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Call Updates

Cigna - CI - close: 121.69 change: +2.00 stop: 117.85

Today's bounce back above the $120.00 level is certainly encouraging but we are going to remain cautious until CI trades back above the $124 level. Otherwise the stock is in danger of merely filling the Monday gap down and turning lower again. The P&F chart remains bullish and weeds out a lot of the daily noise so if you're a P&F chart believer then this rebound today may be a new entry point to buy calls. Our target is the $129.50-130.00 range.

Picked on February 12 at $123.63
Change since picked: - 1.94
Earnings Date 02/08/06 (confirmed)
Average Daily Volume = 979 thousand

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Express Scripts - ESRX - close: 91.83 chg: +0.20 stop: 88.45*new*

The trading in ESRX should be a concern if you're long calls. The market produced a relatively widespread rally today yet shares of ESRX could not muster enough momentum to breakout over resistance at the $93.00 level. At this point we would not consider new bullish positions until ESRX trades over $93.00. We are going to inch our stop loss up to $88.45 putting it closer to the 50-dma. 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: - 0.60
Earnings Date 02/22/06 (unconfirmed)
Average Daily Volume = 2.1 million

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Lehman Brothers - LEH - cls: 141.93 chg: +4.12 stop: 134.49

Broker-dealer stocks turned in a big day. The XBD index surged 1.68% and is trading near a new high. Shares of LEH are leading the way with a 2.98% gain and a new record-setting close. 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: + 4.43
Earnings Date 03/14/06 (unconfirmed)
Average Daily Volume = 2.0 million

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Universal Health - UHS - close: 49.41 chg: +0.06 stop: 48.49

There is still no change from our previous updates. 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. 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

Cameco Corp. - CCJ - close: 68.12 change: +0.22 stop: 72.56

There was a pretty good rebound in metal and mining stocks today. Thankfully shares of CCJ under performed the market and its peers. That doesn't mean that traders should not act cautiously here. Watch the $70 level and its 10-dma (now at 70.18) to act as short-term overhead resistance. Our target is the $61.50-60.00 range.

Picked on February 07 at $ 68.57
Change since picked: - 0.45
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 1.1 million

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Intl Bus. Mach. - IBM - close: 81.09 change: +0.65 stop: 82.05

Technology stocks produced a decent bounce today as well but IBM managed to lag behind its peers. Shares remain above the $80.00 level and thus we're in danger of being stopped out if the market rally continues. 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: + 1.60
Earnings Date 01/17/06 (confirmed)
Average Daily Volume = 6.0 million

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Johnson Controls - JCI - cls: 68.00 chg: +1.26 stop: 68.65*new*

The bullish reversal today, mostly likely fueled by short covering, is bad news for our put play in JCI. We strongly considered exiting early right here. More conservative players might do well to do just that. Instead we're going to inch our stop loss down to $68.65. Our current target is the $65.50 level.

Picked on January 25 at $ 69.90
Change since picked: - 1.90
Earnings Date 01/20/06 (confirmed)
Average Daily Volume = 955 thousand

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MGIG Invest. - MTG - close: 63.86 change: +0.88 stop: 66.05

Today's rally in MTG may prove to be another entry point. Shares rallied to $64.42, near its exponential 200-dma, before turning lower again. While this might look like the sort of failed rally we could short we would wait for a move back under $63.40 before considering new positions. More conservative traders may want to tighten their stop losses. Our target is the $58.00-57.50 range.

Picked on February 06 at $ 63.70
Change since picked: + 0.16
Earnings Date 01/12/06 (confirmed)
Average Daily Volume = 833 thousand

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Meritage Homes - MTH - close: 58.49 chg: +0.60 stop: 61.11

Homebuilders rallied along with the rest of the market but shares of MTH failed to gain much purchase. We would not be surprised to see shares make another run at the $60.00 mark before turning lower again. 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: - 0.27
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: 68.67 chg: -0.70 stop: n/a

The intraday trading action in BMHC actually looks like a new entry point to buy puts with the failed rally at the $70.00 level. With regards to our strangle play 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: -12.28
Earnings Date 02/07/06 (confirmed)
Average Daily Volume = 527 thousand

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Encana Corp. - ECA - close: 41.32 chg: -0.44 stop: n/a

Oil stocks were the weak sector in the market today with crude oil sliding under $60.00 a barrel. Natural gas futures sank to a new one-year low. We are not suggesting new strangle positions. 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: - 4.24
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Loews Corp. - LTR - close: 96.12 change: +0.40 stop: n/a

Shares of LTR did not move much today in spite of the rally. Odds are that investors are waiting to hear the company's earnings report due out on Thursday morning. We are suggesting a strangle to take advantage of any post-earnings volatility. This is a high-risk speculative play. Buying this strangle is a bet that LTR will be trading at more than $102 (above resistance) or less than $88 (under support) by March expiration. The options in our strangle are the March $100 calls (LTR-CT) and the March $90 puts (LTR-OR). Our estimated cost is $1.75.

Picked on February 13 at $ 95.72
Change since picked: + 0.00
Earnings Date 02/16/06 (confirmed)
Average Daily Volume = 513 thousand

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Ryland Group - RYL - close: 67.72 change: +1.20 stop: n/a

We do not see any change from our weekend update on RYL. 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: - 7.47
Earnings Date 01/24/06 (confirmed)
Average Daily Volume = 1.1 million
 

Dropped Calls

None
 

Dropped Puts

Ambac Fincl. - ABK - close: 77.13 change: +1.65 stop: 78.05

We are choosing an early exit and suggest readers follow suit. Today's 2% gain in ABK was fueled by stronger than average volume and the stock has broken out above its month-long trend of lower highs. There is still some resistance near $78 but we'd rather exit now to minimize any losses.

Picked on February 05 at $ 76.09
Change since picked: + 1.04
Earnings Date 01/25/06 (confirmed)
Average Daily Volume = 463 thousand

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Administaff - ASF - close: 39.83 change: +1.53 stop: 41.75

Our plan was to exit on Wednesday afternoon to avoid the Thursday earnings report. Unfortunately, today's big rebound in the stock price looks like a good reason to exit early. Shares did fail to close over round-number resistance at $40.00 so more aggressive traders might want to hold on to it for another day and exit tomorrow as planned.

Picked on February 08 at $ 39.90
Change since picked: - 0.07
Earnings Date 02/16/06 (confirmed)
Average Daily Volume = 367 thousand

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Ipsco Inc. - IPS - close: 90.21 chg: +4.11 stop: 90.01

The wide spread rally today sparked some short covering and the shorts were hit pretty hard in the steel industry. IPS managed to rally sharply and trade back above round-number, psychological resistance at the $90.00 level. We were stopped out at $90.01.

Picked on February 10 at $ 85.90
Change since picked: + 4.31
Earnings Date 02/06/06 (confirmed)
Average Daily Volume = 343 thousand
 

Dropped Strangles

None
 

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