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Call Updates

Biogen Idec - BIIB - close: 46.05 change: +0.13 stop: 44.45

BIIB dipped toward the $45.00 level this morning but slowly rebounded throughout the rest of the session. This test of support near $45.00 and its rising 50-dma looks like a new bullish entry point. However, more conservative traders may want to wait for some confirmation that the consolidation is over by waiting for a rise over $46.75 or the $47.00 level before initiating new positions. The Point & Figure chart remains bullish and points to a $62 target. Our target for BIIB is the $49.85-50.00 range.

Picked on December 27 at $ 46.11
Change since picked: - 0.06
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 3.2 million

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Caterpillar - CAT - close: 62.51 change: +0.18 stop: 59.90 *new*

CAT is still trying to climb higher but its momentum is definitely lagging. We only have a few days left before the company is due to report earnings on the morning of January 26th. We don't want to hold over the report so we plan to exit on Wednesday afternoon at the close on the 25th. We are not suggesting new positions at this time and we are raising our stop loss to $59.90. Our target is the $64.75-65.00 range. The Point & Figure chart points to a $72 target.

Picked on January 08 at $ 60.45
Change since picked: + 2.06
Earnings Date 01/26/06 (confirmed)
Average Daily Volume = 4.0 million

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Fortune Brands - FO - close: 78.59 change: +0.02 stop: 76.45

The lack of follow through on yesterday's bullish breakout over resistance is not a positive sign for the bulls. Today's failure to rally looks even more bearish when compared to the widespread bounce across the rest of the market. Enter positions here carefully. There is potential resistance at the 100-dma near 79.75 and again near round-number resistance at $80.00. Our short-term target is the $83.00-84.00 range. We do not want to hold any positions over the early February earnings report.

Picked on January 18 at $ 78.65
Change since picked: - 0.06
Earnings Date 02/03/06 (unconfirmed)
Average Daily Volume = 803 thousand

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Gannett Co - GCI - close: 63.54 change: -1.14 stop: 61.99

GCI is still struggling to breakout over resistance near $65.00. The weekly technicals are bullish but the short-term daily oscillators are turning more bearish. The stock is probably headed for a dip into the $63.00-62.50 range. Watch for a bounce in that area as a new potential entry point. More conservative traders may want to wait for GCI to clear the $65 level and/or its 100-dma before considering new bullish positions. Our target is going to be the $68.50-69.00 range. Remember that we do not want to hold any positions over the January 27th earnings report.

Picked on January 15 at $ 64.28
Change since picked: - 0.74
Earnings Date 01/27/06 (confirmed)
Average Daily Volume = 1.4 million

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Giant Ind. - GI - close: 59.24 change: -0.31 stop: 55.45

Oil stocks turned in another strong session with crude oil nearing $67 a barrel. The OIX index added 1.4% and the OSX oil services index soared to another new all-time high on today's 3.9% gain. Unfortunately, GI did not participate in the rally today and remains under the $60.00 level. Our trigger to buy calls on GI is at $60.85. If triggered we are going to target a rally into the $66.00-67.00 range before GI reports earnings in late February. 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 02/20/06 (unconfirmed)
Average Daily Volume = 279 thousand

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Holly Corp. - HOC - close: 67.74 chg: +1.86 stop: 59.95

HOC produced a 2.8% gain today as the oil sector rallied on rising crude prices. The stock closed at a new high and looks poised to make a run at the $70 level. Our target is the $69.75-70.00 range. We do not want to hold over the February earnings report.

Picked on January 17 at $ 65.65
Change since picked: + 2.09
Earnings Date 02/06/06 (unconfirmed)
Average Daily Volume = 303 thousand

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Hydril - HYDL - close: 77.18 change: +3.24 stop: 69.99 *new*

Oil well service stocks were the best performing sector today. The OSX index added 3.9% to close at a new high. Shares of HYDL did its best to contribute to the move with a 4.3% gain and a new high of its own. The only oddity with today's session was the under average volume behind HYDL's gain. We do not want to hold over the company's earnings report no matter how good we might think it will be. Our target is the $79.00-80.00 range. Currently HYDL's earnings date is unconfirmed at 01/31/06. We are raising the stop loss to $69.99.

