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Call Updates

Apple - AAPL - close: 72.10 change: -3.32 stop: 69.99

Technology stocks helped lead the market lower on Thursday. The NASDAQ fell 1.25% while hardware related issues slid for a 1.5% decline. Shares of AAPL, the high-flying stock that it is, was targeted by more aggressive profit taking and closed with a 4.4% decline. The $70.00 level has been tested support for the last two months so we're counting on another bounce there in the $70.00-70.80 range. Aggressive traders can buy the bounce as a new entry point. Our target is the $84-85 range.

Picked on January 30 at $ 75.00
Change since picked: - 2.90
Earnings Date 01/18/06 (confirmed)
Average Daily Volume = 27.1 million

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Aetna - AET - close: 97.02 change: -0.37 stop: 89.99

AET held up relatively well considering today's market-wide pull back. We are not suggesting new plays at this time although a dip to and bounce from the $94 level would look like an attractive entry point to buy calls. Our target is the $99.00-100.00 range.

Picked on January 30 at $ 94.05
Change since picked: + 2.97
Earnings Date 02/09/06 (confirmed)
Average Daily Volume = 1.7 million

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Cummins Inc. - CMI - close: 97.85 change: -2.07 stop: 95.95

Run away! We're dealing with a worse case scenario here. We listed CMI as a bullish candidate last night with a trigger to buy calls at $101.01 thinking to catch a breakout to a new high over round-number resistance near the $100.00 level. The stock did hit new highs today with a gap higher this morning to $100.90 and a quick rally to $101.87, which was enough to open our play. Unfortunately, CMI failed to hold its gains and the market wide sell-off drug shares of CMI lower. Thursday's session has produced a bearish engulfing candlestick pattern (a.k.a. bearish reversal). If you are still on the sidelines we would not suggest new bullish positions here. If you did enter call positions this morning you need to consider exiting now to reduce your losses since we expect CMI to continue lower on Friday. The question is how low? While it stall near short-term support at the $96 level or will it dip to $95 or even the 50-dma near 92?

Picked on February 2 at $101.01
Change since picked: - 3.16
Earnings Date 01/30/06 (confirmed)
Average Daily Volume = 742 thousand

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Express Scripts - ESRX - close: 90.84 chg: -0.33 stop: 87.45

ESRX has thus far resisted any serious profit taking and is holding above support at the $90.00 level. However, if the markets seriously turn lower then we expect ESRX to follow - at least with a decline back to the rising 50-dma, currently at 87.30. We are going to leave our stop loss alone at $87.45 for now but more conservative traders may want to think about putting their stop just under the $90 level to take them out on any further weakness.

Picked on January 29 at $ 92.42
Change since picked: - 1.58
Earnings Date 02/22/06 (unconfirmed)
Average Daily Volume = 2.1 million

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SFBC Intl. - SFCC - close: 22.98 chg: +0.18 stop: 19.90

Highly shorted SFCC weathered the market the weakness today with some relative strength. We are not suggesting new positions here. Our target is the $24.90-25.00 range. More conservative traders may want to exit in the $24.50-24.65 zone since the 38.2% Fibonacci retracement of its October-December sell-off is about $24.65.

Picked on January 25 at $ 20.92
Change since picked: + 2.06
Earnings Date 02/22/06 (unconfirmed)
Average Daily Volume = 2.5 million

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Universal Health - UHS - close: 49.50 chg: -0.19 stop: 48.49

UHS turned in a relatively decent session on Thursday. The stock produced another failed rally at the $50.00 level this morning before turning lower. Yet the selling stalled at $49.25 and the stock was bouncing higher into the closing bell. We are still on the sidelines. Our trigger to buy calls is at $50.51. If triggered then we'll target a rally into the $54.50-55.00 range. The P&F chart is bullish with a $61 target. We do not want to hold over the late February earnings report.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/27/06 (confirmed)
Average Daily Volume = 613 thousand
 

Put Updates

Johnson Controls - JCI - cls: 68.82 chg: -0.56 stop: 72.01

Wednesday's afternoon bounce has failed but bears are still struggling to pull JCI under technical support at the 100-dma. More conservative traders might want to consider tightening their stops. Our target is the $65.50-65.00 range.

Picked on January 25 at $ 69.90
Change since picked: - 1.08
Earnings Date 01/20/06 (confirmed)
Average Daily Volume = 955 thousand

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XM Sat.Radio - XMSR - close: 25.04 chg: -0.91 stop: 28.01

XMSR continues to hit new relative lows. The stock lost 3.5% today on above average volume. We remain bearish but XMSR is looking a little oversold and the $25.00 level is round-number support and a perfect spot for an oversold bounce. We would not suggest new bearish positions here. If shares do bounce we'd watch for a move into the $26.50 region. Our target is the $21.00-20.00 range. We do not want to hold over the (unconfirmed) February 9th earnings report making this a short-term play. FYI: the P&F chart points to a $19.00 target.

Picked on January 30 at $ 26.43
Change since picked: - 1.39
Earnings Date 02/09/06 (unconfirmed)
Average Daily Volume = 5.0 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: 76.76 chg: -1.49 stop: n/a

We do not see any change from our weekend update on BMHC. Earnings are coming up around February 7th and will probably produce more volatility. 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: - 4.19
Earnings Date 02/07/06 (unconfirmed)
Average Daily Volume = 527 thousand

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Encana Corp. - ECA - close: 47.43 chg: -0.73 stop: n/a

ECA continued to see profit taking today. We're not suggesting new positions in ECA right now. 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: + 1.87
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Google Inc. - GOOG - close: 396.04 chg: -5.74 stop: n/a

The trading in GOOG today could be a sign that the stock will indeed head lower. The early morning rally failed and shares dove lower in the last hour of trading on a surge of volume. We are not suggesting new positions. The put side of our strangle involves the February $420 puts. Our target is for a rise to $60 before expiration but traders may want to adjust the target as appropriate.

Picked on January 29 at $433.49
Change since picked: -37.45
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 11.1 million

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Ryland Group - RYL - close: 68.78 change: -2.13 stop: n/a

Homebuilders continue to sink and RYL lost another 3% today while breaking down under the $70.00 level and its exponential 200-dma. We're not suggesting new 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: - 6.41
Earnings Date 01/24/06 (confirmed)
Average Daily Volume = 1.1 million
 

Dropped Calls

Carter's Inc. - CRI - close: 66.20 chg: -0.32 stop: 64.75

Retail stocks were some of the few spots of bullishness on Thursday but not so with CRI. The stock traded under support at the $65.00 level and hit our stop loss at $64.75 closing our play.

Picked on January 25 at $ 66.62
Change since picked: - 0.42
Earnings Date 02/20/06 (unconfirmed)
Average Daily Volume = 313 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

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