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Call Updates

Caterpillar - CAT - close: 61.35 change: +0.31 stop: 59.90

Tomorrow is our last day before we exit. The plan is to jump out on Wednesday afternoon near the closing bell. We do not want to hold over the earnings report even though we think CAT will turn in better than expected results. There are too many variables that could send shares lower. Wall Street expects CAT to report earnings of $1.11 a share. We are not suggesting new plays at this time. 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: + 0.90
Earnings Date 01/26/06 (confirmed)
Average Daily Volume = 4.0 million

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Fortune Brands - FO - close: 78.11 change: +0.41 stop: 76.45

The lack of movement in shares of FO is not very inspiring. More conservative traders may just want to hop out right here and wait for the stock to pick a new direction. We would not suggest new bullish positions until FO trades over $79.10 or $79.31 or its 100-dma near $79.50. Nimble traders may want to have already considered bearish put positions if FO trades under $76.50. Earnings are expected in early February and we do not want to hold over the report.

Picked on January 18 at $ 78.65
Change since picked: - 0.54
Earnings Date 02/03/06 (unconfirmed)
Average Daily Volume = 803 thousand

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Holly Corp. - HOC - close: 69.26 chg: +0.53 stop: 63.95 *new*

HOC almost hit our target today. The stock hit a high of $69.69 this afternoon in spite of a general pull back in the oil sector today. Odds are decent that HOC might be able to spike higher tomorrow into our target range of $69.75-70.00. If not then we'd expect a consolidation back down toward its 10-dma now at 66.25. We would not hold over the February earnings report. Please note that we are changing the stop loss to $63.95.

Picked on January 17 at $ 65.65
Change since picked: + 3.61
Earnings Date 02/06/06 (unconfirmed)
Average Daily Volume = 303 thousand

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Lehman Brothers - LEH - close: 135.82 chg: -0.73 stop: 131.05

The XBD broker-dealer index managed to see a new high today but shares of LEH failed to participate. The stock consolidated sideways for most of the session with a bearish tilt to the whole day. We would not be surprised to see LEH continue lower tomorrow and aim for the $134.00 region. Our target is the $138.50-140.00 range.

Picked on January 09 at $131.05
Change since picked: + 4.77
Earnings Date 03/14/06 (unconfirmed)
Average Daily Volume = 2.3 million

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Selective Ins. - SIGI - close: 57.48 chg: +0.33 stop: 54.65 *new*

The IUX insurance index closed lower today but SIGI bucked the trend in the sector with a 0.5% rally. The stock tried to breakout over the $58 level again but failed. Yesterday we warned readers to watch for a dip into the $56.00-56.50 range and that's what occurred this morning. We remain bullish and continue to target the $59.50-60.00 range. We are going to raise the stop loss to $54.65. We do not want to hold over the late January earnings report. 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: + 1.41
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 163 thousand

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Wynn Resorts - WYNN - close: 57.70 change: +0.19 stop: 54.99

If you're feeling optimistic you could say the good news here is that there was no follow through on yesterday's failed rally. The overall pattern remains bullish for WYNN but we're surprised that the stock is under performing with the market positive both Monday and Tuesday this week. More conservative traders may want to wait for a move over $60.00 or the November high at 61.50 before initiating positions. We're going to target a rally into the 64.75-65.00 range. We do not want to hold over the February earnings report.

Picked on January 22 at $ 58.78
Change since picked: - 1.08
Earnings Date 02/09/06 (unconfirmed)
Average Daily Volume = 1.1 million
 

Put Updates

Biotech HOLDRs - BBH - close: 194.57 chg: +1.57 stop: 201.55

Given yesterday's bounce from its lows we're not surprised by the gain today in the BBH. We are not expecting a lot of movement tomorrow. BBH will likely pace the action in Amgen (AMGN) and we don't expect AMGN to move much ahead of its earnings report due out on Thursday morning. Remember, that AMGN's earnings report is our biggest risk here in the BBH since AMGN is such a large component. This is risky and more conservative traders may not want to hold a position over AMGN's earnings report. Our target is the $187.00-185.00 range above the 200-dma on the BBH.

