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Call Updates

Cummins Inc. - CMI - close: 99.70 change: +0.24 stop: 96.95

CMI did indeed find some support near its simple 10-dma this morning. The stock bounced from its lows but the bounce was not very convincing and CMI is struggling with the $100.00 mark. We remain pretty cautious. The DJIA index added more than one hundred points and CMI's efforts amounted to a 24-cent bounce. We are not suggesting new positions.

Picked on February 2 at $101.01
Change since picked: - 1.31
Earnings Date 01/30/06 (confirmed)
Average Daily Volume = 742 thousand

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Express Scripts - ESRX - close: 91.36 chg: +0.81 stop: 87.85*new*

ESRX bounced from the $90.00 region again (actually 89.54) and short-term technicals are hinting at some improvement. We would consider new bullish positions here but you might want to tighten your stop loss. We are raising our stop loss to $87.85 just under the 50-dma near $88.00. More conservative traders may want to wait for a move over $92.00 or $92.50 before considering new bullish positions. Our target is the $99.50-100.00 range. We do not want to hold over the late February earnings report.

Picked on January 29 at $ 92.42
Change since picked: - 1.06
Earnings Date 02/22/06 (unconfirmed)
Average Daily Volume = 2.1 million

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Universal Health - UHS - close: 49.89 chg: +0.13 stop: 48.49

We don't see any change from our previous updates. 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 February x at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/27/06 (confirmed)
Average Daily Volume = 613 thousand
 

Put Updates

Administaff - ASF - close: 39.51 change: -0.74 stop: 42.65

We have been triggered in ASF. The stock continued lower today and broke down under round-number support at the $40.00 mark. Our trigger to buy puts was at $39.90. We are a little bit wary with the intraday bounce from its lows but readers can watch for a failed rally under $40.00 or even $41.00 as a new bearish entry point for puts. Our target is the 200-dma but we're using an exit range of $35.25-34.50. This is a short-term play. We do not want to hold over the February 16th earnings report.

Picked on February 08 at $ 39.90
Change since picked: - 0.39
Earnings Date 02/16/06 (confirmed)
Average Daily Volume = 367 thousand

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Cameco Corp. - CCJ - close: 70.00 change: +1.43 stop: 73.76

A number of the metal and mining stocks produced an intraday bounce off their lows today. CCJ was one of them with a rebound from its simple 50-dma. The short-term pattern is still bearish but CCJ might continue to bounce from here. Watch for resistance near the 10-dma (73.67). A failed rally under the 10-dma could be used as a new bearish entry point although we'd hesitate to open new put positions with CCJ above $70.00. Our target is the $61.50-60.00 range. The P&F chart is bearish and points to a $57 target. CCJ is set to split 2-for-1 on February 23rd.

Picked on February 07 at $ 68.57
Change since picked: + 1.43
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 1.1 million

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Ambac Fincl. - ABK - close: 75.85 change: +0.10 stop: 78.05

ABK still looks bearish with its short-term trend of lower highs. We don't see any change from our previous updates. There is some short-term technical support at its exponential 200-dma and simple 100-dma near the $74 level. We do expect a bounce there. Our target is $71.00. Our time frame is four to six weeks, probably sooner.

Picked on February 05 at $ 76.09
Change since picked: - 0.24
Earnings Date 01/25/06 (confirmed)
Average Daily Volume = 463 thousand

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Intl Bus. Mach. - IBM - close: 80.80 change: +1.15 stop: 82.05

IBM has moved back into the danger zone for bears. The bounce back over $80 has turned its short-term technical oscillators bullish again. Bulls still have work to do. IBM remains under technical resistance at its 200-dma and appears to have resistance in the $81.00-82.00 region. We are not suggesting new put positions until IBM trades back under $79.50 again. Our target is the $75.25-75.00 range.

Picked on February 06 at $ 79.49
Change since picked: + 1.31
Earnings Date 01/17/06 (confirmed)
Average Daily Volume = 6.0 million

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Johnson Controls - JCI - cls: 67.03 chg: -0.21 stop: 70.05

JCI is still sinking lower and hit a new relative low today but like a lot of stocks it rebounded from its worst levels of the session. We suspect it will continue to bounce tomorrow until it hits the short-term trendline of lower highs. Our target is the $65.50-65.00 range.

Picked on January 25 at $ 69.90
Change since picked: - 2.87
Earnings Date 01/20/06 (confirmed)
Average Daily Volume = 955 thousand

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MGIG Invest. - MTG - close: 62.73 change: -0.12 stop: 66.05

MTG dipped toward $62 and bounced. Watch for a failed rally near $64.00 and its 200-dma as a new bearish entry point to buy puts. Our target is the $58.00-57.50 range.

Picked on February 06 at $ 63.70
Change since picked: - 0.97
Earnings Date 01/12/06 (confirmed)
Average Daily Volume = 833 thousand

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Meritage Homes - MTH - close: 58.76 chg: +0.63 stop: 62.05

Homebuilders rallied today but it looks like an oversold bounce. We don't see any change from our previous updates on MTH. Our target is the $52.00-50.00 range.

Picked on February 02 at $ 58.76
Change since picked: - 0.00
Earnings Date 01/26/06 (confirmed)
Average Daily Volume = 560 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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Building Materials - BMHC - cls: 72.43 chg: +0.13 stop: n/a

Wednesday proved to be a relatively volatile day for BMHC but the stock ended the session close to unchanged. 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: - 8.52
Earnings Date 02/07/06 (confirmed)
Average Daily Volume = 527 thousand

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Encana Corp. - ECA - close: 44.39 chg: -0.63 stop: n/a

ECA continued to sink today and closed under round-number support at $45.00. Shares are currently testing technical support at the 200-dma. This looks bearish. 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: - 1.17
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Ryland Group - RYL - close: 68.62 change: +1.00 stop: n/a

RYL rebounded from its lows of the session and we don't think the bounce is over yet. Watch for another rally back toward the $70 level again. 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: - 6.57
Earnings Date 01/24/06 (confirmed)
Average Daily Volume = 1.1 million
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

Google Inc. - GOOG - close: 369.08 chg: +1.16 stop: n/a

Target achieved. Shares of GOOG were weak for most of the morning and hit a low near $355. This was more than enough for the puts in our strangle (February $420 puts GOP-ND) to hit our target of $60.00. The high for the puts today was $64.50. We are happy to be out. The intraday bounce from GOOG's lows looks like a set up for a stronger oversold bounce.

Picked on January 29 at $433.49
Change since picked: -64.41
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 11.1 million
 

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