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Call Updates

Freeport Mcmoran - FCX - cls: 60.47 chg: +0.25 stop: 55.79

Metal and mining stocks trended higher again on Wednesday after another analyst firm upgraded their forecasts for copper, gold and other metals for 2006. This is certainly a positive for the sector but FCX's inability to hold its early morning gains today is a potential concern. A bounce from here (60.00) could be used as a new bullish entry point but patient traders may want to hold out for a possible dip back toward the $58 level. Our target is the $64.75-65.00 range. Please note that there is some headline risk involving rival Phelp Dodge's (PD) earnings report coming up on January 31st.

Picked on January 24 at $ 60.22
Change since picked: + 0.25
Earnings Date 01/17/06 (confirmed)
Average Daily Volume = 2.6 million

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Lehman Brothers - LEH - close: 134.95 chg: -0.87 stop: 131.05

The short-term outlook for LEH doesn't look very good. Technical oscillators are rolling over and its MACD is starting to lean back toward a sell signal, which would produce a bearish divergence between LEH's higher high versus a lower high in the MACD indicator. We are not suggesting new bullish plays and fully expect LEH to pull back into the $132.00-134 region. Our target is the $138.50-140.00 range.

Picked on January 09 at $131.05
Change since picked: + 3.90
Earnings Date 03/14/06 (unconfirmed)
Average Daily Volume = 2.3 million

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Selective Ins. - SIGI - close: 56.46 chg: -1.06 stop: 54.65

Traders need to be careful here and they should double-check their stop loss placement. Today's action is giving us mixed signals. Overall the session produced a one-day bearish reversal known as a bearish engulfing candlestick pattern. Yet the afternoon bounce from the $56 level near its 50-dma looks like a new buying opportunity. More conservative traders may want to inch up their stop loss toward the 50-dma (currently 55.64). 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: + 0.41
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 163 thousand

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Wynn Resorts - WYNN - close: 57.54 change: -0.16 stop: 54.99

We don't see any change from our previous update on WYNN. 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: - 1.24
Earnings Date 02/09/06 (unconfirmed)
Average Daily Volume = 1.1 million
 

Put Updates

Biotech HOLDRs - BBH - close: 194.60 chg: +0.03 stop: 201.55

We do not see any change from our previous update on BBH. As we expected the HOLDR did not move much on Wednesday and neither did shares of AMGN. Investors are waiting to see what AMGN reports and what they have to say in their earnings report and conference call tomorrow. AMGN should report before the opening bell so don't be surprised to see the BBH gap or spike (up or down) tomorrow at the open. 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: - 1.18
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 539 thousand

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Express Scripts - ESRX - close: 88.24 chg: +0.08 stop: 90.01

We don't see any change from our previous updates on ESRX. 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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Johnson Controls - JCI - close: 70.30 chg: -0.05 stop: 72.51

Our new bearish play in JCI has been opened. The stock dipped lower enough to hit our trigger to buy puts at $69.90. Unfortunately the breakdown below the $70.00 level did not hold. This is somewhat dangerous and we would not consider new put positions until JCI trades back under $70.00 or today's low at $69.80. Our target is the $65.50-65.00 range.

Picked on January 25 at $ 69.90
Change since picked: + 0.40
Earnings Date 01/20/06 (confirmed)
Average Daily Volume = 955 thousand

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Omnicare - OCR - close: 52.96 change: -2.73 stop: 56.25 *new*

OCR fell to an intraday low of $51.79 and closed with a 4.9% loss on big volume after being downgraded to "under perform" before the opening bell. The volume was more than 4.6 times the daily average and is a positive sign for the bears. We are lowering our stop loss to $56.25 near the 100-dma. Our target is the $51.00-50.00 range before its February earnings report.

Picked on January 20 at $ 54.99
Change since picked: - 2.03
Earnings Date 02/23/06 (unconfirmed)
Average Daily Volume = 1.3 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: 75.25 chg: +0.26 stop: n/a

BMHC gapped open higher this morning after an analyst started coverage with a "buy" rating. The rally failed near its trendline of lower highs (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: - 5.80
Earnings Date 02/07/06 (unconfirmed)
Average Daily Volume = 527 thousand

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Encana Corp. - ECA - close: 46.15 chg: -0.90 stop: n/a

ECA fell for a 1.9% loss on Wednesday and looks poised to test its short-term trend of higher lows. 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: + 0.59
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Ryland Group - RYL - close: 70.35 change: -4.82 stop: n/a

RYL finally reported earnings and beat estimates by 20 cents a share but reported that new orders were slowing. Investors focused on the new order news and pushed the stock lower. It didn't help matters that the National Association of Realtors also reported that home sales were slowing today, for the third month in a row. Plus, one analyst firm downgraded RYL to a "sell" rating. 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: - 4.84
Earnings Date 01/24/06 (confirmed)
Average Daily Volume = 1.1 million
 

Dropped Calls

Caterpillar - CAT - close: 62.07 change: +0.72 stop: 59.90

It was our plan to exit today near the closing bell. CAT is expected to report earnings tomorrow morning and we don't want to hold over the event even if we expect the results to be positive. Wall Street expects CAT to report earnings of $1.11 a share.

Picked on January 08 at $ 60.45
Change since picked: + 1.62
Earnings Date 01/26/06 (confirmed)
Average Daily Volume = 4.0 million

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Fortune Brands - FO - close: 77.36 change: -0.75 stop: 76.45

We are choosing an early exit in FO. The stock has failed to produce any sort of follow through on the January 18th breakout. Instead shares look poised to turn lower now. We would still consider buying puts if FO broke down below $76.50. Alternatively a move over the 100-dma (near 79.00) could be used as a new bullish entry point. We would not hold over the February earnings report.

Picked on January 18 at $ 78.65
Change since picked: - 1.29
Earnings Date 02/07/06 (unconfirmed)
Average Daily Volume = 803 thousand

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Holly Corp. - HOC - close: 66.90 chg: -2.36 stop: 63.95

Target achieved. The oil sector turned lower today after a sharp decline in crude oil futures. Yet that didn't stop shares of HOC from first making a rally attempt toward the $70.00 level. The high today was $69.92. Our target was the $69.75-70.00 range. The selling did stop near HOC's rising 10-dma but the failed rally at $70.00 is an ominous short-term bearish signal. We would watch for a bounce in the $64-65 range as a potential entry point for new bullish positions.

Picked on January 17 at $ 65.65
Change since picked: + 1.25
Earnings Date 02/06/06 (unconfirmed)
Average Daily Volume = 303 thousand
 

Dropped Puts

DRS Tech. - DRS - close: 50.23 change: +1.00 stop: 51.01

We are going to abandon this play. DRS has continued to bounce and shares have now broken back above the $50.00 level and its simple 200-dma. Volume on today's gain was way above average. The stock is still below its four-week trend of lower highs but it looks like the bears are losing this fight.

Picked on January 17 at $ 47.95
Change since picked: + 2.28
Earnings Date 02/09/06 (unconfirmed)
Average Daily Volume = 275 thousand

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Sears Holding - SHLD - close: 122.61 chg: +0.91 stop: 124.05

The retail sector turned lower today but that didn't stop SHLD from spiking higher intraday and hitting our stop loss at $124.05. The overall trading range is still very much intact and aggressive traders may want to keep the play open.

Picked on January 23 at $119.95
Change since picked: + 2.66
Earnings Date 03/07/06 (unconfirmed)
Average Daily Volume = 2.5 million
 

Dropped Strangles

None
 

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