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Call Updates

Cigna - CI - close: 119.69 change: -3.94 stop: 117.85

It is probably just profit taking but today's decline in CI does not inspire any confidence. The stock was the worst performer among most of its rivals today. Shares of CI lost more than 3% on no news against the backdrop of a market-wide pull back. We would not suggest new positions here. Furthermore the failure to really bounce much from its intraday lows does not encourage us going forward. At the minimum tomorrow we would expect CI to test today's lows (118.82) and probably stop us out at $117.85. This is one play that has definitely started on the wrong foot! If you bought the gap down this morning you might want to consider an early exit right here to minimize any losses.

Picked on February 12 at $123.63
Change since picked: - 3.94
Earnings Date 02/08/06 (confirmed)
Average Daily Volume = 979 thousand

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Express Scripts - ESRX - close: 91.62 chg: -0.29 stop: 88.24

We don't see any change from our weekend update on ESRX. Our biggest concern here would be a substantial pull back in the major indices, which would probably drag ESRX back toward technical support at the 50-dma (near 88.57). Our target is the $99.50-100.00 range. We do not want to hold over the late February earnings report so that only gives us about a week and a half but so far the 22nd earnings date is unconfirmed.

Picked on January 29 at $ 92.42
Change since picked: - 0.80
Earnings Date 02/22/06 (unconfirmed)
Average Daily Volume = 2.1 million

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Lehman Brothers - LEH - cls: 137.81 chg: +0.31 stop: 134.49

LEH did manage to squeak out another gain on Monday but the market-wide decline is not an environment that we really want to start new call plays. More conservative traders may want to wait for a move in shares of LEH over $138.50 as confirmation of the short-term bottom or even wait for a new move over $140.00. Our target is the $144.95-145.00 range. More aggressive traders could aim higher maybe $149.

Picked on February 12 at $137.50
Change since picked: + 0.31
Earnings Date 03/14/06 (unconfirmed)
Average Daily Volume = 2.0 million

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Universal Health - UHS - close: 49.35 chg: -0.19 stop: 48.49

We do not see any change from our weekend update. We do note that UHS was bouncing higher into the closing bell on Monday. Our strategy is to try and capture a breakout over resistance near $50.00. We are using a trigger at $50.51 to open the play. If UHS trades at or above $50.51 then the play is open and we're targeting a run into the $54.50-55.00 range. This zone coincides with resistance from its August 2005 peak and P&F chart resistance near $56. We do not want to hold over the February 27th earnings report so we only have about two weeks for the play to be triggered and then for shares to run higher.

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

Ambac Fincl. - ABK - close: 75.48 change: -0.09 stop: 78.05

ABK remains under short-term resistance. More conservative traders may want to consider an early exit if ABK trades above 76.50. Our target is $71.00.

Picked on February 05 at $ 76.09
Change since picked: - 0.61
Earnings Date 01/25/06 (confirmed)
Average Daily Volume = 463 thousand

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Administaff - ASF - close: 38.30 change: -0.19 stop: 41.75

Time is almost up. We need to exit on Wednesday afternoon, February 15th, to avoid holding over the Thursday morning earnings report. Our target is $35.25.

Picked on February 08 at $ 39.90
Change since picked: - 1.60
Earnings Date 02/16/06 (confirmed)
Average Daily Volume = 367 thousand

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Cameco Corp. - CCJ - close: 67.90 change: -2.12 stop: 72.56*new*

Metal and mining stocks turned lower again on Monday. Shares of CCJ lost just over 3% but remain just above technical support at the simple 50-dma. We are going to lower our stop loss to $72.56, which is above the high from last Thursday and still above the simple 10-dma. Our target is the $61.50-60.00 range.

Picked on February 07 at $ 68.57
Change since picked: - 0.67
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 1.1 million

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Intl Bus. Mach. - IBM - close: 80.44 change: -0.89 stop: 82.05

IBM almost erased Friday's gain today. More importantly it looks like IBM has produced a failed rally at short-term resistance near $82.00. We would not suggest new plays until IBM traded under $80.00 or better yet under $79.50 again. Our target is the $75.25-75.00 range.

Picked on February 06 at $ 79.49
Change since picked: + 0.95
Earnings Date 01/17/06 (confirmed)
Average Daily Volume = 6.0 million

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Ipsco Inc. - IPS - close: 86.10 chg: -1.15 stop: 90.01

As a group the steel stocks witnessed some widespread profit taking today. Unfortunately, IPS was not one of them. The stock did lose 1.3% but shares spent almost the entire session trading sideways in a 50-cent range. It looks like the 50-dma is offering a bit more support than we expected. Traders might feel better off to wait for a breakdown below the 50-dma, now at 84.95, before initiating new positions. Our target is the $80.25-80.00 range.

Picked on February 10 at $ 85.90
Change since picked: + 0.20
Earnings Date 02/06/06 (confirmed)
Average Daily Volume = 343 thousand

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Johnson Controls - JCI - cls: 66.74 chg: -1.27 stop: 69.05

Good news! On Friday we almost pulled the plug on JCI as a bearish candidate. We kept the play alive because shares were still under resistance. The stock has produced a failed rally at its 10-dma today and looks poised to make a run at our target in the $65.50-65.00 range.

Picked on January 25 at $ 69.90
Change since picked: - 3.16
Earnings Date 01/20/06 (confirmed)
Average Daily Volume = 955 thousand

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MGIG Invest. - MTG - close: 62.98 change: -0.39 stop: 66.05

We do not see any change from our previous update on MTG. Our target is the $58.00-57.50 range.

Picked on February 06 at $ 63.70
Change since picked: - 0.72
Earnings Date 01/12/06 (confirmed)
Average Daily Volume = 833 thousand

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Meritage Homes - MTH - close: 57.89 chg: -0.67 stop: 61.11

Housing stocks continue to slide and MTH lost 1.14% on Monday. The stock's consolidation has coiled into a narrow point and we expect a breakout, either direction, very soon. Odds are the direction will be lower. A drop under $57.35 could be used as a new bearish entry point. Our target is the $52.00 level and this coincides with the P&F chart's target at $52.

Picked on February 02 at $ 58.76
Change since picked: - 0.87
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: 69.37 chg: -1.87 stop: n/a

BMHC is cracking round-number support at the $70.00 mark and has definitely broken technical support at its 50-week moving average. 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: -11.58
Earnings Date 02/07/06 (confirmed)
Average Daily Volume = 527 thousand

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Encana Corp. - ECA - close: 41.76 chg: -0.09 stop: n/a

We do not see any change from our weekend update on ECA. We are not suggesting new strangle positions. The $45 level, bolstered by the simple 200-dma looks like short-term resistance. Our strangle 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: - 3.80
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Ryland Group - RYL - close: 66.52 change: -0.65 stop: n/a

We do not see any change from our weekend update on RYL. The housing stocks continue to show weakness. We're not 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: - 8.67
Earnings Date 01/24/06 (confirmed)
Average Daily Volume = 1.1 million
 

Dropped Calls

None
 

Dropped Puts

Loews - LTR - close: 95.72 change: -0.13 stop: 97.01

We have run out of time for LTR to be an effective put candidate for us. The company is due to report earnings on Thursday. While we are dropping LTR as a put candidate we've chosen to launch a strangle strategy (see the details under new plays tonight) in an effort to capture any post-earnings volatility.

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/16/06 (confirmed)
Average Daily Volume = 508 thousand
 

Dropped Strangles

None
 

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