick produced a bearish engulfing pattern usually seen as a bearish reversal.

Picked on January 03 at $ 83.50
Change since picked: + 4.33
Earnings Date 03/00/06 (unconfirmed)
Average Daily Volume = 488 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

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