Picked on January 18 at $ 73.94
Change since picked: + 3.24
Earnings Date 01/31/06 (unconfirmed)
Average Daily Volume = 259 thousand

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Lehman Brothers - LEH - close: 137.49 chg: +4.22 stop: 131.05*new*

It was a good day for the brokers. Merrill Lynch (MER) reported better than expected earnings results and that lifted the entire group. Shares of LEH turned in a strong day after increasing its dividend by 20% and declaring a 40 million share buy back program. LEH hit an intraday high of $138.44, which was just six cents away from our $138.50-140.00 target range. More conservative traders may want to just exit right here for a gain. We are raising our stop loss to $131.05.

Picked on January 09 at $131.05
Change since picked: + 6.44
Earnings Date 03/14/06 (unconfirmed)
Average Daily Volume = 2.3 million

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Ipsco Inc. - IPS - close: 84.90 change: +0.63 stop: 81.95

IPS looks like it wants to turn higher with its five-week trend of higher lows. If the market can keep bouncing then IPS might actually break free of resistance in the $85.50 region. Traders might want to use a move over $85.50 as a new entry point for bullish positions. Our target is the $89.00-90.00 range.

Picked on December 30 at $ 83.55
Change since picked: + 1.35
Earnings Date 02/06/06 (confirmed)
Average Daily Volume = 396 thousand

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Lennar Corp. - LEN - close: 62.62 chg: -0.74 stop: 61.90

Weaker than expected housing starts sapped the homebuilding sector. The DJUSHB index lost 1.1% and shares of LEN followed suit. More conservative traders may just want to exit early right here. We're going to let our stop stand where it is just under short-term support at the $62.00 level. We are not suggesting new positions at this time.

Picked on January 09 at $ 64.01
Change since picked: - 1.39
Earnings Date 03/16/06 (unconfirmed)
Average Daily Volume = 2.6 million

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Selective Ins. - SIGI - close: 55.34 chg: -0.11 stop: 53.79

Thursday was a mixed session for SIGI. The first half of the day was bullish with a breakout over resistance at $56.00 and its 50-dma. Our trigger to buy calls was at $56.05 so the play is now open. Unfortunately, the rally failed to hold and SIGI closed back under the $56.00 level. This does not look like the sort of strength we want to buy positions in. Wait for a move back over today's high (56.42) before considering new calls. In the news today SIGI confirmed it would report earnings after the closing bell on January 31st. We do not want to hold over the report. Our target is the $59.50-60.00 range. FYI: SIGI might announce a stock split with its earnings report. The company last split its stock in December 1997 in the $50-52 region.

Picked on January 19 at $ 56.05
Change since picked: - 0.29
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 163 thousand

Put Updates

DRS Tech. - DRS - close: 49.20 change: +2.17 stop: 51.01

Reversal alert! The overall pattern still looks bearish for DRS but today's bullish reversal is trouble. The stock rocketed higher for a 4.6% gain after word hit that a new tape from Osama Bin Laden had surfaced with talk about new attacks in the U.S. DRS is part of the defense industry so it's not a surprise to see traders covering on today's news. The stock is still trading under resistance at its 200-dma and the $50.00 level but we are not suggesting new positions. More conservative traders may just want to cut their losses right here since there is no way to know how far this bounce might run.

Picked on January 17 at $ 47.95
Change since picked: + 1.25
Earnings Date 02/09/06 (unconfirmed)
Average Daily Volume = 275 thousand

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Scotts Miracle grow - SMG - cls: 46.60 che: +0.84 stop: 47.05

The market bounce today inspired a strong bounce in shares of SMG and once again the stock is poised to breakout over resistance near the $47.00 level. More conservative traders may just want to exit now and cut their losses. We are not suggesting new positions.

Picked on January 01 at $ 45.24
Change since picked: + 1.36
Earnings Date 01/24/06 (confirmed)
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: 24.87 chg: -0.12 stop: n/a

We see no change from our weekend update. Our strangle play in AEOS is pretty much dead. There is one trading day left before January options expire. 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).

Picked on November 13 at $ 25.47
Change since picked: - 0.58
Earnings Date 02/23/06 (unconfirmed)
Average Daily Volume = 3.6 million

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Abercrombie&Fitch - ANF - close: 61.70 chg: -1.31 stop: n/a

We see no change from our weekend update. Murphy's law is alive and well. When ANF was above the $65 level we had a chance that shares might spike higher and give us an opportunity to exit at breakeven ($5.15). Friday's action has doomed the strangle play. ANF was downgraded last Friday morning. We have one trading day before January options expire. The options in our strangle are the January $65 calls (ANF-AM) and the January $55 puts (ANF-MK).

