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Call Updates

Express Scripts - ESRX - close: 92.13 chg: +0.77 stop: 87.85

The rebound in ESRX is growing stronger. The stock looks poised to breakout over resistance at the $93.00 level soon. We would consider new bullish positions here but more conservative traders might want to wait for a new high instead. 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: - 0.29
Earnings Date 02/22/06 (unconfirmed)
Average Daily Volume = 2.1 million

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Universal Health - UHS - close: 49.67 chg: -0.22 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: 39.12 change: -0.39 stop: 42.65

ASF produced an oversold rally this morning but it failed under the $40.50 level. This is good news for the bears and today's move looks like another entry point to open new put positions. 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: - 0.78
Earnings Date 02/16/06 (confirmed)
Average Daily Volume = 367 thousand

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Cameco Corp. - CCJ - close: 70.99 change: +0.99 stop: 73.76

Several of the mining-related stocks have been somewhat volatile lately and CCJ is no exception. Yesterday we warned readers to expect the bounce to continue into today. Fortunately, the rebound stalled at $72.55, under the 10-dma. We would wait for a new decline under the $70.00 mark before buying new put positions. 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: + 2.42
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 1.1 million

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Ambac Fincl. - ABK - close: 74.93 change: -0.92 stop: 78.05

ABK is finally seeing some follow through to the downside. This looks good for the bears and volume came in well above the average today, which suggests strength behind the decline. Unfortunately, we need to keep a careful eye on the 100-dma (74.51) and the exponential 200-dma (74.13) since either or both could act as short-term support. Expect a bounce but look for the bounce to fail under $76.00. 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: - 1.16
Earnings Date 01/25/06 (confirmed)
Average Daily Volume = 463 thousand

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Intl Bus. Mach. - IBM - close: 80.40 change: -0.40 stop: 82.05

We don't see a lot of change from our previous update on IBM except that resistance at the $81 level and its 200-dma seems to be holding. 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: + 0.91
Earnings Date 01/17/06 (confirmed)
Average Daily Volume = 6.0 million

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Johnson Controls - JCI - cls: 67.25 chg: +0.22 stop: 69.05 *new*

There are no surprises here. We warned readers to expect the bounce to continue today. Fortunately, the move stalled near the top of its narrow, descending channel. We are lowering our stop loss to $69.05. Our target is the $65.50-65.00 range.

Picked on January 25 at $ 69.90
Change since picked: - 2.65
Earnings Date 01/20/06 (confirmed)
Average Daily Volume = 955 thousand

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MGIG Invest. - MTG - close: 63.01 change: +0.28 stop: 66.05

As expected shares of MTG bounced today but the stock remains under resistance near $64.00 and its simple 200-dma. We don't see any change from our previous updates. Our target is the $58.00-57.50 range.

Picked on February 06 at $ 63.70
Change since picked: - 0.69
Earnings Date 01/12/06 (confirmed)
Average Daily Volume = 833 thousand

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Meritage Homes - MTH - close: 59.38 chg: +0.62 stop: 61.55*new*

MTH bounced toward the $60 level but it failed to hold most of its gains. This may have been the move needed to fill the gap down from February 7th. We expect the bearish trend to continue. Our target is the $52.00-50.00 range. We are going to inch the stop loss down to $61.55.

Picked on February 02 at $ 58.76
Change since picked: + 0.62
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: 72.77 chg: +0.34 stop: n/a

This sideways trading we're seeing in BMHC over the last couple of days is the worst thing that can happen for our strangle play. The trend appears to be bearish but BMHC may need to fill the gap down from February 7th before moving again. 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: - 8.18
Earnings Date 02/07/06 (confirmed)
Average Daily Volume = 527 thousand

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Encana Corp. - ECA - close: 42.69 chg: -1.70 stop: n/a

Oil stocks continued to get hammered today. ECA lost 3.8% and broke down below its simple 200-dma. 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: - 2.87
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Ryland Group - RYL - close: 67.82 change: -0.80 stop: n/a

The bounce in RYL has already failed and the stock looks poised to move lower. 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: - 7.37
Earnings Date 01/24/06 (confirmed)
Average Daily Volume = 1.1 million
 

Dropped Calls

Cummins Inc. - CMI - close: 99.71 change: +0.01 stop: 96.95

We are losing our confidence with CMI. The overall trend in shares of CMI remains bullish but the action in the broader markets looks like a failed rally today. The Point & Figure chart for CMI is still in a bullish pattern as well. Unfortunately, we feel like that to keep this play open we'd have to put the stop under the $96 level and we don't want that kind of risk right now. We'd rather exit now with a loss than see that loss grow any bigger. Short-term technicals and the daily MACD indicator are not very convincing if you're a bull. A move over $102 might convince us to change our minds.

Picked on February 2 at $101.01
Change since picked: - 1.30
Earnings Date 01/30/06 (confirmed)
Average Daily Volume = 742 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

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