Picked on January 20 at $195.78
Change since picked: - 1.21
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 539 thousand

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DRS Tech. - DRS - close: 49.23 change: +0.48 stop: 51.01

DRS rallied this morning with a gap higher to open at $49.45 but the upward momentum failed to breakout over the $50.00 level and shares failed to close over technical resistance at the simple 200-dma (49.67). This could be the sort of failed rally at resistance that traders can use as a new bearish entry point just be sure to put your stop losses in place! Our target is currently the $45.00-44.00 range.

Picked on January 17 at $ 47.95
Change since picked: + 1.28
Earnings Date 02/09/06 (unconfirmed)
Average Daily Volume = 275 thousand

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Express Scripts - ESRX - close: 88.16 chg: +2.00 stop: 90.01

It looks like bulls are buying the bounce from the 50-dma, which occurred yesterday. ESRX added 2.3% and could be headed for a retest of resistance in the $90.00 region. We remain on the sidelines. Our trigger to buy puts is under the 50-dma at $84.95. If triggered we'll target a decline to the rising 100-dma (currently 74.87). We will be adjusting our target to account for the rising 100-dma. At the moment we'll use an exit zone of $77.00-75.00.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/22/06 (confirmed)
Average Daily Volume = 2.1 million

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Omnicare - OCR - close: 55.69 change: +0.67 stop: 57.51

OCR is still bouncing. We would watch for a failed rally near $56.00 and its 100-dma as a new bearish entry point. If the stock trades over the $56.30-56.50 zone then our play could be in trouble and conservative types might want to jump out quickly. We're going to leave our stop loss at $57.51. Our target is the $51.00-50.00 range before its February earnings report.

Picked on January 20 at $ 54.99
Change since picked: + 0.70
Earnings Date 02/23/06 (unconfirmed)
Average Daily Volume = 1.3 million

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Sears Holding - SHLD - close: 121.70 chg: +0.44 stop: 124.05

We feel fortunate that the bounce in SHLD today was not bigger. Our put play is still alive but we wouldn't suggest new positions until SHLD trades back under the $120.00 level. Our target is the $116.00-115.00 range.

Picked on January 23 at $119.95
Change since picked: + 1.75
Earnings Date 03/07/06 (unconfirmed)
Average Daily Volume = 2.5 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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Building Materials - BMHC - cls: 74.99 chg: +0.50 stop: n/a

BMHC is still churning sideways near $75 and its 200-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: - 6.06
Earnings Date 02/07/06 (unconfirmed)
Average Daily Volume = 527 thousand

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Encana Corp. - ECA - close: 47.05 chg: -1.04 stop: n/a

Oil stocks felt some profit taking on Tuesday with a decline in both the OIX and OSX indices. Shares of ECA lost just over 2%. Watch for a bounce above the $46.00 level. 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: + 1.19
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Ryland Group - RYL - close: 75.17 change: +0.05 stop: n/a

As we expected shares of RYL continued to trade sideways on Tuesday as investors waited to hear the company's earnings report that was due out after the closing bell. Unfortunately, at the time we wrote this update the company had not yet released its earnings numbers. Analyst estimates are for profits of $3.12 a share. Investor reaction to the report should spark some volatility tomorrow. We are no longer suggesting new strangle positions. Our play involves the April $80 calls (RYL-DP) and the April $70 puts (RYL-PN). Our estimated cost is $7.00. Our target is $12.00.

Picked on January 22 at $ 75.19
Change since picked: - 0.02
Earnings Date 01/24/06 (confirmed)
Average Daily Volume = 1.1 million
 

Dropped Calls

Giant Ind. - GI - close: 67.13 change: +5.01 stop: 55.45

Target achieved. Actually our target has been surpassed. Oil stocks actually took a break today and consolidated lower but shares of GI bucked the trend. The stock got a big boost (+8%) after an analyst firm started coverage on GI with a new "buy" rating this morning. The stock rallied strongly on very big volume. Our target was the $66.00-67.00 range.

Picked on January 20 at $ 60.85
Change since picked: + 6.28
Earnings Date 02/20/06 (unconfirmed)
Average Daily Volume = 279 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

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