Picked on November 13 at $ 59.67
Change since picked: + 2.03
Earnings Date 02/14/06 (unconfirmed)
Average Daily Volume = 2.7 million

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Blue Coat Sys. - BCSI - cls: 41.47 chg: +0.64 stop: n/a

Time is almost up for the strangle on BCSI. 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: - 3.92
Earnings Date 02/23/06 (unconfirmed)
Average Daily Volume = 416 thousand

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Building Materials - BMHC - cls: 74.58 chg: -1.28 stop: n/a

BMHC is still retreating after last week's failed rally near the 50-dma. 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: - 6.47
Earnings Date 02/07/06 (unconfirmed)
Average Daily Volume = 527 thousand

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Chicago Merc. Exchg. - CME - cls: 381.98 chg: +3.98 stop: n/a

We see no change from our weekend update on CME. Time is almost up for our strangle in CME. 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: + 6.08
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 879 thousand

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Encana Corp. - ECA - close: 47.90 chg: +0.29 stop: n/a

Strength in the energy sector today is pushing ECA higher after yesterday's retest of support. We're not suggesting new positions. Our strategy involves the April $50 calls (ECA-DJ) and the April $40 puts (ECA-PH). Our estimated cost is $3.45. We are aiming for a rise to $5.95.

Picked on January 10 at $ 45.56
Change since picked: + 2.04
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Four Seasons - FS - close: 54.74 chg: +0.08 stop: n/a

FS has not moved outside of its two-week trading range. It seems that investors and/or market makers are just waiting for January options to expire. Honestly, this looks like a new entry point to consider another strangle or straddle play. Unfortunately, an April $55 straddle would cost more than $8.00. An April $50put/$60call strangle would cost about $2.70. The previous strategies are merely observations not suggestions. The options in our current strangle are the January $60 calls (FS-AL) and the January $50 puts (FS-MJ).

Picked on November 08 at $ 55.37
Change since picked: - 0.63
Earnings Date 02/26/06 (unconfirmed)
Average Daily Volume = 319 thousand

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Texas Ind. - TXI - close: 51.37 chg: -0.53 stop: n/a

We see no change from our weekend update. TXI is still stuck in its trading range and that's bad news for our strangle play. The options in our strangle are the January $55 calls (TXI-AK) and the January $45 puts (TXI-MI).

Picked on November 27 at $ 49.57
Change since picked: + 1.80
Earnings Date 01/05/06 (confirmed)
Average Daily Volume = 354 thousand

Dropped Calls

Goldman Sachs - GS - close: 133.82 chg: +1.97 stop: 127.45

Target achieved. The broker-dealer sector index XBD rallied for a 2.1% gain and hit a new all-time high after Merrill Lynch (MER) reported a strong earnings report. MER beat Wall Street estimates by 21 cents. The positive news lifted the industry and shares of GS hit an intraday high at $134.82. Our target was the $134.80-135.00 range. The group continues to look bullish and more aggressive traders may want to keep some positions open in GS but we're going to close the play per our target. You'll notice that GS does have some resistance near the $135 level.

Picked on January 09 at $130.05
Change since picked: + 3.77
Earnings Date 03/16/06 (unconfirmed)
Average Daily Volume = 3.6 million

Dropped Puts

Expeditors Intl. - EXPD - cls: 68.49 change: +0.92 stop: 68.55

The transportation sector completely ignored the rising oil prices today and instead chose to focus on better than expected earnings results from railroad company Union Pacific (UNP). Shares of UNP soared to a new all-time high with an 8.1% gain. This helped fuel a 2.5% rally in the Dow Transportation index and shares of EXPD rose to $69.16 before paring its gains. Our stop loss was at $68.55.

Picked on January 18 at $ 65.80
Change since picked: + 2.69
Earnings Date 02/14/06 (unconfirmed)
Average Daily Volume = 972 thousand

Dropped Strangles

Questar Corp. - STR - close: 83.86 chg: +0.43 stop: n/a

We are suggesting that traders exit early in the STR strangle. The stock is still inching higher and looks poised to challenge resistance at the $85.00 level. More aggressive traders may want try and time an exit near $85 if STR rallies tomorrow. We'd rather exit here and cut our losses. Our strangle involved the January $80 calls (STR-AP) and the January $70 puts (STR-MN) with an estimated cost at $5.10. The January $80 calls (STR-AP) are currently trading at $3.70bid/$4.00ask.

Picked on November 20 at $ 76.25
Change since picked: + 7.61
Earnings Date 02/09/06 (unconfirmed)
Average Daily Volume = 716 thousand

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